The Committee on Judiciary was called to order at 7:30 a.m., on Friday, March 26, 1999. Chairman Bernie Anderson presided in Room 3138 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. Bernie Anderson, Chairman

Mr. Mark Manendo, Vice Chairman

Ms. Sharron Angle

Mr. Greg Brower

Ms. Barbara Buckley

Mr. John Carpenter

Mr. Jerry Claborn

Mr. Tom Collins

Mr. Don Gustavson

Mrs. Ellen Koivisto

Ms. Sheila Leslie

Ms. Kathy McClain

Mr. Dennis Nolan

Ms. Genie Ohrenschall

GUEST LEGISLATORS PRESENT:

David Goldwater, Assembly District 10, southern Nevada

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Chairman Anderson called the meeting to order and proceeded with roll call. There was a quorum. He announced he would start with A.B. 467.

Assemblyman David Goldwater representing Assembly District 10, southern Nevada, testified A.B. 467 restored Nevada to being the boxing capital of the world. The first prize fight was held in the State of Nevada. After recent troubles and debacles the Nevada Athletic Commission had proposed legislation to make sure the state remained the boxing capital of the world. What made gaming great in the state and different from most other states were the regulations. Nevada Gaming had credible regulations, a regulatory board, a commission to check that board, and the legislature to oversee all of that. The same needed to apply to the sport of boxing if it was going to truly be the great sport that it was. If people were going to pay their hard-earned dollars to watch the sport they needed to know it was well-regulated. A.B. 467 built on what was already a good regulatory system but would make it greater.

The bill would do three things:

1. Some of the information a licensee presented to the commission would be made confidential. If effective regulation meant a licensee would hold back information because he was scared of public disclosure it was not effective regulation. If he went before the board in order to fight in Nevada and something he could tell a doctor would become public record, he was probably going to withhold a little information. He felt Nevada’s gaming statutes prohibited certain disclosures.

2. It would allow the commission to grant a limited license. Right now it could either grant or not grant a license, it could not grant a limited license.

3. The bill would give the commission subpoena power.

Assemblyman Goldwater introduced Commissioners Lorenzo Fertitta, Luther Mack and Glenn Carano and Kirk D. Hendrick, senior deputy attorney general from the Nevada Athletic Commission.

Lorenzo Fertitta said the Nevada State Athletic Commission was a tax collecting body. He and the other commissioners appeared before the committee to protect the interest of the state and to ensure the health and safety of participants of unarmed combat in the State of Nevada. He felt the points Mr. Goldwater had covered were very important to the Nevada Athletic Commission to effectively regulate the sport of boxing.

Section 1 covering certain confidentiality matters regarding medical, financial, and criminal information was very important. The commission needed factual information to be able to make a good decision, and in a couple of circumstances the commission felt it had not received proper disclosure. The most poignant example was the highly publicized hearing with Michael Tyson. Because Mr. Tyson was going through psychological testing, Mr. Fertitta was not 100 percent convinced he was as frank as he could have been with his doctors. Mr. Tyson was aware the minute any information or reports were received by the commission they would be open for public scrutiny. Mr. Fertitta thought there was an inherent doctor-client privilege, where doctors had a code of ethics and were not required to release all information. "We are there to protect, the fighters not to open their entire personal life up to the world."

Section 1, subsection 3 (a), covered financial disclosure. Mr. Fertitta thought it was very important to continue legitimizing the sport of boxing. To effectively do that they needed to get the right people working in boxing in the state. When applicants knew once they filled out a financial disclosure, every source of income, liabilities, home mortgage, and taxes were open for scrutiny to the public:

a) either they held back on the commission or,

b) they did not become a promoter in the State of Nevada.

Nevada was at a disadvantage. He pointed out Nevada was regarded as the preeminent state for regulation of boxing, but many other states who also had a large boxing industry had those provisions. The states of California, Connecticut, New York, and New Jersey all had confidentiality laws protecting medical information for their applicants. New Jersey also had financial confidentiality provisions that protected applicants from certain information becoming public record and gave them a competitive advantage over Nevada.

Mr. Fertitta made reference to section 2, the issuance of a "conditional license" which was important to effectively regulate the sport. He presented an example of when a championship fight took place in the State of Nevada the fighters were tested for drugs. If the drug test was positive it would be very helpful if the commission could place a condition on the boxer’s license that he needed to go through drug rehabilitation or have random drug testing, currently that ability did not exist. If a promoter was promoting a fight for the first time in Las Vegas the commission could put forth a policy that the fighter had to meet conditions a, b, c, d, and e, or else he could not promote in the state. Under current law, once they were granted a license it was theirs for 1 year. The new provision would be an effective tool.

Section 3 allowed the Nevada Athletic Commission to discipline a licensee if he did not comply with those issues.

Section 4 pertained to the ability to subpoena documents and to hold witnesses under oath, so when they testified they understood their testimony had to be truthful, or they could face criminal charges. The sport of boxing desperately needed credibility. Mr. Fertitta said Nevada was the leading state in bringing that forth and should continue. The commission needed to be assured they were being told the truth or there would be consequences.

Kirk D. Hendrick, senior deputy attorney general, said for the sake of brevity he would echo what Commissioner Fertitta had told the committee and was available to answer any questions on behalf of the Attorney General’s Office and the Nevada Athletic Commission.

Mr. Carpenter referenced section 1, subsection 3 (c), regarding confidentiality of criminal records.

Mr. Hendrick said "criminal record" was included for the sake of compilations. Nevada Revised Statute NRS 179A stated compilation of criminal information going beyond convictions, detentions, and arrests was among the information by statute which could not be allowed to be further disseminated. If a promoter had been questioned twice in New Jersey about whether or not he had been involved in fixing a prior boxing contest, Nevada needed to be aware. They could not further disseminate it if it became involved in a rap sheet, and the reason a criminal record was included was to prevent the commission from being libel for making something public which another statute actually said could not be made public.

Ms. Buckley stated her concerns regarding confidentiality pertained to criminal, medical, and financial records. She presented an example, in which medical and financial records affected their ability to box. If the commission became aware there were psychological or previous medical problems or their finances were deplorable it might cause an issue for the commission to monitor. That became a public issue, because the commissioner’s job as it affected the integrity of the game was part of the concern of the State of Nevada. If it caused the commission concern, why would they not want that open to the public so they could ascertain on their own whether or not the commission was acting in the best interest in the sport and in the best interest of the state.

Mr. Hendrick said the bill would not fully close records to the public. He referred to section 1, subsection 4, in which one would be able to petition the court to examine records. It created a barrier for public examination of those records. The Nevada Athletic Commission had an obligation to protect the people and licensees coming before them. It was a tough balance and was something done in all areas of public policy, and some things they had decided should remain confidential. "It is an age old argument around here, but it was a tough one to answer, here we are talking about the well-being of our licensees."

