MINUTES OF THE
SENATE Committee on Legislative Affairs and Operations
April 1, 2003
The Senate Committee on Legislative Affairs and Operations was called to order by Chairman Maurice E. Washington, at 3:45 p.m., on Tuesday, April 1, 2003, in Room 2144 of the Legislative Building, Carson City, Nevada. Exhibit A was the Agenda. Exhibit B was the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Maurice E. Washington, Chairman
Senator Barbara Cegavske, Vice Chairman
Senator Raymond D. Rawson
Senator Dina Titus
Senator Bernice Mathews
Senator Valerie Wiener
COMMITTEE MEMBERS ABSENT:
Senator William J. Raggio (Excused)
GUEST LEGISLATORS:
Senator Mark E. Amodei, Capital Senatorial District
STAFF MEMBERS PRESENT:
Fred W. Welden, Chief Deputy Research Director
Robert Erickson, Research Director
Brenda J. Erdoes, Legislative Counsel
Johnnie Lorraine Willis, Committee Secretary
OTHERS PRESENT:
Lawrence E. Jacobsen, Ex-Senator, Former Member, Marlette Lake Water System Advisory Committee
Juan Palma, Executive Director, Tahoe Regional Planning Agency
Steve L. Teshara, Lobbyist, North Lake Tahoe Resort Association, and Lake Tahoe Transportation and Water Quality Coalition
Pamela B. Wilcox, Administrator and State Land Registrar, Division of State Lands, State Department of Conservation and Natural Recourses
George M. Caan, Executive Director, Colorado River Commission of Nevada
Julie Wilcox, Lobbyist, Southern Nevada Water Authority, Las Vegas Valley Water District
Joseph Guild, Lobbyist, Southern Nevada Water Authority
Chairman Washington opened the hearing on Senate Bill (S.B.) 216 and invited Senator Mark E. Amodei, Capital Senatorial District, to explain the bill and his reasons for requesting this legislation.
SENATE BILL 216: Creates interim legislative committee to review Tahoe Regional Planning Compact and oversee Tahoe Regional Planning Agency and other federal, state, interregional and interstate governmental entities within State of Nevada. (BDR 17-175)
Senator Amodei said he was a member of the interim committee, which was a study of Tahoe Regional Planning Compact and this bill was a result of findings that came out of the study. He said one unanimous thing among the committee members was the oversight function for the Tahoe Regional Planning Agency should continue as it had for the previous 20 years.
Senator Amodei said there were some concerns expressed by colleagues in southern Nevada regarding the expansion of the committee's work for oversight in regard to other bistate functions and resource-related interregional functions occurring in Clark County.
Senator Amodei said S.B. 216 creates a statutory legislative committee from the interim committee. He explained the statutory committee was for the review and oversight of interstate and interregional compacts and entities. The new committee would incorporate the existing statutory oversight committee for the Marlette Lake water system, the interim oversight committee for the Lake Tahoe Basin, and would add oversight of activities associated with the Colorado River Compact (CRC) and Southern Nevada Water Authority (SNWA).
Senator Amodei commented it was the proper duty of a representative body to look diligently into every affair of government and to talk about what it sees. He said the representative body was meant to be the eyes, the voice, and to embody the wisdom and will of its constituents. Senator Amodei quoted former President Woodrow Wilson:
Unless the legislative body had and uses every means of acquainting itself with the acts and the disposition of the administrative agents of the government, the state will be helpless to learn how it was being served.
Senator Amodei then quoted National Conference of State Legislators (NCSL):
Legislators often look to policy making, constituent relations, and budget decisions as being the critical areas of their work, but oversight was highly important to making the legislature a coequal branch of government. We tend to emphasize oversight only when there was a major crisis, but constituents demand accountability and oversight work ensures accountability.
Senator Amodei said the historically significant Hobart Lake and Marlette Lake water system was originally constructed in 1873 to move water from the Carson Range to Virginia City and the Comstock Mining District. He said with the decline of the Comstock in the years and decades that followed, the fortunes of the water systems suffered. Senator Amodei continued, the system was eventually purchased by the State of Nevada in 1963. He said the Marlette Lake Water System Advisory Committee was created as a permanent and statutory committee by the Legislature in 1971, and had continued to perform its oversight functions since that time. He said that committee was the statutory committee already in existence. He explained one of the committee's recommendations was the statute outlining its creation be repealed and the oversight function be transferred to the committee overseeing the Tahoe Regional Planning Agency.
Senator Amodei explained the bistate Tahoe Regional Planning Compact was originally approved by the states of Nevada and California and ratified by the U.S. Congress in 1969, with major amendments constituting a redraft of the compact being enacted in 1980. He said the legislative committee to continue the review of programs and activities in the Lake Tahoe Basin had been created by concurrent resolution every biennium, except one, since 1985. He emphasized it had effectively been a permanent committee for the past 18 years.
Senator Amodei said the Colorado River Compact was signed by the affected states in 1922. That compact apportioned the river's water among the seven Colorado River Basin states. He said in 1923 the Nevada Legislature created the Colorado River Development Commission, which was empowered among other things to represent the State of Nevada in negotiations with other states concerning the Colorado River and its tributaries. Senator Amodei explained in 1935, the Nevada Legislature enacted legislation creating the Colorado River Commission and expanded its powers significantly. In addition to its other duties, the commission was empowered to receive and protect for the State all water and water rights related to the river and its generating power. He said the Legislature, once again in 1967, enacted legislation providing for the acquisition or construction of Southern Nevada Water System to provide Colorado River water to the municipal areas of southern Nevada. He explained the Colorado River Commission was authorized to act on behalf of the State in all matters concerning that project.
