The Senate Committee on Judiciary was called to order by Chairman Mark A. James, at 8:50 a.m., on Friday, April 2, 1999, in Room 2149 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 Mark A. James, Chairman

Senator Jon C. Porter, Vice Chairman

Senator Mike McGinness

Senator Maurice Washington

Senator Dina Titus

Senator Valerie Wiener

Senator Terry Care

STAFF MEMBERS PRESENT:

Jo Greenslate, Committee Secretary

OTHERS PRESENT:

Anne Cathcart, Senior Deputy Attorney General, Office of the Attorney General, testified S.B. 485 is referred to in shorthand as the "Omnibus High Tech Crime Bill." She said the bill originated out of the efforts of the Nevada high-technology task force which was created in the summer of 1997, and was the result of the realization that law enforcement in Nevada was not equipped to deal with the challenges presented by high-technology criminals. Ms. Cathcart explained that high-technology crime refers to crimes in which the instrument of the crime has to do with high-technology, such as a computer, and is either the instrumentality of the crime or used to hide evidence of the crime, and so forth. Continuing, Ms. Cathcart informed the committee the task force has worked to put together S.B. 485, which contains a "potpourri" of provisions, covering everything from a new definition of property to include trade secrets to making it unlawful to intercept cable television services without paying for them. It also encompasses such areas as "slamming" and "cramming," and it creates a high-technology advisory board.

According to Ms. Cathcart, the purpose for the high-technology advisory board would be to pull together the private and public sectors and form a partnership to obtain resources, funding, and so forth, for law enforcement throughout the state to tackle the high-technology crime problem. Further, Ms. Cathcart

advised the attorney general’s office currently has the only computer forensics staff and equipment in the entire state. She mentioned they share it with other law enforcement agencies, but they need more resources to equip law enforcement agencies throughout the state. Ms. Cathcart remarked the idea behind the board is to hire an executive director to seek grants, donations, expertise, and equipment from the private sector. She gave an example of a successful high-technology task force in Sacramento, California, that works with approximately eight corporations. The corporations include such companies as those dealing with technological advances, and computer hardware and software. Ms. Cathcart stated these companies come into the Sacramento group to train its members and provide up-to-date equipment, which is important in keeping up with high-technology criminals.

Ms. Cathcart referred to her handout (Exhibit C) consisting of a cover letter addressed to Honorable Mark James, Chairman, Senate Judiciary Committee, dated April 1, 1999, Re: Senate Bill 485 (Omnibus High-technology Crime Bill), a summary of the bill itself, proposed revisions to S.B. 485, and a summary of proposed revisions to S.B. 485. Ms. Cathcart mentioned it was her understanding the Senate Committee on Judiciary recently passed a bill dealing with debit cards. Therefore, she was not certain whether the provisions in S.B. 485 regarding debit cards are necessary. Ms. Cathcart commented the proposed revisions were put together in a process that took several days and included recommendations from various entities in the private sector, for example, Nevada Bell, Sierra Pacific Power Company, the local cable television company, and so forth.

Ms. Cathcart advised there were people from her office present at the meeting knowledgeable about technology that she might call upon in response to questions from the committee. Chairman James suggested Ms. Cathcart start with section 13 on page 4 of the "Proposed Revisions to S.B. 485," since she had already explained the advisory board. Ms. Cathcart stated that section 13 on page 4 of the "Proposed Revisions to S.B. 485" corresponds to No. 2 of the "Summary of Provisions of Senate Bill 485," which are the "slamming" and "cramming" provisions. She said that Marshall Smith, who drafted this language was available to answer questions. Ms. Cathcart also mentioned this section defines telecommunications service and prohibits telecommunication service providers from making false, misleading, or deceptive representations or statements or misrepresenting their identity relative to attempting to change a consumer’s long-distance carrier. Ms. Cathcart further stated the provisions require certain information be included in customer billing and prohibit billing for unauthorized services. Additionally, they require the provider to honor requests to cancel services.

Marshall Smith, Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General, directed the committee to the document titled "Proposed Revisions to S.B. 485," and offered the following revisions. Section 15, subsection 6 of S.B. 485, after "Bill a customer for services . . . ," insert "that the provider knows or should have known." Section 15, subsection 8, after "Charge a customer a fee for . . . ," insert "changing or."