Mr. Fertitta wanted everyone to understand the proposed legislation was not an effort to keep information from the public. He believed it was good public policy to have information open for the public, but under certain circumstances it needed to be kept confidential.

Mr. Fertitta thought the most recent example of something relevant to boxing was the Mike Tyson case. The commission discussed psychological information and requested the team at Massachusetts General to examine him and advise Nevada whether or not he was fit to fight or at least give a recommendation. They had to know his past history. If Mr. Tyson told the doctors as part of his examination he had a bad situation when he was 15 years old and felt that would be disclosed, he would not be as willing to tell them. Disclosure obtained from Massachusetts General would be watered down and might affect either Mr. Tyson, his opponent, the referee in the ring or anybody else involved in boxing.

Mr. Anderson had questions regarding section 1, subsection 1, "The commission shall maintain a file of applicants licensed pursuant to this chapter records for all action taken with respect to the applications. The file and record are open to public inspection." He wondered if it would be a procedural file that would be open for public inspection. Mr. Hendrick said absolutely, as it was currently those applications were available and would remain available to the public.

Chairman Anderson continued in subsection 2, lines 7 and 8 of the bill, "The commission may maintain such other files and records as it may deem desirable." He questioned whether the commission would create unnamed files that were going to be held confidential.

Mr. Hendrick stated the files would not be unnamed, they would be medical records, financial records, criminal records, and documents provided to the commission for bookkeeping purposes. He gave an example of fighter X. Fighter X would have a file with his application, picture, and records of wins, losses and draws, but his medical information would be kept in another file, so if the public requested to review fighter X’s file they would not inadvertently receive medical information.

Chairman Anderson wondered if athletic commissions from state to state shared information. If the access to information was limited, how would Nevada be able to share information with other athletic commissions, and how would they purport to obtain information from other athletic groups.

Mr. Hendrick said the idea of sharing with other government agencies was extremely important to the industry. Nevada needed a sharing of information because boxing was a worldwide sport. There was a provision in A.B. 467 that would allow sharing with other government agencies. It would be the commission’s intent to only share the sensitive information if the legislature deemed it to be confidential. "The system should not be allowed to see it, absolutely nobody else’s citizens should be allowed to see it, but we do want the government agency to see it." Nevada would enter into "Memorandums of Understanding" with other jurisdictions that required them to maintain the information confidentially, or they could not receive it except for an edited version.

Mr. Anderson asked if any of those documents received would appear in the log that was open to the public.

Mr. Hendrick confirmed if the commission received something from another state without a "Memorandum of Understanding," it would be a public document. It would not be covered by the provision unless they asked the commission to keep it confidential.

Chairman Anderson questioned even though it was a confidential document its arrival would be logged into an open log which was available to public examination.

Mr. Hendrick responded to Mr. Anderson’s question and said if he was referring to "action taking thereon," it would probably not be logged into the open log. The term was used to mean action on the license which meant was the license granted, suspended, or revoked. He said there would be a log, and he believed the information would be public, but if the commission went too far in disclosing what it had received, confidentiality would be lost. If California sent Nevada a medical record with sensitive information regarding HIV, the commission would only be able to reference something about medical documents received from California.

Mr. Nolan queried when medical records were received was there a formal process in place by which the physicians actually reviewed those records or was the commission just collecting information for the file.

Mr. Hendrick responded the State of Nevada had a medical advisory board made up of some very distinguished doctors in the state. They did review those documents in conjunction with the commission who had some extremely knowledgeable people. Dr. Elias Ghanem, chairman of the Nevada Athletic Commission, reviewed the information.

Mr. Nolan asked with respect to drug testing and confidentiality, what were the parameters the commission could request or demand of an applicant.

Mr. Hendrick said at the current time it was not confidential, because it was available to the public if they asked. If someone came back "dirty" after a championship fight, a public hearing would be held. Because the fighter would receive a deduction from their "purse fee" it would remain a public issue. There would have to be a complaint brought forward unless they just stipulated to it, so the drug test after a championship fight would be public information.

Mr. Hendrick reiterated Commissioner Fertitta’s comment about trying to help the boxer with his or her life, and that would be more limited. The commission wanted to encourage those people to go for rehabilitation. The goal of the commission was to get the boxer off drugs.

Glenn Carano, commissioner, Nevada Athletic Commission, wanted to echo Mr. Fertitta’s and Mr. Hendrick’s remarks. Nevada was the boxing capital of the world and the Nevada Athletic Commission was highly regarded. It was a very competitive industry and as it continued to get more competitive Nevada needed the confidence of everybody with whom it did business including the boxers and the promoters.

Luther Mack, member of the Nevada State Athletic Commission, wanted to concur with everything previously stated. He re-emphasized Nevada had the best athletic commission in the world, and what happened in New York would never happen in the State of Nevada. "We are the leaders in the field and we would just like to take this time to tell you that this bill is important to us and it gives us an opportunity to regulate this sport."

Chairman Anderson said he would make the document called the "Summary of Proposed Testimony from Mr. Mack, Mr. Carano and Mr. Fertitta" part of the record (Exhibit C).

Harvey Whittemore on behalf of the Nevada Resort Association supported the bill. He would be happy to serve on any subcommittee the chair proposed to help work on the language.

Mr. Anderson said the proposed legislation would give the athletic commission quasi-judicial powers, enhancing the boards subpoena power to require the production of documents of importance to the commission, administer oaths and require testimony under oath, appoint hearing commissioners, service of process and notices required in civil action, and would make giving false testimony before the commission perjury.

Kent Lauer, the executive director of the Nevada Press Association testified in opposition to A.B. 467. The Press Association represented 41 newspapers throughout the state. Part of their mission was to protect the public’s right to know and to protect freedom of information. The press association strongly objected to section 1 of the bill, which provided for nearly all information submitted to the Nevada Athletic Commission to remain confidential. "This sweeping secrecy is an overly broad knee-jerk response to an isolated incident that did not cause any substantial harm to anyone." He referred to the release of the psychological reports of Mike Tyson. He felt the Nevada Athletic Commission had been doing its job for years, and there had not been any significant problems that would call for broad confidentiality. He questioned if anyone could say with certainty public dissemination of Mike Tyson’s psychological reports caused substantial harm to Mr. Tyson. He did not think so and would submit that public confidence in the commission’s decision to grant Mr. Tyson a license was bolstered by the release of those reports.

