MINUTES OF THE ASSEMBLY COMMITTEE ON GOVERNMENT AFFAIRS Sixty-eighth Session June 1, 1995 The Committee on Government Affairs was called to order at 8:00 a.m., on Thursday, June 1, 1995, Chairman Joan A. Lambert presiding in Room 330 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Douglas A. Bache, Chairman Mrs. Joan A. Lambert, Chairman Mrs. Deanna Braunlin, Vice Chairman Mr. P.M. Roy Neighbors, Vice Chairman Mr. Max Bennett Mrs. Marcia de Braga Mr. Pete Ernaut Mrs. Vivian L. Freeman Mr. William Z. (Bill) Harrington Mr. Dennis Nolan Mrs. Gene Wines Segerblom Ms. Patricia A. Tripple Mr. Wendell P. Williams COMMITTEE MEMBERS EXCUSED: Ms. Saundra (Sandi) Krenzer STAFF MEMBERS PRESENT: Ms. Denice Miller, Senior Research Analyst OTHERS PRESENT: Mr. Michael Mackedon; Mr. Steven King; Mr. R. Michael Turnipseed, State Engineer, State of Nevada; Ms. Susan Joseph-Taylor, Deputy Attorney General, State of Nevada; Judge David Gamble, District Court Judge, Douglas County; Judge Michael Fondi, District Court Judge, Carson City; Mr. Gordon De Paoli, Sierra Pacific Power Company; Mr. C. Joseph Guild,III, Santa Fe Pacific Gold Mining Corporation; Mr. Norman Harry, Chairman, Pyramid Lake Paiute Tribe of Indians; Mr. Doug Busselman, Executive Vice President, Nevada Farm Bureau; Mr. Tom Tatro, Administrator, Purchasing Division, Department of Administration, State of Nevada; Ms. Thelma Clark, Liquid Petroleum Gas Board; Mr. Kenneth A. West, Chief Deputy Controller, State of Nevada; Ms. Margi A. Grein, Nevada State Contractors Board (See also Exhibit B attached hereto). ASSEMBLY BILL NO. 398 - Provides district courts with jurisdiction over actions relating to disputes involving title or ownership of water rights. Assemblyman Marcia de Braga, District No. 35, left her chair in the committee and testified from the witness table. She provided a written analysis of A.B. 398 (Exhibit C) and proposed amendments to A.B. 398 (Exhibit D). She advised, as it was proposed it be amended, A.B. 398 would make changes to Chapters 533 and 534 of NRS which would require an action related to a dispute about title to or ownership of a water right be commenced in the district court of the county in which the water was applied to beneficial use or was diverted from its natural course. She advised, in such an action, a water right would be treated as real property. Chairman Lambert pointed out the reference to "NRS 30.010 to 30.160" constituted the main change in the language of A.B. 398, as it was proposed it be amended, from the language of the first reprint of A.B. 398. Mr. Michael Mackedon testified. In response to Chairman Lambert's comment, Mr. Mackedon advised the reference to NRS 30.010 to 30.160 corrected a clerical error in A.B. 398. He advised the proposed amendments to A.B. 398 (Exhibit D) would make a more substantive change, which was to change "may" to "must," thereby requiring an action involving title to or ownership of a water right to be commenced in district court. Mr. Mackedon referred the committee to the analysis of A.B. 398 (Exhibit C) and indicated he would be happy to answer any questions. Chairman Lambert asked Mr. Mackedon to testify as to the reason A.B. 398 was requested, what difference it would make in Nevada's water law, who would benefit from it and who might be harmed by it. Mr. Mackedon stated he believed A.B. 398 to be neutral in terms of possible harm. He said Nevada's courts treated water rights as property rights and, based on recent decisions of Nevada's supreme court, it appeared Nevada's courts would determine actions involving disputes about ownership of a vested water right and about extinguishment of a vested water right should be brought in district court. He advised, "In a sense, the bill only clarifies what we believe to be the decisional law in place." He maintained the purpose of such clarification was to eliminate any doubt or dispute about where an action concerning extinguishment of water rights should be commenced and about the rules which should apply to such an action. He contended those rules should be similar to the rules which applied to an action concerning extinguishment of any other property right. He suggested A.B. 398 would neither increase nor diminish the responsibilities or the jurisdiction of the State Engineer. Assemblyman Freeman asked whether A.B. 398 would affect the negotiated settlement concerning water from the Truckee River and whether it was "...involved in any way with the federal courts as related to water in Nevada." Mr. Mackedon replied he did not believe A.B. 398 would in any way affect the negotiated settlement. He explained A.B. 398 concerned disputes between private parties about vested rights. He said A.B. 398 would affect a federal court only in the sense A.B. 398 would clarify, in statute, the position of Nevada's courts with respect to disputes about water rights. Mrs. Freeman asked what practical difference that would make. Mr. Mackedon responded the practical significance was the elimination of any confusion over how actions dealing with disputes about water rights were to be treated. Mrs. Freeman asked whether there had been such confusion. Mr. Mackedon replied there had and said A.B. 398 would eliminate the possibility of a party filing a plenary petition in which he merely claimed certain water rights were invalid. Assemblyman Bennett asked whether A.B. 398 applied to both surface water and subsurface water. Mr. Mackedon replied it would affect all water. Assemblyman Harrington asked whether, currently, disputes over water rights were decided by the State Engineer. Mr. Mackedon said it was his opinion disputes over water rights should be decided in court and stated A.B. 398 would require