Co. of Clark v. Lb Properties, Inc. ( 2013 )

 value of comparable parcels. Statements made at various times by the
NTC suggest that the regulation may or may not have been intended to
operate retroactively, but its later decision in this case suggests that the
NTC did not intend retroactive application.
The parcel at issue, which is owned by respondent LB
Properties, Inc., was divided from a larger piece of land prior to the
regulation's enactment. The parties do not dispute that the land is a
"remainder parcel." Appellant, the Clark County Assessor, valued the
land under the multi-factored formula in use before the enactment of NAC
361.61038. Seeking application of the new formula, LB appealed to the
NTC, which assigned an administrative law judge to the case. The
administrative law judge decided that NAC 361.61038 should apply, but
thereafter the NTC disagreed based on its position that the regulation did
not apply retroactively. LB petitioned for judicial review and the district
court ordered the NTC to follow the administrative law judge's decision.
On appeal to this court, the parties primarily dispute whether
NAC 361.61038 applies retroactively and, if so, whether it conflicts with
Nevada's Constitution and is void. Because the regulation does not apply
retroactively, this court need not reach the challenge to its
constitutionality.
Regulations generally only operate prospectively "unless an
intent to apply them retroactively is clearly manifested." State ex rel.
State Bd. of Equalization v. Barta, 124 Nev. 612, 622, 188 P.3d 1092, 1099
(2008). However, there are two types of regulations: legislative and
interpretive. Fmali Herb, Inc. v. Heckler, 715 F.2d 1385, 1387 (9th Cir.
1983). Whereas legislative regulations implement statutory mandates,
interpretative regulations simply interpret the statute. Id. If a regulation
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is a first-time interpretive regulation, application to pre-existing issues
may be permissible. Smiley v. Citibank (South Dakota), N.A., 517 U.S.
735, 744, n.3 (1996). For example, in Smiley the Supreme Court approved
application of an interpretive regulation that clarified an ambiguity the
Legislature left for the agency to resolve, namely the definition of
"interest." Smiley, 517 U.S. at 740-41. But see Pauly v. U.S. Dep't of
Agric., 348 F.3d 1143, 1152 (9th Cir. 2003) (holding that first-time
interpretive regulations are not generally retroactive, but where the new
regulation is an explicit break from prior practice or the agency has
expressly stated application would be impermissibly retroactive, it may
not be retroactively applied). Therefore, unlike legislative regulations,
interpretive regulations construe, but do not expand upon, the terms of a
statute.
Legislative regulations differ from interpretive regulations in
that they are adopted under power delegated by the Legislature to the
agency and establish substantive rules that create standards of conduct
and impose new rights or duties; they do not generally apply retroactively.
See, e.g., Jerri's Ceramic Arts, Inc., v. Consumer Prod. Safety Comm'n, 874
F.2d 205, 207 (4th Cir. 1989) ("a substantive or legislative rule, pursuant
to properly delegated authority, has the force of law, and creates new law
or imposes new rights or duties."); Slippery Rock Area Sch. Dist. v.
Unemployment Comp. Bd. of Review, 983 A.2d 1231, 1236 (Pa. Ct. App.
2009) ("a legislative regulation establishes 'a substantive rule creating a
controlling standard of conduct"); see generally Bowen v. Georgetown
Univ. Hosp., 488 U.S. 204, 208 (1988) ("Retroactivity is not favored in the
law. Thus, congressional enactments and administrative rules will not be
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construed to have retroactive effect unless their language requires this
result.").
Here, NAC 361.61038 was promulgated pursuant to the
express direction of NRS 361.4722(5). It is, as LB concedes, a substantive
rule that establishes a standard of conduct. Specifically, it establishes a
method of assessing and valuing properties; it does not merely construe
the meaning of the statute. Thus, NAC 361.61038 is legislative, not
interpretive, and does not apply retroactively. Also, NAC 361.61038
represents an explicit break from the prior valuation method, as the prior
method considered additional factors such as land size and shape and
looked at the separate value of the individual piece, whereas NAC
361.61038 focuses on the remainder parcel's contribution to the value of
the larger parcel. Moreover, NAC 361.61038 does not specifically provide
for retroactive application, the NTC made inconsistent statements
regarding retroactive application when promulgating the regulation, and
the NTC later ruled against retroactive application in the underlying case.
The district court therefore erred by ordering the NTC to follow the
administrative law judge's decision and value the land according to the
apportionment formula set forth in the regulation. Because NAC
361.61038 was enacted in 2007 and the valuation at issue occurred prior
to that time, application of the regulation would be impermissibly
retroactive.
In the absence of an applicable regulatory method of
assessment, the question then becomes whether the method the assessor
used was proper or whether it was itself in violation of Nevada law.
LB Properties argues that the assessor's use of the pre-2007
method violated the holdings in Barta and State ex rel. State Board of
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Equalization v. Bakst, 122 Nev. 1403, 148 P.3d 717 (2006), because the
assessor's method was an "ad hoc standard" rather than a method
formally promulgated by the agency. The district court determined,
without analysis, that the assessor's method of calculation was in violation
of Bakst. We disagree, because the pre-2007 method does not inherently
lend itself to inconsistent application.
Bakst and Barta dealt with the County Assessor's authority
under NRS 361.260 to substantially deviate from statutorily-mandated
methods of assessing land. See Bakst, 122 Nev. at 1414-15, 148 P.3d at
725; Barta, 124 Nev. at 620-21, 188 P.3d at 1098. In Bakst, the assessor
used a unique method to adjust property values—one not consistent with
others used throughout the state. 122 Nev. at 1406, 1411, 1414, 1416, 148
P.3d at 719, 722-23, 725-26. In deeming the assessor's methods
unconstitutional, this court held that our Constitution requires "that the
methods used for assessing taxes throughout the state must be uniform."
Id. at 1413, 148 P.3d at 724 (internal quotations omitted). See also Barta,
124 Nev. at 624, 188 P.3d at 1100 (citing Bakst and stating that "methods
used to value taxpayers' properties play a material role in ensuring that
the constitutional guarantee of a uniform and equal rate of assessment"
exist in property valuations). But Bakst and Barta also recognize that the
wide and varied differences in each property make it impossible to devise
an absolute formula to determine value. Bakst, 122 Nev. at 1412, 148
P.3d at 723; see also Barta 124 Nev. at 622, 188 P.3d at 1099 (upholding
Bakst generally). Moreover, NRS 361.228(3) encourages consideration of
property attributes "such as zoning, location, water rights, view and
geographic features" in valuing a property, suggesting that valuations
should account for all relevant attributes—perhaps even where
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consideration of a particular attribute is not codified by statute or
regulation.
In contrast to Bakst and Barta, the record here supports the
conclusion that the assessor's method did not lead to unequal taxation—to
the contrary, both the administrative law judge and the NTC recognized
that it likely led to more equitable taxation than did the method set forth
in NAC 361.61038. Indeed, the assessor's method appears to be the one
generally used prior to the regulation's enactment. Neither Bakst nor
Barta states that only formal regulations may be used to assess value.
Since the assessor's approach did not conflict with existing statute or
practice, we therefore conclude that the assessor's methods did not violate
the Constitution.
For these reasons, we
ORDER the judgment of the district court REVERSED.
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cc: Chief Judge, The First Judicial District Court
Hon. Robert E. Rose, Senior Justice
James Georgeson, Settlement Judge
Attorney General/Carson City
Clark County District Attorney/Civil Division
Frazer Ryan Goldberg & Arnold LLP
Lionel Sawyer & Collins/Reno
Carson City Clerk
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