Mr. Lauer felt now was not the time to throw a blanket of secrecy over information used to regulate professional boxing in the state. The committee just had to look at what happened in New York with the Holyfield-Lenox Lewis fight to understand that. Secrecy bred skepticism and lessened public confidence in government. Their position was quite simple, the Nevada Athletic Commission represented the public, the taxpayers. If the commission had access to information, the public should have access to the same information unless there was an extremely compelling justification for confidentiality. The need for government confidentiality must outweigh the need for public accountability. The government needed to operate in the open. The potential embarrassment to a person who wanted a boxing license did not in any way outweigh the need for accountability. Openness had to prevail.

Mr. Lauer said nobody was questioning the integrity of the athletic commission, but he wanted the committee to ask themselves how would the public be able to judge decisions of the athletic commission if much of the information used in those decisions was kept private. There was no public accountability in that. Boxing fans who were paying to see the fights and place bets should know if a boxer had a medical problem which could affect his performance in the ring. They should know if there was some criminal activity or financial information that affected the licensing of those involved in the sport. Las Vegas was the boxing capital of the world. He doubted fighters and promoters would shy away from Nevada if the bill failed, economics said otherwise. He agreed with Assemblywoman Buckley, the public should not have to run and hire an attorney and file a complaint to get information.

Chairman Anderson said dealing with the press was always a touchy subject. He felt the committee was very aware of that, and not just because of the political spotlight in which it lived, but because of the public’s right to know and the proper role of the press in keeping the public informed of the general condition of the state. He did not think the committee would doubt the power of the media in any of its forms. The question, however, came forward on more than one occasion about the misuse of the press that pursued a topic which was not really of any pressing nature. It gave the appearance of only wishing to sell, or to raise issues that had nothing to do with whatever the event happened to be.

He wondered how Mr. Lauer would suggest they dealt with that when they were trying to say full disclosure was needed of somebody’s medical or criminal past. How would the commission deal with other states which had confidential statutes.

Kent Lauer felt Mr. Anderson’s point was well taken, information could always be abused. Not only could it be abused by the press, the general public, and public officials, it could be abused by anyone who had access to the information. He often received questions regarding sensationalism, which was a legitimate concern not only on the public’s part but public officials as well.

He felt the information the athletic commission received had been open for a long time, and commissioners hadn’t testified there had been any significant problems or abuses in the past. Due to the Mike Tyson episode they wanted to make everything confidential because Mike Tyson’s psychological reports were placed on the internet. Mr. Lauer thought the public had a right to know what was in those reports. Much of the commission’s decision was based on Mike Tyson’s psychological exam. If it was good enough for them to read, why was it not good enough for the public to read.

Chairman Anderson said maybe that was part of the question. The internet had dramatically changed the way information was received and disseminated in society. Rules from the past no longer applied because it was a new information age. The committee needed to take a hard look at how information was disseminated through the internet and other means that were not available when the statutes were written and when the shield law for the press was put forward. He asked Mr. Lauer if he did not see that as a legitimate issue for public discussion.

Mr. Lauer thought if the information was public information, anybody had a right to take the information and disseminate it through any medium they chose. He did not think the fact Mike Tyson’s psychological reports were on the internet caused anybody any substantial harm. "How can you say that that embarrassed Mike Tyson? It didn’t. Mike Tyson does a good job of embarrassing himself in other ways. You just have to look at the Playboy Magazine interview to determine that." Because of today’s technology he felt information was going to be disseminated through a wider audience and did that require broad sweeping confidentiality. Under section 1 practically every bit of information submitted to the athletic commission would be confidential. The public no longer would be able to judge those decisions since it would not have access to that information. He felt the press would not report any medical problem not relevant to a boxer’s career.

Ms. Buckley wanted to follow up with Mr. Lauer’s last comment. If medical information was revealed to the commission that was irrelevant in their inquiry as to whether or not they were currently fit to box, would Mr. Lauer object to the information being kept confidential.

Kent Lauer agreed if medical information was not relevant to that licensee, there was no need for the public to know, but under the bill everything would be kept confidential and that was the problem. He felt certain medical information was very pertinent to boxing fans. For instance, if a boxer had a heart condition that would affect his performance in the ring, he saw no need to keep that confidential.

Mr. Claborn had a problem with section 1, subsection 3 (b), which said "any background regarding the applicant that has been furnished to or obtained by the commission from any source," He questioned what "any source" meant, where would the line be drawn. Would they draw the line at just the two items, criminal records or medical records. What kind of records was the commission talking about. There was confusion because the bill said "any source."

Kent Lauer, thought the athletic commission could address Assemblyman Claborn’s question, but that was why he contended the bill was far too broad. The section said "any and all information submitted to the Athletic Commission is confidential" from any source. Section 1 spoke to information which needed to remain confidential after being obtained from an informant regarding a promoter.

Mr. Manendo asked Mr. Lauer if he thought the commission received the best information possible from the licensee when the information was public.

Kent Lauer did not think he was in a position to answer the question but thought the argument that somehow applicants were going to withhold information if they thought it was going to be made public, was a bit disingenuous. He thought if they wanted to withhold some negative information they were going to withhold it from the athletic commission as well. He restated his previous point, the Nevada Athletic Commission had been in operation for years, and he had not seen them mention any particular overwhelming problems caused by the current statute, because it did not provide confidentiality.

Chairman Anderson questioned Mr. Lauer, if the athletic commission received confidential information based upon the promise of continued confidentiality would they not have a duty and an obligation to make sure such information remained confidential.

Mr. Lauer said that was a good question, sometimes he got information and kept that information confidential or at least the source of the information confidential. He thought what they were dealing with was the source wanted to provide the information but he did not want anybody to know it was provided by him, and the problem was keeping the source of the information confidential. He thought they were talking about the identity of the source and not necessarily the information itself.

Chairman Anderson questioned if in his profession Mr. Lauer used all source material he received or did he make a definitive judgement as to the value. The legislators frequently spoke of what happened here and how it was portrayed in the press differently than how they had perceived it even though they were all at the same meeting. Not every source of information received by a reporter was used, so why would the athletic commission be required to divulge every bit of information they received which they felt was not in the public purview.

Kent Lauer asked what if the information was pertinent, and the athletic commission decided not to use or disclose it. Nobody would know because it would be confidential information, there would be no check and balance. In answer to Mr. Anderson’s question about the press, when he was a reporter he received information he did not think was relevant and could not be verified, so he just ignored it.

Mr. Collins wanted legal clarification whether it was public or privileged licensing being discussed. Where was the balance of what was public and privileged for specific fights, and what part was pertinent and what was not.

Mr. Hendrick responded, if he understood Mr. Collins’ question, the licensing process was going to be done in public. On any championship fight, "special event," there had to be a duly noticed, open meeting. The bill dealt with the actual documentation, did the public need to see the entire file of a fighter, especially as it pertained to medical, financial, and criminal rap sheet information.