that they be. Mr. Harrington indicated he would prefer parties who were engaged in a dispute about water rights first seek arbitration or go to the State Engineer before commencing a court action. Mr. Mackedon responded a water right constituted a property right and questioned whether an action to challenge or to extinguish such a right should be brought in any manner other than by a complaint (filed in a court of law). He contended passing A.B. 398 probably would reduce the number of disputes over water rights. Assemblyman Harrington commented, at the present time, anyone who wished to file a claim in a court of law could do so and suggested A.B. 398 would force people to do so rather than to pursue "...lesser means." Mr. Mackedon responded the appropriate and the only viable process through which a property right could be extinguished was "...some sort of actual case or controversy..." and said A.B. 398 clarified that fact. Mr. Steven King testified. He maintained, at the present time, in many cases, the State Engineer's office advised the parties to a dispute over water rights the State Engineer's office could not resolve their dispute and they should address their dispute in a court of law. He stated the fact NRS was silent as to how such disputes should be resolved enabled parties to file "...ad hoc type petitions or applications just to have general protest to real property rights that are already vested, already in place..." He advised A.B. 398 merely would codify what he believed the existing law to be, to-wit that a party or parties who had standing to allege a controversy involving real property should do so by filing a complaint in a court of law. He contended A.B. 398 was neutral with respect to causing anyone harm and would prevent litigation rather than increase it. Mr. Harrington opined the party able to obtain the best legal advice tended to prevail in a court of law and suggested A.B. 398 would create a potential legal nightmare. Mr. Mackedon responded, in his estimation, the nightmare was created when an actual complaint was not filed. He asserted a complaint had value in that it articulated a party's claim and his standing to make that claim and by doing so provided the holder of a property right with knowledge of the position against which he must defend. Assemblyman Segerblom asked whether the proposed amendment to A.B. 398 (Exhibit D) would constitute the bill in its entirety. Mr. Mackedon replied it would. Assemblyman Tripple asked Mrs. de Braga how many disputes about title to water rights there were in a year. Mrs. de Braga replied she did not have such statistics but advised, in the area in which she lived, water rights were constantly being challenged. Mrs. de Braga explained applications for water rights properly were considered by the State Engineer and pointed out A.B. 398 pertained to those situations in which ownership of a water right was being challenged. She said, at the present time, in Churchill County, there were 2,300 cases in which ownership of water rights was being challenged. Chairman Lambert asked whether the intent behind A.B. 398 was to have issues about title to water rights decided by a state district court rather than by a federal court or, rather, that the State Engineer not have the ability to declare a forfeiture of water rights. Mr. Mackedon replied, "We have no quarrel with the State Engineer...We think it's good legislation." Chairman Lambert posed a hypothetical situation in which she owned a water right and Mr. Mackedon alleged she had not used "...the corner of it..." for eight years. She asked Mr. Mackedon to explain the difference between what he would do in that hypothetical situation under current law and what he would do under the provisions of A.B. 398. Mr. Mackedon replied he believed, pursuant to decisions of Nevada's courts, if he was challenging a vested right of Chairman Lambert, it would be incumbent upon him to proceed in court, however, NRS 533 and 534 were silent on that point and the purpose of A.B. 398 was to make that point clear in NRS. Chairman Lambert asked what option there was to proceeding in court. Mr. Mackedon replied the other option was to seek forfeiture of such a vested right through the State Engineer's office but indicated he did not believe that to be a valid option. Chairman Lambert observed, if one was dissatisfied with the State Engineer's decision, one had the right to appeal to the court. Mr. Mackedon reiterated he believed, under current law, an action such as that being discussed must be commenced in a court of law. Chairman Lambert posed a hypothetical situation in which Mr. Bache contended an individual had not exercised his water right for a period of six years. She asked whether (under A.B. 398) Mr. Bache would commence a forfeiture procedure in district court rather than in the State Engineer's office. Mr. Mackedon responded affirmatively. Mrs. de Braga interjected the burden would be upon Mr. Bache to prove his case and he should do so in a court of law. Mr. Bennett asked whether an individual who owned a water right would be required to go to court in order to sell his water right. Mr. Mackedon responded sale of a water right involved only the buyer, the seller and the State Engineer and A.B. 398 would have no bearing on such a sale. Mr. Steven D. King testified. He said only that he agreed with Mr. Mackedon's testimony. Mr. R. Michael Turnipseed, State Engineer, State of Nevada, testified. He said he wished to explain "...the driving force behind this bill." He advised the "Alpine decree" was rendered in 1980 and the opinion attached to that decree said individual water rights within the Truckee-Carson Irrigation District belonged to "...the