Clean Water Coal. v. the M Resort Llc

• Decision Date: 26 May 2011
• Docket Number: No. 57649.,57649.
• Parties: CLEAN WATER COALITION, A Nevada Joint Powers Authority, Appellant/Cross–Respondent,v.THE M RESORT, LLC, A Nevada Limited Liability Company; PH Metro, LLC, A Nevada Limited Liability Company; Ovation Development Corporation, A Nevada Corporation; Jet Hangars, LLC, A Nevada Limited Liability Company; Sun City Summerlin Community Association, Inc., A Nevada NonProfit Corporation; and Henderson Chamber of Commerce, Inc., A Nevada NonProfit Corporation, Respondents/Cross–Appellants,v.State of Nevada, ex rel. the Legislature of the 26th Special Session of the State of Nevada; The Honorable Brian E. Sandoval, In His Official Capacity as Governor of the State of Nevada; the Honorable Kate Marshall, In Her Official Capacity as Treasurer of the State of Nevada; and the Honorable Kim R. Wallin, In Her Official Capacity as Controller of the State of Nevada, Respondents/Cross–Respondents.
• Court: Nevada Supreme Court

255 P.3d 247

CLEAN WATER COALITION, A Nevada Joint Powers Authority, Appellant/Cross–Respondent,
v.
THE M RESORT, LLC, A Nevada Limited Liability Company; PH Metro, LLC, A Nevada Limited Liability Company; Ovation Development Corporation, A Nevada Corporation; Jet Hangars, LLC, A Nevada Limited Liability Company; Sun City Summerlin Community Association, Inc., A Nevada NonProfit Corporation; and Henderson Chamber of Commerce, Inc., A Nevada NonProfit Corporation, Respondents/Cross–Appellants,
v.
State of Nevada, ex rel. the Legislature of the 26th Special Session of the State of Nevada; The Honorable Brian E. Sandoval, In His Official Capacity as Governor of the State of Nevada; the Honorable Kate Marshall, In Her Official Capacity as Treasurer of the State of Nevada; and the Honorable Kim R. Wallin, In Her Official Capacity as Controller of the State of Nevada, Respondents/Cross–Respondents.

No. 57649.

Supreme Court of Nevada.

May 26, 2011.

[255 P.3d 250]

Parsons Behle & Latimer and Michael R. Kealy and Robert W. DeLong, Reno, for Appellant/Cross–Respondent.Catherine Cortez Masto, Attorney General, and C. Wayne Howle, Solicitor General, and Blake A. Doerr, Deputy Attorney General, Carson City, for Respondents Brian Sandoval, Kate Marshall, and Kim Wallin.Legislative Counsel Bureau Legal Division and Brenda J. Erdoes, Legislative Counsel, and Kevin C. Powers, Senior Principal Deputy Legislative Counsel, Carson City, for Respondent Legislature of the State of Nevada.Kaempfer Crowell Renshaw Gronauer & Fiorentino and Jason Woodbury, Christopher L. Kaempfer, and Severin A. Carlson, Las Vegas; O'Reilly Law Group and John F. O'Reilly and Timothy R. O'Reilly, Las Vegas, for Respondents/Cross–Appellants Henderson Chamber of Commerce, Inc.; Jet Hangers, LLC; Ovation Development Corporation; PH Metro, LLC; Sun City Summerlin Community Association, Inc.; and The M Resort, LLC.Elizabeth Macias Quillin, City Attorney, and Michael J. Oh, Assistant City Attorney, Henderson, for Amicus Curiae City of Henderson.Nicholas G. Vaskov, Acting City Attorney, and Jeffrey F. Barr, Deputy City Attorney, North Las Vegas, for Amicus Curiae City of North Las Vegas.John J. Kadlic, City Attorney, and Jonathan D. Shipman, Deputy City Attorney, Reno, for Amicus Curiae City of Reno.Before the Court En Banc.

OPINION By the Court, HARDESTY, J.:

Confronting a statewide budget crisis, the Nevada Legislature, during the 2010 special session, undertook several revenue-adjustment and cost-cutting measures in an effort to balance the State's budget, which resulted in the enactment of Assembly Bill 6 (A.B. 6), 26th Special Session (Nev. 2010). Section 18 of A.B. 6 mandates the transfer of $62 million in securities and cash from a political subdivision of the State created by interlocal agreement into the State's general fund for the State's unrestricted, general use.

In this appeal, we are asked to consider whether A.B. 6, section 18 violates the fundamental law of the state—the Nevada Constitution. We recognize that the Legislature is endowed with considerable lawmaking authority under Article 4, Section 1 of the Nevada Constitution. But that authority is not without some restraints. Two such restrictions are contained in Article 4, Section 20, which prohibits, among other things, local and special laws for the “assessment and collection of taxes for state ... purposes,” and Article 4, Section 21, which requires laws to be “general and of uniform operation throughout the State” in all cases “where a general law can be made applicable.”

