Ta Meeting Eliminating Access To Public Records

BEFORE THE STATE OF NEVADA TAXICAB AUTHORITY WORKSHOP MINUTES November 09, 2005

A W orkshop for the State of Nevada Taxicab Authority was held on W ednesday, November 9 th, 2005 at the Taxicab Authority, 1785 East Sahara Avenue, Suite 200, Las Vegas, Nevada 89104. The meeting began at 9:30 a.m. Board Members Present: Horacio Lopez, Member, Dr. Edward E. Goldman, Member. and Carolyn M. Sparks, Member. Others present: Legal Counsel for Staff, Senior Deputy Attorney General Christine Guerci; Kenneth D. Mangum, Acting Administrator; and Barbara W ebb, Legal Secretary II/ Recording Secretary. Interim Chairman Kathryn W erner was absent. Senior Deputy Attorney General Christine Guerci read the regulation into the record. Ms. Guerci asked for Public Comment. Cheryl Knapp of W hittlesea Blue/Henderson Taxi stated that previously when these regulations were discussed, she had submitted in her intervention her comments. Her company supports this regulation and was involved in previous workshops. She has a problem with the language as it reads, if an existing certificate holder were to make application before this Authority to change their certificate in some way, they are bound disclose those financial records pursuant to the existing statutes, whereas intervenors, the way it now reads, she doesn’t believe she would have access to those records and she believes the regulation should be modified so that anyone who is an existing certificate holder applying for authority, anyone who is applying for new authority that those financial records are imperative to them to determine whether or not as intervenors we believe that they can actually support what they are asking for. An example being Deluxe’s application to go countywide. If we had not had access to their financial records, intervenors would have been unable to make their opposition to that application. That is the only change that she suggests. Member Sparks questioned Christine Guerci as to whether that was part of the original discussion. Ms. Guerci stated that no it wasn’t because they drafted a very simple, narrow regulation and sent it up to LCB and they expanded it. At the Adoption Hearing is when the Board will have to discuss. It does not have to be adopted the way it is written, changes can be made and then adopt it. Member Sparks reiterated that LCB did not choose to include other parties as part of the regulation. Cheryl is asking that each company have access to everyone else’s, is that right? Ms. Guerci answered is no, what she meant was that intervenors have access to new applicants or when people Workshop Minutes November 9, 2005

are changing their certificates. That makes all financial records that are submitted to the Authority, whether a new applicant or certificate holder confidential and not available to intervenors as it is now Attorneys Stacy Smith and Judah Zakalik for Frias Companies stated that it is their opinion that because the Taxicab Authority wants to protect confidentiality of certain financial information, they has not met its burden of establishing privilege of non-disclosure for the financial records based on statutory authority or the relevant balancing tests under Nevada law. Member Goldman asked what the statutory that exempts these documents from the public record law. Ms. Guerci stated that that is what is being created now is the statutory authority to do that. Member Sparks asked if there was an existing

1

statutory law preventing it and Ms. Guerci said no. It is probably better to discuss this during the adoption hearing when it’s a meeting, this is now a workshop to get public comments. W hen this is completed, we can then discuss this. Member Lopez asked for more information on that. Atty. Zakalik stated that under open records law, Nevada case law states that it’s the agency that bears the burden of establishing the existence the privilege on confidentiality. There are 2 ways that that can be done - statutory authority in the statutes and/or balancing test laid out by the case law and attorneys. The open records law states that unless all public records of a government’s entity the contents of which are not otherwise declared to be by law to be confidential are to be kept open to the public. Therefore, the statutory authority should first be looked at to see if the statute states that these records should be kept confidential, i.e. declared by law to be confidential and if not, they should be opened to the public. If there is no statutory authority, then a balancing test is waived, which has been laid out by the Attorney General’s Opinion. Ms. Guerci, in answer to Member Sparks’ questioned regarding asking questions, stated that today, a workshop for public opinion and when all information is received, it is closed and an adoption hearing is opened when public comment can be asked for by the Board again. Jamie Pino of Nellis Cab supports the confidentiality regulation. He agrees with Cheryl Knapp’s comment regarding new applicants should be excluded so the current certificate holders can determine if they are financially stable to run a company as well as the expansion of current certificate holders. Ms. Guerci asked if there were any further public comments. She asked Linda Holtan if there were any other written comments the Board is familiar with. Cheryl Knapp commented that at the time of the original workshop, the TA requested comments from the certificate holders, George Balaban of Desert Cab intervened that the regulation should be modified to exclude whenever a person is making application or existing companies want to expand. Ms. Guerci stated that there are written comments that will be attached to this section and will be available in a day or two. There had been some written comments submitted also which the Board had seen when this item was on the agenda so they are familiar with those comments. She stated that if there is no further public comment, the W orkshop will be closed and it is time for the adoption hearing. Ms. Guerci stated that it is now the Board who will oversee the Adoption Hearing. As senior board member, Member Lopez took the helm and was advised to state what was to be done at this time. Member Lopez continued that it was the time for the Adoption of the Regulation regarding the Confidentiality of the Financial Records. He asked for comments from the Administrator. Workshop Minutes November 9, 2005 Ms. Guerci advised that typically the Board has some discussion and then open the meeting up for public comment and then take a vote so the public will know what to comment on. Therefore, discussion of comments heard and feelings of the regulation should be discussed among the Board. He asked to speak to Ken Mangum the Administrative Services Officer. He asked Administrator Land how extensive is the examination of the financial statements when new company applications are filed or when a current company wants to expand their operation for recommendations

Nevada Department of Business & Industry F inancial Services T eam

Licensing & R egulatory Services T eam

2

N atural R esources Services T eam

Consum er & Labor Services T eam

that will be made. Member Lopez suggested getting the financial person before answering the question. Member Lopez reiterated his question to Ken Mangum, Administrative Services Officer. Mr. Mangum commented that the investigation is very extensive especially on new applicants. A lot is based on the 80/20, they need to maintain at least 80% of their capital, they can only run about a 20% deficit in their debit side. A lot of that is looked. Prior to the Boards recommendation on a previous expansion, a lot of the information was fairly “murky”. Looking at new companies, it is reviewed very closely. The Controller’s Office also reviews the financials with TA Accounting Staff. There are guidelines in the NRSs that must be adhered to, some of which is the 80/20. Member Lopez asked about the expansions of the existing companies. Mr. Mangum said in the time he has been with the TA, there have not been any expansions. Most of what is looked at is their financials once a year which need a lot of work, when they are submitted, but not much more than that unless the companies are audited. W hat is reviewed as a program statement which is turned into LCB looks at current financials they look back in the current fiscal year and review the current financials that are reported on a monthly basis? Member Lopez stated that the TA accounting staff is aware of the financials on a monthly basis. Mr. Mangum stated that yes other than their debiture and the TA has the access to call the companies and request a review of their bank statements. Most of the companies will do it as soon as possible, the TA gives them 72 hours at which time their bank statements and debiture can be audited. Member Lopez asked if that determines their source of recommendation. Mr. Mangum stated in an expansion only. Otherwise, it is just medallions. Mr. Lopez reiterated that the financial statements are scrutinized by the Controller’s Office as well as the TA. Mr. Mangum stated one individual in the Controller’s office and that the TA’s contact. The Board had no further questions. Ms. Guerci asked if the Board discussed all they want to. Member Sparks would to be sure she understands if all financial records are public records. Ms. Guerci stated that originally when the financial report was discussed it was to change the reporting form at which time, because of the information that was requested on that new form, the certificate holders did not want to give such detailed information because it was a public record and could be used against them in litigation and various avenues. Ms. Guerci did research on whether or not the financial records could be made confidential. She found that a majority of other financial institutions or Boards or Commissions that require financial records keep those records confidential. Some do them through statute others through regulation. There is an Attorney General Opinion that interprets this declared by law is confidential which is what the Frias Companies is talking about. And declared by law has been interpreted by the AGO to include a statute or regulation, but not an ordinance so that the Board has the authority to place this regulation on the books to make these financial records confidential at which time it would be declared by law because the Board has declared that these are confidential. This is not out of the ordinary and lot of people were surprised that the TA had not been keeping this information confidential and there were no regulations or statute declaring so. The balancing test that Frias Companies referred to is only if there’s no law therefore that we had been using now when someone requested financial information, we would have to give them out because they were public record or do this in balancing test which only comes in if it hasn’t been declared by law by either statute or regulation. Therefore, it is within the Board’s authority to make the change. Member Sparks stated Workshop Minutes November 9, 2005

that up until now, they have not been satisfied with the financial reporting they have received because it was unclear or insufficient. Therefore, if the Board adopts it to be confidential, they can request more information. Ms. Guerci stated yes to make the companies more forthcoming which is why Mr. Croy

Nevada Department of Business & Industry F inancial Services T eam

Licensing & R egulatory Services T eam

3

N atural R esources Services T eam

Consum er & Labor Services T eam

designed a new form in conjunction with requiring certificate holders to give the extra information as promising their records would be confidential. W hen LCB received the regulation, they added financial records of applicants for certificates which had not been in the initial draft. The initial draft which the Board approved and was submitted to LCB was only for the new Annual Financial Report submitted pursuant to 706.8829. Ms. Sparks asked if new revisions were made would they include new applicants or expansion. Ms. Guerci stated if the Board was to modify the current regulation, they could take out financial records of the applicants for certificates or limit it to only the Annual Financial Report, but she suggests the Board speak with Ken Mangum because the TA does audits and they would want some of that information confidential for whatever other times they would be used. Ms. Sparks said the regulation states currently applicants for certificates and certificate holders so the only thing Cheryl Knapp wants to include is expansion. Ms. Knapp said she thinks that NRS 706.8827 speaks to applying for authority whether initial or expansion of your authority, therefore, if the language from LCB has added, with the exception of anyone applying for authority, pursuant to NRS 706.8827, that would cover her concerns. This would be a 5-prong test for anyone who is applying for new authority or expansion of their existing authority which includes the financial records referenced in that statute. Ms. Guerci stated that a separate section could be added at the end of the financial or information submitted, pursuant to NRS 706.8827 is not confidential. It will be looked at to be sure it is the correct statute. Member Lopez asked if all the conditions have been met that the Frias Companies had alluded to. Ms. Guerci stated that they commented that, and she is paraphrasing, “that we haven’t done the proper balancing test or we haven’t done the proper background before we do this”. And what I am saying is that their argument is not valid because what the statute says is that “all public documents are open to the public unless they are declared confidential by law”. Declared confidential by law has been interpreted to mean either a statute or a regulation, but not an ordinance because a municipal ordinance is not a law. The Board has the authority to adopt regulations which then become law. The balancing test they referred to is if you did not declare these confidential and someone was to request a copy of them, it would be public record. The basic point is the Board would be declaring by law that the records are confidential, this is not out of the ordinary as financial records are confidential in other entities. Atty. Zahalik asks that declared by law has been interpreted a regulation? Ms. Guerci answered yes. He asked where she found that. She can send a copy of Jim Spencer’s AGO in 1998. Member Lopez asked if there were any comments from the Board. Member Goldman stated that at the school district regulations are adopted just as Ms. Guerci had stated. Ms. Guerci commented that financial records are in a class where they are confidential, so she feels it is within their pervue to do this. Atty. Zakalik stated that there is an Attorney General Opinion that looked at whether financial records of a private school who was applying for licensing whether those by themselves should be kept confidential and he AG stated that although we recognize the sense and nature of the information they are persuaded that non-disclosure is automatic justified on that basis alone. Ms. Guerci stated that that is right and that is the reason for the regulation. He is exactly right, but that’s because they had no confidentiality regulation or statute in place which is why we are here today so when we get a request we don’t have to honor it. Workshop Minutes November 9, 2005

Nevada Department of Business & Industry F inancial Services T eam

Licensing & R egulatory Services T eam

4

N atural R esources Services T eam

Consum er & Labor Services T eam

Atty. Zakalik stated that at this point, the regulation isn’t based on the sense or nature of these confidential financial records…. Ms. Guerci interjected – and the need for the Taxicab Authority to have more financial information from the certificate holders. Ms. Sparks asked what this had to do with a private school. Atty. Zahalik just wanted to point out that even a private school has to submit certain confidential information or financial information and in the AGO just based on financial information doesn’t give a privilege of confidentiality in and of itself, sensitive information. Ms. Sparks stated that they are not a government agency either. Ms. Guerci stated that his point ties into why we are doing this because they couldn’t say well we’re not giving it out because it’s financial records, they needed statutes or regulations to base that on and that is what we are doing because we don’t want to be caught in the battles of giving out financial records. The Board wanted it this way. A regulation is needed to withhold the information. Member Lopez said before asking for a motion, he wants to open up the discussion for the intervenors. No one had anything else to add, therefore, Member Lopez asked for a motion. Ms. Guerci stated that is the Board wants to modify per Cheryl’s comments, let’s look at the statute first. Discussion your motion first and then see if anything has to be pulled up. Member Goldman asked if it could be done with out specifying the number of the statute she’s referring to or make a motion to include that statute. Ms. Guerci answered no that the statute has to be identified. Member Goldman asked what the advantage was to add what Cheryl has suggested. Ms. Guerci explained that now the regulation as it was drafted by LCB, based on the Board’s requests, exempts all financial records that the certificate holders give us, potential applicants give us, as well as the financial records of existing certificate holders give when they want to expand which Cheryl’s, Jamie’s and George’s written comments had asked. They want access to financial records for people applying for certificates or for when certificate holders want to expand. They want an exception in the regulation that financial records submitted by applicants for certificates, for expansion of certificates deems not confidential. Ms. Sparks asked if there was an AGO that prohibited this. Ms. Guerci said no it is strictly a Board decision as to whether that is appropriate or not. Member Lopez again questioned why the Frias Company does not want that regulation. He asked the attorneys for Frias to be more specific, beyond stating the burden of proof or balancing test. Atty. Zakalik commented that they are not necessarily against the regulation they just want to be sure that burdens have been met. Member Sparks asked what benefit it would be to them not to have a regulation. Atty. Zakalik stated he could not comment. Member Sparks said those are commenting why they want the change and it is only fair to hear why Frias does not want it. How can the Board make a determination if they don’t have all sides of the story? Atty. Zakalik stated that they are not against keeping the information confidential, but he understands that certain burdens have to be met before such information is kept confidential in contrary to open records law and the AG is advising is that such records can be kept confidential based on the regulation not just a statute. Ms. Guerci stated that she had done the research when this first came to discussion to see what route to take, whether it be a regulation or make a statutory change. Workshop Minutes

Nevada Department of Business & Industry F inancial Services T eam

Licensing & R egulatory Services T eam

5

N atural R esources Services T eam

Consum er & Labor Services T eam

November 9, 2005

Member Sparks stated that the Board wants to be fair to all concerned parties and if Frias has major concerns the Board needs to know as the others feel it would be beneficial. Member Lopez asked for more comments which there were none, therefore, he closed the comments section. He asked the Board for a motion. Ms. Guerci, after reviewing the statute, feels that she is not sure that adding in not confidential for things submitted pursuant to NRS 706.8827 is accomplishing what she has heard from the certificate holders. Does the Board want the financial records for people applying for certificates or applying for expansion should not be confidential, is that what the Board prefers? The agreed that that is what has been requested and what they are leaning toward. Member Goldman stated he thought is was to allow the intervenors access so they would have a basis on which to intervene. Ms. Guerci asked if it was just on the financial portion. Member Goldman said yes just on the financial portion of it as opposed if they wanted to make them public, not to the public, but just to the intervenors so that they can make objective decisions on the financial status of the company in question. Ms. Knapp stated that was exactly what they wanted. Ms. Sparks asked if it would be make it available on to the intervenors and not to the public by using 8827. Ms. Knapp stated it would be only to those intervening. Mr. Goldman stated that intervenors are limited to company owners, correct. Ms. Knapp said correct. So any attorney can file a motion to intervene and then have access to those financial records. Ms. Knapp said they would have to be granted intervenor status by giving the administrator or the board if they had substantial interest in that issue. Ms. Guerci stated that she is not comfortable with carving out the exception for confidentiality for a specific group because there will be hearings on expansions and at the hearing information would become public unless – it would curtail the ability to have a public hearing if the intervenors have the information, but the general public does not because of their presence at the hearing. If that section is going to be specific and submitted pursuant to applications for certificates or expansions then the particular section should be omitted and leave those as a public document. Member Goldman asked if were deemed confidential and there was a public meeting and someone objects because of what was found, then it becomes public information. Member Lopez stated that at one time there was discussion regarding the financial statements being available to everyone, that would leave an opening for a lawsuit, is that still valid. Ms. Knapp commented that the information that is requested in the new annual report being made available to anyone, concerns of suits being filed against the companies. Her company was instrumental in changing the format of the annual report because they believed the board was not getting necessary information and the certificate holders would give the TA information they needed so when they came before the Board asking for a rate increase at the annual review of rates, how can it be justified if all information is not available. On the other hand, when providing this information, the companies want protection from the public getting that information or the union when they sit down to negotiate a new contract. At the TSA they have people that sit in on the meetings for a new applicant or a company that wants an expansion and pick apart the financials. The TA does not do that because they do not have a specific staff to do that. The burden of proof is always on the intervenors as well as the applicant. If intervenors feel that application should be denied, it is up to them to present all the arguments and they pick apart the application, therefore, their hands would be tied when a decision has to be made. She wants them kept confidential, but if a company wants to expand, they want to have access to the records. Administrator Land asked if the TSA picked apart the application in an open meeting and Ms. Knapp said yes.

Nevada Department of Business & Industry F inancial Services T eam

Licensing & R egulatory Services T eam

6

N atural R esources Services T eam

Consum er & Labor Services T eam

Workshop Minutes November 9, 2005 Member Lopez asked if TSA has any confidentiality regulation. Ms. Guerci stated that they have a different process where they ask for the information to be held confidential. Looking on that previously, the Board did not want another process to go through, they just wanted it to be confidential or if the Board wants to exempt something they can, but not to have to make a decision on every financial record that comes in. Also, the force of law is behind the Board when there’s a statute or regulation, it’s the law and it takes the burden off of the Board. Dr. Goldman feels just exempt those that apply for a certificate or wish to expand because even if it was confidential, once it was discussed in a public meeting, it would be public information, so just exempt certificate holders who apply for expansion or a new applicants. Member Lopez asked if that was a motion. Dr. Goldman motioned to adopt this regulation with the following amendment – -

exempt from confidentiality those certificate holders who are applying for expansion or new applicants for a certificate.

Ms. Guerci suggested that before a vote is taken, can some language be put together to give back to LCB. Draft specific language and then make that part of your motion so that we’re adopting that regulation with the addition of this subsection. -

financial records submitted

Member Lopez asked Cathy Olendorff, attorney for YCS, if she had any comments. She stated that Cheryl covered them, but she had a suggestion for the language, but it incorporates the intervenor and I was just going to add subsection 2 – to the exception employee of the authority, or a recognized intervenor for those that would have access to the public record, so if you wanted to make a note that if someone has applied for a new certificate. Ms. Guerci reiterated – put in #2 “or intervenors”, that gives intervenors access to all financial records and she doesn’t believe that what the Board wants. The Board agreed it was too broad. She said she would just do a separate one after #3 – financial records submitted pursuant to an application for a certificate of public convenience for the expansion or transfer of an existing – Section 1 – B - It will be as follows - “Financial records submitted, pursuant to an application for a certificate of public convenience or the expansion or transfer of an existing certificate of public convenience are not confidential”. Dr. Goldman motions with the language added by the attorney general that the Board adopt this regulation. Ms. Sparks seconded. Passed unanimously. Ms. Guerci stated that this will go to the public commission. Dr. Goldman motioned to adjourn. Seconded by Member Sparks. Passed unanimously. W orkshop was adjourned at 10:30 A.M.

Nevada Department of Business & Industry F inancial Services T eam

Licensing & R egulatory Services T eam

7

N atural R esources Services T eam

Consum er & Labor Services T eam

Nevada Department of Business & Industry F inancial Services T eam

Licensing & R egulatory Services T eam

8

N atural R esources Services T eam

Consum er & Labor Services T eam