individual farmers..." He said the decree neither named the individual farmers nor specified how much water rights those individual farmers owned. He stated, in 1984, the farmers began to file "...change applications to correct their places of use..." He indicated the original hearing on those applications involved approximately 25 applications and the decision on those applications was appealed. He advised, between 1985 and 1992, an additional 190 such applications were filed and he ruled on those applications. He said his decisions on those applications were also appealed but "...were held in abeyance to see what happened to this original 25." He said, approximately one month earlier, a federal court judge remanded those cases to him for further findings regarding abandonment, forfeiture or lack of perfection (of water rights). He stated, "So that's the driving force behind this bill. If it were simply ownership...I don't need to be involved in that, in fact, it would get me out of the title business." Mr. Turnipseed advised the federal court judge held the State Engineer was the proper finder of fact with respect to issues of perfection, abandonment or forfeiture (of water rights). He contended, if actions pertaining to those issues were required to be filed in a court, he would be made a party to any such action because it would be necessary to use his records. He said the proponents of A.B. 398 maintained its provisions were limited to vested water rights but A.B. 398 did not so state. Mr. Turnipseed described NRS 533.090 through 533.320 as the adjudication statutes. He declared one purpose of adjudication was to determine who owned pre-statutory water rights. He contended many vested water rights in rural portions of Nevada had never been adjudicated. He explained the adjudication process. He indicated that process began as an administrative process and resulted in an order of determination which was filed with the court. Mr. Turnipseed referred to Ms. Tripple's question of how many disputes over title to water rights there were in a year and said he had held hearings on 215 which involved transfer applications. He advised, in addition to those, the Pyramid Lake Indian Tribe had challenged 2,200 water rights. Chairman Lambert asked whether A.B. 398 would remove federal courts from the appeal process. Mr. Turnipseed replied affirmatively. Chairman Lambert asked, "Even with a federal court decree?" Mr. Turnipseed replied federal courts retained jurisdiction over the Alpine decree and the Truckee River decree. Chairman Lambert asked whether A.B. 398 would require actions pertaining to disputes over water rights to be commenced in state court rather than in federal court. Mr. Turnipseed replied affirmatively. Chairman Lambert asked whether, as a state, Nevada had the ability to establish such a requirement. Mr. Turnipseed said he did not think Nevada had that ability, however, it might. Ms. Susan Joseph-Taylor, Deputy Attorney General, State of Nevada, testified. She said, while she believed the intent of A.B. 398 was merely to reassert that issues of forfeiture, abandonment and perfection of water rights were governed by state law, the Attorney General believed A.B. 398 had the potential to substantially increase the Attorney General's caseload. She suggested someone whose water right had been declared forfeited by the State Engineer twenty years previously could attempt to argue A.B. 398 allowed him the opportunity to challenge the State Engineer's decision in district court. She indicated such a challenge would require a trial de novo and contended such court actions could increase the case loads of both the State Engineer and the Attorney General. She provided another example of the manner in which A.B. 398 might increase the workload of the Attorney General's office and, also, that of the district courts. Ms. Joseph-Taylor suggested it was not only the number of court cases which would increase those workloads but, also, the scope of those cases. She pointed out, in order to cope with such an increased workload, the Attorney General would require more deputies, more support staff, more equipment, more supplies, and more travel time. Ms. Joseph-Taylor advised the Attorney General was neutral with respect to the intent of A.B. 398 but asked the committee to consider both the impact of A.B. 398 on the Attorney General's office and its financial impact. Assemblyman de Braga asked whether Ms. Joseph-Taylor was providing the committee with a "...worst case scenario." Ms. Joseph-Taylor replied she was not necessarily doing so. She advised, at the present time, there were those who attempted to bring lawsuits which were outside the context of the statutory limits for appellate review. She explained the Attorney General had to defend against those lawsuits by bringing motions to dismiss them on the ground they were not contemplated under Nevada's water law. She indicated Mrs. de Braga was familiar with the 2,300 cases in her area and pointed out the State Engineer had testified he believed he would be made a party to those lawsuits and would require legal representation. Lengthy discussions were held between Mrs. de Braga and Ms. Joseph-Taylor. Mrs. de Braga asserted, no matter what was entailed, people were entitled to receive the protection they deserved, and she contended not a great many people would invest the money required to pursue an action in a court of law. She asserted it was not known whether A.B. 398 would increase the Attorney General's caseload. Mrs. Freeman asked Mr. Turnipseed how A.B. 398 would affect his office with respect to its ability to provide records needed to resolve court actions. Mr. Turnipseed replied he did not