Senator Amodei said the Las Vegas Valley Water District was originally created by a special act of the Legislature in 1947 to distribute water to a large potion of the urban population in Clark County. He said in 1991 the Southern Nevada Water Authority was formed to address water resource management regionally in Clark County. He explained the authority was a political subdivision of the State of Nevada created through an interlocal cooperative agreement and its board of directors included one member each from Boulder City, Henderson, Las Vegas, North Las Vegas, the Big Bend Water District, Clark County Water Reclamation District, and the Las Vegas Valley Water District. He said the membership of the Colorado River Commission had been modified several times over the years. Senator Amodei continued, the original membership consisted of the Governor and four gubernatorial appointees, and then was changed in 1963 by replacing the Governor with the director of the State Department of Conservation and Natural Resources. He said those changes were later revised to include five members with certain specifications to be appointed by the Governor.
Senator Amodei said in 1993 the board of the CRC was expanded to seven members. He explained the Governor appointed four of the seven members, and the board of directors of the SNWA appointed three members from the water authorities' board.
Senator Amodei explained in 1995 the Legislature transferred the Southern Nevada Water System from the Colorado River Commission to the Southern Nevada Water Authority, which assumed all liabilities of the State of Nevada and the Colorado River Commission relating to that system. He said in 2001 the official name of the Colorado River Commission was changed to the Colorado River Commission of Nevada. Every governmental entity discussed above was either an agency, a committee, or a political subdivision of the State of Nevada. Senator Amodei said these entities included the Marlette Lake Water System Advisory Committee, the Legislative Commission's Committee to Continue the Review of Programs and Activities in the Lake Tahoe Basin, the Colorado River Commission of Nevada, the Las Vegas Valley Water District, and the Southern Nevada Water Authority including Boulder City, Henderson, Las Vegas, North Las Vegas, the Big Bend Water District, Clark County Water Reclamation District, and the Las Vegas Valley Water District. He advised these entities should be subject to oversight by the Nevada Legislature to ensure accountability.
Senator Amodei explained the bill combines two committees, an interim study committee and a statutory committee, into one statutory committee. He said the Tahoe Regional Planning Agency (TRPA) was very much in favor of an oversight committee for their agency. He explained the TRPA had excellent communication with members of the Legislature. Senator Amodei said the association between the Legislature and the TRPA had evolved from a contentious association to an effective working relationship. He said there was a frank and productive exchange of information about TRPA's policies and procedures and they were accomplishing their goals. He stated the Legislature was very much a full partner with the TRPA, which had resulted in very few surprises coming out of the Lake Tahoe Basin in terms of policy during the period of the oversight. He said that oversight committee, during the interim, provided the mechanism by which communication had been healthy.
Senator Amodei explained the TRPA did not want the committee relationship and communications between the Legislature and the TRPA to be diluted by diverting committee attention to other projects. He continued, stating this was a success story where the Legislature was doing its job in an oversight context and those overseen thought it was important the relationship continue.
Senator Amodei explained there was a fiscal note on the bill; however, this bill combines two committees into one. He said the fiscal note stated the cost would be around $8800. He said the Tahoe oversight committee traditionally met four times during each biennium. He noted the budget for the past biennium was $9520, the committee's expenditures, however, totaled $6580. He emphasized it was not a money issue, even with the expanded range, because where there had been two committees, there would now be one. Senator Amodei said even with more meetings, he did not believe it was a money issue, it was strictly about policy. He said when one thinks about policy, with the representatives of the TRPA believing the oversight committee was a positive thing, then ask what the TRPA did for the region, what kind of budget it had, how it affected the lives of the people in the Lake Tahoe Basin, and how well had oversight been working. Senator Amodei said compare the effectiveness of this oversight with the oversight of the additional projects the bill was proposing to establish. He stated oversight was not a dirty word, it was one of the things the Legislature was supposed to do. He enjoined the committee to ask what kind of budgets these entities had, was it appropriate to subject these entities to oversight, and was it appropriate in the sense of how those entities affect the everyday lives of the people in Clark County.
Senator Amodei said historically the TRPA conducted four meetings an interim, thus the committee would hear reports from these entities every 6 months, which he believed was healthy.
Senator Amodei said regardless of whether or not the committee felt some of the cited entities in the bill should be amended out, the oversight of the TRPA should continue. He said that oversight had been very successful and had consolidated operations. He commented the oversight committee should be a statutory committee.
Senator Amodei pointed out the language in the bill that described the duties of statutory committees. He explained those duties included the power to subpoena; however, he did not believe the committee had ever used that authority, but it was appropriate for a statutory committee.
Senator Amodei said he sincerely believed oversight was healthy and one of the most important things the Legislature could provide. He reminded the committee the Nevada Legislature, with only 120 days every other year, was not famous for its oversight. He said while some individuals in the Executive Branch and other agencies thought the Legislature was a little too zealous, he believed when the committee heard how well oversight had worked with TRPA, it would understand oversight could be positive for everyone involved.