We conclude that A.B. 6, section 18 violates both. A.B. 6, section 18 converts $62 million collected by the Clean Water Coalition (CWC) as user fees into a tax that is contrary to Article 4, Section 20's prohibition against local or special taxes. Because A.B. 6, section 18 applies only to the CWC, and a general law could have applied, it also violates Article 4, Section 21's mandate that all laws shall be general and operate uniformly throughout the state in all cases where a general law can be made applicable. For those reasons, we reverse the district court's judgment declaring A.B. 6, section 18 constitutional.

FACTS AND PROCEDURAL HISTORY The Clean Water Coalition

The Clean Water Coalition was created pursuant to an interlocal cooperative agreement

[255 P.3d 251]

among four Nevada political subdivisions, all located in Clark County: the Clark County Water Reclamation District and the cities of Henderson, Las Vegas, and North Las Vegas.¹ In accordance with NRS 277.080–.180, the four members agreed to form the CWC based on their “common environmental, economic and regulatory interest in the efficient and responsible collection, treatment, reuse and discharge of municipal [e]ffluent.” ² The agreement lists the CWC's conferred functions, the first of which is to implement the Systems Conveyance and Operations Program (SCOP), which involves planning, designing, financing, constructing, operating, and maintaining a regional system to convey effluent from existing and future wastewater treatment facilities to its ultimate outfall location in the Colorado River system. The interlocal agreement recognizes that the SCOP may include physical facilities such as pipelines and real and personal property, including leases of such property, permits, and licenses. Other CWC functions include managing effluent flowing through CWC facilities and contracting to sell or lease power produced from energy recovery facilities that might be constructed.

The CWC's powers include, among others, preparing, reviewing, approving, and implementing regional water quality plans; adopting and amending operating and capital improvement plans and budgets; financing facilities that may be needed to carry out its conferred functions, including funding all aspects of the SCOP; assessing members for their agreed share of administration, operation, maintenance, and capital costs; and establishing and adjusting regional sewer connection and user fees to defray CWC costs. Each of the CWC's members collected sewer connection and usage fees from households and businesses, including The M Resort and other cross-appellants, in their respective localities, and then paid the CWC with the funds from the collected fees, in part to finance the building of the SCOP. The CWC had been collecting the fees since approximately November 2002,³ but by October 2010, it stopped collecting. It is unclear whether the SCOP project has been put on hold indefinitely or terminated altogether.⁴

[255 P.3d 252]

Litigation over A.B. 6, section 18

A.B. 6 was adopted and approved as part of the Legislature's effort to balance the state's budget during its 2010 special session. Section 18 of that bill requires the Clean Water Coalition, an entity created pursuant to interlocal agreement by the Clark County Water Reclamation District and the Cities of Henderson, Las Vegas, and North Las Vegas, to “transfer to the State of Nevada securities and cash which together total $62,000,000, for deposit in the State General Fund for unrestricted State General Fund use.” In adopting A.B. 6, section 18(1), the Legislature found and declared that:

(a) The transfer of money from the Clean Water Coalition to the State General Fund is necessary to ensure that the government of this State is able to continue to operate effectively and to serve the residents, businesses and governmental entities of this State;

(b) The transfer of money from the Clean Water Coalition to the State General Fund will promote the general welfare of this State; and

(c) A general law cannot be made applicable to the provisions of [Section 18] because of special circumstances.

Section 18 became effective on March 12, 2010, and that same day, the CWC filed a district court complaint against the State seeking declaratory and injunctive relief, challenging section 18's constitutionality on numerous grounds, including that it violated Nevada Constitution Article 4, Section 20, prohibiting local and special laws for the assessment and collection of taxes, and Article 4, Section 21, prohibiting local and special laws where a general law can be made applicable.⁵ The M Resort also filed a district court complaint against the State and the CWC, seeking injunctive and declaratory relief and damages, also based on allegations that section 18 is not constitutionally permissible legislation.⁶ The two actions were consolidated, and the parties stipulated to other businesses (cross-appellants in this matter) intervening in the actions. The State answered the complaints and filed a counterclaim against the CWC, seeking a declaration that section 18 is constitutional and an order compelling the CWC to transfer the $62 million to the State's general fund, as mandated under the bill.

Subsequently, on cross-motions for summary judgment, the district court entered an order declaring A.B. 6, section 18 constitutional. The court made eight conclusions of law, all but one of which would support a determination that section 18 is unconstitutional as a tax upon only certain Clark County residents and businesses, or as a local or special law where a general law could have applied. Nonetheless, the court upheld the bill section because it could not conclude without a reasonable doubt that section 18 plainly conflicted with the Nevada Constitution, given its ultimate determination that “each political subdivision remains subject to the overriding sovereign control of statutes enacted by the Legislature.” The court certified its judgment as final under NRCP 54(b) and, pursuant to the parties' stipulation, stayed enforcement of the judgment pending appeal. This appeal and cross-appeal followed.⁷

[255 P.3d 253]

DISCUSSION

The CWC and The M Resort and other Clark County business cross-appellants (hereinafter The M Resort) challenge A.B. 6, section 18 on two grounds: that it impermissibly converts funds assessed as user fees and exacted on a local basis into a...