MINUTES OF MEETING
ASSEMBLY COMMITTEE ON COMMERCE
Sixty-seventh Session
May 24, 1993
The Assembly Committee on Commerce was called to order by Chairman Gene T. Porter at 3:45 p.m., on Monday, May 24, 1993, in Room 332 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Mr. Gene T. Porter, Chairman
Mr. Morse Arberry, Jr., Vice Chairman
Ms. Kathy M. Augustine
Mr. Rick C. Bennett
Mr. John Bonaventura
Mr. Val Z. Garner
Ms. Chris Giunchigliani
Mr. David E. Humke
Ms. Erin Kenny
Mr. Richard Perkins
Ms. Myrna T. Williams
COMMITTEE MEMBERS ABSENT:
Mr. Dean A. Heller
Mr. Scott Scherer
GUEST LEGISLATORS PRESENT:
Senator Alice Constandina Titus, District 7; Assemblyman John C. Carpenter, District 33
STAFF MEMBERS PRESENT:
Mr. Paul Mouritsen, Senior Staff Analyst, Legislative Counsel Bureau
OTHERS PRESENT:
Mr. L. Scott Walshaw, Commissioner, Financial Institutions Division; Mr. Doug Walther, Deputy Attorney General; Mr. Bob Barengo, Nevada Consumer Finance Association; Mr. Larry Johnson, Association of Engineering Geologists; Mr. Kelvin Buchanan, past president, American Institute of Professional Geologists; Ms. Pamela Klessig, past president, Geological Society of Nevada; Mr. Larry D. Struve, Director, Department of Commerce; Mr. John Kuminecz, Commissioner, Consumer Affairs Division; Ms. Ande Engleman, Nevada Press Association; Mr. Sam McMullen, Nevada Broadcasters Association (See also Exhibit B attached hereto)
SJR 19 Urges Congress to develop alternative use for Nevada Test Site and contingency plans for alternative employment of workers at that site.
Senator Alice Constandina Titus, District 7, testified. She gave some historical background of nuclear weapons testing in the United States. She advised a total ban of nuclear weapons testing was to go into effect in 1996 and contended the ban would have great economic impact on Nevada. She advised during the 40 years Nevada's test site had been in operation, the federal government had spent approximately $1 billion dollars on capital improvements at the site and in 1992, the federal government had spent $300 million for wages and salaries. She said 8,700 people were currently employed by the test site, and an additional 13,000 people were employed in "support jobs."
Senator Titus stated SJR 19 called upon Congress to take advantage of the unique facilities, equipment and personnel of the Nevada Test Site by "making it the nation's testing and demonstration center for geographically demanding technologies." She advised such technologies included "renewable energy sources, such as solar, geothermal and hydrogen energy, satellite laser projects, possible ground water and soil remediation demonstration projects."
Senator Titus said SJR 19 was supported by organized labor, by the Test Site Contractors Association, by the Economic Development Commission and by Nevada's congressional delegation, and she urged the committee to support it. She declared, "...I do not consider support for this reinvestment and conversion plan for the test site in any way related to the activities at Yucca Mountain."
Chairman Porter closed the hearing on SJR 19.
ASSEMBLYMAN WILLIAMS MOVED DO PASS SJR 19.
ASSEMBLYMAN GIUNCHIGLIANI SECONDED THE MOTION.
THE MOTION WAS CARRIED UNANIMOUSLY BY ALL THOSE PRESENT.
AB 632 Authorizes credit against annual fee charged to owners of mobile home parks to assist low-income owners of mobile homes.
Assemblyman John C. Carpenter, District 33, testified. He provided a computer printout which reflected rents for some of the spaces in his mobile home park (Exhibit D).
Mr. Carpenter advised during the last legislative session, legislation was passed which required mobile home park owners to pay to the Division of Manufactured Housing the sum of $12 for each space within their parks which was occupied during a certain period of time. He said those monies were to be placed in a fund from which to provide assistance to the elderly and to the poor.