Senator Wiener asked Senator Amodei to explain how the TRPA study committee went from being a very contentious situation to a relationship the TRPA was concerned about sharing. Senator Amodei responded most of the contentiousness was due to poor communications between the TRPA and the Legislature. He said a formalized oversight committee, which required the TRPA to report what had been accomplished, what the agency planned to do in the future, and what its budget looked like, went a long way toward making both sides aware of what had happened with the agency and what the expectations were of the various members of the Legislature. He said communication between the two facilitated a better understanding of the goals and concerns of both sides.
Senator Wiener asked whether the bill expanded the committee's oversight beyond the environmental issues the individual entities were addressing at the moment, and would its authority be for anything that was an interstate or interregional issue. Senator Amodei replied he believed the oversight function was not limited to environmental issues. He said some of the issues for the TRPA included where the offices would be located, in California or Nevada. He said if the committee was going to oversee operations, then it needed to oversee all of the operations, and oversight should be oversight in a very generic sense of the word. He advised if there were issues of concern needing to be addressed, then these issues should be addressed. Senator Amodei pointed out the TRPA oversight committee had also been used to generate any needed legislation the agency thought was appropriate after discussion with the committee. He said the interim committee had carried most of the agency's bill drafts for the following sessions.
Senator Titus asked whether this would replace the existing legislative committee. Senator Amodei replied what had existed was a statutory committee for Marlette Lake and a committee, by continuing resolution, to oversee the TRPA. He pointed out the bill would combine both of those committees into one statutory committee, and expand the scope of that committee's mission to include other interregional and interstate entities such as the Colorado River Commission and the Southern Nevada Water Authority.
Senator Rawson asked whether this bill would cover entities such as emergency medical assistance and child placement compacts. Senator Amodei responded theoretically those compacts could be overseen by the committee documented in the bill; however, the bill was drafted to focus on those entities which had a connection with natural resources, or environment, and whether the entity had an impact on the daily lives of the Nevada citizens it served. Senator Rawson said he wanted to verify all of the other compacts would be brought in under this bill. He said he did not believe human resource and emergency medical issues should be under the purview of this committee. Senator Amodei said that was not the intent of the bill as drafted.
Senator Wiener said perhaps the language should be clarified to reflect that the bill's intent was toward management of natural resources and to interstate and interregional compacts. Senator Amodei stated he would have no objection to an amendment to limit the scope of the committee in the bill.
Lawrence E. Jacobsen, Ex-Senator, Former Member, Marlette Lake Water System Advisory Committee, said he was in opposition to the bill as written. He said he had chaired the Marlette Lake committee since 1969, about 30 years. He remarked he had proposed the construction of the current Legislative Counsel Bureau building and his first concern was to make sure it had an adequate water supply.
Mr. Jacobsen explained Marlette Lake was the only water source that served Carson City and Virginia City. He indicated the construction committee tried to tie the systems together so the system would work without too many problems. He said at the time none of the water rights had been secured for Marlette Lake, so all the water rights for Marlette Lake, Hobart Lake, and many other water systems in the area had to be secured. He said a great deal of time was expended on the project in order to make sure everyone knew who was responsible for what.
Mr. Jacobsen said the Governor at the time had wanted to sell the system to Sierra Pacific Power Company and Southwest Gas Corporation. He, however, felt it was a State asset and the State needed to retain control. He added he worked extensively toward that goal. He said over the 30 years he served on the committee, it had explored every detail of the Marlette Lake system and published two books. He stated he did not believe Marlette or Hobart Lakes needed any more governing. He added the systems did need improvements and had needed improvements since the beginning. He continued the State only used what water it needed, and so far had been able to supply all of the needs of the area the system served.
Mr. Jacobsen explained Carson City alone had three separate water systems, along with other systems in Virginia City and other areas served by the present systems. He said it had been difficult to determine who was controlling what and serving whom.
Mr. Jacobsen explained when the legislative building was first built, it used one of the many systems in use at that time. He said at first it had to "rob" water from the rest of the Capital Complex. He said after trying to satisfy everyone involved, the committee tried over the years to make sure everyone who used the system was a part of the system. He said the committee sold Carson City its part of the system for $1 and likewise sold Virginia City its part for $1 in the hope the counties would maintain those systems. However, he said, that proved untrue; Storey County took the system, but failed to keep it repaired.
Mr. Jacobsen explained Marlette Lake was over the ridge from Carson City and the only way to get water from the lake was to pump it. He said there used to be a flume line around the hill, which deteriorated over the years, leaving only the option to pump the water to this side of the hill. He explained the water was pumped once every 5 years, by hauling a pump to the area and then hooking up and pumping the water to the top of the hill where it ran into Hobart Lake. He stated the project was successful, worked, and seemed to have no current problems.
Mr. Jacobsen commented Marlette Lake also had a fishery, which had produced as many as 3.5 billion eggs for cutthroat trout. He described cutthroat trout as a native Nevadan fish whose eggs were shipped all over the State to replenish rivers, lakes, and streams.
Mr. Jacobsen explained Marlette Lake was self-contained, with only the overflow running into Lake Tahoe. He said there were four or five streams running into Marlette Lake, however there was no fishing in the lake.
Mr. Jacobsen identified another part of the system as Hobart Lake, which was a man-made lake fed by runoff from the mountains around it.
Mr. Jacobsen reiterated Marlette Lake and its water systems did not need more governing. He said the advisory committee had worked very well and everyone using the system had a voice on the committee.