Mr. Collins said it was a privilege to box, but it was also a public event, so where was the balance between privileged information and public information.

Chairman Anderson asked if the rules were the same ones currently used for gaming control.

Mr. Hendrick informed Chairman Anderson he was also the chief deputy attorney general for the State Gaming Control Board, and the Nevada Gaming Commission. The proposed legislation was actually a narrowing of the Gaming Control Board statutes. NRS 463.120 subsection 4, was a small portion of what the Gaming Control Board was allowed to keep confidential from the public. It was an opportunity to allow the athletic commission the opportunity to be sure it remained the best in the world.

Chairman Anderson closed the hearing on A.B. 467.

Ms. Buckley said she liked sections 2 and 3, but thought any information relating to the applicants’ current ability to box should be made public.

Chairman Anderson said they could probably safely move on sections 2, 3, 4, 5, and 6 of the bill then delete section 1.

Ms. Buckley wanted to add the ability of the commission to redact private medical information no longer relevant to their ability to box.

Chairman Anderson said as long as the committee included other information the commission received from sources already designated as confidential. Then it would be amend and do pass section 1 retaining the ability of the boxing commission to examine medical records and determine sections of the medical record that would not be open to the public based upon age. Further the boxing commission having received information designated in a confidential manner would be able to continue hold it in confidence. The committee would hold on to sections 2, 3, 4, 5 and 6 of the bill.

Mr. Carpenter questioned if it was received confidential would that mean just from anybody, or would it have to be from some other state.

Chairman Anderson said it would have to be from a governmental agency. If the materials they received from another governmental agency were already confidential in that state, then it would have to maintain the same level of confidentiality. He did not want to prevent the commission from obtaining information so it would have to come from a governmental agency.

Chairman Anderson assigned the bill to Mr. Goldwater to defend on the floor and would provide backup if needed.

Chris Giunchigliani, Assembly District 9, stated A.B. 496, was an attempt to clarify what had long been a policy within the state, that it was illegal for a single party to wiretap. A two-party consent was necessary in order to be able to do so, if not it was a felony. During a congressional race there had been some murkiness based on a situation where ones privacy was invaded without notice, and without the other party knowing they were being taped and was released to the public. She cited a recent case, Lane vs. Allstate Insurance Company, in which the majority ruled it required a two-party consent in the State of Nevada in order to do the tapping. The two dissenting Justices, Charles Springer and Bob Rose, pointed out two areas that were unclear (Exhibit D). The bill was an attempt to make sure they tightened the language so as not to risk ones privacy. Exhibit D also contained an article regarding problems with Nevada’s wire tap statutes and an amendment that clarified a couple of words which had been left out in drafting.

She introduced Stan Hunterton who would discuss the legal side of issue and Bill Koot, district attorney, Clark County District Attorneys office. The purpose of the bill was to increase individual privacy and the legitimate needs and requirements of law enforcement in Nevada.

C. Stanley Hunterton, attorney and counselor at law, Hunterton and Associates, testified for the first 12 years or so of his professional life he was a special attorney with the Organized Crime Strike Force, United States Department of Justice. He worked on cases in both Detroit and Las Vegas, and he probably intruded on the privacy of more people than everyone in the room put together, because one of the things they did virtually full-time was conduct electronic surveillance on organized crime figures.

Surveillance was done primarily pursuant to a court order under a scheme called Title 3. They also had a great deal of experience with what was called the single-party consent issue, which was having agents and/or informants wear body microphones to record a conversation. He had spent 30 percent of his time dealing with electronic surveillance issues as a prosecutor getting the court authorizations to conduct the surveillance, monitoring the conduct of the surveillance to make sure it was done correctly, and then defending the surveillance in court against motions to suppress by the defense.

He was in favor of the bill because he believed there was too much misuse of the single-party consent. He further believed there was an inherent value in being able to have conversations with business partners, business competitors, children’s teachers, ex-wife, friends and relatives without concern conversations were being electronically monitored.

He had seen an inherent mischief that was not an issue today, but was one he had seen at work, and that was informants who worked for law enforcement agencies who were not properly supervised, were given recording equipment and told to go out and see what they could do to make cases. Those people had a tendency to record the conversations they wanted to record and not record the conversations they did not want to record which did a great disservice to the privacy issue and in that instance to law enforcement itself.

The type of surveillance which A.B. 467 addressed did not have any oversight by the committee or the courts. The kind of electronic surveillance Mr. Koots’ office conducted and that law enforcement conducted pursuant to court orders were subject to a great deal of scrutiny as they had to go to a judge to get the order. The judge could say "no." Progress of the wiretapping or use of the body microphone needed to be reported to the judge. Annual reports needed to be documented as to how often they were done, and they were made public, so people could get some sense of how much electronic surveillance was being used. When citizens were permitted to do the same thing there were none of those rules of accountability. Those were the reasons he had assisted Assemblywoman Giunchigliani in drafting the bill.

Mr. Anderson asked for clarification if they were going to add the term "oral communications" and was it the only amendment to the bill Assemblywoman Giunchigliani wanted.

Assemblywoman Giunchigliani said yes.

Chairman Anderson questioned if the only changes of the bill were the addition of "oral" page 1, section 1, at line 4, and the definition at page 2, line 22, and in Section 2, line 25.

Assemblywoman Giunchigliani said yes, however, Mr. Koot’s proposed amendments were absolutely acceptable (Exhibit E).

Mr. Gustavson asked Mr. Hunterton if the way the bill was written in section 1, line 3, subsection 1, the terms for definition of "intercept means aural or other acquisition of the contents of any wire or radio communication through the use of:" meant a person would be prohibited from listening.

Mr. Hunterton responded there was no difference between intercepting and listening and intercepting and recording, both were an intercept. They were trying to achieve some uniformity of interpretation and he knew based on litigation and legislative changes since 1968, when the federal law was put into effect what "intercept," "aural," and "wire" meant. "Radio communication" was a little different because it was not a phrase that appeared in the federal scheme it was unique to Nevada.

Mr. Gustavson stated as a professional driver he as well as most truck drivers had a scanner and listened to Cal Trans, Nevada Department of Transportation, or highway patrol especially in the wintertime, for safety purposes and road conditions especially driving over Donner Summit. Would the bill prohibit truck drivers from listening even though it was for their own safety and for the safety of others.

Stan Hunterton stated that was not the intent of the bill because they used the existing definition of "radio communication." Current definition permitted that kind of activity and would not be changed under the bill. NRS 200.610 definitions of "wire communication" and "radio communication" specifically exempted what they were discussing, "the term radio communication does not include the transmission of writing, signs, signals, pictures and sounds broadcast by amateurs or public or municipal agencies of the State of Nevada, or by others of the use of the general public."