Additional revisions mentioned by Ms. Cathcart under No. 3 on page 1 of "Summary of Proposed Revisions to S.B. 485," in A, "direct billings" are added, B prohibits use of subscriber authorizations for service after 30 days. Also, under C it requires compliance with Federal Communications Commission (FCC) procedures, and D allows a civil action to commence without determination that a criminal violation occurred.

Senator Porter inquired, regarding section 16, subsection 1, paragraph (a) of S.B. 485, " . . . a fine of not less than $50 nor more than $5,000 . . . ," why the low end of the fine is such a small amount. Mr. Smith replied the fine of "not less than $50 nor more than $5,000" was based on a survey of other state legislatures showing that slamming can result and be facilitated on a small, one-case basis up to thousands of cases a day or an hour in some instances. Therefore, this is a sliding scale as far as a civil penalty is concerned to address the minor from the major violators.

Chairman James asked which companies in Nevada have been doing the slamming. Mr. Smith answered they have received numerous complaints regarding various companies. He said they have received slamming complaints on every company, large as well as small. Mr. Smith further stated this has been an ongoing problem that has been increasing since 1994 and continues to grow.

Returning to the $50 fine, Senator Porter mentioned there would probably not just be one person that has been slammed, and that is why he was concerned that $50 is not an adequate beginning point. Mr. Smith remarked it could be a beginning point, or if there is an instance where there is evidence to support a civil violation of 100 or 1,000 slamming cases, then $50 times 1,000 cases or 10,000 cases, may be appropriate. Also, as far as the violation itself, the $50 could be attached to every type of violation such as those delineated in section 15, resulting in a higher aggregate penalty amount.

Chairman James inquired what the penalties are for similar violations under federal law. Mr. Smith replied the FCC has rules regarding slamming actions, but he is not aware of a specific fine per slamming incident.

Senator Care asked why the language in section 16, subsection 1, paragraph (b), subparagraph (1) of "Proposed Revisions to S.B. 485" is necessary. He further inquired why it could not simply be said that a victim may sue. It was Senator Care’s understanding that victims may currently sue if there has been fraud or misrepresentation. He mentioned the proposed language in subparagraph (2) that says "The court shall . . . ," and stated in civil litigation he would prefer the court retain its discretion. By way of clarification, Mr. Smith inquired if Senator Care proposed changing the language to "The court may . . . ." Senator Care affirmed that was correct, but reiterated it was his understanding that a victim or a class of victims could already sue. Mr. Smith replied, as provided for in other deceptive trade practices, the equitable relief which the attorney general may seek is in those sections, and that is why the bill drafters inserted it in section 16. As indicated in section 16, subsection 3, paragraph (a), Mr. Smith advised they added to that sentence "or any other appropriate forum," to allow any victim to seek redress in any appropriate forum.

Senator Care remarked that if the bill drafters were going to leave the referenced language in the bill, he would like to see the language, "The court may . . . ," as opposed to "The court shall . . . ." Chairman James concurred, noting it may not be appropriate to give declaratory or injunctive relief in every case, and the court needs to retain its discretion in those cases.

Regarding section 18 on debit cards, Chairman James advised the bill covering debit cards has already been passed and sent to the Governor for signature. Therefore, in his opinion, section 18 is unnecessary. Ms. Cathcart stated they would look at that, and if anything has been left out, they will suggest it be included. Otherwise, her office has no problem with removing those provisions.

Ms. Cathcart remarked the next area that would change state law is the addition of definitions to the statutes. She noted those are summarized in No. 3 of "Summary of Provisions of Senate Bill 485," and they affect sections 17 through 20, 24, and 28. Ms. Cathcart pointed out one of the most important definitions in her opinion is "intangible property," which includes trade secrets, customer lists, copyrighted materials, and other confidential information, such as information included in attorney-client records or physician-patient records. She said they could remove the definition for "debit card." Additionally, definitions are included for "information service," "provider" of information service, and an indication the definition of property would include "real, personal or intangible."