Chairman Washington asked Mr. Jacobsen whether he was aware the Legislative Commission had requested the repeal of the current statutory committee and to add that committee's duties to the oversight committee contained in S.B. 216.
Mr. Jacobsen said he failed to mention he had 30 years of experience with the Marlette system, and had spent the last 4 years as chairman of the advisory committee on Lake Tahoe. He pointed out the Lake Tahoe system was very different from the Marlette Lake system. He said the people were different, and had different issues than the people who used the Marlette Lake system. He said the two systems were not compatible, and each system and its people needed to be treated completely different from each other. He said he did not believe one committee should cover both systems.
Chairman Washington asked Fred W. Welden, Chief Deputy Research Director, to give the committee a brief report.
Mr. Welden said his memorandum to Chairman Washington, Exhibit C, outlined the history and important points regarding the Tahoe Regional Planning Compact creation in 1969, and the Tahoe Regional Planning Agency was set up at that time. He said in 1980 there were major amendments to the bistate compact. He explained the structure changed, the voting changed, and most of the requirements changed. Mr. Welden said the legislative oversight committee was first approved by resolution in 1985, and had been adopted during every Legislature except one since then. He referred the committee to Exhibit C for further history of the compact and its oversight committee.
Mr. Welden said the last oversight committee's report summarized the most significant activities the committee had supported through the years. He told the committee Exhibit C also outlined the Colorado River Compact and its associated agencies.
Juan Palma, Executive Director, Tahoe Regional Planning Agency, said from the inception of the original Tahoe Regional Planning Compact in 1969 to the revision of the compact in 1980, Nevada had had a high interest in Lake Tahoe. He said the Legislature had participated with the agency throughout the whole process.
Mr. Palma said in 1985 the oversight committee for Lake Tahoe was created, and had partnered the agency since then. He said the Lake Tahoe agency had enjoyed the benefits of being able to meet with the oversight committee.
Mr. Palma explained the difference between S.B. 216 and prior resolutions was the current bill created a permanent oversight committee. He said every 2 years the agency had to request another interim committee, and S.B. 216 would change that. He commented there were pros and cons to that idea. He said on the one side, the agency would not have to go through the rebirthing of the committee every interim, which was a plus of S.B. 216. He said on the other hand, not being able to discuss the program with the Legislature every 2 years might not be a plus for the Legislature. Having to come back every 2 years would provide a venue for the Legislature to ask the TRPA how the programs were going.
Mr. Palma said the agency believes its relationship with the oversight committee was going well and he firmly agrees with Senator Amodei. He explained the committee and the TRPA had worked through many issues, particularly in the past couple of years with ex-Senator Jacobsen as chairman of the committee. He said TRPA was able to take ex-Senator Jacobsen out in the field, show him the project, show him what was happening, and discuss the issues with him and other members of the committee. He said many suggestions came out of that committee and the agency worked to resolve those issues.
Mr. Palma stated the TRPA would like to continue to have its own oversight committee and its four meetings a year with them. He reiterated it was a good venue for the agency and the TRPA did not want to have the oversight committee's attention diluted by issues and concerns of other entities. He said the TRPA wanted the oversight because it was a two-way exchange and the TRPA wanted to keep that exchange going.
Steve L. Teshara, Lobbyist, North Lake Tahoe Resort Association, Lake Tahoe Transportation and Water Quality Coalition, said he represents the nongovernmental people involved in Lake Tahoe. He said his agencies had some of the same concerns as Mr. Palma. He explained his coalition included gaming, skiing, tourism, chamber of commerce, and local environmental and property rights groups from Lake Tahoe. He said his agencies had worked on land‑use issues as a coalition in Lake Tahoe with the TRPA and other agencies for more than 14 years. He said the coalition had been involved with the oversight committee, assisting staff and the committee with field trips, meeting venues, and working closely on issues. He said it had certainly been an excellent opportunity.
Mr. Teshara said the oversight committee started back in the 1980s, in a time of great turmoil. He said there was a regional plan adopted in 1984, which was immediately sued by every side. He said all the entities went through a consensus‑based negotiation process, which resulted in the regional plan of 1987. He explained most of the entities involved were pleased the Nevada Legislature was directly involved as a major stakeholder. He said there had never been such a committee on the California side and therefore they had unresolved issues. Mr. Teshara continued his testimony through Exhibit D.
Pamela B. Wilcox, Administrator and State Land Registrar, Division of State Lands, State Department of Conservation and Natural Recourses, said the committee in S.B. 216 would oversee the Division of State Lands as it oversees the Lake Tahoe Basin. She said State Lands had been the preeminent Tahoe agency for a long time. She added she had been attending the meetings since 1985. She said the 1985 Legislature also passed the first Tahoe Bond Act approved by voters in 1986. She explained all the agencies involved worked together on the issues. She recalled in the early meetings people were very tense, were not happy, and there was a great deal of conflict. She said she watched as the relationship slowly evolved into a good, working partnership. She said the oversight had been good for everyone and she would like it to continue.
Ms. P. Wilcox extended her thanks to the oversight committee for its accomplishments in the Lake Tahoe Basin, which included two bond issues. She explained the 1986 and the 1996 bond acts were both supported by the oversight committee. She said the Lake Tahoe License Plate Program came out of this committee and had generated more than $1.7 million for Lake Tahoe. She continued, the Lake Tahoe Environmental Improvement Program also originated from this committee and was funding $82 million worth of environmental improvements into the Lake Tahoe Basin.
