Killebrew v. State ex rel. Donohue

535 P.3d 1167

Eleanor F. KILLEBREW, TRUSTEE 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 Residential Trust and Dean Ingemanson as Trustee of the Ingemanson Family Trust; 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, Trustees of the Amoroso Family Trust; and Shorezone Property Owners Association, Inc., d/b/a Tahoe Lakefront Owners Association, Appellants,

v.STATE of Nevada, EX REL. Charles DONOHUE, State Land Registrar and Administrator of the Division of State Lands, Respondent.

No. 83830

Supreme Court of Nevada.

Filed September 28, 2023

Lewis Roca Rothgerber Christie LLP and Daniel F. Polsenberg 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.

BEFORE 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 under 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 summary judgment.

FACTS AND PROCEDURAL HISTORY

Appellants own property in Nevada along Lake Tahoe's shoreline and have piers or buoys on the lake. 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 permit fee for piers and buoys in former NRS 322.120. See , e.g ., 1995 Nev. Stat., ch. 645, § 9, at 2511. In 2017, the Legislature amended NRS 322.120 to require the Registrar to establish the permit fee amount 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 "[t]his fee schedule has not been modified since 1995" and that "[t]he 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." Id. at 2256.

In response to the amendment, 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 established 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 solicited comment and feedback from specific stakeholders, including appellant Tahoe Lakefront Owners Association. The Division also provided individual notice to all permittees, 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 summary judgment, claiming the regulation did not violate statutory or constitutional provisions and did: not exceed the Division's statutory authority. After a hearing on the motion, the 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, LLC 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 genuine issue of material fact exists, and the moving party is entitled to 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.¹

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 added.) "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 meaning beyond the statute itself." State v. 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 233B.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 included 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 ." Id. at 293, 995 P.2d at 485 (emphasis 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. v. 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 for arbitrary and capricious review, see Clark Cty. Social Serv. Dep't v. Newkirk , 106 Nev. 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 at 485.

Furthermore, of the eases that have included the "arbitrary and capricious" language, none have actually used, the standard to review a regulation, including State Farm, and all were instead decided on different grounds. See Romano, 138 Nev. at 7-8, 501 P.3d at 985-86 (listing grounds for invalidating a regulation and concluding "none of those circumstances apply here"); Felton , 134 Nev. at 38, 410 P.3d at 995 (interpreting the challenged regulation in harmony with statutory authority); Meridian Gold, 119 Nev. at 635-36, 81 P.3d at 519-20 (applying arbitrary and capricious review to an agency decision, not a regulation); State Farm , 116 Nev. at 295-96, 995 P.2d at 486 (determining the agency exceeded its statutory authority m 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 standard for reviewing the validity of a regulation under NRS 233B.110 is that which is provided for in NRS 233B.110(1) —whether the regulation "violates 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 involving interpretation of a statute or regulation present...