know whether A.B. 398 would either enhance or detract from his ability to maintain records. He advised his office monitored more than 30 ground water basins to determine water pumpage and maintained records of the amount of ground water pumped each year but it maintained few records regarding use of surface water. He indicated his office also kept records concerning ownership of water rights and other matters. He stated the records maintained by his office were being used in 73 forfeiture actions in Mr. Neighbors' district. Judge David Gamble, District Court Judge, Douglas County, testified. He advised both he and Judge Michael Fondi of Carson City's district court were present to represent the District Judges' Association. He said the District Judges' Association was neither in favor of nor opposed to A.B. 398 but did have some concerns about the bill. He said, currently, he heard many cases concerned with disputes regarding ownership of water rights and indicated issues regarding title to water rights and appurtenance of water rights were presented to him frequently. Judge Gamble contended it was clear a person who had a valid dispute about ownership of an existing water right could bring his dispute to district court. He suggested A.B. 398 dealt with a different situation. He advised, under A.B. 398, if an individual believed an owner of a water right had abandoned or forfeited that water right through nonuse, that individual could bring an action in district court to have that water right declared forfeited. He indicated his concern was whether such an individual had standing to bring such an action. He explained, in order to obtain standing to come before a district court, such an individual would first have to file an application, with the State Engineer, to assume the water right in the event it was forfeited. He advised, thereafter, when such an individual brought an action in district court, the issue presented to the court was one which the State Engineer and his staff had been trained to investigate and to decide. He pointed out the entire statutory scheme for investigation of water rights involved the State Engineer and said, "Our whole system is set up so that findings of fact can be made by him which will have a relatively consistent effect across the state." He advised any decision the State Engineer made with respect to ownership of water rights was subject to appeal to district court. Judge Gamble declared, at the present time, it was almost a certainty he would remand any case concerning a claim of forfeiture of water rights which came before him to the State Engineer for the purpose of having the State Engineer make findings of fact because "...his hearing system is set up to do it." He stated, "Then, it would seem more appropriate to me, that we would do a judicial review examination of it afterwards to make certain that he hasn't made some gross error." He advised the process he had described would provide consistency throughout the state. He pointed out, within the past two years, inconsistent decisions were made by two district courts about the same water right. Judge Gamble asserted the District Judges' Association believed most of what A.B. 398 sought to accomplish already existed but, with respect to issues such as forfeiture of water rights, which the State Engineer was specifically equipped to decide, the initial jurisdiction to make decisions concerning those rights should remain with the State Engineer and, thereafter, the district court could review those decisions. Mrs. Freeman asked how the legislature could guard against different district court judges rendering disparate decisions about the same water right. Judge Gamble replied such disparate decisions could not be entirely prevented but could be significantly reduced by having the initial review of and decision about water rights made by the same entity. Assemblyman Bache asked whether the law contained any ambiguity about an individual's ability to appeal a decision made by the State Engineer concerning water rights to district court. Judge Gamble replied there was not. He advised, although there were those who would like the court's review on appeal to consist of a trial de novo, under the current system, the court could not reexamine the facts but could only determine whether the State Engineer either made a decision which was obviously in error or made a mistake in applying the law. Chairman Lambert asked whether, if A.B. 398 became law and actions involving water rights were filed directly in Judge Gamble's court, Judge Gamble would remand those cases to the State Engineer for the purpose of making findings of fact. Judge Gamble replied he would do so with respect to some of those cases. He advised, at the present time, some such actions were filed directly in district court, however, inserting the word "must" in A.B. 398 would require those actions to be filed in district court and he would remand some of those actions to the State Engineer. Chairman Lambert commented (based on Judge Gamble's testimony) A.B. 398 would not necessarily preclude having to present a case concerning water rights in two different places. She pointed out Mrs. de Braga testified it was costly to have to appear both before the State Engineer and before the District Court and said, "...in those cases, you would still have to go to both." Judge Gamble indicated Chairman Lambert's comments were correct but suggested the cost of the review process in district court, in which the court reviewed decisions rendered by the State Engineer, was relatively small. Judge Michael Fondi, District Court Judge, Carson City, testified. He advised cases concerning water rights were not the only