Ms. P. Wilcox said every interim the oversight committee received reports on the TRPA and the Lake Tahoe coalition of the agency's accomplishments, and what they hoped to accomplish. She said the committee supported the TRPA's activities and brought a BDR to the Legislature every session for the continuation of the State's environmental work in the Lake Tahoe Basin. She stated the oversight committee had been a resounding success for the Legislature and for the State of Nevada.
Ms. P. Wilcox indicated if the Senate Committee on Legislative Affairs and Operations chose to extend the jurisdiction of the oversight committee, she hoped there would continue to be four meetings on Lake Tahoe issues each interim. She said she also hoped the agencies would continue to have the same kind of attention and the same kind of communications. She emphasized the oversight committee had given a voice to everyone, no matter what side of an issue the person was on, and held hearings at the request of environmental groups, property owners, and agencies. She reiterated the oversight committee had been a voice for everyone.
Senator Titus asked whether the Legislature had performed an audit of the TRPA. Mr. Palma responded there had been a few audits, with the most recent one conducted on the California side. He added at the last meeting of the interim oversight committee, the committee recommended the TRPA conduct a performance audit, and the TRPA was in the process of performing that audit.
Senator Titus asked whether the TRPA was an agency subject to audit by the Legislative Counsel Bureau's (LCB) Audit Division. Chairman Washington replied those kinds of audits could be requested, even though the LCB Audit Division was currently backlogged. Senator Titus then inquired whether the LCB Audit Division could also audit the Colorado River Compact. Chairman Washington replied, "Yes."
Chairman Washington asked whether the TRPA was concerned about adding Marlette Lake to the oversight committee. Mr. Palma replied he did not want to respond until he had time to discuss the issue with ex-Senator Jacobsen. Ms. P. Wilcox said she had been attending the Marlette Lake committee meetings for many years, and it was a different kind of job. She said she hoped some kind of legislative involvement in Marlette Lake would continue. She explained the question of whether the Marlette Lake Water System Advisory Committee would fit with the committee in S.B. 216 or should stay separate was just a matter of balance. She related it was not a bad fit with Tahoe; however, Marlette Lake had different people and different issues. She said perhaps it would require five meetings a year for the oversight committee, with one devoted just to Marlette Lake.
George M. Caan, Executive Director, Colorado River Commission of Nevada (CRC), said the mission of the CRC was to acquire, manage, and protect all of Nevada's water and hydropower resources from the Colorado River for southern Nevada and to manage certain land in the Mohave Valley near Laughlin. Mr. Caan continued his testimony by reading Exhibit E.
Senator Mathews asked whether Henderson was part of the CRC. Mr. Caan replied each year the Southern Nevada Water Authority (SNWA) appoints three members from its board to the CRC. He said the membership rotated among the various entities that were part of the water authority.
Senator Mathews questioned whether, in any given year, one of the participants could drop out. Mr. Caan replied it could happen and at one time or another the CRC had members from Henderson, Boulder City, North Las Vegas, and Las Vegas. He said participants rotated on an annual basis, although the membership was not required to rotate. He explained some members continued to serve on an annual basis for more than one term.
Senator Cegavske asked how it came about that the Southern Nevada Water Authority appointed members to the CRC. Mr. Caan responded in 1991 SNWA was formed by cooperative agreement, and in 1993 the Legislature passed a bill changing the composition of the CRC from five members appointed by the Governor to four members appointed by the Governor and three members appointed by SNWA. He said an act of the Legislature made the decision to allow SNWA to appoint board members to the CRC.
Chairman Washington asked what the relationship was between the CRC and the SNWA. Mr. Caan replied the staff of the CRC worked hand in hand with the Southern Nevada Water Authority on issues such as water acquisition, interstate negotiations, and environment. He said both entities attended the various meetings, supported each other in such things as research and analysis; the legal staffs worked together, and both boards were supportive of that cooperation. He commented when the SNWA board members were briefed on an issue, the CRC board members were briefed on the same issue. He said he believed that was a sign the two entities were working well together.
Chairman Washington asked, outside of the budget oversight given by the finance committee, was there any other oversight by the Legislature of CRC and the SNWA board activities. Mr. Caan replied any time the Legislature met regarding water issues, the CRC was part of the presentation. He said CRC did have the responsibility to the Legislature to inform Legislators on water issues. He commented when the CRC had a bill, it was generally presented to the committees on natural resources. He stated CRC was available to the Legislature any time it needed information regarding water issues.
Chairman Washington reiterated outside of requests there were no other oversight committees the CRC was accountable to, especially for things such as contractual agreements and interstate compacts between other state entities and local governments. Mr. Caan replied when CRC had a contract, the CRC board reviewed it, and if it involved the water authority, the water authority board would also review the contract. He said CRC would appear before the Interim Finance Committee for any budget changes. He added the CRC board reviewed all the contracts and that comprised the oversight and review for the CRC. He said CRC's contracts were reviewed and approved by the State Board of Examiners.
Senator Cegavske asked whether the CRC or the SNWA had performed any audits requested by agencies, and how were those handled. Mr. Caan replied in 2000, CRC had a Legislative audit and had yearly audits performed by a private firm. He said he would provide a copy of the audit to the committee.
Senator Cegavske asked whether the audit was just for the Colorado River Commission of Nevada. Mr. Caan replied she was correct, the audits were for CRC funding and programs.