Chairman James mentioned a bill he considered requesting at the beginning of the session that would make it a crime to send a virus to a person’s computer. He stated he heard about S.B. 485, and decided to offer his proposal as an amendment to it. Ms. Cathcart remarked the attorney general’s office would be happy to add his suggestion to the bill as an amendment. She inquired if there is a penalty associated with it. Chairman James answered there are several options depending on if it is a first offense and other factors. He also noted he was not sure if it would apply outside Nevada. Ms. Cathcart stated currently there is nothing in the bill addressing jurisdiction, and her office is currently working with the National Association of Attorneys General on a task force effort to work on jurisdictional issues, not only at a national level, but an international level. She commented that would probably come before the committee in another session.

Senator Care pointed out in the "Proposed Revisions to S.B. 485," section 21, subsection 1, paragraph (b), "The victim . . . may bring a civil action . . . " implies to him there has to be a conviction first. He suggested changing the language to, "The victim of the criminal conduct described in Nevada Revised Statutes (NRS) . . . ," and then "loss or injury suffered as the result of the criminal conduct." Ms. Cathcart concurred with Senator Care’s point, and stated the only deference she would make would be if the Legislative Counsel Bureau staff had a particular reason for the current wording.

Ms. Cathcart continued with No. 5 of the "Summary of Provisions of Senate Bill 485," section 22 of the bill, and explained the section would require Internet service providers to give notice to their subscribers that they have the option to request confidentiality. Under the provision the subscriber may give the provider permission to give out personal information, but is not required to do so. Senator Porter inquired, regarding Internet companies posting notice and giving approval, if the company is in a foreign country or another state, how that would be handled. Ms. Cathcart replied that was a good question, and she did not have the answer.

Charles Stokes, Senior Computer Forensic Technician, Office of the Attorney General, responded to Senator Porter’s question by saying a lot of Internet providers are out of state, and aside from jurisdictional issues, technically it is difficult to control Internet providers’ business practices. Senator Porter asked if Mr. Stokes anticipates federal regulation in this area. Mr. Stokes answered the federal government is becoming involved in Internet regulation. Senator Porter inquired whether Mr. Stokes thought slamming would occur in the Internet industry, and Mr. Stokes replied it has already happened occasionally. Senator Porter referred to the definition of "provider" in section 13 of the bill, and asked if that definition is broad enough to cover those in the Internet field. Mr. Stokes answered affirmatively.

Ms. Cathcart next addressed No. 6 on the "Summary of Provisions of Senate Bill 485," regarding sections 27 through 30, where it defines and prohibits certain criminal acts involving computers and other telecommunications devices. Ms. Cathcart read paragraphs A through C, which define the criminal acts and penalties for each criminal act. She mentioned her office offered some changes included in the "Summary of Proposed Revisions to S.B. 485," that are specific to section 29. Ms. Cathcart explained the change would remove the provision that makes it unlawful to give technical assistance to someone who is obtaining information service without full payment.

Chairman James indicated they had not covered the proposed revisions to section 22 in the "Summary of Proposed Revisions to S.B. 485." Ms. Cathcart noted the proposed changes were under No. 4, and they prohibit the falsification of an e-mail address or providing false or misleading information as to the point of origin, transmission path, or subject line of the e-mail. Chairman James inquired whether this would include setting up a false domain name, for example, using a competitor’s business name, setting up an e-mail address under that domain name, and sending out inflammatory information under that e-mail address to hurt a competitor. Another possible situation mentioned by Chairman James is to sell a false domain name to a third party. Mr. Smith advised this change does not cover the scenarios mentioned by Chairman James, but was intended for the actual technical trickery involved in e-mail "spamming." He informed Chairman James the issue he was talking about is being investigated at the federal level, primarily in the trademark area. Continuing, Mr. Smith stated this provision is for elimination of those entities that care to bounce a "spammed" e-mail off an Internet service provider in order to avoid association with that "spam." Chairman James asked if there was a way to amend the language of this section to cover wrongfully using a domain name. Mr. Smith replied that could probably be done. Chairman James requested Mr. Smith look into language that would address this issue.

