The Committee on Judiciary was called to order at 8:20 a.m., on Friday, May 21, 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. Kathy McClain

Ms. Genie Ohrenschall

COMMITTEE MEMBERS ABSENT:

Ms. Sheila Leslie (Excused)

Mr. Dennis Nolan (Excused)

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

After roll was called, Chairman Anderson opened the hearing on Senate Bill 485.

Anne Cathcart, representing the Office of the Attorney General, noted Frankie Sue Del Papa, Attorney General, had wished to attend the hearing on the bill but would not be present due to a prior commitment. She explained the Office of the Attorney General became involved in high technology crime a few years ago when it became aware that there was no entity in the state with the capability to adequately detect, investigate, and prosecute the increasing problem of technological crimes. Reading from a letter submitted by the Attorney General, she reviewed the background and intent of the bill. The letter was attached as Exhibit C. Ms. Cathcart pointed out one of the most disturbing things about the use of technology in committing a crime was that it was very difficult to detect and crimes could be accomplished anonymously and inexpensively. The goal was to identify and stop the different types of criminal activity that were rising throughout the United States.

Ms. Cathcart explained the bill created an advisory board to the Nevada High Technology Crime Task Force. The intent was to bring together the public and private sectors in order to coordinate and fund efforts to fight high technology crime. She noted the bill identified certain acts, prohibited them and made them subject to penalties. It also offered more current definitions, taking into consideration advancing technology.

Ms. Cathcart introduced Kevin Higgins, also from the Office of the Attorney General and Director of the Worker’s Compensation Fraud Unit.

Mr. Higgins explained a couple years ago, the Attorney General’s Office was presented with a complex and unique case. He explained a State Gaming Control Board employee had been using his equipment to gaff slot machines in such a way that enabled him to predetermine jackpots and cause them to trigger. He was eventually caught in Atlantic City, but it became clear that Nevada was going to have a difficult time prosecuting those types of cases. The task force was then created in order to bring law enforcement and local businesses together in an attempt to stop both "old" and "new" crimes from being committed with computers. He said the community was subject to those types of crimes daily and included casinos being "ripped off" with checks that had been printed by a scanner, cable box fraud, and the exploitation of children through the Internet. Mr. Higgins reiterated the bill clearly defined certain crimes and provided the Attorney General’s Office with a tool to prosecute those cases.

Chairman Anderson questioned why there appeared to be a lack of reporting of those particular crimes. Ms. Cathcart explained one of the reasons was due to the businesses’ concern that the public would perceive them to be unable to protect their assets, resources, and the confidentiality of their customers.

Mr. Higgins added many businesses were not aware a crime was being committed and if they were, they did not know anything could be done about it. He elucidated one of the bill’s goals was to educate the public and make it more aware of the issue.

Chairman Anderson drew attention to Assembly Bill 71, which dealt with identity fraud. He noted that legislation had already passed both houses. He asked how or if that would impact S.B. 485.

Ms. Cathcart stated originally there were identity theft provisions in S.B. 485. They were removed when it became apparent A.B. 71 would address that issue.

Chairman Anderson noted he had received notice that S.B. 485 was in conflict with another bill, S.B. 366, which had already been signed by the Governor. He noted if the bill was to be processed that conflict would have to be resolved.

Ms. Cathcart and Mr. Higgins proceeded to review various sections of S.B. 485 (see pages 4 and 5 of Exhibit C). Ms. Cathcart emphasized the money necessary to start up an advisory board would not be coming out of general funds. It would be taken from monies which were to be reimbursed to the Office of the Attorney General for attorneys’ fees and costs expended in the tobacco settlement. She opined it would be self-funding in a couple of years due to the availability of gifts, grants, and donations.

Assemblyman Carpenter expressed concern with section 21. He believed Internet providers should not release information unless a person granted the authority to do so and not the other way round.

Mr. Higgins explained that was what was said in the bill. Section 21, subsection 1(a) stated the Internet provider "shall" keep that information confidential unless the subscriber gave permission to disclose it. He noted the problem with drafting that section was to draft it in such a way that maximum protection was afforded the customer while the least intrusive burden was placed on the internet service provider. The intent was to make it illegal for a person to invade an Internet service provider, steal those addresses, and send out junk email.

Charlie Stokes, also representing the Attorney General’s Office, came forward to explain the practicalities of commerce on the internet made it such that restricting the confirmation of an email address would pose a hardship for ready commerce or a ready exchange of information. He noted the option to have a private address did exist.

Mr. Carpenter noted section 22 said, "A victim of a crime described in section 21 of this act may not bring a civil action pursuant to this section." He asked why that exemption was in the bill.

Mr. Higgins replied currently, there was a provision in the law for civilly suing somebody that "spams" another person.

Risa Lang, Committee Counsel, clarified that provision was a policy choice for the committee to make and not a technical decision that needed to be there.

Assemblywoman Ohrenschall also expressed confusion over section 22. She believed subsections 1 and 2 cancelled each other out.