Chairman Washington expressed there was concern with issues brought up by the Federal Energy Regulatory Commission (FERC) findings with regard to market manipulations in the Western United States. Mr. Caan explained FERC issued a "show cause" to 37 firms regarding several types of transactions related to the Western states' energy crisis. He stated although the Colorado River Commission of Nevada was not one of those firms, the CRC was listed in an exhibit in one of the documents FERC was checking. He said CRC had not received an order from FERC to "show cause." However, he explained, the CRC was expecting it to happen, so the CRC was putting together information in advance of a "show cause" issuance by FERC.
Mr. Caan explained FERC had an exhibit, which was provided by a person during testimony in an investigation not related to CRC. He said one of the exhibits showed a list of entities that consumed, bought, and sold energy. He said the list was found in the files of Enron Corporation. Those documents for the investigation illustrated Enron had a list of different firms, both private and public, through which it conducted nefarious activities. He stated the Colorado River Commission of Nevada was not part of those activities. He said CRC bought and sold energy for SNWA and other customers, and when CRC bought energy, there were times it had to sell that energy. Mr. Caan pointed out if the CRC bought energy for pumps and the pumps did not run, then the CRC had to get rid of that energy, because it could not be stored. He identified Enron as one of the firms CRC sold energy to during the time period in question by FERC. He emphasized the CRC had no idea how that energy was used after it was sold, and said when the CRC sold energy, it did so under contract and then the company that bought the energy sold it to someone else. Mr. Caan stated if someone took CRC's energy after it was sold and used it in a nefarious way, as indicated by FERC, that was not something CRC could control or was even involved with. He asserted CRC was required to use Enron to sell energy for the California market.
Mr. Caan stated CRC was waiting for FERC to order a "show cause" and once it received that order, it would respond in due course.
Chairman Washington asked if FERC ordered an investigation, which resulted in funds being owed, who would be required to reimburse those funds; who would be left holding the bag. Mr. Caan said CRC did not know what the "show cause" would say, and it did not admit to doing anything wrong. He explained the remedy for those who may have been guilty was to return the profits. He said CRC had a good relationship with its customers, for whom it buys and sells energy, and if CRC were ordered to repay, it would have to work something out with its customers. He emphasized the CRC was not guilty of anything and did not expect to be found guilty of any wrongdoing. He said CRC did not believe the State or the taxpayers would be left holding the bag. Mr. Caan said these were issues CRC would deal with and resolve with its customers.
Chairman Washington asked whether oversight of CRC activities and relationships could have avoided the current dilemma. Mr. Caan answered he did not believe legislative oversight could have avoided the current situation. He said the situation resulted from a natural course of business when the CRC sold energy to California. To sell energy to California, the CRC was required to hire a scheduling coordinator as part of California's deregulation law and Enron was one of a number of scheduling coordinators. He asserted the CRC used Enron as it would have used any other scheduling coordinator. He said CRC and the other energy vendors had no idea their product was being used in a mischievous or nefarious way.
Mr. Caan stated the energy crisis affected many entities as it did the CRC. He said when the Western U.S. was in the middle of the energy crisis, the choices were to buy energy very high for 1 year, buy energy a little lower, but very high for 5 years, or not buy at all. He said not buying energy for a system, like the water authority that had to pump water from Lake Mead to the Las Vegas Valley, and not knowing whether there was enough energy was untenable.
Mr. Caan stated he was not sure anyone could have foreseen what happened in order to perform preventive measures. He said all the State could do would be to ensure this did not happen again.
Chairman Washington asked Mr. Caan to supply a list of CRC's customers. Mr. Caan replied the list was supplied to the committee on the back page of Exhibit E under the heading CRC's Power customers.
Senator Titus asked whether CRC sold power to the Basin Management Industries (BMI) Industrial Complex cheaper than it could buy power from Nevada Power. Mr. Caan responded the primary source of energy for the BMI Industrial Complex was hydropower delivered from Hoover Dam. He said the prices for hydropower were less than the power company could supply. Mr. Caan noted the power provided to BMI was at market rates, with the majority of its power as hydropower, which cost less than other forms of power.
Chairman Washington indicated he believed having SNWA as a customer and having SNWA members on the board of the CRC created a conflict of interest. Mr. Caan said he did not believe that was the case. In fact, he believed having both boards review every action provided for better decisions. He said both boards require backup information about power procurement and other issues surrounding that procurement. He asserted it was more difficult having to submit detailed information to both boards, which ensured CRC had performed a thorough analysis of the issue. Mr. Caan related he believed the process worked very well.
Senator Rawson commented, in 1993 when the Legislature set up the relationship between the CRC and SNWA, it wanted southern Nevada interests to be overseen. That relationship, he said, was set up by design, not accident, and stated the money committees had always felt oversight was in their purview and watched over these entities very carefully. He said other kinds of review could be good and this was the appropriate venue for discussion. He said he believed the money committees would be very reluctant to give up their oversight of these agencies.
Senator Cegavske asked why there were not members on the CRC board from its other customers. Mr. Caan responded he did not know. He said the CRC tried to get power interest representation on the board. Mr. Caan added Lamond Mills, an attorney in Las Vegas and member of the CRC board, also represented the Overton Power District. He said CRC power customers were very vocal at board meetings and all had a voice.