Mr. Carpenter said there were a number of elderly tenants in his park whose rent had not been increased since he and his wife had assumed management of the park except for increases which resulted from increased costs imposed on the park by the city. He stated current space rent in his park was $190. He advised six tenants received a "break on their rent." He said of those six tenants, three received rent reductions of $60, one received a rent reduction of $25 and two received rent reductions of $5.
Mr. Carpenter suggested a credit against the $12 fee he had discussed be given to those mobile home park owners who allowed tenants to pay reduced rents.
Chairman Porter asked how many spaces there were in Mr. Carpenter's mobile home park. Mr. Carpenter replied there were 101 spaces in his park of which the 68 spaces reflected on Exhibit D were permanent spaces.
Chairman Porter asked if Mr. Carpenter paid the $12 fee on each of the 101 spaces in his park. Mr. Carpenter replied he did. Chairman Porter asked if Mr. Carpenter paid a total fee of $1,212. Mr. Carpenter said he did.
Chairman Porter asked if it was Mr. Carpenter's wish that, under AB 632, if the total amount of rent reductions Mr. Carpenter allowed his tenants equalled the $1,212 fee he was required to pay, he then not be required to pay that fee. Mr. Carpenter replied he would be satisfied to receive some credit (against the fee) if only to the extent of not having to pay the $12 fee on those six spaces for which he charged reduced rents. Chairman Porter asked if Mr. Carpenter was suggesting AB 632 be amended to reflect a mobile home park owner need not pay the $12 fee on any space for which he charged a reduced rent. Mr. Carpenter responded affirmatively.
Ms. Augustine asked why four of Mr. Carpenter's tenants were paying rents in excess of $190. Mr. Carpenter explained those tenants rented larger spaces.
Chairman Porter closed the hearing on AB 632 and requested Mr. Carpenter work with the committee's staff analyst to generate an amendment to AB 632 which would provide the fee mobile home park owners were required to pay be reduced with respect to those spaces for which such owners gave a rent reduction.
AB 629 Makes various changes relating to regulation of installment loans.
Mr. L. Scott Walshaw, Commissioner, Financial Institutions Division, testified. He provided a memorandum summarizing AB 629 (Exhibit E). He said provisions contained in the first section of AB 629 were requested because of advance fee loan scams perpetrated during the preceding two years. He advised existing statute was "...somewhat lacking in going after people who are holding themselves out as being able to provide loans and not fulfilling that promise..."
Mr. Walshaw stated Section 2 of AB 629 expanded the kinds of credit related insurance licensees could utilize to include those kinds of credit related insurance provided for in the insurance code. He said in addition, Section 2 would limit the amount charged a borrower (for credit related insurance) to a sum commensurate with the insurance premium. He explained "non-fling insurance" was insurance taken out by a licensee in lieu of recording a lien on personal property and Section 2 would limit the amount charged a borrower for such insurance to the amount the licensee would have paid a county recorder to record a lien.
Mr. Doug Walther, Deputy Attorney General, testified. He advised the proposed amendment to AB 629 (Exhibit F) would clarify that either the act of soliciting a loan or the making of a loan would bring an individual under the jurisdiction of the Financial Institutions Division, and the division need not prove a loan was actually made.
Mr. Bob Barengo, Nevada Consumer Finance Association, testified. He said the association had worked with Mr. Walshaw on AB 629 and supported the bill.
Chairman Porter closed the hearing on AB 629.
ASSEMBLYMAN HUMKE MOVED AMEND AND DO PASS AB 629.
ASSEMBLYMAN BENNETT SECONDED THE MOTION.
THE MOTION WAS CARRIED UNANIMOUSLY BY ALL THOSE PRESENT; Assemblymen Arberry and Bonaventura were absent at the time of the vote.
AB 607 Provides for regulation and certification of engineering geologists.
Mr. Larry Johnson, Association of Engineering Geologists, testified. He said the association sponsored AB 607. He advised it was the association's desire all geologic specialties in Nevada be registered. He stated however, there were considerable differences of opinion among the various professional societies regarding the benefits and the ramifications of such registration. He requested AB 607 be withdrawn to allow the association to work with all interested parties in revising the bill.
A colloquy ensued among Chairman Porter, Mr. Larry Johnson and Mr. Joe Johnson, whose input to the discussions was requested by Chairman Porter.
Mrs. Williams asked the definition of an economic geologist. Mr. Joe Johnson replied an economic geologist was a geologist who worked in the exploration sector of the mineral industry.
Chairman Porter expressed his willingness to permit AB 607 to be withdrawn and indicated if the parties involved were able to reach a compromise, he would restore the bill to the committee's agenda at the request of those parties.
Mr. Kelvin Buchanan, past president, American Institute of Profession Geologists, addressed the chair. He contended the differences concerning AB 607 could not be quickly resolved and said several people were present who wished to share information with the committee.
Ms. Pamela Klessig, past president, Geological Society of Nevada, addressed the chair. She advised there had been considerable controversy over the previous two years concerning the issue (of registering geologists) and said she supported the withdrawing of AB 607.
Chairman Porter permitted AB 607 to be withdrawn and closed the hearing on AB 607.
AB 635 Makes various changes relating to solicitation by telephone.
Chairman Porter turned the chair over to Vice Chairman Arberry for the purpose of conducting the hearing on AB 635.
Mr. Larry D. Struve, Director, Department of Commerce, testified. He said he wished to give an overview of AB 635 and also to bring the committee up to date on what was occurring in the Senate with regard to amendments to NRS 599B.
Mr. Struve stated AB 635 was premised on retaining a licensing system for the telemarketing industry but advised there was interest in going from a licensing system to a registration system.
He said AB 635 incorporated language of several other bills introduced during the current legislative session which were concerned with the telemarketing industry.
He advised Section 7 contained extensive language dealing with "the charitable exemption from the current licensing scheme."
He pointed out Section 9 contained portions of SB 375, as originally introduced, and amended certain statutory provisions concerned with exemptions under the current telemarketing law which was a licensing law governed by NRS 599B. He stated those provisions had been extensively reworked in the amended version of SB 375 which was in the process of being printed. He said Section 9 also contained a new exemption, for persons licensed to do business when soliciting the sale of services of a resident agent, the language of which was taken from AB 210.
He pointed out language in Section 10, in lines 43 through 45 of page 45, which limited the amount of money the Consumer Affairs Division could carry forward from one fiscal year to the next and said that language was basically the same as language contained in SB 277. He contended that language was contrary to language in SB 375, as amended, which would prohibit any transfer of funds from the telemarketing account into the general fund.
He stated most of the remaining provisions of AB 635 or portions thereof were contained in SB 394 and were intended to strengthen current licensing laws. He advised the Senate Commerce Committee had appointed a subcommittee which considered SB 394 along with SB 375 and "...many of these other bills, including AB 210." He said the subcommittee had concluded it preferred a registration system (to a licensing system) and a transfer of all enforcement authority from the Consumer Affairs Division to the Attorney General's office. He said however, the amended bill would provide the Consumer Affairs Division retain authority to register telemarketing companies, to ensure those companies posted appropriate bonds and to take any action necessary to deal with consumer complaints.
He said SB 375 was in the process of final amendment and the fiscal notes he had seen on SB 375 indicated extensive additions to the staff of the Attorney General and a reduction in the staff of the Consumer Affairs Division.
Mr. Struve said thousands of complaints about telemarketing companies were filed with the Consumer Affairs Division each year, and the department hoped the Commissioner of the Consumer Affairs Division would retain some enforcement authority in order that he might process those complaints administratively, negotiate assurances, obtain restitution and take such action as needed to enforce statutory registration provisions if such registration provisions were enacted by the legislature.