Bill Koot, district attorneys office, Clark County, explained the bill as a two part bill. The bill redefined "person" to include the private citizen who wished to record his own or her own telephone conversation. It was clear to the Nevada Supreme Court, but the proposed legislation would make it clear in the State of Nevada a person could not record their own telephone conversation. It was the part they had initially wished to address. The drafters of the bill then decided to insert the words "radio" thereby making it illegal to intercept radio communications. It was not unlawful, in the federal system or in the State of Nevada to intercept radio communications. The bill would make it unlawful to intercept radio communications.

Mr. Koot had put himself in the middle on both sides of the fence and that was why he had drafted an amendment which basically said, if you are going to outlaw radio communications then at least give the government and the police authority through a court order to lawfully intercept radio communications, because NRS chapter 179 only gave law enforcement through court authorization the right to intercept wire communications. It did not address radio communications. Today’s technology was such that there was even a debate on whether a cellular phone was a radio or a wire. So far it had been defined as a wire communication because there was wire somewhere along the road; however, tomorrow it may well be wireless, which would make it a radio communication.

Chairman Anderson said his answering machine at home records messages where people were informed either he or his wife were not available or not able to answer the telephone and if the caller could leave a message. He asked if the bill prohibited individual citizens from using answering machines.

Mr. Koot responded it had always been implied it was not against the law. It was not specifically set forth, and there could be a debate among lawyers because it was not spelled out it was against the law in the State of Nevada.

Chairman Anderson continued if he picked up a telephone in the wrong part of the house and the phone was not attached to the answering machine and the conversation was recorded, would there be a problem.

Stan Hunterton advised Mr. Anderson the answering machine was fine and picking up the phone while the answering machine was on was not forbidden for two reasons, the statutory definitions excluded normal phone equipment. Those were not called interception devices, there was a telephone and the answering machine was part of the telephone, so they were exempted under current statutes. The other reason why neither of those things would inadvertently become illegal was because when someone left a message they knew it was being recorded. It would be not one party but both parties consenting to the recording. He gave an example where an insurance adjuster would call and want to get a statement over the phone about an accident, and he would say, "I want to record this okay? And you say okay, and he turns on the tape recorder, nothing wrong with that."

Chairman Anderson had a 1930’s type big Philco radio with a mast attached to the side of the house. He was able to pick up police bands and wondered if it would be outlawed.

Bill Koot said it was debatable subject. The definition of radio communications in NRS chapter 200.610 said "the term does not include a transmission of writing, signs, signals, pictures and sounds broadcast by amateur, so that would be the CB, or public or municipal agencies of the State of Nevada or by others for the use of the general public." Would "for use of the general public," modify the rest of that, and were police communications "for use of the general public". Under federal statute there was a phrase "readily accessible to the general public." He did not know if it was a better phrase than, "for use of the general public." The federal system did not utilize the definition and there was no case law in the State of Nevada.

Mr. Hunterton thought Mr. Anderson’s "Philco" ought to be "grandfathered" in on the legislation. He was comfortable with the language of the bill. Policeman knew their conversations were being monitored. Regarding undercover operations, narcotic operations, and surveillance, they used different frequencies and the FCC controlled who could obtain access to monitor those. When there was a need for confidentiality in law enforcement, Mr. Anderson’s "Philco" was not supposed to receive those transmissions. When they were talking about the location of an accident out on the highway, they were aware everyone was listening. Mr. Anderson thought that was a part of Mr. Gustavson’s concern.

Mr. Nolan agreed the committee could not outlaw Mr. Anderson’s Philco. He understood there had been a number of domestic battery cases in which the batterer made threatening phone calls and those had actually been recorded. Often recorded threatening messages were substantial evidence in those cases.

Bill Koot responded the law presently was very clear and referenced the Nevada Supreme Court decision of Lane Vs. Allstate. If the husband knew it was being recorded, Mr. Koot was of the opinion it was admissible into evidence and not refutable. If the husband was not aware the conversation was being recorded and a wife was simply recording it in order to get some proof against the husband, it was against the current law in the State of Nevada and would continue to be against the law with the passage of A.B.496.

Mr. Koot expressed concern from the very beginning they probably did not need the bill, because the Nevada Supreme Court Lane vs. Allstate had already said that a person could not record their own telephone conversations, and it was implied that an individual could, so long as the other party knew about it.

Assemblywoman Giunchigliani wanted to clarify, in 1993 she wrote a piece on domestic violence that began to add dating relationship which was wisely expanded by Assemblywoman Ohrenschall. They added if a person called in on a 911 tape, that tape could be used as admissible evidence, so she felt they tried to recognize under certain circumstances it would be allowable.

Assemblyman Manendo asked would scanners be included. Bill Koot said Mr. Hunterton and he agreed the definition of radio communication stated "radio communication does not include, the transmissions of public or municipal agencies for the use of the general public." People could debate whether or not the police radio communication was intended for use of the general public. The truth was it was an AM or FM signal and the general public could pick it up. The committee needed to amend the definition of radio communications and instead of "for use of the general public" and say, "readily accessible to the general public," because those communications were readily accessible to the general public. Without that type of amendment a person could certainly argue it would be a violation of Nevada law. It would be a felony to use a scanner to pick up police communications.

Mr. Hunterton agreed it would be a good amendment and felt the clarification was useful.

Assemblywoman Giunchigliani felt the suggested amendment would be appropriate.

Bill Koot stated if they were going to amend the last phrase "readily acceptable to the general public," it needed to be amended in both NRS chapter 200 and 179.

Mr. Brower wanted to make sure he understood the current law. Currently one-party consent with respect to a person to person conversation was not against the law. Stan Hunterton said that was correct.

Assemblyman Brower continued it also was not necessarily inadmissible in subsequent action. Stan Hunterton agreed.

Assemblyman Brower further stated if he and Mr. Hunterton had a phone conversation and he was recording the conversation without Mr. Hunterton’s consent under Nevada law, that was illegal. Stan Hunterton responded under current Nevada law Mr. Koot would say it was illegal. He further believed it was now the subject of confusion and debate because part of Nevada’s surveillance law was in NRS chapter 179 and the rest was in NRS chapter 200. Nevada also had the Lane versus Allstate Insurance case, in which two judges said it did not violate the law. He felt the bill was necessary and important to Nevada law enforcement to obtain clarity regarding the area of privacy.

Mr. Brower asked if the bill would make person-to-person live recordings with one party consent illegal. Stan Huntington that was correct. Mr. Koot said no. Mr. Brower felt his original understanding was different, and it sounded like Mr. Koot’s was as well.

Mr. Koot said no, "that would overrule a some precedence we have in the state the "Bonds case" for example which clearly held that you could be in the same room." The State of Nevada allowed that and it was done every day with undercover officers who wired themselves for sound that they had some evidence to take into court.