Mr. Caan stated the CRC purchased power for the Southern Nevada Water Authority for their pumps and treatment facilities. He said the job was to purchase affordable and reliable power. He added there was really no conflict between the two boards and conveyed these two boards ensure the CRC received the best product. Mr. Caan explained the CRC's job before the board to present how it attained the best product. He said SNWA was part of that goal and there was no conflict between the organizations. He said the CRC board ensured the budget was correct, the right authority in place, and procured appropriate resources. Mr. Caan noted the CRC was required to purchase from the vendors in the Western Systems Power Pool.
Chairman Washington explained the committee was not trying to imply any impropriety from CRC or SNWA. He said the committee was just trying to learn quickly how the system worked and whether an oversight committee would be appropriate. He said the committee understood the money committee oversaw CRC's budget; however, only CRC and SNWA boards oversaw policies. Chairman Washington asked whether the money committees reviewed CRC's contracts. Mr. Caan replied all CRC contracts were open to the public. He said the boards and their customers reviewed those contracts in great detail and the State Board of Examiners reviewed some contracts, however the Legislature did not review each and every contract. He stated everything the board did was subject to the open meeting law, so anyone could have a copy of any contract that came before the CRC board.
Julie Wilcox, Lobbyist, Southern Nevada Water Authority, and Las Vegas Valley Water District, said SNWA had a proposed amendment, Exhibit F, to S.B. 216, which would remove the CRC and the SNWA from the bill. She said SNWA was under the impression the bill was generated by the interim study of the TRPA. She stated SNWA did not participate in those meetings and did not hear the discussions, and when she had looked at the history of the meetings, she did not find any mention of SNWA.
Ms. J. Wilcox explained SNWA was created by a joint powers agreement and was made clear the SNWA board was to have seven members. She emphasized through that process, SNWA had created many checks and balances for the operations and financial management of the water authority. She said if you added up all of the member agencies and their boards, there would be 27 elected officials involved with SNWA in one way or another.
Ms. J. Wilcox said the water authority required members to consult their individual boards in order to acquire an agreement for any plans involving water resources or conservations. She said the Southern Nevada Water Authority - A Brief Overview, Exhibit G, described the board of directors, what must be approved by the various governing boards of member agencies, and the kind of projects requiring approval.
Ms. J. Wilcox explained the water authority was created with the intent of a consensus organization that could work cooperatively with all the entities involved to ensure each had a vote in the process. She said a two‑thirds vote of the board of directors was required to approve water budgets, water resource plans, conservation plans, rates, charges, and fees changes. She said her point was the member entities put many checks and balances in place, and every city and county involved reviewed the major documents of the water authority more than once a year.
Ms. J. Wilcox explained the water authority involved citizens and created a citizens advisory committee whenever there were policy issues to be decided. She commented in addition to the oversight built into the system, the SNWA also had a positive relationship with the State through the CRC.
Ms. J. Wilcox said SNWA partnered with the CRC and that relationship was beneficial. Although Nevada received the least amount of the Colorado River resources distributed by congressional delegation, she asserted the CRC had a very large voice. She stated SNWA had a very effective team and added the relationship with the CRC had allowed SNWA to save more than $30 million over the last 3 years.
Chairman Washington asked what the rate per kilowatt was for SNWA. Ms. J. Wilcox indicated she would have to ask Mr. Caan from CRC. Mr. Caan responded the rate was around 7 1/2 cents. Chairman Washington asked how that rate compared to the rest of the market. Mr. Caan explained the current market was around 5 1/2 cents per kilowatt, however, when the CRC procured the energy, the price was higher whereas the price of hydropower was around 1 to 2 cents.
Mr. Caan conveyed the CRC primarily provided SNWA with energy purchased from the market, not hydropower, although SNWA received some hydropower. He stated the CRC did not mark up hydropower, hydropower was sold to the SNWA or any other entity at cost.
Chairman Washington asked if CRC funding did not come from State taxpayers, then from where did CRC receive funding. Mr. Caan acknowledged every kilowatt hour the CRC sold had a surcharge attached to pay for administrative staff. Chairman Washington inquired how much was the surcharge. Mr. Caan answered it was around five-tenths of a million dollars, which amounted to $800,000 to $900,000 per year.
Chairman Washington asked what would happen if Nevada Power needed extra power. Mr. Caan replied the CRC only provided hydropower to Nevada Power and mentioned 4 percent of Nevada Power's total resources was hydropower. Chairman Washington asked whether Nevada Power passed those savings on to customers. Mr. Caan asserted Nevada Power was required to pass the benefits on to residential ratepayers.
Ms. J. Wilcox conveyed the SNWA had a very close relationship with the Legislature. She said SNWA was often called to testify on water issues, which included resource planning, capital improvement planning, and resource purchases.
Ms. J. Wilcox said in 1995, when SNWA came to the Legislature to request authority to asked the public for a 1/4 cent tax increase, the Legislature performed an extensive audit of SNWA. She acknowledged the auditors made several suggestions, and one of the suggestions was extended even further than suggested. She explained SNWA had an independent financial audit performed every year and changed auditing companies every 5 years. She noted SNWA also chooses a sector of the agency for a comprehensive performance audit each year.
Ms. J. Wilcox explained SNWA believed it had sufficient oversight, had the mechanisms in place for oversight, and kept the public informed, aware, and involved in every process. She said SNWA's existing oversight was why it proposed the amendment to eliminate SNWA from S.B. 216. She asserted SNWA felt the oversight documented in the bill was not necessary.