Mr. Higgins opined section 22 allowed for a civil suit to be brought for everything except section 21. For example, if someone had put a virus on another person’s computer or used a "spoofed header" to send threatening messages, a suit could be brought. However, a person could not sue an Internet service provider if their address had been stolen or revealed.

In regard to section 29, Mr. Higgins remarked currently, the statute prohibited unauthorized access but the problems that had been occurring involved employees who had authorized access and committed crimes. The intent of that section was to narrow the user’s right.

Mr. Carpenter questioned what the remedies were for a consumer if a provider was found to be in violation of the items listed in sections 44 and 45. Mr. Higgins replied the provider would be guilty of deceptive trade practices which were a crime in the state. Violations would be prosecutable by either the Attorney General or the local district attorney.

Marshall Smith, representing the Attorney General’s Office, came forward to explain penalties associated with the sections dealing with "slamming and cramming" would be placed into Chapter 598 of the deceptive trade practices act. Therefore, any violation of those sections would be equal to the penalties for deceptive trade practices, which were up to $2,500 per violation.

Mr. Carpenter pondered if action would really be taken to resolve the problems. Mr. Smith replied the Attorney General’s Office had specifically assigned him to review complaints about slamming and cramming and there was action being taken. Much of the language in the bill was developed through his review and investigations of those matters and passage of the bill would enhance his ability to solve problems.

Brian Herr, representing Nevada Bell, introduced Kent Anderson, also from Nevada Bell and an expert on slamming, cramming, and other terms associated with unauthorized movement of a customer from one provider to another. He expressed support for S.B. 485 and noted they had worked with the Attorney General’s Office on high technology crime issues for the past couple of years. He commented they were particularly in support of sections 41 through 46.

Mr. Anderson explained to the committee that slamming was the unauthorized changing of a person’s long distance carrier without permission. The series of numbers associated with a particular provider were actually changed on a person’s bill. Cramming was different in that there was no such mechanical transaction. It was the placing of erroneous charges on a person’s bill by another carrier without any actual change to their account status. He noted those were the two primary problems which were occurring and addressed in sections 41 through 46. He told the committee the bill contained the necessary language to stop those practices.

Margaret McMillan, representing Sprint, also spoke in favor of S.B. 485. She apologized for the many calls people received from different carriers but noted when the Federal Government made the decision that telecommunication companies should be competitive, they encouraged that type of competition. She noted even if the bill was to pass, those calls would continue. The bill would simply give the Attorney General’s Office the tools necessary to prosecute those who did such things as fraudulent transfers. Ms. McMillan noted initially they had concerns in regard to section 45 of the bill, but she believed, in working with the Attorney General’s office, the concerns had been addressed.

Chairman Anderson offered the bill included many compromises that met the various needs of the industry, allowed it to operate competitively, and yet provided sufficient protection for the customers.

Mr. Herr and Ms. McMillan agreed with his comment.

Bob Gastonguay, Executive Director of the Nevada State Cable Telecommunications Association, testified in favor of S.B. 485. With the help of Mr. Manendo, he showed the committee how easily a person could purchase a descrambler for a cable box through the Internet. He noted there were some 340,000 web sites that offered a similar product and to his knowledge, only one state, Pennsylvania, made it illegal. Mr. Gastonguay wanted to see it made illegal in Nevada. He explained "the illegal black box" equated to $10 million in lost revenue to the state. Local governments were losing $500,000 in franchise fees. He urged the committee to pass the legislation.

Chairman Anderson closed the hearing on S.B. 485 and asked members of the committee if they had any further questions or comments.

Mr. Carpenter reiterated his concern with section 22, lines 12 and 13.

Chairman Anderson acknowledged it was a policy decision as to whether the language was necessary but asked Ms. Lang to further research why it had been included in the bill.

Ms. Lang explained that the bill drafter indicated it was included as part of the request. She noted further clarification as to intent would be needed from those people who proposed the legislation.

Mr. Higgins and Ms. Cathcart admitted that neither of them could recall asking for that specific exception. Ms. Cathcart reiterated the only reason she could think of for its inclusion was to address potential opposition from internet service providers if they felt they were going to be subject to those penalties every time it was alleged they had given out someone’s confidential information. She told the committee she would not be opposed to eliminating that subsection.

Chairman Anderson suggested the committee propose an amend and do pass motion. The amendments would be to clarify the conflict with S.B. 366 as it affected NRS 244A.7641 and to remove subsection 2 from section 22.

For the remainder of the meeting, Chairman Anderson shared with committee members several amendments, proposed by the Senate, which he wanted them to determine whether or not to concur. The amendments to be considered were distributed. A list of the amendments is attached as Exhibit D.

Chairman Anderson expressed his intent to recommend the full body of the Assembly concur with each amendment listed on Exhibit D.

There being no further business before the committee, Chairman Anderson adjourned the meeting at 10:30 a.m.

RESPECTFULLY SUBMITTED:

Jennifer Carnahan,

Committee Secretary

APPROVED BY:

Assemblyman Bernie Anderson, Chairman

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