Stan Hunterton referred to section 2, lines 22 through 25. "It is unlawful for any person to intercept or attempt to intercept any wire, oral or radio…"

Mr. Anderson said Mr. Hunterton was referring to a proposed amendment. Ms. Giunchigliani’s proposed amendment would add "oral" to the list at line 4 after "wire." It would be wire, oral or radio, and then again it would be a definition of oral at 5 of the Ms. Giunchigliani’s proposed amendment, and then an addition of oral to line 25 (Exhibit D).

Bill Koot said the bill he had removed from a stack of bills at the table did not have that.

Chairman Anderson said the amendment was not located in the bill.

Stan Hunterton responded he had discussed it with Assemblywoman Giunchigliani thought it would be appropriate to have a law enforcement exception, so a police officer, for his own protection and to gather evidence while acting undercover could wear a body-microphone. "But, as to private citizens, yes, so that we are all on the same page here since apparently we have had different drafts. The proposed bill would eliminate one-party consent whether the conversation was being held telephonically or face to face."

Chairman Anderson restated for clarity there was the original bill, to which Mr. Koot referred and the proposed amendments Ms. Giunchigliani would like adding in the phrase "oral" with a definition at a later spot. They had the further clarification in Mr. Koot’s proposal to use the definition for "radio" as outlined in NRS chapter 200.620. He thought Mr. Koot was of the opinion by adding Ms. Giunchigliani’s amendment it dramatically broadened the bill, which attempted to clarify the wireless radio and electronic communication question.

Assemblyman Brower said his concerns were finally clarified and he would have to respectfully disagree with Mr. Hunterton. He saw no harm in allowing one-party consent with respect to person to person or telephone or wire.

Stan Hunterton said for clarification and windup they did not have any objection to the amendments to both NRS chapter179 and NRS chapter 200 reflected in Mr. Koot’s memo.

Mr. Koot restated his original opinion the bill was not needed. "Lane versus Allstate" made it very clear to everybody what the law was in the State of Nevada. The Supreme Court had said, "you cannot record your own telephone conversations" period, end of story until the statute was amended. He initially had no objection, but he had not had an opportunity to respond to the "oral" part of it. I would not mind sitting here and debating one-party consent, because he had done it in the past. Mr. Koot just did not think the bill was needed but if the legislature wished to include radio communications, he was just simply asking to remove from the amendment the term "oral."

Chairman Anderson asked Mr. Koot if the committee was going to proceed with the bill would he like them to amend the original bill and not accept Assemblywoman Giunchigliani’s amendment.

Mr. Koot said that was correct.

Ms. Giunchigliani clarified the issue on amending the current definition of "radio communication" by deleting "for the use of the" and inserting "and readily accessible to the" and then "general public" would continue.

Kent Lauer, representing the Nevada Press Association supported the bill but felt it was a mess in their opinion. It took a very confusing law with difficult language and made it even more confusing.

The bill would have some really strange consequences. The bill would make it illegal for two people to have a telephone conversation, if their phones were purchased at a retail store. If a person had a phone that came from the phone company they could have a conversation without violating the bill, but if a phone was purchased elsewhere, it was not covered by the exemption. Their second concern, under Nevada’s existing wire tapping statute, two things had to occur, one of the parties to the communication approved of the intercept and a court approved.

Ben Graham, Nevada District Attorney’s Association, felt all issues had been well represented.

Chairman Anderson closed the hearing on A. B. 496.

Chairman Anderson opened the hearing on A. B. 443. Mr. Anderson informed Fritz L. Reese the assistant director, of the Clark County Family Youth Services the bill was in conflict with S. B. 87, which had already been signed by the governor, which meant any kind of action the committee took would mean amending the bill.

Mr. Reese said he understood but wanted to provide the committee with some background information. Currently there were eight states that charged for juvenile probation services, they were Arizona, Arkansas, Connecticut, Florida, Indiana, Kansas, Oklahoma and Texas. Arizona could charge up to $40 per month however, it was based on a sliding scale according to the financial ability of the parents. The money went to the general fund about $15,000 per month and provided a special account to provide services for families. In the State of Arkansas, they supervised older juveniles 18 to 21, and those young men and women were assessed $20 per month and were expected to pay in order to show their responsibility and intention to adhere to the order of the court. The State of Connecticut charged up to $200 for probation services as a one-time fee. The State of Indiana charged an up-front fee of $25 to $100 and then $5 to $15 a month. The State of Kansas legislature had passed a law, but had not determined fees. Oklahoma statutes said when a child was placed on probation the court may impose a probation supervision fee of not more than $25 per month if the court found the child, parent, or legal guardian had the ability to pay however, they also used the sliding scale. The State of Texas had a fee scale charging juvenile probation fees as follows: ages 10 to 13 were $5 a month, ages 14 to 15 were $10 a month, and ages 16 to 17 were $15 a month. The juveniles were expected to pay however, if they had an inability to pay the parents were requested by the court to pay. California’s law passed in 1998 enabled probation departments to collect for home based services and intensive supervision. Those would be specialized services provided for the department in terms of electronic monitoring, special home, and in-service programs.

In terms of financial impact, if Clark County began assessing probation fees for juvenile probation services there would be a need for additional financial specialists; however, the figures for Clark County were as follows: an average of 2,000 probationers per month, at $25 per month, at $50,00 per month times 12, was $600,000. Many families may not have the ability to pay and therefore, if they were to cut the expected revenue in half, they would still collect approximately $300,000 per year. The number of beds available in the Department of Family Youth Services institutions had remained static over approximately the last 18 years, and the number of staff providing direct service to youth had increased slightly. A tremendous strain had been placed upon the staff and the institutions in the department. The adult criminal justice system in Nevada was permitted by law to collect probation fees. It was proposed that the Department of Family Youth Services have the same ability to retain any revenues generated from services. They would be used by the department to augment programs and services. The revenue could also be used to place youths in alternative programming in order to beds in the state correctional system.

In closing Mr. Reese said the statute allowed the ability to assess fees. The court could assess a fine and enforce or request that the family pay for the cost of the proceedings. The court could also request that a monetary amount be placed as a down payment or in an account based on liability and the terms of ability of a youth to participate in work programs funded by the county. They were requesting the ability for a court to assess probation fees in the amount of $25.

Chairman Anderson said they would need an amendment to avoid the conflicts in S. B. 87, which had already passed.

Mr. Carpenter believed they were giving the court an option. It was not a requirement, but "a may" to assess those fees after making such a determination thus increasing the possibility a child would have to pay for the program. If a judge chose to place him and he did not have or the family did not have the financial resources and the judge felt it was in the best interest of the child, they would still be able to place him in the program. He questioned if he had made a correct assumption.