Frankie Sue Del Papa, Attorney General, testified she was attending the meeting to let the committee know how important, in her opinion, this piece of legislation is, and how important it is for Nevada to continue to focus on the whole high-technology area. She advised that United States Attorney General Janet Reno informed a recent meeting of the National Association of Attorneys General this issue affects every state of the country, and the new federal crime bill includes $350 million just for technology, due to the importance of staying ahead of the curve. Ms. Del Papa further testified that Nevada is small enough that it receives a great deal of cooperation, collaboration, and communication among law enforcement in the state. However, she mentioned the resources have been extraordinarily slim. Ms. Del Papa stated one of the greatest new resources that has come on-line recently is the Technology to Recover Abducted Kids (TRAK) system. She remarked that Nevada is the first state in the country to be fully equipped with this system. Ms. Del Papa explained a wallet photograph may be put on screen, and a missing child flyer may be developed with all the essential information within minutes and be distributed with the push of a button to Nevada and California law enforcement. There are 16 states on-line, and 300 TRAK systems nationally. Further, Ms. Del Papa advised that on several different fronts, Nevada is not competitive. However, this legislation keeps Nevada moving forward at a time when the average bank robbery in the United States nets $2,500, but the average high-technology crime starts at approximately $50,000. Ms. Del Papa concluded by emphasizing the importance of passing S.B. 485 in light of living in the age of the Internet.

Senator Porter mentioned the Reader’s Digest approach to contests in the mail, and inquired whether that is now happening on the Internet as well. Ms. Del Papa replied just when the attorney general’s office thinks it has seen everything, something else comes along. She remarked they have seen everything from auctions to selling fraudulent baseballs, supposedly owned by baseball stars. Ms. Del Papa mentioned a pamphlet put together by Mr. Stokes as a guide for parents, because a lot of parents are not as sophisticated as their children regarding the Internet. Other concerns mentioned by Ms. Del Papa are Internet gambling and alcohol sales to children on the Internet.

Ms. Cathcart resumed explaining proposed changes to S.B. 485. She mentioned section 27 is No. 5 in the "Summary of Proposed Revisions," stating it would make identity fraud a Category C felony. It would also make interfering with, denying access, or unlawful access, depending on the monetary damages, a Category B felony. Senator Titus referred to language regarding devices and information services, and remarked that last session there was a bill regarding cellular telephones and inquired whether this bill would affect that statute. Ms. Cathcart remarked that without reading the statute, she does not know, but believed this language would add to that statute, rather than change it. She asserted the intention of S.B. 485 would be to strengthen rather than weaken any related statutes. Mr. Wilkinson advised this bill changes the definition slightly, but does not make any substantive changes to the provisions added by S.B. 265 of the Sixty-Ninth Session, referred to by Senator Titus.

Ms. Cathcart stated the next changes were to sections 31 through 47, regarding debit cards, which she agreed to remove since a bill was recently passed covering debit cards. The next sections Ms. Cathcart addressed, sections 49 through 59, and section 64, concern investigative subpoena power for production of computer and storage media to further the criminal investigation of a felony. She explained the individual requesting the subpoena must provide a sworn statement affirming that the subpoena is being issued as part of a felony criminal investigation. Service of the subpoena must be made upon the owner of the computer to ensure the owner knows what is going on with his or her computer. Further, Ms. Cathcart testified the computer must be produced for inspection pursuant to the subpoena, but if the computer owner refuses to comply, the issuing party may petition the district court for an order. She also mentioned it would state the owner of the computer is not civilly liable for the disclosure of confidential information that might be obtained pursuant to the subpoena. The person that issued the subpoena is also exempt from civil liability. Additionally, Ms. Cathcart advised evidence obtained pursuant to the subpoena would not be subject to public inspection before the prosecuting attorney initiates a criminal proceeding unless the person who provided the evidence consents to making that information public.

Chairman James clarified that the attorney general or a district attorney can issue an investigative subpoena, meaning no charges have been filed. He mentioned the bill states the individual’s computer must be returned within 48 hours, but the attorney general’s amendment changes the time frame for returning the computer to within 30 calendar days, and noted that could destroy a person’s business.

Jeanette Supera, Senior Investigator, Medicaid Fraud Unit, Office of the Attorney General, stated she is certified in computer forensics and has done a number of search warrants involving seizing computers or computer information. She explained that generally, if a business is up and running, the investigator will try to do a mirror image of the computer system in order to obtain all the information without actually taking the computer system. Ms. Supera continued, S.B. 485 is written for instances in which it is impossible for the investigator to do a mirror image or a backup of the system on site and they actually have to take the system. Chairman James remarked the problem is the bill does not say that. Ms. Supera noted the bill is written for the eventuality of being able to remove a computer system from the home of the private citizen, the pedophile, who is doing things in his home. Chairman James asserted the bill is not written for pedophiles, it is written for everybody. Ms. Cathcart pointed out that the bill is written for felony activities.

John C. Morrow, Lobbyist, Washoe County Public Defender’s Office, remarked this topic is not generally in his area of expertise, but he does have a general concern regarding an investigative subpoena that would authorize an agency to take a business’s computer for 30 days. Chairman James asserted to do a wiretap the investigator has to go to court, and the wiretap is limited to certain crimes. He noted when the Legislature expanded the crimes to include certain types of murder this session, there was extensive opposition. Chairman James said this would be similar because the investigator would be taking somebody’s information with no court action, no charges filed, and no affidavits setting forth the basis of the information removal. Ms. Cathcart mentioned there is a provision requiring a sworn statement be included, and the computer owner may refuse to comply, which would send the issuing party to district court to explain the reason for it. She also mentioned the workers’ compensation fraud unit has investigative subpoena power available to it, and there are checks and balances in the bill to ensure due process is followed. In Chairman James’ opinion, the same procedures should be required as are necessary to obtain a wiretap. Mr. Morrow concurred with Chairman James’ comments, and added in his opinion, some court oversight would be appropriate.

Ms. Cathcart continued with sections 61 through 63, prohibiting state prisoners from having access to telecommunications devices, and said she had a small revision. She explained her revision would allow prisoners use of the telephone system currently in place, in which the prison monitors prisoners’ telephone calls, prisoners receive notice that their conversations are being monitored, and there are certain restrictions and limitations on the numbers that they can call. What it would prohibit is telemarketing by prisoners or any business that would require the prisoner to telemarket, conduct opinion polls, or acquire personal information. According to Ms. Cathcart, it would also prohibit prisoners from using computers with modems, cellular telephones or other devices capable of communicating with others outside the facility. She clarified the intent is not to affect the educational programs whereby prisoners are taught word processing and things related to computers, but it would prohibit any communication via the Internet or e-mail with the outside world that cannot be monitored.

Continuing, Ms. Cathcart advised there would be a new section that would define encryption, which is a method by which activity on computers can be put into an unreadable format. That section is included in No. 9 of the "Summary of Provisions of Senate Bill 485." Chairman James clarified that this section would not prohibit encryption, except where it is used as part of criminal activity. Ms. Cathcart proceeded to No. 10 and stated her office has an amendment to it as well (section 65). She explained her office had put into the bill that every state entity that uses computers would have to adopt a policy regarding computer use, and every employee would have to be provided a copy of the policy. Ms. Cathcart indicated the amendment would be that every state agency should be required to use the policy adopted by the Department of Information Technology to ensure there is consistent policy throughout the state.

The next sections covered by Ms. Cathcart were sections 69 through 72, regarding making it unlawful for a person to knowingly and with intent to intercept or receive a community antenna television service without authorization or to utilize kits or modify devices for this purpose, and it involves penalties. Additionally, these sections would permit the victim to go after the perpetrator for civil damages. The last sections included in the attorney general’s proposed revisions, according to Ms. Cathcart, have to do with appropriations. She requested the appropriations for the computer forensics laboratory be removed from the bill, because the chairman of the Senate Committee on Finance said it would be preferable for the Office of the Attorney General to add it as an amendment to its budget. Ms. Cathcart reiterated the fiscal note for the advisory board is essentially a request for seed money of approximately $80,000 for each year of the biennium. Ms. Cathcart noted the attorney general’s office has already submitted a Byrne grant application, and if this bill is approved, $80,000 or half of the appropriation, would be used as matching funds for the requested grant.

Senator Wiener pointed out that the attorney general’s office changed "high-technology" early in the bill to "technological crime." She inquired whether they would be changing the name of the advisory board to "Technological Crime Advisory Board." Ms. Cathcart answered they could do that, but added for purposes of consistency and simplicity, they just called everything "technology crime." She said they would be happy to leave the determination of whether the designation for the board should follow the language in the bill up to the committee.

Gene P. Etcheverry, Chief Financial Officer, Office of the Attorney General, stated the Byrne grant was submitted March 31, 1999, and the matching amount on that is $20,000, which is a 25-percent match when compared to $80,000.

Senator Care asked the significance of making it a gross misdemeanor, in section 71 of S.B. 485, if a violation involves nine or fewer devices and a Category D felony if a violation involves ten or more devices. Ms. Cathcart deferred to members of the cable television community who requested this provision.

Robert Gastonguay, Lobbyist, Executive Director, Nevada State Cable Telecommunications Association, introduced expert witnesses that could speak to the various provisions. Those with him were: Daniel J. Backo, Director, Office of Cable Signal Theft, National Cable Television Association; Robert Kijowski, Senior Audit Manager, Cox Communications; and Gregory P. Harrison, Lobbyist, Regional Director, Government Affairs, TCI Cablevision of Nevada Inc.

Mr. Backo responded to Senator Care’s question by stating his organization is quite interested in this bill, especially in regard to pirate decoder devices or "black boxes." He testified that the National Cable Television Association (NCTA) estimates the problem of signal piracy, especially focused on black boxes, causes a loss to the industry of $5.2 billion a year. Mr. Backo mentioned the Federal Bureau of Investigation requested his agency come up with a decoder piracy formula to estimate the extent of loss caused by each black box. He reported they determined that over the life of one pirate black box decoder, estimated at 5 to 7 years, each box costs the industry $2,600 of lost revenue. Senator Care repeated his question about the difference between nine or fewer devices and ten or more devices.

Mr. Kijowski remarked the difference between nine and ten devices is to differentiate between an individual who would actually become a distributor. In his opinion, if a person has ten or more devices, that person would be considered a distributor and receive harsher penalties. Mr. Kijowski reported that in 1986 his Las Vegas company had 67,000 subscribers, and today they are approaching 400,000 subscribers. He continued 200,000 of the 400,000 subscribers are "basic only" subscribers, meaning they take one of the lowest levels of service. Mr. Kijowski explained the basic level subscriptions do not include the premium channels such as "HBO," "Showtime," "Pay Per View," and so forth. He asserted the NCTA has reported that 9.23 percent of a cable television provider’s subscriber base is stealing premium services. Mr. Kijowski continued, saying if they have 200,000 basic-only subscribers, 9.23 percent represents to Cox Communications a little over 18,000 subscribers. The premium channel services cost the subscriber, in addition to the basic service, $24.85 per month, excluding the "Pay Per View" programming. Multiplied out, Mr. Kijowski stated, the figure is $470,000 a month, or $5.5 million a year of programming services that are being stolen. He remarked his company pays franchise fees to the local municipalities that they serve, which can run from 3 to 5 percent of the gross revenues. Mr. Kijowski noted that $5.5 million in lost revenues through theft of service represents close to $300,000 to the municipalities that receive that money. Regarding the Internet problems mentioned earlier in the meeting, Mr. Kijowski maintained that if an individual was to go onto the Internet and type "descrambler," he would get 300 "hits" regarding the type of black box he could buy. In closing, Mr. Kijowski urged the committee to vote in favor of S.B. 485.

Mr. Harrison echoed comments by previous speakers. He told of an incident in Reno in which a person was arrested and convicted of possessing black boxes, and due to the current weak Nevada laws, the judge had no alternative but to return the seized property to the individual once the case was concluded. Mr. Harrison offered his support for passage of S.B. 485.

Brian G. Herr, Lobbyist, Nevada Bell, remarked he came into the meeting late, but heard a couple of the questions regarding fines associated with the "slamming," "cramming," and "sliding" issues. Upon hearing those questions, he said it raised a question, in his mind, as to whether the committee understands what those processes are all about. Mr. Herr explained "cramming" is the process of loading a bill with charges for services that the customer does not receive. "Slamming" is the process of switching a customer from his current long distance carrier to another long distance carrier without the customer’s knowledge. The act of "sliding" is the act of changing a customer from one local provider to another local provider. To illustrate the magnitude of the problem, Mr. Herr indicated that in 1996, Nevada Bell had 6,500 complaints on this issue; in 1997 they had 7,900 complaints; in 1998 the complaints were close to 13,000. Mr. Herr further reported Nevada Bell has a manager in its regulatory department who has dedicated more than half his time on the job to the issues of slamming, cramming, and sliding. He said the reason Nevada Bell, a local carrier, becomes involved in these complaints is because it is the company that makes the technical change to move a customer from one long distance company to another. Mr. Herr advised that Nevada Bell has stopped making the changes for 39 companies they discovered were slamming customers. However, the companies are reinventing themselves and returning under different names.

Senator Porter pointed out it is not only the "no name" companies that are slamming customers. Mr. Herr remarked it is his understanding there have been accusations to nearly all the carriers, and stated Nevada Bell is not in the long distance business, so are not in that position at this point in time. He gave a couple of examples of how people are slammed. One black box example is a promotion at a grocery store parking lot where a representative sells individuals a black box for $5 stating it will save the customer money on long distance calls. When plugged into a customer’s telephone, it directs the long distance calls over a carrier that charges high rates, but the customer does not realize that until receiving a long distance telephone bill. Senator Porter pointed out that Mr. Herr gets paid every time a change is made, so it is also to his advantage. Mr. Herr maintained he gets paid for Nevada Bell’s cost to make the change.

The second example given by Mr. Herr is, again, in a parking lot with a sweepstakes where they are giving away a car. An individual signs up for a chance at winning the car, and at the bottom of the card is permission for them to change the individual’s long distance company; the person signs the card and his long distance telephone carrier is changed. He said they can hold that card until such time as there is a new local service provider, and change the individual’s local provider at some future point. Mr. Herr advised that Nevada Bell has some problems with the language of the bill. He expressed a desire to work with Mr. Smith and the attorney general’s office to clarify the language. In conclusion, Mr. Herr stated his company is in support of S.B. 485.

Stephanie Tyler, Lobbyist, Nevada Bell, testified Nevada Bell looks forward to the opportunity to be able to clean up the "cramming/slamming" section of S.B. 485. Additionally, she noted Nevada Bell’s lawyers have not had the opportunity to review the language of the bill. Ms. Tyler pointed out an important definition to Nevada Bell is "provider." She remarked Nevada Bell wants to ensure it is clear that provider is specifically a provider of a service for which a company such as Nevada Bell would merely be doing the billing. Section 15, regarding billing cycles, is also of concern to Ms. Tyler. Currently, she reported, a proposed amendment would change the date to 15 days, and Nevada Bell does not want to be in a position to have to change to an entirely different billing cycle. Therefore, Ms. Tyler would propose having the time frame proposed in the bill be consecutive to Nevada Bell’s billing cycle.

Margaret A. McMillan, Lobbyist, Sprint, remarked Sprint shares the same concerns that were raised by Nevada Bell. She addressed a question by Senator Porter regarding being paid for changing a customer from one long distance carrier to another, stating they do get paid for making such changes, which are called "pick changes." However, Ms. McMillan maintained that does not compensate for all the adjustments made by Sprint. She advised that her office is the billing agent for over 100 telephone companies offering long distance service in Las Vegas. When a customer calls saying he has been slammed, Sprint takes the charges off the customer’s bill; however, it is an expensive process, according to Ms. McMillan. Continuing, she stated Sprint is in support of S.B. 485, but Sprint does have a couple of issues with it. One is on the "cramming" section, section 15, subsection 5, which mentions notifying customers in writing. Ms. McMillan advised that a customer may obtain a better price by combining custom calling features in a package. On a bill, the various features would not be broken out. Ms. McMillan noted Sprint also needs to work with the attorney general’s office on language changes to address its needs.

Clayton D. Johnson, Lobbyist, Representative, GTE of Nevada, testified his company is not as big as some of the other players, but is extremely interested in this bill. He stated GTE of Nevada is not against the concept of S.B. 485, but does have a problem with the broadness of its definitions.