cases heard in district court and explained, under the law, many cases took priority over cases concerning water rights. He indicated, therefore, an individual who brought an action concerning water rights in district court was not likely to have his matter adjudicated as quickly as he would had he brought his action before the State Engineer. Judge Gamble indicated some concerns had been raised regarding the extent of the findings made by the State Engineer but suggested that small concern should not be addressed by the "...big change..." which A.B. 398 would create. He contended small problems in the current process could be corrected without avoiding the State Engineer entirely. Mrs. de Braga commented, because the State Engineer's office was seriously under funded, applications required to be acted upon by his office within one year might not be acted upon for up to five years. She asked whether disputes about water rights brought before the State Engineer were acted upon more quickly than were the applications to which she referred. Judge Gamble replied he did not know. Mr. Turnipseed gave further testimony for the purpose of answering Mrs. de Braga's last question. He said, as of the time of his last quarterly report to the Interim Finance Committee, there were approximately 4,300 applications ready for action by his office and 1,700 of those applications were protested. He advised it was unlikely action would be taken on protested applications until a decision was made as to who was the proper finder of fact with respect to issues of abandonment, forfeiture and perfection of water rights. Mrs. de Braga asked whether, if two parties were in dispute as to whether or not one of those parties had forfeited certain water rights, the State Engineer would hold a hearing on that dispute more quickly than he would hold a hearing on an application. Mr. Turnipseed replied affirmatively. Mr. Gordon De Paoli, Sierra Pacific Power Company, testified. He advised he also represented a few farmers in connection with petitions, filed in federal court, concerning forfeiture and abandonment of certain water rights. He contended there was a distinction between issues pertaining to title to or ownership of a water right and issues concerning forfeiture or abandonment of a water right. He advised, in Nevada, water was owned by the public and individuals obtained the right to use water subject to applicable state laws. He pointed out, in some cases, state law imposed the condition that the individual who possessed a water right not discontinue use of the water to which he was entitled under that right for a period of five consecutive years and, in other cases, imposed the condition such an individual not abandon his water right by not using the water with the intent never to use it again. He maintained a distinction should be drawn between a contention that the holder of a water right failed to satisfy those conditions and a dispute, between private parties, over ownership of a water right. He suggested disputes over ownership of a water right, routinely, were handled by district courts. He indicated issues of forfeiture and abandonment raised in "...change application context..." were determined by the State Engineer, whose rulings were subject to judicial review in district court and, ultimately, in the state supreme court. Mr. De Paoli stated he had no concern about A.B. 398 if it was intended to deal solely with issues concerning ownership of and title to water rights. He maintained, however, if it was intended also to deal with issues of forfeiture and abandonment of water rights, it would create problems and he was concerned about the effect it would have on those matters currently before the federal court. He expressed concern about the costs and expenses which would be incurred by those required to defend (in court) against allegations of forfeiture or abandonment of water rights. Mr. De Paoli discussed what he feared would be the effect on cases presently pending before the federal court if a bill was passed which required issues of forfeiture or abandonment of water rights to be tried in state district courts. Mrs. de Braga pointed out the language of A.B. 398 stated it applied to matters involving title to or ownership of a water right and asked whether Mr. de Paoli believed that language would extend the application of A.B. 398 to issues of forfeiture of water rights. Mr. De Paoli replied, prior to hearing the testimony given before the committee, he believed A.B. 398 pertained only to title and ownership. He said, however, it appeared other people interpreted A.B. 398 to apply to issues of abandonment and forfeiture also. Mrs. de Braga asked whether Mr. De Paoli believed the language of A.B. 398 was sufficiently broad that a district court judge might extend its provisions to issues of forfeiture and abandonment of water rights. Mr. De Paoli replied some individuals would argue its provisions should be so extended and suggested the intent of A.B. 398 should be made clear. Chairman Lambert said it was unclear to her how A.B. 398 would prevent the filing of what Mr. Mackedon referred to as "plenary petitions." Mr. De Paoli responded, if the language "title or ownership" was interpreted to include "forfeiture" and "abandonment," and if, under A.B. 398, proceedings regarding those matters were required to be brought in district court, he was not certain it would prevent "...those 2,300 petitions from proceeding in federal court..." He reiterated his concern about the effect of A.B. 398 on cases presently pending before the federal court. Chairman Lambert described a situation in which "...60 acre feet of water on the Truckee were sold to a utility and