Mr. Reese said Mr. Carpenter was correct.

Assemblywoman Leslie questioned whether the chief juvenile probationers officers had taken a position on the bill.

Mr. Reese said the chiefs had all agreed to the particular legislation and were in support of it.

Assemblywoman Leslie’s second question was in reference to Mr. Reese’s written handout (Exhibit F) and asked if the parents would be able to have their drivers license renewed if they were not able to pay.

Fritz Reese said there had been discussion on parents who did not pay, or had ability to pay and did not pay. He pointed out in California, they had the opportunity to not renew drivers licenses of parents who did not pay. He said he was not suggesting Nevada enact that policy but just providing additional background.

Chairman Anderson said the committee had looked at other pieces of legislation and had rejected the concept.

Assemblyman Gustavson had a question as far as accountability and record keeping. What type of records were presently being maintained and were they open to the public. How detailed were the records as far as the charges and were those provided to the parents. What were the charges and how did they come up with the figures.

Fritz Reese said if he was understanding Mr. Gustavson correctly every parent would be required to fill out a financial statement, and a determination would be made in terms of their ability to pay.

Mr. Gustavson apologized for not making himself very clear. He restated the question whether agency charges were applied to the parents or child.

What type of detailed records were kept, and were those provided to the parents or child.

Fritz Reese responded they keep complete, accurate records, and those would obviously be provided to the parents. Family and Youth Services would bill them and would provide monthly statements much like a balance sheet in terms of what they had paid.

Assemblywoman Buckley said it looked as if the other states had a large number of people who were indigent. One said 9 out of 10 families could not afford to pay, and Nevada certainly had lot of poor people in the juvenile justice system. She wondered where Mr. Reese had come up with the figure to conclude that half would have the ability to pay. She asked if Mr. Reese would comment in terms of the cost efficiency of the program when they proposed to hire someone to do nothing but collect the fees.

Mr. Reese pointed out the projections were based on a survey from information available in other states. Due to the generosity of the district court they were given aid fees to assist in funding placements for juvenile sex offenders. The proposal would be an opportunity to offset some of those costs. Currently in the court they charged special programming for parents, if for example, a youth was placed in a selected group home, for a period of time the parents were assessed a sliding fee amount in terms of their ability to pay.

Assemblywoman Buckley restated her original question, where did they get "half would have the ability to pay." Had they done a survey. She felt that was very high compared to other states.

Fritz Reese said in terms of the research the department had discussion with probation managers and probation officers and made that determination based on their expectations of parents’ ability to pay. They were very successful in terms of getting other payments from parents of particular services provided by juvenile court.

Chairman Anderson asked in what way would the bill change the nature of the way Mr. Reese’s agency operated.

Mr. Reese said it would clarify and allow the court the ability, to charge for probation services provided by the department. Currently the taxpayers were paying for all of those services.

Chairman Anderson inquired if he felt they did not have the statutory authority currently to charge the fee. Fritz Reese said that was correct.

Chairman Anderson asked if Mr. Reese was in favor of the bill. Mr. Reese said he was in favor of the bill.

Ms. Buckley stated her only hesitancy was generally as a policy the committee tried encourage the users to pay when appropriate, but in 1997 they were approached and asked to do an administrative assessment fee as a way to give back. They were hesitant about doing that because the Committee on Judiciary already had fines imposed to pay back the system.

Ms. Leslie stated her ongoing concerns with the bills the committee had been getting as to whether the court could already authorize certain things.

Mr. Carpenter felt they already had the authority to charge those fees.

Chairman Anderson wondered if they were only expanding the law to do something the committee thought they were already empowered to do. He asked Ms. Lang to research the question to determine if the court currently had the authority and how it would broaden the scope of the court, before action was taken on the bill.

Bill Bradley, attorney at law, representing Nevada Trial Lawyers, along with Sam Sorich who was representing the National Association of Independent Insurers, testified in support of the bill. Mr. Bradley said it was one of the few times when the trial lawyers and the insurance industry supported the same bill. A.B. 392 was an effort to increase the tools under alternative dispute resolution. Currently alternative dispute resolution meant arbitration and mediation. Arbitration was when people could not agree, a third party was asked to give final decision. Mediation was when two parties could not agree and brought in a third person to try and work out the differences. The mediator did not make a decision, but he or she tried to get the parties to agree to something in the middle.

A. B. 392 expanded the alternative dispute resolution to include a new term called "short trial." Arizona introduced what was known as a short trial where cases of a certain value, the same value as the arbitration system which was under $40,000, would have the opportunity to be heard through the context of a short trial thus alleviating overcrowding of their court system. Each side would have a prescribed amount of time in which to present their case. There would be a maximum of six jurors, which could be reduced to four. The case would be heard by a pro tem judge and court rooms would be used to make sure the formality of the system was preserved, but it was basically for the parties to go in front of a jury of their peers and present a small case to a jury. That jury would deliberate and then make a decision using pro tempore or judges who were attorneys and had indicated their willingness to serve in a judicial capacity for the purposes of hearing a "one-day jury trial." The committee was likely to hear some problems later with their current alternative dispute resolution system.

Arbitration seemed to be much more successful resolving cases in northern Nevada than it was in southern Nevada. The rules would be adopted and promoted through the Nevada Supreme Court and then would cover all short trials to be heard in different jurisdictions.

Sam Sorich, assistant vice president with the National Association of Independent Insurers, testified on behalf of the entire property and casualty, insurance industry. The industry had asked him to indicate their support for the bill (Exhibit G). He thought the bill offered a real hope some of the backlog clogging up the arbitration and trial court dockets could be reduced through the short trial procedure. It was important to note the bill did not force plaintiffs or defendants to use the short trial procedure. The procedure was entirely voluntary. The parties to a lawsuit might choose to submit their case to a short trial procedure before, during, or after arbitration. In cases where both parties agreed to use the short trial procedure, they had the assurance of a quick, efficient, economical, and final resolution to their dispute. It was an option they thought would be attractive to the litigants in many lawsuits and would mean fewer cases going to arbitration, and fewer cases going to traditional trial. He agreed with Mr. Bradley the bill would not be the complete solution to some of the controversy surrounding the arbitration system, but was a positive first step and offered a real hope to improve the system.

Assemblywoman Koivisto asked if the decision reached at the "short trial" would be a binding final decision.

Mr. Sorich said yes.

Mr. Brower felt they needed to look at the appealability of those cases, and he saw some real problems with the short trial procedure.

Mr. Bradley responded as long as both parties agreed and understood it was binding. If they did not want it binding, they did not have to agree and would maintain all of their appeal rights to go to normal district court.