Mr. John Kuminecz, Commissioner, Consumer Affairs Division, testified. Mr. Kuminecz referred to a document setting forth a comparative analysis of 10 states in which telemarketing was regulated. He pointed out eight of those states accomplished such regulation through registration and two of those states, Nevada and Florida, accomplished regulation through licensing. He pointed out none of the states' regulatory programs were very old, and Nevada's program had been in existence only a little longer than 3 1/2 years. He indicated there was no true example of such a program when Nevada began its program. He indicated Exhibit G enumerated distinctions among the programs of Nevada and the other states listed thereon and said Nevada had the best restitution program for consumer victims of telemarketing scams and the best record of getting consumers their money back and ranked in the top three states with regard to enforcement actions.
Mr. Kuminecz pointed out the other states listed on Exhibit G had less staff with which to regulate the telemarketing industry than Nevada had and said registration made that fact possible by eliminating some of the regulatory requirements (of licensing). He said the fact programs in eight of the states were "general funded" was an indication of why those states had less staffing. He indicated four of the states kept no statistics and contended those states did not have sufficient staff to be able to keep statistics or to do such work with regard to consumer complaints as the citizens of Nevada had come to expect from Nevada's Consumer Affairs Division.
Mr. Kuminecz suggested eliminating licensing in favor of registration would simplify the process of regulating the telemarketing industry. He advised under a registration program, complaint mediation and resolution would remain a mainstay of the program of regulating the industry.
Mr. Kuminecz said the division's compliance investigators were some of the most knowledgeable in the United States about the telemarketing industry. He stated under a proposal of the legislative Senate, the divisions's compliance investigator positions would be eliminated and the division would lose that knowledge. He contended the division's compliance investigators should be left in authority in order to improve regulation of the telemarketing industry. He stated enforcement activity was increasing, and the staffs of both the Consumer Affairs Division and the Attorney General's office needed to be enhanced in order "to keep up the pace."
Mr. Kuminecz said he had worked on proposed amendments to AB 635 without the assistance of a bill drafter and wished to submit those proposed amendments to bill drafting after discussing them with the committee.
He said the first proposed amendment was to add legislative intent to NRS 599B.
He stated the second proposed amendment provided for registration of both in-state and out-of-state telemarketing companies and salesmen.
He indicated it was also proposed legislative standards or findings be applied with regard to the Commissioner's existing authority to grant exemptions by regulation. He stated an exemption for resident agents was being requested in the Senate. He said he believed it best to handle such an exemption by having it considered by the Commissioner of the Consumer Affairs Division and the Telephone Sales Communication Board and having it determined by regulation rather than legislation.
Mr. Kuminecz said with regard to publicly traded companies, it was proposed language be adopted which would require such companies to be traded on the major exchanges and to have $2.5 million of assets.
Mr. Kuminecz explained the division currently exempted charitable organizations (from licensing) if none of the net profits of such organizations inured to any one private shareholder or individual. He said that condition for exemption should remain but "...along with it should be the approaching the commission and the board for exemption to that if in fact 80 percent of the gross that is raised for a charity goes to the charity." He said because of the exemption for charitable organizations, many individuals started businesses employing telemarketing techniques (to solicit charitable contributions) "...where they are the sole charity."
Mr. Kuminecz stated AB 635 would create standing authority for the board and the Commissioner to adjust fees by regulation as the need to do so arose.
He stated an amendment was proposed to increase fees in order to create a fund to be used for consumer education and information in order to combat deceptive trade practices, including abusive telemarketing practices. He explained since 1971, the Consumer Affairs Division had been chartered as the consumer information and education center. He advised the division was the "complaint intake center." He stated through the National Association of Attorney Generals, Attorney Generals had become involved in consumer education and information and said "...the money for this on the Senate side, has been earmarked for the Attorney General." He contended the place for consumer education and information should be that place where the complaint intake center existed.
Mr. Kuminecz advised an amendment was proposed with respect to security bonds. He said initially, a sliding scale for bonds had been considered. He stated members of the telemarketing industry had approached the division and advised they were being required to post bond in many states, and the division agreed it might not be necessary to impose a sliding scale for bonds until a violation occurred. He said many telemarketing companies had gross annual sales of less than $4 million, and the division believed a bond of $50,000 would be adequate for those companies. He stated escalation of the amount of a bond could be utilized when a penalty was required, and he proposed AB 635 be amended to include such a provision. He said it was proposed AB 635 be amended to provide violations of assurances of discontinuance could be used by the Commissioner as prima facia evidence of violation of the Deceptive Trade Act.
Mr. Kuminecz pointed out AB 635 would increase the penalty for conducting business without a license from $25,000 to $50,000.
Mr. Kuminecz summarized by saying the division wished to continue "...to handle consumer considerations when it comes to telemarketing..." and to do so through a registration process, which process had numerous benefits and would alleviate some problems.
Mr. Bonaventura said he was troubled by the fiscal note on AB 635 and said there was no fiscal note in the fiscal book. Mr. Kuminecz responded, "It has just been requested, sir, from the Legislative Counsel Bureau, so I'll be working on that."
Mr. Bonaventura asked if with respect to registration, the problem regarding companies exempted from registration because they were registered under the securities exchange had been resolved. Mr. Kuminecz responded the division suggested the current exemptions remain with the exception of those he had enumerated. Mr. Bonaventura asked if a company registered under a stock exchange would remain exempt (from registration) under AB 635. Mr. Kuminecz responded affirmatively.
A colloquy ensued between Mr. Bonaventura and Mr. Kuminecz regarding exemption from registration.
Mr. Bonaventura asked if Mr. Kuminecz could estimate the fiscal note on AB 635. Mr. Kuminecz responded by describing the staff augmentation requested by the division. Mr. Bonaventura indicated he wished to know the dollar amount of the fiscal note. Mr. Kuminecz replied, "...the total budget that we operated with is something around $1 million..."
Mr. Bonaventura asked if Mr. Kuminecz foresaw that companies which were not exempt from registration "under public security trade" would place themselves under an umbrella company in order to be exempt. Mr. Kuminecz replied one practice of non-exempt companies was for such a company to do business as a "dba". He said such a company might hire itself out as a contractor to another business and adopt that other business' name. He indicated the division would invite anyone who needed to do so to apply to the regulatory body for an exemption.
Ms. Augustine expressed concern about the fingerprinting requirements contained in Section 4, subsection 2. Mr. Kuminecz said Sections 1 through 5 were to be deleted and were to be replaced by new sections, 1 through 4, which would deal with legislative intent and commencement of registration procedures.
Mr. Augustine referred to Section 13, subsection 1(a), and asked, "...just to be a salesman, you have to identify any of those things?" Mr. Kuminecz responded the division did not feel there was a problem in requesting such identification. A colloquy ensued between Ms. Augustine and Mr. Kuminecz.
Mr. Arberry requested Mr. Kuminecz have his proposed amendments prepared in written form for the committee's consideration.
Ms. Ande Engleman, Nevada Press Association, testified after first introducing Mr. Sam McMullen, Nevada Broadcasters Association. She said the association was concerned about the new language regarding exemptions contained in Section 9, subsections (d) and (e) of AB 635. She said her particular concern was that under subsection (d), the Reno Gazette Journal would no longer be able to hire a telemarketing firm. She suggested the provisions under discussion be amended to enable a newspaper to hire a telemarketing firm. Ms. Engleman stated, "And also, we don't quite understand why, out of all the exemptions, these two are prohibited from sweepstakes premiums or chance promotions."
Mrs. Williams advised Ms. Engleman until such time as the amendments proposed by Mr. Kuminecz were drafted, the committee would not know whether or not the provision about which Ms. Engleman was concerned would be included in AB 635.
Mr. McMullen stated the associations wished to be certain their concerns were addressed in the final amendment to AB 635.
Vice Chairman Arberry closed the hearing on AB 635.
There being no further business to come before the committee, Vice Chairman Arberry adjourned the meeting.
Chairman Porter directed the committee secretary to attach to the minutes of the meeting a letter to Chairman Porter from the Commission on Economic Development.
RESPECTFULLY SUBMITTED,
________________________
SARA J. KAUFMAN
Committee Secretary
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Assembly Committee on Commerce
May 24, 1993
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