Killebrew v. Donohue

• Court: Nevada Supreme Court
• Decided: September 28, 2023
• Docket: 83830
• Status: Published

Opinion

139 Nev., Advance Opinion

IN THE SUPREME COURT OF THE STATE OF NEVADA

ELEANOR F. KILLEBREW, TRUSTEE No. 83830 OF THE KILLEBREW REVOCABLE TRUST, 5TH ADM 1978; KWS NEVADA RESIDENTIAL LLC, A/K/A KERN SCHUMACHER, LLC; DEAN INGEMANSON, TRUSTEE OF THE LFI-MORGAN PERSONAL SEP 28 2023 RESIDENTIAL TRUST AND DEAN ELIAB TR A. aR INGEMANSON AS TRUSTEE OF THE OLER . OF.Y URT

BY INGEMANSON FAMILY TRUST; IEF DEPUT1CLERK

DENNIS AND KATHERINE HART, TRUSTEES OF THE HART TAHOE TRUST; TODD AND JANET LOWE, TRUSTEES OF THE LOWE PERSONAL RESIDENCE TRUST; PAUL INGEMANSON; FRED J. AMOROSO AND REGINA A. AMOROSO, TR USTEES OF THE AMOROSO FAMILY TRUST; AND SHOREZONE PROPERTY OWNERS ASSOCIATION, INC., D/B/A TAHOE LAKEFRONT OWNERS ASSOCIATION, Appellants, vs. STATE OF NEVADA, EX REL. CHARLES DONOHUE, STATE LAND REGISTRAR AND ADMINISTRATOR OF THE DIVISION OF STATE LANDS, Respondent.

Appeal from a district court order granting summary judgment in a declaratory relief action. Second judicial District Court, Washoe County; Barry L. Breslow, Judge. Affirmed.

SUPREME COURT OF NEVADA 3IY27 10) I 947A em Lewis Roca Rothgerber Christie LLP and Daniel F. PoIsenberg and Abraham G. Smith, Las Vegas; Snell & Wilmer and William E. Peterson, Reno, for Appellants.

Aaron D. Ford, Attorney General, and Daniel P. Nubel, Senior Deputy Attorney General, Carson City, for Respondent.

Legislative Counsel Bureau, Legal Division, and Kevin C. Powers, General Counsel, Carson City, for Amicus Curiae Legislative Commission of the State of Nevada.

BEFORI, THE SUPREME COURT, EN BANC.

OPINION

By the Court, LEE, J.: In this opinion, we are tasked with reviewing NAC 322.190, a regulation that sets permit fees for the residential use of piers and buoys on navigable waters in Nevada. In completing that task, we clarify the

standard of review for challenges to the validity of an agency's regulation und.er NRS 233B.110, which mandates that we review the regulation for violations of constitutional or statutory provisions or whether it exceeds the permissible scope of statutory authority. Because the regulation at issue does not violate any constitutional or statutory provision and does not exceed the statutory authority granted to the agency, we affirm the district court's grant of suminary judgment.

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I947A 2 FACTS AND P.ROCEDURAL HISTORY Appellants own property in Nevada along Lake , Talioe's shoreline and have piers or buoys on the lak.e. For a. fee, the State Land Registrar (the Registrar) issues permits for the use of piers and buoys on Lake Tahoe. The Registrar serves as the Administrator of the Division of State Lands of the State Department of Conservation and Natural Resources (the Division), and Lake Tahoe is administered by the Division. Prior to 2017, the Legislature statutorily set a uniform permi.t fee for piers and buoys in fOrmer NRS 322.120. See, e.g., 1.995. Nev. Stat., ch. 645, § 9, at 2511. In 2017, the Legislature amended NRS 322.120 to require the Registrar to establish th permit fee aniount by regulation rather than by statute. 2017 Nev. Stat., ch. 366, § 2, at 2256. In the preamble to the amended bill, the Legislature stated that Itjhis fee schedule has not been modified since 1995" and that ItPie fees charged under this fee schedule are less than the fair market value for the uSe of state land and, less than what other western states and. agencies charge for comparable uses." Icl. at 2256. In response to the amendniént, the Registrar promulgated NAC 322.195, which sets forth the fee schedule for pier and buoy permits. In creating the fee schedule, the Division took into consideration•the following five methodologies: (1) a historical review of the statutory.fee as establiSh.ed in 1993; (2) a comparative analysis of fees in other Western states (Arizona, California, Idaho, Washington, Oregon, and Utah); (3) an'evaluation of fees charged by marinas and other businesses in Nevada and adjacent states, such as Arizona and California; (4) an in-house evaluation method:to estimate the fair market value of the piers in the . Nevada side of Lake Tahoe; and (5) an independent appraisal. Additionally, the DiviSion

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(Or IN7A • 3 solicited comment and feedback from speci.fic stakeholders, including appellant Tahoe Lakefront Owners Association. The Division also provided individual notice to all perrnittees, posted notice at every Nevada library, advertised in newspapers, and held five public workshops. In response to comments, the Division reduced its proposed fee schedule and phased in fee increases over time. The Division ultimately set a uniform fee for the residential use of piers at $750 and buoys at $250 in the regulation, an increase to the previously set.fees of $50 for piers and $30 for buoys. The regulation was subsequently approved by the Legislative Commission, a legislative body that reviews agenCy regulations for legislative intent and statutory authority. in March 2020, appellants petitioned under NRS 233B.110 for a declaratory judgment that the fee-setting regulation Was invalid. The Division moved for surnraary judgment, claiming the regulation did not violate statutory or constitutional provisions and did ri lot exCeed the Division's statutory authority. After a hearing on the motion; t-he district. court granted summary judgment in the Division's . favor. This appeal follows. DISCUSSION -.Appellants argue the district court erred in granting- summary judgment because it (1) used the wrong standard of review for the regulation, and (2) erroneously concluded that the regulation.did not exceed or violate statutory authority. "A district court's decision to grant summary judgment is reviewed de novo." A Cab, ELC v. Murray, 137. Nev. 805, 813, 501 P.3d 961, 971 (2021). "Summary judgment is appropriate. . when the pleadings, depoSitions, answers to interrogatories, admissions, and affidavits, if any, that are properly before the court demonstrate-that -no

SUPREME COURT genuine issue of material fact exists, and the moving party is entitled to OF NEVADA

10) I947A 4 judgment as a matter of law." Wood v. Safeway, Inc., 121 Nev. 724, 731, 121 P.3d 1026, 1031 (2005). Standard for reviewing the validity-of a regulation Appellants first contend that the district court. applied the wrong legal standard when considering the' validity of the fee-setting regulation and insist the district court should have reviewed whether the regulation was "arbitrary and capricious." We take this opportunity to clarify the standard of review when assessing the validity of a regulation.' The standard• for reviewing the validity of a regulation is outlined in NRS 233B.110(1), which states that "[t]he court shall declare the regulation invalid if it finds that it violates constitutional or statutory provisions or exceeds the statutory authority .of the agency."2 (Emphasis

'Nothing in our discussion here should be conflated with. the standard of review of an agency's final decision. under NRS 233B.135, which includes arbitrary and capricious review. See NRS 233B.135(3)(f).. Because appellants did not petition for judicial review under that statute, our review is confined by the review mandates articulated in NRS 233B.,110.

2 In order to remain within the authority provided by statute,. an agency must articulate a basis or reason for the adopti.on of the challenged regulation that rationally relates to a reasonable interpretation of the agency's governing statutory authority. See NRS 233B.040(1)..("To the extent authorized by the statutes applicable to it, each agency may adopt reasonable regulations to aid it in carrying out the fun.ctions assigned to it by law . .. . [This] power . . . is limited by the terms of the grant of authority pursuant to which the function was assigned."); The Nev. Indep. v. Whitley, 138 Nev. 122, 126, 506 P.3d 1037, 1.042 (2022) (stating tha "regulations cannot contra.dict or conflict' with the statute they are intended to implement" (internal quotation marks. omitted)); 73 .c.J.S. .Public •

Administrative Law and Procedure § 2'75 (2014) (noting that • courts reviewing "whether a regulation that haS been proMulgated is consistent with the statutes" only defer when the agency's determination is CC reasonable and not arbitrary").. SUPREME COURT OF NEVADA

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41;2'7 add.ed.) "Where the language of a statute is plain and unambiguous, and its meaning clear and unmistakable, there- is no room for construction, and the courts are not permitted to search for its rneaning beyond the statute itself." State u. Jepsen, 46 Nev. 193, 196, 209 P. 501, 502 (1922). Based on the statute's plain language, arbitrary and capricious review is not contemplated. NRS 2338.110(1) is clear and unambiguous-- an agency regulation is reviewed for whether it violates statutory or constitutional provisions or whether it exceeds the agency's statutory authority. There is no room for us to read arbitrary and capricious review into the standard provided by statute. Despite the distinct lack of language in NRS 233B.110

authorizing arbitrary and capricious review, we acknowledge our caselaw .has incl.uded the words "arbitrary and capricious"• when discussing regulatory review, beginning with State, Division of Insurance v. 'State Farm Mutual Automobile Insurance Co. 116 Nev, 290,- 995 P.2d 482 (2000). There, we said "a court will not hesitate to declare•a. regulation invalid When the regulation Violates the constitution, conflicts with existing statutory provisions or exceeds the statutory authority of the agency or is otherwise arbitrary and capricious." Icl. at 293, 995 P.2d at 485 (ernphaSis added). We repeated this same standard in subsequent caselaw. • See Romano. v. Romano, 138 Nev. 1, 8, 501 P.3d 980, 985 (2022); Felton v. Douglas County, 134 Nev. 34, 38, 410. P.3d 991, 995 (2018); Meridian Gold Co. 0.. State ex rel. Dep't of Taxation, 119 Nev. 630, 635, 81 P.3d 516,.519 (2003). -

No analysis or discussion, however, was presented in State Farm to account for the addition of the "arbitrary and capricious. language. We further cited two cases that also do not contain language kor arbitrary and capricious review, see Clark Cty. Social Seri). Dep't-u: Yewkirk, 106 Nev.

6 177, 179, 789 P.2d 227, 228 (1990); Roberts v. State, 104 Nev. 33, 37, 752 P.2d 221, 223 (1988). State Farm, 116 Nev. at 293, 995 P.2d a 485. Furthermore, of the cases that have included the " rbitrary and capricious" language, none have actually used the standard to review a regulation, including State Farrn, and all were instead decide on different grounds. See Romano, 138 Nev. at 7-8, 501 P.3d at 985-86 (lis ing grounds for invalidating a regulation and concluding "none of those ci cumstances apply *here"); Felton, 134 Nev. at 38, 410- P.3d at 995 -(inte preting the challenged regulation in harmony with statutory authority); M ridian Gold, 119 Nev. at 635-36, 81 P.3d at 519-20 (applying arbitrary a d capriciorts review to an agency decision, not a regulation);. State Farm, 116 Nev. at 295- 96, 995 P.2d at 486 (determining the agency exCeeded, i s . statutory authority in. promulgating the challenged regulation):- The statute at issue expressly provides for the standard of -reView that should be applied.3 Therefore, we clarify that the third ard. for reviewing the validity of a regulation under NRS 233B.110 is t at which is provided for in NRS 233B.110(1.).--whether the regUlati n "violates

3Appellants do not raise an issue of fundamental rights i • the present case. We note, however, that a court's review of a regulati n irwolving. fundamental rights is not, and cannot be, limited by standar set• by the Legislature. See Salisbury v. List, 501 F. Supp. 10,5, 109 03 Nev. 1980) ("Where a fundamental. right is involved, the inquiry of the co rt does not end upon a finding that the regulation ... is reasonably r lated to its enabling legislation . . . ."); 73 C.3..S. Public Administrativ Law and Procedure § 275; see also Marbury v. Madison, 5 U.S. 137, 178 ( 803) C VT] he constitution is superior to any ordinary act of the legi, lature; the constitution, and not such ordinary act, must govern the case t whith they both apply."). SUPREME COURT OF NEVADA

1947A constitutional or statutory provisions or exceeds the statutory authority of the agency."4 Application of the standard of review in the promulgation of NAC 322.195 Turning to the regulation at issue., appellants next argue that the Division exceeded its statutory authority in promulgating NAC 322.195 because the fee schedule does not comport with the statutory standard for setting fees. "Appeals involvin.g interpretation of a statute or regulation present questions of law subject -to our independent review." Silver.. State Elec. Supply Co. v. State ex rel. Dep't Of Taxation, 123 Nev. 80, 84, 15TP.3d 710, 713 (2007). Although this court "will generally odder tO an agency's interpretation of its governing statutes and regulations, we need only do .so if its interpretation is reasonable," Pub. Ernps.' Ret. Sys. of Nev. v. Nev. .Policy Research Inst., Inc., 134 Nev. 669, 673 n.3, 429 P.3d 280, 284 n.3 (2018), and it is firmly established that "regulatións canna contradict or conflict with the statute they are intended to iMplement," The Nev. IndeP: v. Whitley, 138 Nev. 122, 126, 506 P.3d 1037, 1042 (2022) (internal quotation marks omitted). Because lalgency regulations are presumed. valid," the burden to overcome that presumption rests withthe challenger. Id. The Division created the challenged regulation, NAC 322195, based on amendments to NRS 322.120. NRS 322.120 mandates that the Registrar charge a fee when issuing permits for the resid.ential uscofá pier. or buoy. NRS 322.120(1), (2)(b)(2). The statute does not specify the

4The Legislative Commission, as arnicus curiae, urges us to give deference to its approval of the regulation and to review whether the regulation is reasonable as a matter of law. We decline the invitatioxi. to alter our statutorily mandated review of a regulation. SUPREME COURT

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(0) 1947A 8 amounts to be charged or how they should be calculated. Both appellants and the Registrar agree, as do we, that. we must look to another statute in the same section to find. legislative guidance for calculating the fee8—NRS 322.100. NRS 322.100(1) provides that the fee charged for issuing a permit 'for any lawful use of state land" be "in such an amount as the State Land Registrar determines to be reasonable based upon the fair market value of the use." •Therefore, when read -together, NRS 322.100 and NRS 322.1.20 require the Registrar to charge a permit fee for the residential use of a pier or buoy in an amount the Registrar determi.nes is reasonable based on the fair market value of the use of state land. See Ceballos v. NP Palace, LLC, 138 Nev., Adv. Op. 58, 514 P.3d 1074., 10'78 (2022) ("Whenever possible, this court interprets separate statutes harmoniouslY."): Appellants argue that the "reasonable baSed upon the fair market value of the use" language in NRS 322.100(1)(b) means that the fee must be based solely on the fair market value of the state-owned submerged land that a pier or buoy occupies, °without regard • to other factors. They likewise argue that a uniform fee cannot be based on the fair market Value of the use of state land because it charges the same fee regardless of the amount or location of the state-owned submerged land. Because the Division considered factors beyond the fair market Value of the.state-owned. submerged land and imposed a uniform fee in NAC 322.195, appellants assert the Division exceeded its statutory authority. We find that in attempting tO establish a fair market value in line with i.ts 'interpretation of the statutes, the Division did not exceed. its statutory authority by referencing multiple methodologies; The statutes d.o not. identify a. particular formula for calculating the fair market value of the SUPREME COURT OF NEVADA

10) 19.17A 9 use of piers and buoys on state land. And the Division ernploYed a range of approaches to obtain varying estimates. The Division then determined a reasonable amount to charge for pier and buoy permits based on. those 1 varying estimates. All of this was done within the authority provided by NRS 322.100 and NRS 322.120. Lastly, we are unpersuaded by appellants' attempts to supplement the statutory language by arguing that the'fees should be bgsed on the fair market value of the individualized use of state la.nd and that a uniform fee Conf.lids with the statutes. Nothing in NRS 322.100. or 70S 322.120 provides for such a customized approach to setting fees, and we note that the statute previously set fees for piers and buoys in• a Uniflorin manner. CONCLUSION- In. conclusion, the Division did not exceed' its statutory authority in promulgating NAC 322.195, and appellants b.ave not overcome the presumption that the regulation i.s valid.5 Contrary to appellants' assertion, no genuine issue of material fact exists, and th.e Divisiori is

5.Appellants assert the district court erred by imposing on them a burden to propose an alternative fee schedule in order to prevail: •in their challenge to the regulation. As discussed, regulations are entitled 4) a presumption of validity, and it Was aPpellants' burden to overcome that presumption. In concluding appellants • had not met their burden, ..ithe district court commented that. appellants did not preSent* evidence of what consti.tuted a fair market value or what a reasonable.fee based -cm the fair market value would have been. We discern no error by the district court in.. this regard. Cf. Cuzze v. Univ. & Only. Coll. Sys. of Neu., 123- Nev. 598, 602-03, 172 P.3d 131, 134 (2007) (1.11f the nonmoving party will bear the burden of persuasion at trial, the party moving.for summary judgment may satisfy the burden of .production by . ... pointing out . . that there is an absence of evidence to support the nonmoving party's case." (second omission in original) (internal quotation marks omitted)). SUPREME COURT OF

(0) I947A 10 • entitled to judgment as a matter of' law. Accordingly, we affirm the district court's or(ler granting summary judgment.

Lee -6,co We concur:

auf) , C.J. Stiglich

Cadish

J.

j. Herndon

(.17 )

Parraguirre

Bell

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