the person that bought the land thought the 60 acre feet were still with the land, the State Engineer said `Go to court.'" She asked whether, in an instance such as she had described, A.B. 398 would require the parties to take their dispute to court rather than to the State Engineer but "...anything else would get a little more complicated?" Mr. de Paoli replied affirmatively. Mr. Harrington asked whether, if the federal court (in the cases pending before it) appointed a special master to determine water rights and that special master disagreed with the determination previously made by the State Engineer, whose determination would take precedence. Mr. De Paoli replied, technically, state law would control and, at such point as there was a clear statement of Nevada's state law, the federal courts would be bound to follow that law "...in the context of these federal court decrees where a state law issue is involved." Mr. C. Joseph Guild, III, Santa Fe Pacific Gold Mining Corporation, testified. He referred to the first reprint of A.B. 398 and to the proposed amendment thereto (Exhibit D) and stated he understood their intent was to deal with existing water rights. He said, however, he interpreted the language of A.B. 398 and of the proposed amendment thereto (Exhibit D) to mean, if an application for a permit to establish a water right was granted by the State Engineer and the permit was protested, the protester had standing to take his protest before the district court. He contended the language of A.B. 398 and of the proposed amendment thereto (Exhibit D) was too broad to accomplish the purposes A.B. 398 was intended to accomplish. Mr. Norman Harry, Chairman, Pyramid Lake Paiute Tribe of Indians (hereinafter referred to as the Tribe), testified by reading from prepared text (Exhibit E.). He advised the Tribe opposed A.B. 398. He contended A.B. 398 was aimed at lawsuits the Tribe had brought which challenged the existence of water rights for approximately 15,000 acres of land within the Newlands Reclamation Project. He provided some background on the Tribe's lawsuits and advised those actions were presently pending in federal court. He declared A.B. 398 appeared to be an attempt to strengthen the position of those whose water rights were being challenged by the Tribe by causing issues concerning those rights to be tried in state court rather than in federal court. He suggested, if that was not its purpose, A.B. 398 should be amended to state it did not apply to water rights established by or recognized under federal court decrees. He indicated, if A.B. 398 were so amended, the tribe would no longer oppose it. Mr. Harry stated the Tribe viewed A.B. 398 as an unwarranted intervention, by the state of Nevada, in an existing dispute between the Tribe and Newlands Reclamation Project farmers. He asserted, if passed in its present form, A.B. 398 would jeopardize the Tribe's newly established relationship with the state of Nevada and, possibly, its relationship with other entities as well. Mrs. Freeman commented Mr. De Paoli testified he believed the decision of the 9th circuit court was incorrect. She asked whether Mr. Harry could clarify what that decision was. Mr. De Paoli replied he did not have a clear understanding of that decision. Mrs. Segerblom asked whether it was true the dispute between the Tribe and the Newlands Reclamation Project farmers was pending before the federal court. Mr. Harry replied affirmatively. Mrs. Segerblom asked whether Mr. Harry believed A.B. 398 would obstruct that court action. Mr. Harry replied the Tribe believed "...giving (that) back to the local districts is like...the fox guarding the hen house." He suggested the federal court would deal with the dispute impartially but, if A.B. 398 was passed, the dispute would not be dealt with impartially. Mrs. de Braga asked whether Mr. Harry believed the language of A.B. 398 which referred to title and ownership could easily be extended to include cases regarding forfeiture and abandonment. Mr. Harry reiterated the Tribe would have no objection to A.B. 398 if it was amended to state it did not apply to federally recognized water rights. Mrs. de Braga observed, if A.B. 398 would do what Mr. Harry suggested it would do and, if courts were biased in favor of their own jurisdiction, then A.B. 398 would be of great benefit to the Fallon Paiute-Shoshone Tribe. She asked Mr. Harry whether her observation was correct. Mr. Harry replied he did not know. Mr. Harry asked who drafted A.B. 398. Mrs. de Braga advised him it was drafted by Mr. Steven King and Mr. Michael Mackedon. Mr. Harry asked whether Mr. King and Mr. Mackedon were residents of Churchill County. Mrs. de Braga replied they were. Mr. Doug Busselman, Executive Vice President, Nevada Farm Bureau, testified. He said there was an ongoing problem involving the fact farmers and ranchers continuously received notices of court actions pertaining to challenges of their water rights. He contended the intent of A.B. 398 was to attempt to resolve "...through some process, a problem." He stated he did not know either what the problem was or what the solution to the problem was but he believed the committee needed to identify the problem and the problem should then be addressed by the legislature. Mr. Busselman advised the Nevada Farm Bureau believed the State Engineer was the appropriate entity to deal with allocation of water rights and with forfeiture proceedings. Chairman Lambert closed the hearing on A.B. 398. SENATE BILL NO. 190 - Requires establishment of program for rental by state agencies of equipment and property from other agencies. Mr. Tom Tatro, Administrator, Purchasing Division, Department of Administration, State of Nevada, testified. He explained S.B. 190 instructed the Purchasing Division to establish a rental program through which state agencies could rent equipment to one another without the necessity of establishing interlocal agreements to permit them to borrow equipment from one another. He said the purpose of establishing such a program was to maximize utilization of equipment purchased by state agencies. He advised the program would be voluntary and any agency which did not choose to utilize the program would not be required to do so. Mr. Bennett asked if such a rental program would save money for the state. Mr. Tatro replied it had the potential to do so. Mr. Bennett asked why the program would be voluntary rather than mandatory if it had the potential to save money for the state. Mr. Tatro suggested some state agencies might have opposed such a program if it was mandatory. Ms. Tripple referred to the language in line 16 of S.B. 190 which discussed establishing a schedule of fees for rental of equipment and property and asked whether an agency which rented equipment to another agency could use the fees it received from such rental for any expenditure it wished. Mr. Tatro replied he did not believe the agency could do so. He said, although he was not certain, he believed the revenue an agency received from renting equipment or property would be required to be used to offset that agency's operating expenses. Ms. Tripple asked, "So you call this an operating expense on both sides, both from the person who's renting the machine and the one who rents the machine." Mr. Tatro replied affirmatively. He said, with respect to an agency who rented equipment from another agency, the situation would be the same as if it had rented the equipment from a private company. He advised, with respect to the agency which provided the equipment for rental, it was envisioned the money it received for renting that equipment would be treated as a reimbursement for operating expenses and could be used to offset the costs the agency incurred by virtue of owning the equipment. Ms. Tripple suggested there should be an incentive for state agencies to rent equipment from other state agencies. Mr. Tatro responded the incentive was that agencies could share the cost of owning equipment. Ms. Thelma Clark, Liquid Petroleum Gas Board, testified. She indicated she wished to know whether S.B. 190 would affect the Liquid Petroleum Gas Board and, if so, would the board be required to rent equipment it used to other agencies or only to list (as available to be rented) equipment it did not use. Mr. Tatro gave further testimony in response to Ms. Clark's question. He advised S.B. 190 would permit a state agency to make equipment it owned available to other state agencies upon a daily rental basis. He cited, as an example, a situation in which a state agency which needed a backhoe for only one day could rent one from another state agency which owned one. Ms. Clark asked whether the provisions of S.B. 190 applied to office equipment. Mr. Tatro replied he did not believe it was intended to apply to office equipment although office equipment would not be statutorily excluded from the rental program. He reiterated no state agency would be required to rent its equipment to another state agency. Mr. Tatro explained, in its annual inventory, a state agency would designate those items which it was willing to rent to other agencies and, if it did not wish to rent any of its equipment to other state agencies, it would not designate any of its equipment as being subject to the rental program. He advised a state agency's use of the rental program to rent equipment from another state agency would also be voluntary. Ms. Clark pointed out line 8 of S.B. 190 contained the language "...division shall..." Mr. Tatro explained the language to which Ms. Clark referred required the Purchasing Division to establish and administer a program through which state agencies might rent equipment from one another. He pointed out the only mandate contained in S.B. 190 was that directing the Purchasing Division to establish the program and reiterated an agency's use of that program was entirely optional. Chairman Lambert suggested Ms. Clark confer with Mr. Tatro, after the hearing on S.B. 190 was concluded, regarding the effects of S.B. 190 upon the Liquid Petroleum Gas Board. Assemblyman Nolan suggested it might not be more appropriate for state agencies to lend equipment to one another rather than to rent it to one another. Mr. Tatro responded, "The rental amounts will be established with the involvement of each of the agencies." He indicated, at the present time, if a state agency was aware another state agency had a piece of equipment it needed, it might ask to borrow that equipment but, if it was not aware another state agency had the equipment it needed, it would rent that equipment from a private company. He said the intent of S.B. 190 was to establish a list of equipment available to state agencies from state agencies. He advised some state agencies were hesitant to share their equipment because of potential liability and because of concern about damage to their equipment. He suggested S.B. 190 would provide some protection for agencies who allowed other agencies to use their equipment and would allow them to recover any costs they incurred by doing so. He contended the rental program would not preclude state agencies from loaning their equipment to other state agencies. Mr. Nolan said he understood the need to offset costs incurred by loaning equipment but suggested, to the extent an agency received money from another agency in excess of such costs, the effect was merely "...shifting money from one pocket to another..." Mr. Tatro responded each state agency had a limited amount of money available for its use and guarded that money closely. He pointed out S.B. 190 would preclude the need to establish an interlocal agreement each time a state agency shared its equipment with another state agency. Mr. Harrington asked which agency would be responsible for a piece of rented equipment which was damaged or destroyed. Mr. Tatro indicated that question had not been resolved but it was anticipated the user would be responsible for repairing damaged equipment. Mrs. Freeman asked whether an agency would recover the cost of damage to its equipment through its rental fees or through insurance on the equipment. Mr. Tatro replied the costs incurred by operating the equipment would be recovered through rental fees. Mr. Bennett declared he foresaw great savings for the state through the provisions of S.B. 190. He contended, with respect to heavy equipment, such as construction equipment, depreciation could amount to hundreds of dollars per day and merely increasing the utilization of such equipment would save the state a great deal of money. He asked whether Mr. Tatro agreed. Mr. Tatro replied he did agree. Chairman Lambert closed the hearing on S.B. 190. At the direction of Chairman Lambert, a letter she received from Mr. Tatro regarding S.B. 190 is attached to these minutes as Exhibit F. SENATE BILL 370 - Eliminates certain provisions regarding disposition of money received by agencies, departments and institutions of state. Mr. Kenneth A. West, Chief Deputy Controller, State of Nevada, testified. He advised S.B. 370 dealt with receiving money and recording receipt of that money in the state's budget accounts. He said, at the present time, state agencies could not record money they received in their budget accounts unless they had been given authority to do so or had filed a budget plan which would permit them to do so. He explained, when a state agency received more monies than it had anticipated (in its budget plan), those monies were placed in a holding account where they remained until plans could be established for their use. He advised there was no concern about revenue deposits but, rather, there was concern about the spending of revenue, for which proper authority was required. He said S.B. 370 would allow agencies to deposit (excess) revenues in their budget accounts (rather than in the holding account) but would not give those agencies authority to spend those revenues. He advised, in order to spend those revenues, agencies would first have to go through the appropriate procedure to obtain authority to do so. He contended current procedures resulted in much unnecessary paperwork and "...the time profile of receipts or revenue have been contaminated..." Mr. West advised the "...budget department...fiscal and even the treasurer..." had input into the language of S.B. 370 and supported the bill. Assemblyman Neighbors said, "...so many times monies are collected to be distributed to the counties...and they're late coming and there's some big interest numbers there. Do you agree with that?" Mr. West replied S.B. 370 would not affect distribution of monies to counties. He explained the only thing being attempted through S.B. 370 was to streamline the process of depositing and recording receipts and revenues. Ms. Tripple referred to the language "...reverts to the source of funding supporting the agency...," on lines 16 and 17 of page 1 of S.B. 370, and asked what was meant by that language. Mr. West explained the intent was, if an agency transferred appropriated monies from one fund to another, any unused portion of those monies would revert to the general fund at the end of the year. Ms. Tripple asked whether those monies must revert as opposed to being held. Mr. West replied affirmatively. Ms. Margi A. Grein, Nevada State Contractors Board, testified. She referred to the fact subsection 1 of Section 1 of S.B. 370 eliminated statutory language which said nothing in that subsection would require an agency, department or institution of the state to deposit any monies in the state treasury which were not required by law to be so deposited. She said the Nevada State Contractors Board wished to be certain the elimination of that language would not affect the board. Chairman Lambert asked Mr. West to address the issue raised by Ms. Grein. Mr. West responded the state treasurer had caused the language to which Ms. Grein referred to be included in statute and now wished it removed. He advised the state treasurer wished those monies required to be deposited in the state treasury to be deposited on a timely basis but said he did not believe the Nevada State Contractors Board's monies were deposited with the treasurer. He indicated he believed the language to which Ms. Grein referred was to be removed because it was redundant. Chairman Lambert asked whether the Nevada State Contractors Board had a work program. Ms. Grein replied it did. Chairman Lambert asked how Ms. Grein interpreted S.B. 370 with respect to the board's work program account. Ms. Grein replied she was not certain what affect S.B. 370 would have. She advised, if subsection 4 of Section 1 of S.B. 370 was amended to include self-funded occupational licensing boards in the exemption provided by that subsection, she would have no concern about S.B. 370. Chairman Lambert closed the hearing on S.B. 370. There being no further business to come before the committee, Chairman Lambert adjourned the meeting at 10:20 a.m. RESPECTFULLY SUBMITTED: Sara Kaufman, Committee Secretary APPROVED BY: Assemblyman Douglas A. Bache, Chairman Assemblyman Joan A. Lambert, Chairman Assembly Committee on Government Affairs June 1, 1995 Page