Joseph Guild, Lobbyist, Southern Nevada Water Authority, said he would like to propose a change to the bill as documented in Exhibit F. He said the SNWA's reason for wanting to be excluded from S.B. 216 was because it was unlike the TRPA and had different issues, missions, goals, procedures, and geographic location. He advised on page 3, section 2 of S. B. 216, lines 5 and 6 should read "'Committee' means the Legislative Committee for the Review and Oversight of the Tahoe Regional Planning Agency." He said the change would also apply to lines 10 and 11. Mr. Guild explained the amendment deleted references to other entities.
Senator Rawson commented the amendment removed Marlette Lake. Mr. Guild replied the amendment needed some work, because a reference to Marlette Lake remained on page 2, line 38 of Exhibit F.
Senator Titus stated she could understand removing some of the entities in the bill because the existing responsibilities would be a mammoth task for any oversight committee. However, she declared, she could see no reason to remove Marlette Lake. She stated Marlette Lake and Lake Tahoe were in the same region and had a lot in common. She acknowledged she appreciated ex‑Senator Jacobsen and all he had accomplished up to that point, but it was time to move on. She said Lake Tahoe and Marlette Lake could go together, and one committee could easily oversee those programs. She asserted she would not support an amendment removing Marlette Lake from the bill.
Chairman Washington asked whether the SNWA was a political subdivision created by the State. Ms. J. Wilcox replied, "Yes, that is correct, Mr. Chairman."
Chairman Washington explained most political subdivisions had oversight beyond budgetary issues; however, SNWA's budget oversight was confined to its board, making it autonomous. Ms. J. Wilcox responded the SNWA board required not only a two-thirds vote, but also required the member entities obtain approval from their governing boards. Chairman Washington clarified that was the oversight Ms. J. Wilcox was claiming for SNWA's board, to which Ms. J. Wilcox replied, "Right." She explained the board was overseen by all local elected bodies in southern Nevada that were members of SNWA.
Senator Cegavske asked Senator Amodei whether he agreed to the amendment. Senator Amodei explained he would like to make it clear the bill was not to cast aspersions on an entity. He affirmed the TRPA did not perceive the oversight committee as a threat or a vote of no confidence on how it had been operating or carrying out its job. He expressed the spirit of adding the other entities to the bill was done in the same spirit as the relationship the oversight committee had with the TRPA. Senator Amodei stated S.B. 216 was not introduced because there were problems, or someone had done something wrong. He continued, the oversight of the entities documented was an area the existing committee had experience with; thus, these entities were included because they were resource‑related, involved multiple states, and had interregional issues. He said the thought was to multitask, roll these issues into one committee, and perform this kind of oversight as efficiently as possible. He said it was interesting to hear on the one hand the TRPA wanted its oversight diluted, and on the other hand to hear agencies claiming they were separate.
Senator Amodei said it was great there were 27 elected officials involved in one entity; however, not one of those elected officials was a member of the State Senate or the State Assembly. He explained the reason he quoted the information regarding oversight was because all the things that had allowed these entities to exist or operate had been accomplished through the Nevada Legislature. He stated oversight was not threatening, negative, or accusatory. Senator Amodei asked the committee to reason out what the focus of the bill was, what were the resources involved, and what were the issues. He said the resources and issues impacted by the operation of the CRC and SNWA were of direct importance to the economy in southern Nevada.
Senator Amodei said with all due respect to Senator Rawson, he understood the finance committee reviewed every penny the State spent; however, there were other committees that discussed policy issues. He explained the issues addressed by the committee in S.B. 216 would not be budget issues. He emphasized the committee was not about budgetary issues or an attempt to supplant the authority of the money committees by reviewing the budgets of the entities in S.B. 216. He avowed the oversight committee would deal with policy issues such as growth, resources, and commerce.
Senator Amodei said the membership of the TRPA included southern Nevadans who were not having problems understanding the issues in the Lake Tahoe Basin.
Senator Amodei said while the Legislature clearly wanted to continue to deal with the Tahoe and Marlette Lake issues, would it not be refreshing to have some of these other agencies saying, "We would like to have a dialog with you." He said oversight did not happen in a 120-day process in the odd numbered years. He added Legislators who were part‑time people in session only during odd-numbered years, were not unreasonable to ask for a couple meetings to stay on top of the issues. He stated oversight was a normal function of what the Legislature was supposed to do.
Senator Cegavske asked whether Senator Amodei had seen the amendment. Senator Amodei replied he had not seen the amendment, but he had spoken to Mr. Guild regarding his concerns. Senator Cegavske asked whether Senator Amodei was in favor of the amendment. Senator Amodei replied, "No, obviously the bill stated what I think was a responsible position."
Senator Titus said she had been leaning toward the amendment because she felt it might be too much of a task for one committee; however, after Senator Amodei's testimony, she believed the bill was a good idea.
Juan Palma, Executive Director, Tahoe Regional Planning Agency, conveyed he had seen not the amendment before his earlier testimony. He said if S.B. 216 were not to pass, he suggested the TRPA be assigned to another interim committee. He emphasized the TRPA wanted the oversight and wanted to keep its door to the Legislature.
Chairman Washington adjourned the meeting at 5:50 p.m.
RESPECTFULLY SUBMITTED:
Johnnie Lorraine Willis,
Committee Secretary
APPROVED BY:
Senator Maurice E. Washington, Chairman
DATE: