In a verbal order issued from the bench, District Judge James Todd Russell on Thursday sharply narrowed the lawsuit challenging the constitutionality of the governor’s Catalyst Fund.
That fund, with some $20 million to help bring businesses to Nevada, has been challenged as a violation of the constitutional provisions barring direct contributions of money by the state to for-profit businesses.
The Nevada Policy Research Institute challenged it on behalf of Michael Little, a southern Nevada businessman who objected to the $1.2 million award to Solar City which he said is his direct competitor.
The lawsuit was originally framed as a blanket challenge of the Catalyst Fund law.
But Russell Thursday narrowed it specifically to a challenge of the award to Solar City.
He said to do otherwise would necessitate bringing into the lawsuit all 13 companies that have won grants — funneled through local governments in Nevada — from the Catalyst Fund.
Those companies have effectively been awarded $9 million from the Catalyst Fund using local government entities as a pass-through.
“If we’re going to take that money away from them, I think they need to be here,” the judge said.
Russell basically ruled Little has no specific standing in the issue different from any other taxpayer.
Russell also questioned whether it’s up to the court to “second guess the Nevada Legislature as to the establishment of a business program.”
He said he wasn’t certain that’s the court’s business.
That enabled him to narrow the case to a specific challenge of the Governor’s Office of Economic Development decision to issue up to $1.2 million to Clark County for that entity to then send to Solar City — a scheme designed to get around the appearance of a direct contribution to Solar City.
Russell said the issue then becomes, “can the state indirectly do what they can’t do directly.”
“We think that’s the thrust of this issue when all the dust settles,” said NPRI lawyer Joseph Becker.
Russell directed Kevin Powers of the Legislative Counsel Bureau to prepare an order narrowing the case to that particular grant and bringing in Solar City and Clark County.
The result is even if Little and NPRI win the Solar City case, the other grants GOED has made to different businesses aren’t invalidated. That would depend on challenges of those grants based on the specifics of those individual contracts.