The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 7:30 a.m., on Thursday, February 11, 1999, in Room 2135 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator Randolph J. Townsend, Chairman

Senator Ann O’Connell, Vice Chairman

Senator Mark Amodei

Senator Dean A. Rhoads

Senator Raymond C. Shaffer

Senator Michael A. (Mike) Schneider

Senator Maggie Carlton

GUEST LEGISLATORS PRESENT:

Senator Bill R. O’Donnell, Clark County Senatorial District No. 5

STAFF MEMBERS PRESENT:

Scott Young, Committee Policy Analyst

Beverly Willis, Committee Secretary

OTHERS PRESENT:

Senator Bill R. O’Donnell, Clark County Senatorial District No. 5, expressed his reasons for supporting Senate Bill (S.B.) 128, claiming almost anyone is able to advertise in the yellow pages of the phone book, whether or not they have a valid license to operate. He maintained this particular legislation protects the consumer from fraudulently being exposed to individuals who are unlicensed, or not bonded and those without appropriate credentials to facilitate the services for which they advertise.

Senator O’Connell inquired how the telephone company could pull these advertisements once they have been printed. Senator O’Donnell explained this legislation would allow an order, to the phone company, be written for the removal of these advertisements, explaining the advertisement would remain in the phone book. He noted, if the number was called, however, there would be no answer. Margaret McMillan, Lobbyist, Director, Governmental Affairs, Sprint, claimed that since there is a severe shortage of phone numbers, business numbers held for 6 months were reassigned promptly. Ms. McMillan presented her remarks (Exhibit C).

Senator O’Connell and Senator Townsend addressed issues that could arise if a mistake were made and the phone was disconnected in error. Senator Townsend claimed phone companies were concerned with the possibility of legal action in case of an erroneous disconnect. He continued, it was his thought the phone companies would agree to this legislation if they would not be held responsible for another’s mistake. Senator O’Donnell claimed he would be willing to entertain a "hold harmless" clause for all the phone companies that participate in the yellow pages.

Tom Skancke, Lobbyist, Cendon Publishing, AT&T, and Espire Communications, stated Cendon Publishing printed phone books for the Las Vegas area and confirmed a major concern was liability on the part of the publisher. Mr. Skancke stated he felt this legislation might hurt those who pay in advance, oftentimes the small business owner. Ms. McMillan voiced her concerns pertaining to protection issues raised by this proposed legislation noting, once again, it could take up to 6 months before numbers could be reassigned.

Stephanie Tyler, Lobbyist, Area Manager, Nevada Bell, claimed her organization had the same concerns posed by Ms. McMillan, noting the phone is a valuable asset. Ms. Tyler mentioned a proposed amendment, yet to be decided upon, dealing with good faith reliance. She maintained the liability issue was of prime importance.

Senator Shaffer and Ms. McMillan touched on the problem of those organizations that might have a suspended license while still advertising in the various directories. Ms. McMillan stated it was the responsibility of the county or the original licensing board to monitor this action. Senator Townsend joined the discussion, pointing out there were two different issues, one being the ability to advertise as a licensed person, the other, to have the phone connected.

George William Treat Flint, Lobbyist, Owner, Chapel of the Bells/Reno, expressed concerns over language allowing county commissions, town boards and city councils the right to monitor what advertising would be allowed in the phone book. He pointed out his company advertises throughout the entire State of Nevada, however was licensed in Reno and the surrounding area. Mr. Flint asserted he was uncomfortable with much of the language in this proposed legislation.

Rick Hackman, Manager, Division of Consumer Complaint Resolution, Public Utilities Commission of Nevada (PUCN), stated he did oppose this proposed legislation. Mr. Hackman stated, "I am speaking on my own behalf in my capacity at the commission [PUCN] and I am not necessarily representing the commission’s [PUCN] view." He indicated this viewpoint was a staff position, not a commission position. Mr. Hackman asserted he understood the goals of this proposed legislation, however he did feel it was the wrong way to go about it. He claimed the commission had a process to control these situations. Pointing out, once again he was speaking on his own behalf, Mr. Hackman continued, ". . . I think we are setting a very dangerous precedent if we use the loss of utility services as a sanction for other inappropriate behavior."

Senator O’Donnell asserted S.B. 128 would not cause anyone to lose their phone service, however the bill did offer controls on false advertising. He asserted there was a great deal of money to be made by phone companies selling false advertising. Senator O’Donnell maintained this proposed legislation had nothing to do with the phone company being a police agency. He cited several instances where unscrupulous contractors would take payment for a job, then leave the area without performing these contracted arrangements. Senator O’Donnell claimed the purpose of S.B. 128 would be to stop this practice.

Senator Townsend claimed, ". . . This committee is concerned about these issues. I would hope we can find a way to address that." Senator Townsend determined S.B. 128 would be attended to in a subcommittee. He indicated S.B. 128 should be addressed section by section.

The hearing on S.B. 128 was closed. The hearing on S.B. 99 and S.B. 130 was opened.

Senator Townsend stated, "My wife is a licensed real estate agent and a licensed broker."

Senator O’Connell declared, "My husband is a licensed realtor and broker."

Matt Di Orio, Compliance Training Officer, Real Estate Division, Department of Business & Industry, spoke first on S.B. 99. Mr. Di Orio presented Exhibit D, a statement from Joan Buchanan, Administrator, Real Estate Division, Department of Business and Industry, outlining the reasons for S.B. 99. He noted a licensed realtor with 8 years experience could obtain a broker’s license without any additional education. Mr. Di Orio claimed the real estate industry is becoming so specialized, it would be appropriate to indicate a broker has some education in office management. Explaining for Senator Townsend, Mr. Di Orio reiterated his opinion that more sophisticated issues need to be addressed.

Senator Townsend questioned Mr. Di Orio whether or not this new legislation would pertain to those already holding a broker’s license. Mr. Di Orio replied they would not be affected.

Senator Shaffer and Mr. Di Orio discussed reciprocity for brokers who would come to Nevada from another state. Mr. Di Orio stated experience application as well as portions of their education would apply; however the new requirement for education would be added.

Senator O’Connell inquired if other types of management experience would be accepted in lieu of the actual course time. Mr. Di Orio declared that was yet to be determined.

Senator Townsend and Mr. Di Orio conferred on the availability of courses that meet this requirement. Mr. Di Orio stated there were none at this time, however he claimed this should be remedied in the near future. Senator Townsend maintained that information pertaining to course availability would be needed before this proposed legislation could be processed.

The hearing was closed on S.B. 99. Senator Townsend then opened the hearing on S.B. 130.

Mr. Di Orio presented Exhibit E, information from Ms. Buchanan on S.B. 130. Referring to Exhibit E, Mr. Di Orio, explained this legislation was for clarification purposes of the term "brokerage agreement" to more accurately define the relationship between a client and a licensee where the client is a property owner, seller, buyer, lessor or lessee. Pat Coward, Lobbyist, Association of Realtors, offered testimony confirming statements pertaining to "exclusive brokerage agreement," made in Exhibit E.

The hearing was closed on S.B. 130. Senator Townsend opened the hearing on S.B. 13.

Senator Townsend, referring to Exhibit F, Amendment No. 4, to S.B. 13 asked if Mary E. Manna, Executive Secretary/Office Manager, State Board of Cosmetology, had the opportunity to review this amendment. Ms. Manna asserted she had reviewed the amendment and the State Board of Cosmetology had no objections.

* * * * *

Senator Rhoads voiced concerns on the population requirement pertaining to S.B. 13. Scott Young, Committee Policy Analyst, Research Division, Legislative Counsel Bureau, pointed out the population figure noted in S.B. 13 was 35,000 or less. Mr. Young explained future legislation would rectify any problems that might be presented, to assure all counties remain eligible for benefits from S.B. 13.

Senator Townsend opened the hearing on S.B. 25.

As there seemed to be some confusion concerning the motive for this legislation, the hearing was closed till further clarification could be obtained.

Frederick Schmidt, Consumer’s Advocate, Bureau of Consumer Protection, Chief Deputy Attorney General, Office of the Attorney General, presented Exhibit G (Original is on file in the Research Library.), and an overall view of duties of the Consumer’s Advocate. Mr. Schmidt offered information on his non-utility duties for consumer protection. Mr. Schmidt introduced Jane Femiano, Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General, who supervises the telemarketing, consumer fraud and securities fraud unit located in Las Vegas.

Mr. Schmidt began his dissertation with an overview of activities performed during the sixty-ninth session of the Legislature, especially those regarding deregulation of electricity. Referring to Exhibit G, Mr. Schmidt pointed out various changes and improvements completed in the last 2 years. His opening remarks focused on Mission Statement/Strategic Plan. He noted heads of various units, giving an explanation of their function, asserting a strategic plan had been formed for each of these units along with an operational plan (Pages 1 through 11 of Exhibit G.)

Senator Shaffer offered the opinion that the Consumer Affairs Division (CAD) might function more efficiently if placed directly under the Office of the Attorney General, indicating it was his thought there might be a duplication of effort. Mr. Schmidt stated CAD handles the majority of complaints with the exception of those involving a utility. He noted CAD also had some responsibility for licensensure and registering of telemarketing firms. Ms. Femiano noted her department would help with any prosecutions generated by CAD.

Mr. Schmidt continued his explanation of Exhibit G. He pointed out the section on performance, focusing on page 15, relating to financial matters. Mr. Schmidt explained almost $5 million had been received in restitution funds.

Senator Rhoads queried Mr. Schmidt on how various dollar figures were obtained. Mr. Schmidt claimed he would be happy to supply Senator Rhoads with a breakdown of the monies. Senator Rhoads inquired on the method of determination in order for Mr. Schmidt’s office to file a major lawsuit against a utility company. He asked if there was any sort of a board that would make this decision. Mr. Schmidt said, "No." Senator Rhoads asked, "Do you make this decision on your own?" Mr. Schmidt indicated a number of factors might influence his office to pursue a lawsuit; i.e., consumer complaints, and/or public hearings to establish the need for that kind of action. Senator Rhoads indicated his surprise there were no checks and balances, ". . . you should have to go to somebody to get involved in a major lawsuit. . . . There should be a board, or something you respond to; that you just cannot make that determination up yourself." Mr. Schmidt maintained he did not make these decisions himself; his staff participated. He asserted this type of action needed to be cleared by the attorney general’s office. Mr. Schmidt said, "The attorney general oversees it and she is an elected official." Senator Rhoads reiterated his concerns over the amount of power designated to Mr. Schmidt. Mr. Schmidt justified his authority by pointing out his association with the Office of the Attorney General, stating attorney’s have the power to file litigation to direct compliance with the state and federal laws. Mr. Schmidt noted his office was created as a check to monitor needs of individual customers.

Mr. Schmidt continued with his explanation of Exhibit G, addressing the antitrust portion. He indicated that over the long term, this area could be very cost-effective, giving an example of a recent antitrust case. Mr. Schmidt proceeded with a short summary of the Securities Division of the Office of the Secretary of State. Mr. Schmidt resumed his dissertation by addressing the telecommunications database created, in particular, for those in the rural area. He continued, asserting there was an outreach program in rural areas with a number of improvements; i.e., 911, and service equipment being recent additions. Senator Rhoads raised questions concerning what help, if any, might be given to small rural telephone companies. Mr. Schmidt cited an example of Nevada Bell helping to finance a small rural telephone company in order for phone service to be made available for those who previously did not have any type of telephone service.

Senator Rhoads asked what regulations or perimeters were set to determine a toll call. Mr. Schmidt claimed there were no set mileage standards, however these could be determined over a period of time. He noted local exchange areas seem to be very broad. Mr. Schmidt asserted each phone company might propose their own perimeters, however the final decision would be up to the PUCN.

Senator Townsend stated:

Senator Townsend indicated it was his wish to make sure the committee has investigated all options to find the least cost to meet regulatory standards.

Mr. Schmidt responded by noting a number of western states have similar situations as Nevada and deregulation will be new to them. He noted a number of eastern states had for many years formed power pools, perhaps because of their close proximity. He commented on problems faced by those states who have adopted competition bills, however as yet have not opened their markets. He noted a major concern would be on how to open your market and ensure it is fair for all those who want to build a power plant or sell power in their state.

Senator Townsend noted concerns of Senator Rhoads and Senator O’Connell pertaining in particular to cost, and for what ratepayers pay and what they receive in return. He asked Mr. Schmidt for information on several items, indicating an interest in the consulting budget. Senator Townsend noted an interest in consumer protection, maintaining a particularly important item is public education.

Senator Townsend indicated he would like to compare this information with other information that might be obtained from the Department of Business and Industry. He continued, referring to items that might be duplicated by various departments, noting the Governor feels it is important to determine if there is duplication of services and obtain better use of the dollars we currently spend.

Mr. Schmidt continued with various explanations of how his department functions. He pointed out a special area of concern; adding services not requested by a customer; i.e., slamming and cramming.

At this time Senator Townsend opened the hearing on S.B. 134.

Chairman Townsend asked for testimony to support or oppose this legislation. Clark (Danny) Lee, Lobbyist, Nevada General Insurance Company, noted the purpose of S.B. 134 was to save money on medical payments. He continued with remarks on some positive implications of saving dollars on medical expenses. Mr. Lee introduced Robert B. Feldman, Lobbyist, President, Nevada General Insurance Company. Mr. Feldman claimed his organization was experiencing "gross over-treatment for soft-tissue injuries, in minor automobile accidents." He asserted chiropractors and physical therapists were among those who participated in this area. Mr. Feldman maintained Nevada was one of the only states with a law indicating a person is able to obtain the services of a physical therapist without referral by a doctor. He cited several instances of this practice, pointing out a large variation in the price structure. Mr. Feldman claimed automobile "med-pay" was not covered under managed care. He asserted, in some cases, a practitioner would provide excessive care. Mr. Feldman stated that as S.B. 134 was newly drafted, perhaps a work session would be in order. Mr. Feldman explained items in this legislation could help resolve lawsuits.

Senator Townsend and Mr. Feldman discussed in detail matters pertaining to the deductible that might be allowed, along with items concerning types of medical care that could be made available. Mr. Feldman maintained a managed-care option for automobile medical insurance would be advantageous to the consumer. Senator Townsend maintained the viewpoint of insurance management, on this proposed legislation, would be needed in order to make a final determination. Mr. Feldman reiterated his concern over out-of-control medical claims.

Bill Bradley, Lobbyist, Nevada Trial Lawyers Association, claimed there could be conflict if doctors with managed care have pressure from a managed-care organization to keep costs low. He commented this legislation could cause problems, and might curb the rights of the consumer and felt it was not a good plan. Mr. Bradley reiterated concerns expressed by Senator Townsend, noting consumer education was of prime importance.

Senator Townsend referred S.B. 134 to a subcommittee.

As there was no further business, the meeting was adjourned at 10:55 a.m.

RESPECTFULLY SUBMITTED:

Beverly Willis,

Committee Secretary

APPROVED BY:

Senator Randolph J. Townsend, Chairman

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