Mr. Brower said if he understood the bill correctly, it was purely voluntary and in no way could the courts order litigants to a "short trial." His criticisms of the "short trial" process, and the use of pro tem judges would be best addressed by advising clients whether or not to agree to it. He would insist that an agreement to submit the case to a "short trial" must be in writing and not oral.

Mr. Bradley had no problem striking the word "oral" from the proposed amendment.

Ms. Buckley wanted clarification the agreement was not be done through a "contract of adhesion," and could be accomplished by at statement at the time it was to be submitted.

Chairman Anderson asked for an explanation of a "contract of adhesion."

Assemblywoman Buckley apologized and explained a "contract of adhesion" was basically a contract presented to someone on a take-it or leave-it basis. If a person entered into a contract to open up a checking account, to get insurance the fine print might say, "you hereby waive your right to a regular jury trial and agree to submit any and all disputes to the short trial as set forth in this."

THE MOTION CARRIED.

Chairman Anderson assigned the bill to Ms. Buckley.

At 10:25 a.m. Mr. Anderson recessed the committee and said they would reconvene 30 minutes after the floor session adjourned and would hear the remaining bill on the agenda.

At 2:00 p.m. Chairman Anderson reconvened the Assembly Judiciary Committee and thanked the members for coming back. They were reconvened as a sub-committee of the Committee on Judiciary and as soon as they had a quorum he would so indicate.

Assemblyman Goldwater, representing Assembly District 10, testified A.B. 469 was in the area of law called spendthrift trusts. He felt the way to explain what the bill did was to go through what a spendthrift trust was. It was created to protect the corpus of a trust from the irresponsible actions of a beneficiary. He gave an anecdotal version. Mr. Anderson was an incredibly wealthy man and he had five children. He created a trust for the beneficiary of those children. One of those children was not the greatest in the world, he smoked, drank, gambled, and acted irresponsibly. He was putting the entire body of the trust at-risk, which was to the detriment of not only the grantor of the trust, but also the other beneficiaries, and it violated common sense. Nevada law included what was called spendthrift trusts. A person could create the kind of trust that was irrevocable that protected those assets from any unknown creditors. If there was child support to pay, known debts, or any other type of claim, those assets would not be free from attachment. They would be part of the attachment, however, once a trust was created knowing somebody else was irresponsible Mr. Anderson could protect those assets from any unknown creditors.

The bill would create what was called settlor trusts or self-settled trusts as the States of Alaska and South Dakota had. He had taken the theory described in the spendthrift trust and extend it to everybody, even the settlor of the trust. It offered protection to wealthy people just as the committee was often fighting for the rights of the poor, and the undeserving. Wealthy people deserved rights as well. When a person walked down the street they took risks in everything they did. When a person drove they took risks and to protect against those risks, most people, bought insurance. They bought liability on auto insurance, homes, and sometimes lawyers bought broad-based liability for their law practice, or sometimes teachers, the school carried liability insurance and that was to protect their own assets. If something happened where an individual became liable, they would have something to protect our personal assets. The problem of becoming extremely wealthy was it becomes impossible to insure against that liability. When the trust was domicile in Nevada and the person was a resident of Nevada, Nevada got the benefit of all their inheritance tax.

Chairman Anderson said for the record there was a quorum present.

Assemblyman Goldwater had drawn up a schematic to illustrate how it worked (Exhibit H).

In closing he summarized the bill was proposed for the very wealthy people. It was a benefit because the state received the estate tax revenue. The purpose was not for hiding assets for any reason, the court would not uphold that. They would not uphold putting assets in the trust and then not buying the liability insurance policy of great magnitude. He felt it was a good bill and asked for the committee’s support.

Chairman Anderson summarized by oversimplify the purpose of the trust was to protect the group from the prodigal son.

Mr. Goldwater said that was addressed under current law.

Chairman Anderson questioned if the bill was expanding the timeline for the transfer of property. A person could not transfer property in debt.

Mr. Goldwater said known creditors needed to be paid off before a person could place any assets in a trust.

Chairman Anderson asked could a person go into debt without endangering the trust.

Mr. Goldwater said that was a great point. Any creditor that was going to lend money to somebody, usually took a look at what they owned. When they looked at somebody who may have a self-settled or had spendthrift trust, they knew as a creditor they would not be able to touch those assets so they did not lend, based on those assets.

Chairman Anderson replied because those assets were not at risk.

Mr. Goldwater said that was right.

Chairman Anderson wondered if there was a threshold at which the people who set up such events usually would recommend such a trust to one of their clients.

Mr. Goldwater stated usually the threshold dollar amount was the amount of insurance somebody could purchase.

Chairman Anderson said a window of 2 years would be left after such a trust was established.

Assemblyman Claborn asked if it worked like a living trust.

Mr. Goldwater said the purpose was different than a living trust.

Chairman Anderson wondered if in setting up such a trust was there any requirement to be met or affidavit submitted stating there were no creditors who would be able to attach any of the assets.

Assemblyman Goldwater expounded he did not know if they would have to submit an affidavit. If a person declared bankruptcy, they would declare "those assets are excluded because they are in a self-settled trust." Creditors would say, "Yes, you are right, under this law" and they would look at the law. Or they would say "no, they are not" and a fight would ensue.

Mr. Claborn asked regarding probate, if the person died, would that eliminate it going to probate.

Mr. Goldwater said yes, it would eliminate probate.

Mr. Goldwater related a story of a client in Elko whose wealth went from $5 million to over $100 million after gold was discovered on his property. That was his net worth, and he tried to make his client understand what was going on. Should something happen to him or a member of his family his net worth was so high, he was putting his entire fortune at risk. If he became liable he would have to sell everything in order to satisfy his creditors. The trust would certainly serve him well he could keep his farm and everything. The land could never be declared free from creditors just because a person was underinsured.

Mr. Goldwater said the bill was drafted by, and thoroughly reviewed by Frank Daykin, who was a well-versed bill drafter.

Chairman Anderson closed the hearing on A.B. 469.

Mr. Brower said he was sure the bill had some merit, but was going to have a trust lawyer take a look at it and just get his idea on spendthrift trusts.

Mr. Collins was also going to check with an attorney.

Mr. Goldwater commented the bill came from a working group of estate attorneys and trust attorneys.

Mr. Claborn said he did not have a problem with it, but would like to see some literature on it though.

Chairman Anderson said he would call for the vote but would delay moving the bill to the assembly floor to make sure there were no major problems.

Assemblyman Gustavson abstained.

There being no further business, the meeting adjourned 2:50 p.m.

RESPECTFULLY SUBMITTED:

Novella Watson-Lee,

Committee Secretary

APPROVED BY:

Assemblyman Bernie Anderson, Chairman

DATE: