The Nevada Supreme Court on Thursday overturned a decision granting Southern California Edison a multi-million dollar refund, ruling the decision void because it was done behind closed doors.
The court ruled unanimously the state Tax Commission's interpretation of state law exempts it from the law prohibiting most closed door meetings is overbroad. It said that interpretation "would eviscerate the Open meeting law's mandate that public bodies deliberate and vote in public."
In the process, the court gave the Gibbons administration a reprieve from having to pay out the $36 million plus interest to cover the refund ordered by the commission. That money was part of the funding taken to help the state cover what has grown to a $913.7 million revenue shortfall.
Southern California Edison filed claims for refunds of use taxes paid between March 1998 and December 2000, saying the department's ruling on whether to exempt mine proceeds from that tax was unconstitutional.
The Taxation Department denied the claims and a hearing officer agreed.
The utility appealed to the Tax Commission, which, after four hearings, granted the refunds. But the attorney general's office took the commission to court, arguing the commission illegally conducted all four sessions on the appeal behind closed doors, heard the evidence, deliberated and voted in secrecy even though the commission's deputy attorney general advised members there was no need to close the hearing. Commission members argued that's the way they have done things for nearly 30 years.
"The Tax Commission declined to follow the deputy attorney general's advice and, following its long-standing practice, closed the hearing," wrote Justice Jim Hardesty.
The commission argued, and Carson District Judge Mike Griffin agreed, that the commission had an exemption to the open meeting law for all taxpayer appeal hearings.
Attorney General George Chanos and his staff argued that exemption was limited to receiving and reviewing a company's confidential information but did not allow complete closure of appeal hearings. Chanos argued all non-confidential evidence, all deliberations and the vote must be handled in an open meeting.
The Supreme Court agreed with the attorney general's arguments, ruling that the Nevada open meeting law requires that, "except as otherwise provided by specific statute, all meetings of public bodies must be open and public and all persons must be permitted to attend any meeting of these public bodies."
"Obviously we believe they got it right," said Senior Deputy Keith Marcher, who presented the arguments before the Supreme Court.
Neil Rombardo, at the time the deputy AG who developed the case, said it was the right decision for the people of Nevada.
"It ends what I feel and believe, and the Supreme Court agreed with, is decades of abuse by the Tax Commission," said Rombardo.
The opinion also pointed out that, because of this case, the 2007 Legislature clarified the law to state that all portions of any meeting must be open except for the portion specifically allowed to be closed by a statute.
"We conclude that the Legislature intended to permit the Tax Commission to close only the portion of its sessions concerning a taxpayer's appeal at which it received confidential evidence and questioned the parties and heard argument concerning confidential information," the opinion states.
And the court ruled that, if some pieces of that confidential information become public during deliberations, that fact doesn't violate the laws respecting company confidentiality.
The opinion states that the practice of closing the entire appeal case at a taxpayer's request violates the open meeting law and, since that is what the commission did for Southern California Edison, its action granting the utility a refund violated the open meeting law.
"Actions taken in violation of the open meeting law are void," the opinion concludes.
Barry Smith of the Nevada Press Association, which joined the fight to stop closed commission hearings, also praised the ruling saying there is never a good reason for public bodies to hold secret votes.
"It reinforces Nevada's open-meetings law by reminding boards and commissions that the overriding principle here is openness," Smith said. "Any exception has to be very specific under the law."
The decision sends the case back to the Department of Taxation and the Tax Commission. If Southern California Edison wishes to still pursue the petition for a refund, new hearings will have to be held - with most of the process done in public.
• Contact reporter Geoff Dornan at email@example.com or 687-8750.