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Dillon's Rule in Nevada

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Las Vegas City Hall, photo courtesy of the City of Las Vegas
Iowa Supreme Court Justice John Forrest Dillon penned his way into a measure of legal fame when he formulated the principle known as Dillon’s Rule, in Merriam v. Moody’s Ex’rs, 25 Iowa 163, 170 (1868). He wrote: In determining the question now made, it must be taken for settled law, that a municipal corporation possesses and can exercise the following powers and no others: First, those granted in express words; second, those necessarily implied or necessarily incident to the powers expressly granted; third, those absolutely essential to the declared objects and purposes of the corporation – not simply convenient, but indispensable; fourth, any fair doubt as to the existence of a power is resolved by the courts against the corporation – against the existence of the power.
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Five months earlier, Nevada Supreme Court Justice J. F. Lewis enunciated the same principle in Tucker v. Mayor and Bd. of Alderman, 4 Nev. 20, 26 (1868), noting that this was a “general proposition,” and apparently so well understood that no citation to authority was necessary. Lewis, however, lacked the reverberation of the author of Treatise on the Law of Municipal Corporations, first published in 1872, and a seminal work on the subject until well into the 20th century. Today, approximately 31 states follow a strict version of Dillon’s Rule; nine others are blended, with the rule not applying to some local entities, and 10 are home rule states. Dillon’s Rule has been frequently described as a canon of statutory construction, but it does not function as a
standard rule of construction where the intention of the enactment is to be discerned, if possible, from the language or, if necessary, from the statutory language or context of enactment.1 Instead, it is a substantive, judicially-created rule that measures local government actions or enactments against its narrow standards and presumption – express, necessarily implied, absolutely essential, presumed not to exist. Dillon’s Rule is still an active factor in the Nevada municipal landscape, turning up in differing shapes in cases involving local entities and receiving detailed discussion in recent legislative sessions. This article will briefly recount that case law and legislative activity.
Local Government Creation
Eight years after the Tucker decision, the court decided State ex rel. Rosenstock v. Swift, 11 Nev. 128 (1876), a case challenging the legislature’s appointment of initial city officials as part of the law creating Carson City. The application of the rule to cities or other municipal corporations was affirmed and the unbounded constitutional authority of the legislature over their creation and existence was recognized. The principle was first extended to counties in Waltz v. Ormsby County, 1 Nev. 370, 377 (1865): “[A]nd that such officers can have no powers except those expressly granted by the legislature, is too well established to admit of question now.” It continues to the present day. State ex rel. Harvey v. Second Judicial Dist. Court, 117 Nev. 754, 773, 32 P3d 1263 (2001) (“Counties are legislative subdivisions of the state and obtain their authority from the legislature”). Most probably, the absence of cases involving special districts stems from the fact that such districts are created to carry out relatively narrow, statutorily specified purposes with the method of financing those activities also prescribed by the underlying statute. This is far different from the situation Nevada cities and counties face: an increasing myriad of functions imposed by the state or federal governments, with a taxing regime almost fully centralized and controlled by the state government. Variations of Dillon’s Rule appear in at least three forms. One involves police power regulation of enterprises involving liquor, gaming and adult entertainment.2 As one commentator has noted, the court, in cases such as these, appears willing to apply a more flexible, “sensible” or “reasonable” reading of the rule.3 A second involves preemption by state law, as in Lamb v. Mirin, 90 Nev. 329, 526 P.2d 80 (1974), or a conflict with state law, as in Falcke v. Douglas County, 116 Nev. 583, 3 P.3d 661 (2000). Third, a version of the rule has also been applied to state administrative agencies, as in City of Henderson v. Kilgore, 122 Nev. 331, 131 P.3d 11 (2006). Against this backdrop, generations of Nevada lawyers have advised their local government clients to proceed with caution, relying upon explicit statutory language.
Nevada Cases
Legislative creation of, and control over, local governmental entities stems from several constitutional provisions. Municipal corporations can be created in two ways. The first, under Nev. Const. art. 8, § 1, provides for creation by special law (NRS 46, city charters). The second, under Nev. Const. art. 8, § 8, allows for creation under general laws (NRS 266 (cities) and 318 (general improvement districts). The third provision, Nev. Const. art. 4, § 25, applies to the creation of a uniform county and township government throughout the state (NRS 243, 244). Thirteen Nevada cities exist by special acts created by city charters. Special acts have also been used to create approximately 14 other municipal corporations. Incorporation of cities by general law has been used for seven cities (most recently Fernley in 2001). Creation of districts, under general laws, to carry out specific functions is common and varied (from general improvement districts to weed control districts).
Nevada Legislation
The Nevada Legislature has been contemplating the dichotomy of Dillon’s Rule and home rule for more than 60 years. A 1952 Legislative Counsel Bureau report (Home Rule in Nevada) highlighted the significant number of local measures introduced in a legislative session (15 percent in 1947), which, in the 2007 session, was approximately 9 percent. Issues identified with so much local legislation included undue demands on the time of legislators in a limited session; a concomitant reduced amount of time for statewide matters; log rolling with members voting for another’s local legislation in return for favorable votes on their own legislation; and cursory examination of local legislation because of a lack of interest by a nonresident legislator. Recent legislative attempts to readjust the balance have resulted in the introduction of bills to accomplish this goal. In 2005, the Senate Government Affairs Committee introduced Senate Bill (SB) 427, which, for counties, sought to abolish Dillon’s Rule and impose a liberal construction upon county powers. The power to impose or increase a tax was restricted, requiring specific statutory authorization. The committee allowed SB 427 to expire silently and automatically, without a hearing under Joint Standing Rule 14.3.1.
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The 2007 legislature took up the mantle, introducing SCR 10, calling for an interim study “concerning the powers delegated to local governments.” A premise of the resolution was that “[a]llowing greater autonomy for local governments may promote more efficient use of limited governmental resources.” The subjects of the study were to be the “structure, formation, function, and powers of local governments,” the fiscal impact of abolishing Dillon’s Rule, the feasibility of increasing local government powers and the experiences of states that had previously rejected Dillon’s Rule. No further action was taken, and no interim study was conducted. In 2009, a different tack was taken, with the introduction of SB 264. The bill shifted all tax authority – property, sales, room and fuel – to local governments. The bill sponsor, Senator Terry Care, noted the 2007 attempt at an interim study: “I had no success with this request. I am term-limited, so I am not requesting a study, but am trying to pass legislation.” Care emphasized that local officials should be accountable to their constituents for taxing decisions, not legislators who often do not even reside in the locality seeking a tax increase. Senator William Raggio (and others) raised the question of statewide consistency: “Without limitation, control, supervision or monitoring, local governments will freewheel and compete for tax dollars. I can see problems … Home rule cannot freewheel.” Hearing on SB 264 Before the Senate Committee on Government Affairs 15, 17 (March 25, 2009). At a followup Government Affairs Hearing eight days later, the winds had shifted, and so had Care: “Senator Care said SB 264 was perceived as a protax bill … He proposed deleting the bill in its entirety and replacing it with language found in SCR 10 of the 74th Session.” This time, the legislature authorized the formation of the Committee to Study Powers Delegated to Local Governments. The eventual committee report made two main recommendations: 1. Create an advisory committee on intergovernmental relations, and 2. Adopt an incremental, Indiana-style approach to granting local governments additional powers.
Although both were introduced (as SB 385 and 392) in the 2011 session, they languished in Senate Committee on Government Affairs and perished, pursuant to Joint Standing Rule 14.3.3. SB 385 – applied to both cities and counties, but not to other political subdivisions – abrogated Dillon’s Rule, and proposed a presumption that any doubt as to the existence of a power must be resolved in favor of its existence. The bill emphasized that a board is granted its powers by statute, as well as “[a] ll other powers necessary or desirable in the conduct of [its] affairs.” One limitation on the power to act is an express denial by the United States and/or Nevada Constitution, or by a statute. A second is if the power is granted to another entity. A final limitation involved prohibitions on conditioning or limiting civil liability, enacting laws governing civil actions, imposing duties on another political subdivision, imposing a tax – regulating in place of a state agency and ordering or conducting an election. Proponents argued that the bill provided a list of limited powers and that, ultimately, the legislature could revoke the authority granted by the bill should it wish to do so. They also pointed out that bills do not get out of committee for a number of reasons, and that cities and counties, for reasons having nothing to do with the merits of a bill, must wait 18 months, under Nevada’s biennial legislative schedule, to again pursue the bill. The bill was voted out of the Senate Government Affairs Committee and sent to the Assembly Government Affairs Committee. Hearing on SB 385 Before the Senate Committee on Government Affairs 29, 31-32 (April 8, 2011). The Assembly Committee provided a different reception. There was concern about the breadth of the expansion of powers, about the ability of local entities to responsibly handle new authority and about the quality and consistency of legal advice provided to local authorities. After this hearing, no further action was taken and SB 385 expired, pursuant to Joint Standing Rule No. 14.3.3. Hearing on SB 385 Before the Assembly Committee on Government Affairs 10, 13-14 (May 2, 2011).
The present session has seen the introduction of SB 2, a duplicate of SB 385 from 2011. The bill applies to counties and cities. Hearings were held on February 27 and April 12, before the Senate Government Affairs Committee, followed by an 18 to 2 floor approval on April 18. 
Some form of Dillon’s Rule has been a part of Nevada’s jurisprudence since early in its statehood. Recent efforts to abrogate the rule have included carefully demarcated areas (notably, taxation powers) where it will still apply in its present form. Passage, as has been repeatedly stated in committee testimony, would allow cities and counties much greater flexibility in dealing with mundane, day-to-day issues, such as naming rights for parks, graffiti removal or the towing of cars.
1 Maynard v. Johnson, 2 Nev. 16, reh’g denied, 2 Nev. 25, 33 (1866) (“Impressed by these influences and consideration, they passed the law, from the bowels of which we seek to eviscerate its meaning. Evisceribus Actus. What is its true meaning.”); Elijah Swiney, John Forrest Dillon Goes to School: Dillon’s Rule in Tennessee Ten Years After Southern Constructors, 79 Tenn. L. Rev. 103, 107-08 (2011). 2 Ex Parte Sloan, 47 Nev. 109, 217 P. 233 (1923); State ex rel. Grimes v. Bd. of Comm’rs, 53 Nev. 364, 1 P.2d 570 (1931); Flick Theater, Inc. v. City of Las Vegas, 104 Nev. 87, 752 P.2d 235 (1988). 3 Louis v. Csoka, The Dream of Greater Municipal Autonomy: Should the Legislature or the Courts Mofity Dillon’s Rule, a Common Law Restraint on Municipal Power?, 29 N.C. Cent. L. J. 194, 206-07 (2007).
BRIAN CHALLY is Legal Services Director for the Las Vegas Valley Water District and Southern Nevada Water Authority.
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