Clark County chastised in tax dispute

CARSON CITY -- Members of the state Tax Commission chastised Clark County on Monday for what they said was a violation of an agreement to protect the confidentiality of information involved in a dispute over a $40 million sales tax refund to Southern California Edison.

But the panel stopped short of denying the county the right to continue to intervene in the dispute in Clark County District Court. The county and Henderson are challenging the refund approved by the Tax Commission for the utility's operation of its Mohave Generation Station in Laughlin.

Carson City attorney Norm Azevedo, who represents the Southern California utility, had asked the tax panel to take some action against Clark County.

Azevedo said the Department of Taxation forwarded the confidential and proprietary information, under seal, to Clark County District Court when the county and city of Henderson sought judicial review of the refund. The county then, in filing its legal brief in the case, attached the very same confidential information but without having it sealed first.

The information was unprotected for three weeks before the court ordered the information re-sealed.

"There has been a breach from our perspective," Azevedo said. "There needs to be consequences for that particular breach."

"Frankly I'm irritated with Clark County and the city of Henderson that they would so openly flaunt this agency," said Commissioner John Marvel.

Tax Commission Chairman Thom Sheets said: "I think an agreement is an agreement and I'm just aggravated with the (Clark County District Attorney's) office for the cavalier way they seem to have undertaken what they have done here. We didn't have to get to this point and it frustrates me.

"I was here when they agreed to confidentiality," Sheets said. "I heard what their counsel said. That is not the way they have acted."

Tax commissioners also expressed frustration that the range of options available to the panel were limited to either doing nothing or taking what they called a Draconian measure of eliminating the public's right to challenge the tax refund in court. The panel could do that by rescinding the agreement that allowed Clark County and Henderson to intervene.

Given its limited options, the commission voted 5-1 to direct its legal counsel to meet with the city and county legal representatives to see if some new agreement on confidentiality could be worked out.

"Withdrawing intervention has other complications as well," said Thomas "Spike" Wilson, an attorney in private practice representing the commission in the Southern California Edison matter, which also involves a separate dispute on the open meeting law that is now before the Nevada Supreme Court.

"The public has the right to know," Wilson said. "This affects the business of Clark County and Henderson and neither side should jeopardize that."

Commissioner David Turner suggested that the panel's attorneys consider seeking sanctions against the county for the alleged violation. The judge presiding over the case could decide what the sanctions should be.

Commissioners were also upset that neither Clark County nor Henderson officials, who were made aware of the meeting, chose to participate.

"I'm disappointed the city and county aren't here today to talk about this issue," Sheets said.

Clark County Deputy District Attorney Paul Johnson said the appeal of the refund is in the hands of the District Court, which has stayed all proceedings until the Supreme Court rules on the open meeting law dispute involving the same refund. Given the stay, the county chose not to participate in the meeting, he said.

The only commissioner to vote against the motion to negotiate with Clark County and Henderson was George Kelesis, who said Azevedo has not suggested that the Department of Taxation or its attorneys did anything inappropriate. Azevedo should take up his complaint with the District Court, he said.

The Tax Commission said it is required by Nevada law to keep proprietary information confidential. The attorney general's office has challenged that view, arguing that the panel has to follow the open meeting law and have its discussions in public. The Supreme Court has not yet ruled.

The 2007 Legislature also got involved in the dispute, passing a new compromise measure allowing confidential information to be presented to the panel in private, but requiring all other discussions and actions to be conducted in public.