MINUTES OF THE meeting

of the

ASSEMBLY Committee on Natural Resources, Agriculture, and Mining

 

Seventy-Second Session

February 24, 2003

 

 

The Committee on Natural Resources, Agriculture, and Miningwas called to order at 1:29 p.m., on Monday, February 24, 2003.  Chairman Tom Collins presided in Room 3161 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. Tom Collins, Chairman

Mr. Jerry D. Claborn, Vice Chairman

Mr. Kelvin Atkinson

Mr. John C. Carpenter

Mr. Chad Christensen

Mr. Marcus Conklin

Mr. Jason Geddes

Mr. Pete Goicoechea

Mr. John Marvel

Mr. Bob McCleary

Mr. Harry Mortenson

 

COMMITTEE MEMBERS ABSENT:

 

Ms. Genie Ohrenschall (excused)

 

GUEST LEGISLATORS PRESENT:

 

Senator Dina Titus, Clark County Senatorial District No. 7

 

STAFF MEMBERS PRESENT:

 

Linda Eissmann, Committee Policy Analyst

Erin Channell, Committee Secretary

 

OTHERS PRESENT:

 

Allen Biaggi, Administrator, Division of Environmental Protection, Department of Conservation and Natural Resources

Keku Kamalani, Intern for Senator Titus, University of Nevada, Las Vegas

Karen Hinton, Dean and Director, Nevada Cooperative Extension, University of Nevada, Reno

Andrew List, Policy and Research Coordinator, Nevada Association of Counties

Mike Baughman, Ph. D., President, Intertech Services Corporation

Russell Fields, President, Nevada Mining Association

 

Chairman Collins called the Assembly Committee on Natural Resources, Agriculture, and Mining to order.  Roll was called.  All members were present except for Ms. Ohrenschall who was noted as an excused absence.

 

Chairman Collins said the first order of business was two requests for committee introductions. 

 

 

Chairman Collins indicated it was for other vehicles required to be registered and said it amended the existing agriculture license plate law. 

 

ASSEMBLYMAN MARVEL MOVED FOR AN INTRODUCTION OF BDR 43-181.

 

ASSEMBLYMAN GOICOECHEA SECONDED THE MOTION.

 

THE MOTION CARRIED. (Ms. Ohrenschall was absent for the vote.)

 

********

 

ASSEMBLYMAN GEDDES MOVED FOR AN INTRODUCTION OF BDR 51-567.

 

ASSEMBLYMAN CARPENTER SECONDED THE MOTION.

 

THE MOTION CARRIED. (Ms. Ohrenschall was absent for the vote.)

 

Chairman Collins stated it was the deadline for committee bill draft requests  (BDRs) and Assemblyman Carpenter was requesting that the Committee make a committee request for a bill draft relating to irrigation ditches, canals, and other conditions of water in Elko.  He entertained a motion to approve.

 

ASSEMBLYMAN CLABORN MOVED TO REQUEST A COMMITTEE BILL DRAFT ON IRRIGATION DITCHES AND WATER CONDUITS IN ELKO COUNTY TO AMEND NRS 536.

 

ASSEMBLYMAN MORTENSON SECONDED THE MOTION.

 

Chairman Collins provided a clarification that it dealt with development, blocking streams, and irrigation problems in Elko where the current law was not clear enough for enforcement.

 

THE MOTION CARRIED. (Ms. Ohrenschall was absent for the vote.)

 

Chairman Collins said they would begin with the presentation from Allen Biaggi.

 

Allen Biaggi, Administrator, Division of Environmental Protection, Department of Conservation and Natural Resources, thanked them for their invitation and interest in the Division.  He provided an overview of the Division, discussing their mission, approach and tools, organizational structure, staffing, and budget (Exhibit C).  He said there were two important components to their mission: protection of public health and the environment, and an economic component.  When decisions were made within the Division, they needed to be cognizant of economic ramifications such as when placing controls on power plants.

 

In the performance of their mission, they used three different environmental protection tools.  The traditional regulatory tools were command and control measures, through regulatory standard, permits, inspections, and enforcement actions.  He said environmental protection had evolved beyond this type of structure.  They supplemented with the use of assistance programs like grants and loans, and with voluntary programs where the owner, operator, and responsible party could voluntarily work with the Division on activities for environmental compliance.

 

Mr. Biaggi briefly discussed the organizational structure:

 

He stated that three boards and commissions governed them:

 

Mr. Biaggi provided a brief description of the Nevada Division of Environmental Protection’s staffing and budget; employees consisted of full-time staff and three federal employees.  He said that they had actively sought delegation of federal programs to the state from the United States Environmental Protection Agency (EPA).  They felt they could better regulate facilities in Nevada than the EPA could from San Francisco or Washington, D.C.

 

He informed the Committee about their budget and where the funding came from.  He discussed their $25 million revenue from the Executive Budget accounts, which did not include state funding from the Petroleum Fund, the State Revolving Loan Program, or the A.B. 198 Grants Program (Exhibit C).  He stated that 57 percent of the budget was from fees, federal grants were 42 percent, and the General Fund contributed less than 1 percent.  He said the Division had 17 budget accounts that included seven executive accounts.

He then moved into a discussion of specific environmental programs, with areas addressing air, water, mining, waste, corrective action, and federal facilities.

 

Air quality, Mr. Biaggi stated, involved two programs: planning and regulatory.  He informed the Committee that air quality programs were unique within the Division of Environmental Protection because they were not involved in activities in Clark County or Washoe County.  Those counties had their own jurisdiction and programs and had delegated authority from the federal Environmental Protection Agency to operate their programs.  The only Division activities within those counties, he said, were by state statute to permit “fossil‑fired steam generation plants,” or large electrical plants.

 

Mr. Biaggi stated that the Air Quality Planning program monitored ambient air quality to meet federal air quality standards, and published a trend report on state air monitoring activities.  They provided state planning for air resources and smoke management activities that were becoming an issue because of prescribed burns, and other fire types because of federal management activities.  Regional Haze Planning was a unique program that was aesthetically based and dealt with the visual impacts of air pollution.  He said they also had an alternative fuels program to minimize emissions from vehicles and an overall reduction in dependence on petroleum fuels (Exhibit C).

 

The regulatory portion of the program was Air Pollution Control that currently regulated 520 stationary sources like power generation plants or industrial facilities.  He said the Division regulated three types of facilities, Class I, Class II, and Class III, which were divided based on tons of emissions produced annually.  There was also a compliance and enforcement component to ensure compliance and take enforcement steps when necessary.

 

Water Quality also had two programs, a planning component and regulatory component.  Water Quality Planning programs established water quality standards on surface waters statewide; if they did not meet the standards, the Division would implement a Total Maximum Daily Load (TMDL) that identified sources of pollution, control measures, and management options for the water course to ensure compliance with water quality standards.  Control of non-point sources was also part of this component; Mr. Biaggi stated that regarding water pollution there were two types:  point source pollution where pollution was released from a discrete source like an industrial plant discharging into a water way, and non-point source pollution where the pollution is not from a discrete source like agricultural runoff, urban runoff, or erosion.

 

Mr. Biaggi said that the Division promoted non-point source control through grants and assistance programs to communities, farmers, and ranches.  He informed the Committee that they monitored water quality at over 100 sites statewide and operated a laboratory certification program to ensure laboratory data was high quality and represented materials accurately for consumer protection.  He commented that there should be a bill presented that would expand the laboratory certification program to include hazardous waste.

 

Assemblyman Marvel asked if the Division of Environmental Protection had their own lab or if they utilized the state facility.

 

Mr. Biaggi replied that they used the state facility or contract laboratories.

 

Assemblyman Mortenson commented on Clark County and Washoe County operation of their own air quality programs and inquired if they operated their own water programs or if they were done statewide.

 

Mr. Biaggi responded that they were operated statewide; however, they did contract out activities as they arose to Washoe County, Clark County, and others.  He said they tried to “push it down to the local level” when possible and when local entities wanted program components.

 

Assemblyman Mortenson asked if the Division retained the responsibility for water quality even though it was contracted out, and Mr. Biaggi indicated that was correct.

 

Chairman Collins reminded the audience about signing in to show the numbers of people present and that those wanting to testify needed to mark the appropriate box on the sign-in sheet; he commented that with four presentations and two bills, he only had one person listed to speak or present.  He said it was for future reference and not just for the current meeting.

 

Mr. Biaggi continued with the Water Pollution Control programs and said they regulated 650 point source discharge facilities for waterways and ground or surface waters.  The Underground Injection Control Program regulated the injection of materials into the subsurface; those were applied primarily to oil and gas facilities in Railroad Valley, and geothermal facilities and mining operations.  He said the Division regulated storm water discharges from communities and construction operations, as well as performing subdivision reviews to ensure wastewater collection and treatment was done correctly.

 

As mentioned previously, the Division operated the State Revolving Loan Fund to provide low interest loans to communities statewide for infrastructure development.

 

Assemblyman Marvel asked how the loans were administered.

 

Mr. Biaggi answered that there was a loan application process annually; they notified each community who could then submit project proposals.  The proposals were then evaluated based on a formula that included the needs of the community, if there was a public health concern, and if there was an environmental concern.  The evaluation resulted in a prioritization from which the funds were allocated as available.

 

Assemblyman Marvel asked if the funds were allocated out of his office and Mr. Biaggi replied that they were.

 

Mr. Biaggi said that approximately $13 million in loans were distributed during FY2002 from the State Revolving Loan Fund.  He said they also operated the Public Water System Grants Program, commonly called the A.B. 198 Grants Program; it was a grant program assisting communities in complying with the Safe Drinking Water Act, and they had awarded $18 million in grants the previous year.  He commented on a potential bill that would increase the capacity for bonding to support the program and other potential bills to address wastewater treatment concerns in Washoe County (Exhibit C).

 

He stated that mining was of major importance to rural economies; during its “boom” in the 1980s, the Legislature recognized a need to regulate the mining industry and implemented the Mining Regulation and Reclamation Program.  The program permitted and regulated fluid management, like water pollution control, at 92 active mine locations statewide.  The Program required financial assurances for reclamation activities when the mining operation was concluded to ensure restoration of the land for post-mine land use.

 

Mr. Biaggi said that Nevada and federal land managers held over $5 million in sureties, half of which were corporate guarantees and of concern during the current legislative session.  He stated that they also regulated closure activities associated with mining operations; they ensured that heap leaches were stabilized and chemically inert, and land was recontoured and revegetated. 

 

Assemblyman Marvel asked why Mine Watch was opposed to corporate guarantees.

 

Mr. Biaggi responded that there were entities, within the state and nationally, concerned with potential liabilities that could be imposed on state and federal government and public taxpayers.

 

Assemblyman Marvel wanted to know if they were legitimate concerns and Mr. Biaggi responded it was a difficult question; Chairman Collins interrupted and said they were going to hear legislation about it and to not put Mr. Biaggi on the spot, and Assemblyman Marvel said he was setting the stage.

 

Mr. Biaggi said it should be looked at; there was a fine edge to the concerns because he thought there was liability to the public and state entities.  He continued saying corporate guarantees were integral to the mining industry and to completely remove them all at once would have a dramatic impact.

 

Assemblyman Marvel commented that cash flow was an important ingredient to good operations, and the cash flow was tied up.

 

Mr. Biaggi indicated that was correct; he said it was a significant public policy issue.  He discussed Waste Management as an important component of the Division of Environmental Protection for solid waste and hazardous waste management.  He said they regulated 350 generators and transporters of hazardous waste materials statewide; they also regulated 11 treatment, storage, disposal, and recycling facilities.  He stated they had a strong and active compliance assistance program and worked with the University of Nevada system for the past 12 years to help the regulated community comply with the complex hazardous waste regulations (Exhibit C).  He wanted to note their hard work and assistance in the programs efforts over the years.

 

He said that for solid waste management they regulated landfills and transfer stations; 12 years previously Nevada had had nearly 100 landfills, but currently they were down to 24.  He commented that the current landfills were well‑placed, designed better, and better operated for the protection of human health and surface and groundwater resources.  There was also a recycling program and a major bill was associated with it for the 2003 Legislative Session, which would attempt to enhance the recycling programs and programs for information gathering to reach the legislatively mandated 25 percent recycling goal for the state.

 

Assemblyman Marvel inquired as to how closely the Division worked with the Fire Marshal on hazardous waste management issues.  He said that through one committee he served on, he found that they were not notified.

 

Mr. Biaggi replied they worked closely with the Fire Marshal because they regulated many of the same facilities; he commented further that the Fire Marshal Division used the Division of Environmental Protection’s lists to identify hazardous materials and generators, and vice versa.  They coordinated information on inspections and facilities, as well as on the Chemical Accident Prevention Program.

Mr. Biaggi discussed the Chemical Accident Prevention Program and said it was an important component of the hazardous waste management program.  This program was a result of the “PEPCON Explosion in 1986” where significant damage was caused in Henderson and the Las Vegas Valley.  The program regulated 42 facilities that handled highly toxic substances, flammable substances, and manufactured explosives.  He said, “The program requires facilities conduct accident prevention measures and ensure emergency preparedness and coordination of emergency response in the event of an accident or catastrophic release.” (Exhibit C)

 

He said the Corrective Action Program oversaw environmental cleanup activities.  The Underground Storage Tank Program was a preventative program to ensure that leakages did not occur from underground storage tanks.  To address releases when they did occur, they operated a Leaking Underground Storage Tank Program to ensure appropriate cleanup in a timely manner.  They also operated the State Petroleum Fund to serve as an insurance company for underground storage tank owners and operators.  The Fund was to reimburse them for the high costs of cleanup activities for underground storage tanks, and since the program had begun, they had disbursed approximately $95 million.

 

The Corrective Action Program also operated a Remedial Action and Voluntary Cleanup Program to provide assistance and ensure cleanups were conducted promptly.  There was also a Brownfields Restoration, with more discussion of it later in the meeting through A.B. 74; it would clean up contaminated properties not being used to their full potential and encourage redevelopment for placement back on payrolls and tax rolls.  For consumer protection they also provided certification of environmental consultants, approximately 640 individuals.

 

Assemblyman Geddes commented that the Underground Storage Tank Program had a 1999 deadline for compliance; he wanted to know if there had been a decline in requests to the program and how many leaking tanks they currently found annually.

 

Mr. Biaggi replied that the deadline was December 22, 1998, and they had seen a dramatic decline in release reports; they were also seeing a decline in funds paid from the Program.  He said prior to 1998 they did not have enough funds in the Program so they were paying 50 cents to 75 cents on the dollar.  After the 1998 deadline they were caught up and able to “turn off” the fees for fund generation because they had reached the ceilings of the Program; they would remain off until they reached the floor, with close to an annual cycle.  He emphasized the 1998 deadline and its importance to the Underground Storage Tank Program.

 

Mr. Biaggi commented on the Federal Facilities Program and said the Program oversaw the Department of Energy and Department of Defense facilities.  They regulated Department of Energy activities at the Nevada Test Site, the restoration of contaminated areas, and long-term stewardship issues.  He clarified that they did not have any responsibilities towards Yucca Mountain.  For the Department of Defense facilities, he said they restored contaminated sites at Defense facilities statewide, mostly at Hawthorne Army Ammunition Depot, Fallon Naval Air Station, Nellis Air Force Base, or other former Defense sites.

 

He said that concluded his brief overview of the Division of Environmental Protection, and he was prepared to answer questions.

 

Assemblyman Marvel asked if they were able to invoke sanctions against federal agencies.

 

Mr. Biaggi responded that they were able to invoke sanctions against federal agencies, but it sometimes depended on the program being dealt with.  They had done it in the past and continued to monitor federal facilities because of their effect on Nevada’s overall environmental state.

 

Assemblyman Marvel inquired about invocation of the supremacy clause, and Mr. Biaggi replied that sometimes it was invoked and there were disagreements with federal facilities, but there were successes in achieving compliance.

 

Chairman Collins asked if there were other questions from the Committee.

 

Assemblyman Mortenson mentioned environmental cleanup, the Fallon Naval Air Station, and commented on contamination problems in California because of depleted uranium shells and the costly cleanup activities; he inquired if depleted uranium shells were used for targeting in Nevada.

 

Mr. Biaggi thought they were currently and said they had been used in the past.  He said range cleanup was an important component of the Federal Facilities Program, addressing cleanup issues for scrap metal, leftover explosives, and dead bombs in Nevada; the depleted uranium projectiles were only one component of those facilities.

 

Assemblyman Mortenson replied that was a radioactive problem and took expensive cleanup measures and outside contractors.

 

Mr. Biaggi indicated he was correct, although the radioactive materials were relatively low-level; depleted uranium was utilized for its strength and the fact that upon impact of a target it became a molten material and burst into flames.  There was, however, a low-level radioactivity associated with the material.

 

Assemblyman Mortenson commented that significant amount of alpha-emitting particles were spread.

 

Chairman Collins commented that those questions were from the Committee’s nuclear scientist.  He asked Mr. Biaggi to remain at the witness table and invited Senator Titus and Mr. Kamalani to come forward.  He apologized for not calling them sooner; he said he wanted to hear two bills and possibly vote on them if there were no problems.  He opened the hearing on A.B. 74.

 

Assembly Bill 74:  Provides for revolving fund to finance remediation of brownfield sites. (BDR 40-518)

 

Senator Dina Titus, Clark County Senatorial District No. 7, thanked the Committee for allowing her to speak before them.  She told the Committee about S.B. 363 of the 70th Session, passed by the Legislature in 1999, which set up a voluntary brownfield program.  The program allowed owners of contaminated properties to voluntarily work with the Division of Environmental Protection for cleanup activities on contaminated property and receive some protection from future liability; schedules were developed and regulations formulated and established.  She complimented Mr. Biaggi on the working form of the program.

 

She said Mr. Kamalani had compiled background information on brownfields for reference; he had also prepared performance information on the program for the Committee members.

 

Chairman Collins asked Mr. Kamalani to spell his name for the record before proceeding, which he did.

 

Keku Kamalani, University of Nevada, Las Vegas, Intern for Senator Titus, defined brownfields as “abandoned, idled, or underused properties where redevelopment or expansion is complicated by real or perceived environmental contamination.”  He discussed the location of brownfields in areas like industrial locations where soil and water contamination might occur; he said that an environmental risk might not be apparent until after the conduction of an environmental assessment.  Environmental liability, he stated, could affect the development process of a property and brownfields redevelopment reestablished underused or underdeveloped property as a viable resource (Exhibit D).

 

He discussed federal attempts to address problems with brownfields in the U.S. Congress through the introduction of funding legislation to finance brownfield site activities.  The Brownfield Tax Incentive was signed by former President Clinton in 1997 to encourage non-responsible parties to undertake cleanup projects, such as tax deductions.  Legislation had also been introduced that would offer additional protection to brownfield participants and increase links between the EPA and state voluntary programs (Exhibit D).

 

Mr. Kamalani addressed S.B. 363 of the 70th Session where prospective purchasers of contaminated property could voluntarily work with the Nevada Department of Environmental Protection for cleanup activities on contaminated lands and receive protection from damage liability caused by the hazardous materials prior to cleanup.  He said A.B. 74 worked as a supplement to S.B. 363 of the 70th Session by creating a revolving fund for distribution of federal funds.  He commended Mr. Biaggi for acquisition of the grant.  He stated that development of brownfield sites was important because of a number of benefits: healthier environments, new jobs, improved property values, commercial enterprise, and development would further diversify the business sector.  Through economic diversification it might be possible to reduce the risk to Nevada’s tourist-based economy from “cyclical slumps.”  He concluded by urging the Committee to support A.B. 74.

 

Other written testimony was provided to the Committee by Mr. Kamalani (Exhibit E) but was not addressed in the meeting.

 

Chairman Collins asked if Senator Titus had any additional comments.  He said according to the sign-in sheets there was no opposition; Senator Titus replied that she had nothing to add in that case.

 

Mr. Biaggi said Mr. Kamalani had provided “an outstanding overview of the brownfields program,” Senator Titus’s good work, and future direction.  He said capitalization of the program was from a $2 million grant to Nevada from the U.S. Environmental Protection Agency for no- or low-interest loans; payments from the grants could be used to make additional loans.  Pilot brownfield grants had successful results in Las Vegas, Reno, Battle Mountain, and Tonopah (Exhibit F).

 

Revolving loan programs, he said, were not new to the Division of Environmental Protection; they operated a revolving loan program related to water pollution for many years.  From an operations standpoint, the Brownfields Program would be operated much the same way to assist communities statewide.  Mr. Biaggi said the Division had been encouraging communities to consider applying for brownfield loans in the event of program approval.  Mineral County, he said, had been proactive and was ready to initiate an evaluation of a former landfill within the community.

 

Mr. Biaggi said the establishment of a Brownfields Loan Fund through A.B. 74 was beneficial to Nevada and its communities, encouraging assessment and cleanup of contaminated properties through low-interest and no-interest loans.  The Program would provide numerous benefits, including utilization of property, reduction of urban sprawl, and protection of public health and environmental quality (Exhibit F).  He said he would be happy to answer any questions.

 

Assemblyman Marvel asked if the grant from the EPA was one-time only or continuous.

 

Mr. Biaggi anticipated securing additional funding from the Agency in the future.

 

Assemblyman Marvel wanted to clarify that they were not building a program the state might need to pick up and fund in the future.

 

Mr. Biaggi said he hoped not and it was not the intent; he did not think the state had the financial capability presently to undertake a program of that magnitude.

 

Assemblyman Geddes inquired regarding how much of the program was structured from the federal program to minimize state liability.  He used an example of a brownfield where the state and the Division of Environmental Protection assumed liability but it was more contaminated than originally thought; he wanted to know if it was then possible to go beyond the $1 million pool.

 

Mr. Biaggi responded by saying Senator Titus had closely reviewed the federal brownfields legislation when establishing the program; he said there was great consistency between the state and federal programs.  During the hearings, the EPA had provided input into the legislation to ensure consistency.

 

He said liability would not transfer to the state or local governments.  Liability remained with owners and operators.  The voluntary program would bring the people in from outside the enforcement and penalty arena, had them work with the Division to identify contaminants of concern, assess land and water resources for contaminants of concern, conduct cleanup activities through proper procedure and protocols, and achieve the appropriate regulatory standards.  Only once that process was completed would a liability release be granted, and only for those contaminants of concern.  Mr. Biaggi said it provided developers, land purchasers, and financial institutions with a comfort level to proceed with redevelopment activities.

 

Assemblyman Goicoechea commented that the bill read “An Act… authorizing the Administrator of the Division to impose a fee …” and he asked what kind of fee was being referred to.

 

Mr. Biaggi replied that the fee would be for securing the funds, perhaps an administrative fee, something to be used to make the loans.

 

Chairman Collins said no one was in opposition; he thanked Senator Titus and the other witnesses.  He asked anyone in the audience who had not signed in to do so before they left.

 

He inquired if there was anyone who wanted to testify, and seeing none closed the hearing on A.B. 74.  He said they would consider voting on it before adjourning the meeting.  Before returning to presentations, he reopened the hearing on A.B. 74 and mentioned that the fiscal note said none because it was federally funded.  He reminded the Committee a two-thirds vote was required for passage.  Whenever that appeared, he also asked the Chairman of the Committee on Ways and Means if they would like to see the bill, so it might also go to that Committee.  Chairman Collins closed the hearing on A.B. 74.

 

Chairman Collins said the next presentation was from Ms. Hinton and invited her forward; he mentioned she was with the Nevada Cooperative Extension, University of Nevada, Reno. 

 

Karen Hinton, Dean and Director, Nevada Cooperative Extension, University of Nevada, Reno, said it was a pleasure to be before the Committee and provide an overview of the agriculture and natural resources programs conducted throughout the state.  She began with background information on Cooperative Extension, beginning with its state and federal establishment in 1914 as a partnership between local, state, and federal government.  Cooperative extension was related to land-grant institutions nationwide, represented in Nevada by the University of Nevada, Reno (Exhibit G).

 

She discussed the funding for Cooperative Extension for FY2002 from core partner contributions and grants; grant contributions had grown for use in support and expansion efforts for programming.  In FY2001, grants contributed 11 percent, and that had increased considerably since.

Ms. Hinton mentioned they had 18 offices and programs in all 17 Nevada counties.  Mineral County was the last to become a part of Cooperative Extension; the Nevada Revised Statutes did require counties to financially commit to participate in programming.  They had included in their proposed budget funding to meet basic needs of county programming in Mineral County and to place an extension educator in Hawthorne.  They hoped to receive support to establish full programming there (Exhibit G).

 

NRS Chapter 549 outlined the program areas of the Cooperative Extension, including: Community Development, Horticulture and Natural Resources, Agriculture, Human and Family Development, and Health and Nutrition.  All programs were operated in urban and rural areas statewide.  She described several of the major agriculture and natural resources programs, like the national “Inside Beef Program” which taught ranchers economic principles of futures and options for sale of cattle and protection from “downside market risk.” 

 

Extension, Ms. Hinton stated, took interaction from the “local coffee shop downtown” to the Internet and connected 250 cattle producers with one another and university faculty for a question-answer service.  This service provided up-to-date information, and she had been told it had a great impact on ranching operations.  Because of consumer demand for healthy and safe food, they were helping ranchers attain national certification that their beef met high standards of animal production.

 

Ms. Hinton discussed a 1999 appropriation of $75,000 for a statewide effort to address Tall Whitetop.  Through the Initiative, cooperative efforts between local citizens, agencies, and media sprayed and mapped hundreds of acres of weeds; the initial seed funds provided were tripled through other funding and support.  That effort was ongoing, with an expansion into collaborative efforts between agencies for eradication, education, and research.

 

Because of the importance of alfalfa, hay, and seed production to rural economies, they worked with farmers to optimize water resources and fertilize efficiently for profits and protection of natural resources.  Through collaboration with farmers there were trials of new crops to supplement incomes and minimize water usage; they were also involved in the testing of other plant varieties.  The Governor’s Sage Grouse Conservation Team requested their involvement to assist local teams working on sage grouse habitat plans to balance the needs of species, needs for habitat conservation, and land user needs.  Extension Educators, Ms. Hinton said, help in the diversification of citizen economies through economic and community development programs linking with agriculture and natural resources statewide.

 

Ms. Hinton discussed the safety of local water sources with relation to the Fallon cancer cluster; staff worked on several projects, funded by the U.S. Department of Agriculture and U.S. Environmental Protection Agency, like the “Nevada Gold” project providing information on arsenic levels in drinking water.  They also worked with the EPA to collect blood and water samples from 900 Fallon 20-year or longer residents to determine long-term effects of arsenic (Exhibit G).

 

She commented on their activities with firefighting agencies and media to prepare for and respond to the hazardous wildfire environment.  They developed a television special and distributed over 1.6 million copies of their defensible space publication throughout western states.

 

Ms. Hinton said they worked on community action projects with local groups.  Through the “Living on the Land Program” they helped urban ranch owners with stewardship activities to protect soil, water, plant, and animal resources.  This program had spread through other western states, and it was 1 of 12 selected to be featured in a USDA national report from the Sustainable Agriculture Program.

 

In a multi-agency collaboration, the Center for Urban Water Conservation in North Las Vegas studied water use of plants and turfgrass, was used by Master Gardeners, and was open to the public for field days.  The Master Gardener program was expanding due to distance technology to outlying communities; after training, volunteers were able to teach other citizens horticulture practices, contributing the hours equal to 14 employees.

 

She said the 4-H programs were experiencing growth in urban and rural communities; life skills and leadership development were core concepts helping 4-H youth prepare to be productive citizens.  Popular projects were:  natural resources and science-related projects and “Ag in the Classroom,” which is a collaborative effort with other agencies and organizations.

 

Ms. Hinton stated they tracked education contacts statewide and implemented strategies to interact with more individuals.  Educational programs had more that 719,000 face-to-face contacts in 2002, and reached citizens through media, radio, and television.  New technologies were used to expand the classroom to include learning centers, homes, and workplaces throughout the state, using the Internet, satellite, and compressed video.

 

Ms. Hinton stated they were proud of their programs and the impact on Nevada citizens statewide; she said they were also proud of the interactions, collaborations, and partnerships they had with other state agencies and organizations to more efficiently use resources.  She commented on a packet of information she provided (Exhibit H) that included more in-depth information on the programs mentioned and other Cooperative Extension programs.  She then said she was available to answer any questions the Committee had.

 

Chairman Collins asked if the Committee had any questions.  He then asked if they participated in the Farm Festival, in addition to “Ag in the Classroom.”

 

Ms. Hinton indicated that they were in Las Vegas.

 

Assemblyman Carpenter stated they had a great staff working for them in Elko and Fallon and he wanted to compliment them on their efforts.

 

Ms. Hinton thanked him for the compliment and stated they had excellent faculty statewide.

 

Chairman Collins commented on the Farm Festival and how he was able to participate in the Horse Council on Nevada.  He asked for any other questions and seeing none, thanked her for her presentation as well as their work in Clark County.  He said the Committee was interested in a presentation on issues relating to rural counties, and invited Mr. List and Mr. Baughman forward.  He asked if Mr. Biaggi would be testifying on A.B. 129, who indicated he would be, and then asked Mr. List and Mr. Baughman to begin.

 

Andrew List, Policy and Research Coordinator, Nevada Association of Counties, stated he had signed in and checked the box; he said he had provided handouts to the Committee of his testimony and supplemental materials he would be referring to throughout his presentation (Exhibit I).  He stated he was originally hired to work as a liaison between county and local governments and federal agencies managing 86 percent of Nevada’s land.  He listed the federal agencies as: Bureau of Land Management, Department of the Interior; U.S. Forest Service, Department of Agriculture; and the Department of Defense who managed military operations including the defense test range and the top gun Air Force base.

 

With the federal government managing so much Nevada land, there was only a small property base for private industry operations in rural communities, as well as establish a property tax base.  This created a direct relationship between federal land activities and the economic activities in related counties.  Thus small communities and rural counties used federal land to generate economic activities, including mining, grazing, and some recreation activities.  Mr. List commented that because of this relationship, the Nevada Association of Counties (NACO) believed in the importance of cooperation with the federal land management agencies. 

 

To this end, they drafted NACO Resolution 02-03, page 4 of Exhibit I, which asked federal land management agencies to recognize Nevada county elected officials as the elected representatives of the county’s citizens.  It also stated their objections to activities by federal land management agencies without communication and consultation with county officials.  Their general position was to cooperate, whenever possible, with federal land management agencies; they had responded to environmental impact statements, requests for information, and provided testimony in Washington D.C. to maintain a working relationship.  They wanted to sustain the land-based economy over time.

 

Mr. List discussed PILT, Payment in Lieu of Taxes, where payments were made to counties annually from the federal government.  The idea of PILT was based on the fact that lands were federally owned and managed, and could not be sold by the county government, so counties were not able to generate property taxes or economic activity from the lands.  PILT payments were to adjust for the lack of private property base; he said the payments helped some, but the land being privatized would further the ability of counties to generate revenue.

 

He stated the current debate over PILT was in its annual authorization by the federal government, but that annual funding then fluctuated and counties were never positive what their PILT payment would be from year to year.  They were currently lobbying through their federal elected representatives to have PILT regularly and fully funded each year without going through the appropriations process.

 

Mr. List said they also dealt with wilderness issues.  Millions of acres had been designated as Wilderness Study Areas but were managed as de facto wilderness, which meant there were more restrictions placed on them than other federal lands might have.  He stated many of the Wilderness Study Areas had non-wilderness values including roads, utility corridors, and water improvements.

 

He said the Nevada Association of Counties (NACO) had commissioned a study in 1991 of the economic impact if the Wilderness Study Areas were listed as wilderness areas.  If the Wilderness Study Areas were to be listed as wilderness, Nevada residents would lose $756 million in personal income, a $2.3 billion loss in sales to Nevada businesses, and $214 million in state and local government revenues (Exhibit I).

 

Assemblyman Marvel said the Wilderness Study Areas were already being treated as wilderness.

 

Mr. List said that was his point; the Areas were already treated and managed as wilderness areas even though they were not specified as such.  The NACO position was listed in NACO 02-02 (Exhibit I) where the acreage deemed unsuitable by the Bureau of Land Management should be released into multiple use.  He said the remaining acreage should be examined county by county, using a consensus process with local input, to decide what the wilderness area should include.  The main point was to have the unsuitable land areas immediately released.

 

Assemblyman Marvel asked if there was any activity in the U.S. Congress to introduce legislation.  He commented on the fact that it required an act of Congress to release wilderness study areas.

 

Mr. List said there was some action currently taking place.  Clark County had recently passed a bill to release some non-suitable acreage as well as to better define what was wilderness in Clark County.  He stated that Nye County, White Pine County, and Lincoln County had created a group called the “Tri-County Wilderness Study Group” to look at wilderness areas and work out differences with stakeholders.

 

He stated that the problem was they were unable to release wilderness study areas back into multiple use or establish the boundaries.  They were only able to ask for their support and influence in that process.  He said NACO Resolution 02-02 stated their position and what they were seeking.  He did not have acreage numbers of what was suitable and unsuitable because of recent changes, like the designation of the High Rock-Black Rock National Conservation Area primarily found in northern Humboldt County.  The designation was made, assigning wilderness in the area and the national conservation area with more restrictions by the federal government as an attachment to an appropriations bill.  There was only one hearing, he said, for that legislation, occurring in Washington D.C. and not in the local county areas.

 

Mr. List commented that 16 of the 17 counties in Nevada opposed the designation, with Clark County remaining neutral.  They were willing to work with the federal government in releasing the wilderness areas.  They hoped the hearings would be held in state in the future.

 

The Endangered Species Act was another area they dealt with.  Mr. List said when endangered species were listed many of the related activities in the habitat of the endangered species were abruptly ended (Exhibit I).  He provided the example of ranching activities in Clark County and the desert tortoise designation as an endangered species. 

 

Mr. List said the counties were working with other concerned parties on the Sage Grouse Conservation Plan; the goal was to create a plan prior to its listing.  The first objective, he said, was to prevent its listing, but if it was listed, that the federal government might be able to utilize the in-state Conservation Plan.  NACO Resolution 02-01 dealt with the usage of sound scientific practices and evidence when making an endangered species designation.  This Resolution was a result of a 2001 experience within the state of Washington where the Forest Service manufactured and manipulated data regarding the lynx species.  They wanted to see an amendment to the Endangered Species Act requiring a peer review of any study conducted by the U.S. Fish and Wildlife Service.

 

Mining was also a regular issue for the Association; he stated the Net Proceeds Tax really tied mining to local economies.  He used the example of Pershing County’s net proceeds for 1998 where the net proceeds of minerals was over $41 million; that amount had fallen by 75 percent to $10.7 million in 2001.  He said when net proceeds fell, the tax revenue generated through the mining industry also fell.  He said it also fell because of sales tax, because mining companies were not purchasing equipment and using it within the county, which caused large declines in sales tax revenues because of a decline in the mining industry.

 

Mr. List said population movement from those counties left large numbers of vacant homes unable to be sold.  Property values in Humboldt County, he stated, had dramatically fallen since the decline in the mining industry.  Homes were vacant and “on the block” and were available for bargain prices.  Because property values had declined so much, there was also a decline in the collection of property taxes.  He said mining was related to the Net Proceeds in Mining Tax, the sales tax, and created fluctuations in property taxes.  He commented that the mining industry was one of the most important in northern Nevada.  He said they sought the support of this body; they supported the mining industry and their activities to mine in environmentally and economically sensitive manners.

 

Mr. List said they also dealt with the issue of wildfire and commented on the 1.9 million burned acres during the 1999 wildfire season, a decrease to 700,000 acres burned in 2000; 654,000 acres in 2001; and 2002’s burned acreage of only 78,000 acres.  He stated Nevada’s luck over the previous year’s wildfire damage.  He commented that NACO and its member counties utilized federal lands for the generation of economic activity, including mining, recreation, and grazing.  Burned acreage was usually closed for several years prior to its release and availability for economic activities (Exhibit I).

 

He said NACO looked for what support this body could provide to rehabilitate federal lands damaged by wildfires, and for support that could be given to those counties supported by those lands.

 

Grazing was another issue they dealt with, and he discussed a 2001 report that found a 16 percent decrease in grazing activities on federal lands since 1980.  Similar to mining, when a decrease occurred in grazing, it removed revenues from that sector of the economy.  There were fewer funds for residents to spend in their communities, lower tax dollars, and falling property values; it was all tied together.  Mr. List said it was a great document prepared with Resource Concepts Inc. to track grazing trends since 1960.

 

Assemblyman Marvel commented that every new calf born was new wealth.

 

Mr. List replied he was from a ranching family and had heard the expression many times and believed it was correct.  He concluded, saying natural resource usage in northern Nevada was problematic with the declining trends in mining and grazing.  He said others had commented that recreational activities from wilderness designations or national conservation areas would counter the revenue lost from multiple use activities.  He stated that thus far that had not been true.  He used the example of the designation of Great Basin National Park in White Pine County which was projected to have millions of visitors annually.  However Great Basin National Park was the least visited park in the United States and had not seen those visitation levels.

 

He said NACO realized that this body, because of federal land ownership, had only limited influence over federal land policy in Nevada.  They only asked for their support and recognition of the fragility of county land-based economies within Nevada.  They asked this body to promote viable economic and environmental use of Nevada lands.  He thanked the Committee for their time and said he was happy to answer questions.

 

Chairman Collins asked if there were any questions for Mr. List, and seeing none asked him to remain at the witness table for possible future questions after Mr. Baughman’s presentation.

 

Mike Baughman, President, Intertech Services Corporation, provided general background including: Intertech’s organization in 1986; he had done consulting in Nevada since 1978, he held a Master’s Degree in Agriculture and Resource Economics and a Ph.D. in Environmental Policy; they had completed work assignments in nearly every Nevada county since 1978.  He provided examples of current projects they were involved in.  He served as a Contract Executive Director for the five county Humboldt River Basin Water Authority that included Elko, Eureka, Lander, Humboldt, and Pershing Counties.  He served as the Contract Executive Director for the Lincoln County Regional Development Authority, one of the smallest counties in population, which was a county-city effort to develop and expand the economic base of Lincoln County.

 

Intertech Services Corporation worked with the Bureau of Land Management, and recently served as contract coordinators for their National Environmental Policy Act compliance projects.  They were currently working on the Ely resource management plan, a district-wide plan for 11.4 million acres, and were near completion of the environmental impact statement regarding the Tonopah energy project that dealt with an 1100 megawatt gas firepower project that would be located in southern Lincoln County.  He served as the facilitator for the Southeastern Lincoln County Multi-Species Habitat Conservation Plan.

 

He said the overall message he wanted to present was that the economy of most rural counties in Nevada remained dependent on natural resources.  Proposals before the Legislature to increase taxes would have an impact on rural county business and industry.  Maintenance and expansion of the tax base was not currently being discussed, which meant more being removed from a fixed quantity of revenue without looking at expansion of the “economic pie.”  He saw that as a fundamental flaw in the debate.  He stated it was nice to discuss increasing taxes, but he thought they needed to talk about expanding the tax base.  This was of concern to rural Nevada because the tax base was already narrow.  Mr. Baughman said the Committee could maintain and expand the natural resource tax base for rural Nevada, and they would encourage the Committee to do that.

 

Assemblyman Geddes asked Mr. Baughman what taxes he would suggest they look at to expand the tax base.

 

Mr. Baughman clarified saying his statement was not about which taxes to focus on to expand the tax base, but more with attracting new industry and diversifying the economy to increase the “size of the pie.”  He thought they should apply the taxes they thought appropriate as a Legislature, but stated that if the “pie” was of a certain size and more revenues were removed from it, then the next industry that wanted to begin operation would have more to consider before relocating.  It would also remove wealth from rural Nevada that would typically be reinvested.  Once the funds were gone, there would be no reinvestment of those revenues by businesses.  He said again, it was about expanding the pie, and it was up them to determine how to divide it up.

Mr. Baughman commented that Nevada’s urban areas provided benefits to rural Nevada for revenue sharing, educational opportunities, service opportunities, and cultural and recreation destinations.  Rural Nevada provided similar opportunities to urban areas for recreation, hunting, fishing, Christmas trees, and industrial minerals for construction usage.  He said every Nevada county had rural areas, including Washoe and Clark Counties.

 

He moved to a discussion of different issues, and began with water resources and their importance to rural Nevada economy.  Agriculture and mining historically established a base to the economy and created wealth from exportation of goods, and water was becoming a part of that basic economy.  More proposals were seen that requested movement of water from rural to urban areas.  A challenge for the new rural economy would be how to allow rural economies to derive economic benefit from the movement of water, like the benefits received from the removal of minerals or conversion of forage to other goods.

 

He provided population statistics including that 10 percent of the population was located in rural areas with the rest located in Washoe County and Clark County.  The urban areas were looking to rural areas to provide water to meet demand.  The demands to change water use affected agriculture and mining with a movement from agriculture to industrial or municipal activities (Exhibit J).  Counties were then losing the historical economic basis.

 

Mr. Baughman said a large proportion of the state was administered by the federal government, between 87 percent to 98 percent, depending on annual fluctuations because of purchases and sales.  He addressed page 14, Exhibit J, with a representation of Lincoln County land ownerships patterns: white represented non-federal lands.  He said there were two exceptions to the map: in southeastern corner of Nevada there was a proposal to sell 13,500 acres by the Bureau of Land Management to allow Mesquite to expand; in the southwestern corner there was a proposal to develop 20,000 acres near Coyote Springs for a new development.

 

Traditional land uses in rural Nevada, predominantly mining and ranching, were being curtailed in favor of recreation and tourism.  Local government did not motivate the change, even though they were interested in diversifying their economy, but it was being driven by national-level policies.  There was encouragement for a shift from consumptive use of natural resources, agriculture, and mining, to more passive uses like recreation and tourism (Exhibit J).  This would not replace the basic economic component associated with mining and agriculture, so they needed to determine an evolutionary path for rural economies that included recreation and tourism without losing the basic economic components based on the extraction of natural resources.

 

Mr. Baughman said many rural communities relied on the disposal of public lands for expansion; the communities were landlocked.  The Southern Nevada Public Land Management Act allowed public lands to be sold for revenues.  In landlocked rural communities, to develop even an industrial park or build a new school, they would have to approach the Bureau of Land Management for a transfer of lands.  The transfer of lands could be lengthy and costly; an example, he said, was through the Ely Resource Management Plan to identify areas, over the next 20 years, for disposal to rural communities and to expedite the process over the 20-year period.

 

Private lands were typically in valley bottoms, along waterways, and riparian areas where agricultural activities typically occur.  These riparian areas were also desirable by federal agencies for acquisition for habitat and wildlife.  There was a risk, he stated, of losing the narrow land parcel that was a part of the agricultural economy to federal government acquisition.  There were ways to allow the acquisition of land like the Southern Nevada Public Land Management Act, which generated revenues for the acquisition of land statewide, and they often looked at riparian areas for acquisition.  Question One provided millions of dollars for different agencies to acquire lands, with the potential for those acquisitions to remove lands from agricultural activities and affect rural economies.

 

Mr. Baughman then discussed threatened and endangered species; he reminded the Committee that he served as a facilitator for the Lincoln County Multi‑Species Habitat Conservation Plan (HCP) process.  This was a constraint to development.  He stated:

 

On private lands, for example, where you have listed species, whether they be in southern Nevada, and look at Lincoln, for example, you have desert tortoise and the southwestern willow flycatcher, both of these large areas, and in the two southern corners of the county which are slated for development, are desert tortoise habitat.  And much in the same way that Clark County developed and adopted its HCP that it provides for a fee to allow developers to go forward, Lincoln County is doing the same thing.  We appreciate the Legislature having passed special legislation a couple of sessions ago allowing Lincoln County to go forward with this process and set up a legal framework to do that.  We are back before you, not so much this Committee but in Government Affairs this year, looking for the ability to expand the authorizing language having to do with general improvement districts to allow those districts to also administer habitat conservation plan areas.  And we see doing that in these two large developments in southern Lincoln County, for example.  This also is an issue over in Nye County where you have existing listed species.  The sage grouse is looming on the horizon as a major threat to some of the land uses throughout Nevada, and the planning work that is underway intends to keep that species from ever being listed.  But beyond that, we have currently listed species which serve as constraints to development today.  And if you destroy their habitat, take the species inadvertently, you are violator of federal law.  And we have to deal with that.

 

Assemblyman Marvel stated that there should be a takings provision, particularly for anything listed.  He said Governor Kempthorne [Idaho], when he was a U.S. Senator, was trying to do that and could never get it through.  He thought it was very important and that they should try and get it through Congress.

 

Mr. Baughman said that was a good point.  He said there was some relief through Section 10 of the Endangered Species Act, allowing for the U.S. Fish and Wildlife Service to issue an incidental take permit.  This allowed a landowner to take a species, directly or through destruction of habitat, such as Clark County did for development of desert tortoise habitat through destruction; it was a take through a permit.  They had to pay $600-plus per acre into the mitigation fund, which was used to create habitat elsewhere or maintain current habitat for the species.  He said it needed strengthening; it was still expensive and a real constraint to developing private lands.

 

Economic development in many cities and counties in rural areas faced stagnation or decline.  Traditional agriculture and mining sectors faced increasing regulatory compliance costs and international competition.  Regulations could adversely affect the economy, and the transition to recreation-tourism based economics might not be feasible, consistently, due to geographical location.  Some rural areas, he said, were “just a long way from anywhere else” and it was difficult to visit.

 

Rural areas also lacked support infrastructure; reduced levels of employment or income could result.  It was difficult to replace a $40,000 to $50,000 per year mining job with a waitress’s job in tourism.  Diversification of agriculture and the application of land and water resources to new industrial ventures was needed.

 

Mr. Baughman addressed fiscal stability in rural areas, saying they had completed a public services analysis for the Great Basin Development Association for six local governments: Humboldt, Lander, Eureka, and White Pine Counties, and the cities of Ely and Winnemucca.  The purpose of the analysis was to examine how local rural governments could sustain themselves during the mining decline of the previous three or four years (Exhibit J).  He said gold prices were rising, and they were optimistic for a slight turnaround, but saw mining attention being turned offshore; this created doubt about a resurgence of mining interests on land.

 

He commented on the fiscal stability tables (Exhibit J).  One dealt with variability in assessed valuation and the fluctuation in net proceeds, and he said that based on local government budgeting processes, if they were unable to predict annually what the revenue sources would be and their amounts, it was difficult to plan for services and sustain the rural economy.  Mining had been quite variable, as shown by the charts, which depicted how something like net proceeds fluctuated wildly, making it difficult to make long-range plans.

 

Sales tax, Mr. Baughman said, was related to mining, but was also related to other basic economic elements.  This area had two components: the Basic City‑County Relief Tax and the Supplemental City-County Relief Tax.  They were also variable, and based on the charts, some counties had upward trends while others had downward trends.  He said there was a lot of instability in rural Nevada, and it was endemic of problems they faced.  With the Supplemental City-County Relief Tax, counties exported sales tax revenue to rural areas.  Lincoln County derived 500 percent more in sales tax revenue than was generated because of importation from other jurisdictions.

 

He said that if the Governor, Senator Raggio, and others examined Clark County’s fiscal health and decided to extract wealth from Clark County to help balance the state budget, Clark County would then be forced to insist the funds sent to rural areas through the Supplemental City-County Relief Tax be returned. 

 

Mr. Baughman said that would create a hole in rural economies’ budgets; they needed to help rural communities become less dependent on distributive revenues through the diversification of industries.  He said there was a PILT, Payment in Lieu of Taxes, chart (Exhibit J) that addressed stability for the Committee to examine at their leisure.  He said they did need to increase the amount of PILT entering counties because of an increased dependency.

 

Assemblyman Goicoechea asked for a clarification of PILT calculations.

 

Mr. List commented he had been told one needed a Ph.D. in PILT to make PILT calculations; it was a complicated formula based on population and land base.  That was as much as he could clarify but said he could get more information for them.

 

Mr. Baughman said Mr. List’s response was a very good answer.

 

Assemblyman Mortenson said he had not been present for some of the PILT, Payment in Lieu of Taxes, discussion and he wanted to clarify the following point:  the federal government owned land and had a commitment to make payments but either did not pay at all or did not pay the amount committed to.  He wanted to know if that was correct or if it could be elaborated.

 

Mr. Baughman replied there was a legal basis for making payments, but Congress had to appropriate the payment funds annually.  He thought Congress decided each year to underfund the PILT program; it was a very political process and seemed to be based on the whims of Congress.  Some years they received more PILT funds and other years were underfunded.  He did not think it had ever been fully funded.

 

Mr. List added that indeed it had not ever been fully funded.  Each year representatives from the West went to Washington D.C. to lobby for PILT to be fully funded, but it had never happened and the amount fluctuated wildly.  The year before, the Secretary of the Interior had said she would fund the program to a particular level, not fully funded, but they were happy with the funding.  When the budget was announced, President Bush had cut PILT by 15 percent from the previous year.  Every county in Nevada sent a letter of support to fully fund PILT to increase PILT funding to the level the Secretary of the Interior had promised.

 

Each year a different amount was appropriated “according to their whim.”  The past year it was held up by the Office of Management and Budget, who thought the money was needed elsewhere, but they had succeeded in increasing the amounts designated to PILT.  They were “lobbying right now to get them back to where they should be.”

 

Assemblyman Mortenson asked if it was correct that if the Reno metropolitan area and the southern Nevada metropolitan area were subtracted from the population, rural areas were only 10 percent of the population.

 

Mr. List said the statement was correct.

 

Mr. Baughman noted that as the Legislature looked for tax revenue, he wanted them to know that Nevada did not get a good return on their Washington investment.  He said they got back fewer dollars than they submitted in comparison to many other states, and they had a case to request funds be returned to Nevada.

 

He wanted to provide some final recommendations:

 

Chairman Collins addressed Mr. Baughman:

 

I have some questions for you but I want to recap.  A couple things that brought interest to me is Great Basin National Park.  We started advertising on Highway 50 to get people to go out there.  I have been there and it makes it tough to get a lot of folks there, but the tourism action — in the rural part, you talk about, you hit it clear on the head, $62,000 miner being replaced by a waitress making minimum wage or working for tips, it does not help the economy in any way at all.  And some of the fluctuations in agriculture, I mean, NAFTA or the mad cow disease in Europe, you know, in fact our agriculture economy over here, and it was not anywhere near close to us — media and distortions.

 

I find it interesting on your recommendations, Mike, considering the impact on rurals and so forth being here awhile, you know, and knowing folks before I ever came up to the Legislature; the state Legislature has funded, in the last 10 years, five new schools in rural communities as well as a lot of other, millions of dollars of other programs, in the rurals. . .  What you have to realize is we’re all — it’s one state, and we have to treat the blister on the foot the same as on the hand or the knot on the head.  It is all part of the same body, and we have to make sure it is all functioning properly.

 

Chairman Collins said he appreciated both testimonies and hoped it was recognized that Clark County would be the largest payer of any state tax, and it would go to the General Fund.  Hopefully it would continue to benefit the rural areas, but also help them get their own standing.  He said:

 

For example, the last land sales in Clark County would buy up all the private land in Lincoln County and it would be totally federal, if they wanted to, I think.  That is not where we want to go with that money in that regard.  We want to expand those opportunities in rurals.

 

Assemblyman Marvel said the point about the acquisition of private lands as a result of bond issues was good.  He continued and said one thing done in the past with wildlife was when lands were acquired, they made a payment similar to PILT to maintain the status quo.  He thought that should be looked at more closely.

 

Assemblyman Mortenson mentioned Mr. Baughman’s testimony regarding Nevada’s small return from the federal government in comparison to other states.  He said he had heard much of the return was based upon matching funds for federal programs, mostly social programs.  He inquired if they fell short, because the funds were not initially appropriated and so they did not receive matching funds.

 

Mr. Baughman responded saying he thought that was part of the problem; two years previously the Nevada Commission on Economic Development created an economic development strategy for rural Nevada called Building Prosperity.  One recommendation was for the state Legislature to establish a grant-matching fund available to those parties pursuing federal funds for assistance in obtaining matching funds.  It was indicative of a problem, but whether that was a major reason for the discrepancy with other states, he was not sure.  He said it was a definite problem for rural Nevada.

 

Chairman Collins asked if any of the other Committee members had questions.

 

Assemblyman Carpenter commented that they needed to try to amend the Southern Nevada Public Land Management Act so funds could be used for improvement of current federal lands; he said they did not need more land, but could improve what they currently had.  He thought they needed to amend the Act because they could buy all the waterways and ranches in northern Nevada and he did not think that was the direction they wanted to go in.

 

Chairman Collins said that also went to improvements.  Much of the land was going through the regional trail system in Clark County, and he wanted to emphasize to them that Lincoln County wanted to make improvements to irrigation ditches, but they needed a water board to get grant funds for improvements.  He said they needed NACO (Nevada Association of Counties) and the Legislature to work with them to get the things they needed, like Lincoln County needing assistance in forming the water board to make the water ditch conversion to a pipeline.

 

Mr. List added to Assemblyman Carpenter’s statement, saying NACO represented rural counties on the Southern Nevada Public Land Management Act implementation agreement.  They had attended several meetings at which lands were prioritized for purchase.  One thing NACO was exploring was utilizing funds for other purposes, like current conservation planning efforts or providing funds to Lincoln County to hire someone to work on their Habitat Conservation Plan or help rural counties plan for sage grouse conservation: things in the spirit of the Act itself for conservation but which needed funding.  He also said Senator Ensign had directed people to keep funds for land purchases in Clark County; they did not want lands purchased elsewhere.

 

Chairman Collins said Mr. Abbey of the Bureau of Land Management stated he was not going to spend large amounts of money in Elko and get into “hot water.”  He thanked them and opened the hearing on A.B. 129 and said they had two speakers so it should move quickly.

 

 Assembly Bill 129:  Makes various changes concerning money deposited in certain accounts and funds for use by State Department of Conservation and Natural Resources. (BDR 40-519)

 

Mr. Biaggi, Administrator, Division of Environmental Protection, Department of Conservation and Natural Resources said A.B. 129 modified existing statutory language to allow earned interest of Division accounts to be repaid back into those accounts (Exhibit K).  He said there were four programs utilizing those accounts:  Hazardous Waste, Air Pollution Control, Chemical Accident Prevention, and Mining Regulation and Reclamation.  He said the Division used internal non-executive budget accounts for temporary storage of fees and revenues.  Federal grants and fees nearly exclusively supported the Division, and the accounts were used to store revenues until needed for expenditures and program activities.  The accounts earned interest according to market conditions.

 

He said the interest was typically credited back to the account where the interest was earned.  The State Treasurer reinterpreted the statutory language regarding interest payments for the accounts in 2001, and the interest was now credited to other state system accounts.  Earned interest was necessary to maintaining a consistent revenue flow for the Division, and it delayed the increase in fees or the need to gain General Fund support.  Historically they developed their budget to include earned interest as a revenue component.

 

Mr. Biaggi continued, saying fairness was an issue, especially with regards to mining.  With the dramatic reduction in precious metals values in 1999, mine bankruptcies were increasing.  A result of mine bankruptcy was the need for maintenance of on-site fluid management until bond or surety companies took over the site or provided monetary resources to state and federal agencies for management.  The mining industry recognized the gap between bankruptcy and performance by bonding companies.  The Interim Fluid Management Fund had been created to bridge the gap, intending that earned interest would be credited back to the account for growth and other additional management needs.  Through the new interpretation, special use interest funds from one industry were diverted to other unrelated programs in state government.

 

A.B. 129 modified the language governing these accounts, clarifying that interest earned on the funds in each account would be credited to that account.

 

Chairman Collins asked Mr. Fields to come forward if he was going to present testimony.

 

Assemblyman Marvel asked how much interest was involved and Mr. Biaggi replied he thought it exceeded $1 million since 2001.

 

Assemblyman Marvel wanted to know about the accounts the interest was credited to.

Mr. Biaggi said the accounts were storehouses for fees and other revenues, held there until used by programs, and then it was dispersed for program management.

 

Assemblyman Marvel asked if it remained within the Department, and Mr. Biaggi said it did.

 

Russell Fields, President, Nevada Mining Association, said he was there to support A.B. 129 (Exhibit L), and it was important to the funding mechanisms of the Division of Environmental Protection.  The mining industry, he said, supported the position that special funds within an agency for specific purposes, especially those funded by a particular industry, should retain the earned interest for the purposes of the fund.  The Interim Fluid Management Fund was one such fund that was established for mining companies with reclamation bonds to contribute to.  He thought there was around $1 million in the fund, and it was important in the event that the Division needed to take on environmental management of a site during the period they were collecting the bond.

 

He said that they hoped that did not occur, but it still did occasionally happen where the state took on that obligation.  They needed the revenues generated by those funds earned as interest to remain in the fund.  He said it was the mining industry’s intention that the interest would remain in the fund; they were surprised by the interpretation by the attorneys for the State Treasurer.  He said Mr. Biaggi and his staff had determined the necessity of the legislation to ensure the continuance of what had originally occurred.  He just wanted to urge their support for A.B. 129, and he was willing to answer any questions.

 

Assemblyman Conklin said he was concerned over page 3, lines 12-14 in Section 2; he said someone had interpreted the language to say the money should go to the General Fund and not remain within.  He said from the language, and he did not know anyone who would read it otherwise, stated the earned interest from fees was to be deposited back into the fund.  He was not sure the bill would resolve the problem; he wondered if they had assurances from the State Treasurer that the revised language would ensure the money would go to them or if there was another problem. 

 

Chairman Collins asked Assemblyman Conklin if he was examining the proposed language or the existing law.

 

Assemblyman Conklin replied he was looking at the stricken language on lines 9-10, and emphasized the portion reading “must be deposited.”  He did not know how that could be interpreted otherwise.  He said that had been stricken, and the new language said basically the same thing and that the whole thing baffled him.

 

Mr. Biaggi said they had tried to work with the State Treasurer, explaining they thought the language was not ambiguous.  They had worked with the Attorney General’s Office, as well as others, to make the language even less ambiguous, and they were confident this would satisfy the Treasurer, combined with legislative intent and the testimony provided to clarify that the money should be credited back to the programs.

 

Chairman Collins asked if that helped, and Assemblyman Conklin replied it had.

 

Assemblyman Geddes asked if the accounts had a cap placed on them; he wanted to know if earned interest could be deposited if it did have a cap, or if the Treasurer would reinterpret that elsewhere, or if additional language would be needed there.

 

Mr. Biaggi responded that the four programs under discussion did not have caps, and the State Petroleum Fund that did have a cap was not at issue.

 

Assemblyman Marvel asked if the Petroleum Fund reached a particular level, if the gasoline tax would be reimposed to bring it back up.

 

Mr. Biaggi said that was correct and he thought the levels were a $2 million floor where a fee was charged until reaching the $7 million cap.  He reminded them this was not one of the funds they were concerned about.

 

Assemblyman Marvel asked what was in the fund currently.

 

Mr. Biaggi he thought it was either ready to be turned on or ready to be turned off; it was either at the floor or the cap.  Assemblyman Marvel made a comment about the current price of gas.  Mr. Biaggi continued and said he thought it was about to be turned on.

 

Chairman Collins thanked them and asked if there were other questions by the Committee.  He asked if anyone wanted to testify on the bill, and seeing no one he closed the hearing on A.B. 129.  He said it was fairly simple legislation and he would recognize a motion to approve the bill.

ASSEMBLYMAN MARVEL MOVED TO DO PASS A.B. 129.

 

ASSEMBLYMAN CLABORN SECONDED THE MOTION.

 

THE MOTION CARRIED. (Ms. Ohrenschall was absent for the vote.)

 

Chairman Collins reopened the hearing on A.B. 74 and said he would accept a motion.  He commented that this bill required a two-thirds majority for approval.

 

ASSEMBLYMAN CLABORN MOVED TO DO PASS A.B. 74. 

 

ASSEMBLYMAN CARPENTER SECONDED THE MOTION.

 

Chairman Collins asked for any discussion on the motion.

 

Assemblyman Geddes wanted a clarification, asking if additional funds from the General Fund were required or more staff resources to administer the program as it was; he also asked if “we do not assume liability until they have met all the requirements that you have set forth.”

 

Mr. Biaggi said the brownfields grant allowed for administrative fees for administration of the program; they had submitted a fiscal note adding perhaps 1 or 1½ staff members, but there were no further General Funds needed because it was paid for solely by the grant from the U.S. Environmental Protection Agency.  For the second question, they had to meet all requirements of the brownfields legislation in its current form to receive the liability release.

 

Assemblyman Marvel asked if the bill passed, if they would need to amend their budget to add new staff.

 

Mr. Biaggi said the fiscal note would move forward, and it would move forward as a new piece of legislation.

 

Chairman Collins said it required a two-thirds vote, and he had a motion to do pass.

 

THE MOTION CARRIED. (Ms. Ohrenschall was absent for the vote.)

 

Chairman Collins reminded the Committee they were working on a 120-day session.  A.B. 74 had been introduced on the floor on February 11, and the scheduling to hear bills was as much in advance as possible.  He requested that they look at bills coming before the Committee in advance.  If they had questions, ask the sponsors.  They would probably have visitors in their offices providing their opinions.  He wanted them to try to be ready to vote on any bill by the end of the bill’s hearing.

 

Assemblyman Marvel provided advice to the Committee saying to vote no if unsure.  Chairman Collins agreed with the advice and stated that it still went to the Floor after passage from the Committee and then to the Senate.  Lobbyists and the Governor’s staff would review it as well.  There were opportunities to catch discrepancies.

 

Chairman Collins assigned the A.B. 74 Floor presentation to Assemblyman Geddes and the A.B 129 Floor presentation to Assemblyman Conklin.

 

Chairman Collins adjourned the meeting at 3:28 p.m.

 

 

 

 

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

Erin Channell

Committee Secretary

 

 

APPROVED BY:

 

 

 

                                                                                         

Assemblyman Tom Collins, Chairman

 

 

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