Senator Porter referred to Ms. Tyler’s statement that Nevada Bell is the billing agent, and asked if that is a statutory requirement. Ms. Tyler answered affirmatively. Senator Porter inquired whether local carriers are required to be the billing agent by federal regulation and if Nevada Bell favors that requirement. Ms. Tyler deferred to Ms. McMillan. Ms. McMillan remarked she was not certain it is a requirement, but Nevada Bell customers have reported they like receiving one bill and prefer to have as much billing on it as possible. She added Nevada Bell has mostly handled long distance billing as a convenience to the customer. Ms. McMillan emphasized they do not handle billing for all long distance carriers, so it is not mandatory. Some of the other carriers have chosen to bill their long distance customers directly. Senator Porter queried what type of safeguards Sprint has to ensure a request for a change in service did or did not take place. Ms. McMillan replied they receive a "mag" tape that records electronically a customer’s request to change long distance carriers. She explained customers may request a "pick freeze," which is a customer’s request to not have their long distance carrier changed without their permission. Continuing, Ms. McMillan said when Nevada Bell receives the "mag" tape indicating a request for a pick freeze, the "mag" tape would kick that customer’s number out as being a frozen pick change. Senator Porter suggested perhaps legislation should be passed to publish a list of companies who have been guilty of slamming and the number of charges against each company. Ms. McMillan indicated large long distance carriers use resellers who call and make the changes for a percentage of the charge. She said they have tried to police that activity, but it still occasionally happens.

Todd G. Shipley, Detective Sergeant, Police Department, City of Reno, testified law enforcement is at a crossroads, and the technology-related portions of S.B. 485 are imperative to allow law enforcement to begin to deal with these issues. He advised the Reno Police Department has been working to develop a team over the last 4 years to deal with high-technology crime. Sergeant Shipley asserted passage of this bill would allow his department to start fighting high-technology crime.

There being no further testimony on the bill, Chairman James closed the hearing on S.B. 485. He then opened the work session and referred to the work session document (Exhibit D). The first bill addressed by Chairman James was S.B. 195.

Chairman James mentioned this matter had already been passed out of committee as S.B. 315, and S.B. 195 could therefore be indefinitely postponed.

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The next bill addressed by Chairman James was S.B. 212.

In Chairman James opinion, S.B. 212 was not adequately crafted to be adopted this session. The committee concurred.

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Chairman James referred to S.B. 401.

The Chairman stated this bill received no opposition, although an amendment was requested to reduce the number of judges to three, and it is to be re-referred to the Senate Committee on Finance. Chairman James further advised the fiscal note would be reduced from $332,500 to $199,500, but there would be additional costs to Clark County. However, with the amendment, Clark County favors passage.

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The next work session bill addressed by Chairman James was S.B. 421. He stated there were no amendments to the bill.

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Chairman James next referred to S.B. 479.

The Chairman noted the committee had a copy of NRS 16.025 in their work session document, and said it is the current preference in use by the insurance industry to expedite cases. Further, he commented the statutory provisions to be adopted in section 2 of the bill would be at odds with the current practice. Chairman James stated by amending the bill to adopt the current provisions relating to the medical and dental malpractice screening panels, the committee would be adding the addition of "70 years of age or older" regarding the person for whom there is substantial medical doubt would live to the end of the screening panel. He reported the other decision for the committee was whether or not to keep in the preference for medical/dental cases if they go to trial, in section 3. Chairman James suggested the committee adopt the amendment in section 2 to adopt in NRS 16.025, subsections 1 and 2, and omit the preference for the trial in these cases. He pointed out it would still be the discretion of the court to accelerate the trial in these cases if it finds there has been undue delay.

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The next bill addressed by Chairman James was S.B. 481.

Allison Combs, Committee Research Analyst, Research Division, Legislative Counsel Bureau, informed the committee the work session document includes the proposal to further define controlled substances under the bill. She said law enforcement and the district attorney’s office have an expert they would like to consult in Elko, Nevada, to develop a list written in layman’s words, since the nomenclatures in the bill are difficult to understand. Chairman James remarked he would hold the bill until the next work session. No action was taken on S.B. 481.

The next bill on the work session agenda was S.B. 484. Chairman James stated he had major reservations about the bill, and all he was prepared to accept, at the present time, was to refer the bill from the committee without recommendation.

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Chairman James addressed the next bill on the work session agenda, S.B. 492.

Chairman James advised that David W. Wasick, Administrative Counsel, Administrative Office of the Courts, Nevada Supreme Court, offered an amendment to reconcile exactly Nevada Rules of Civil Procedure No. 68 to NRS 17.115. The amendment may be found in the work session document (Exhibit D), under tab A. Additionally, to address Chairman James’ concern that expert fees be addressed, on page 3 of the amendment, language has been added in bold, beginning, "Also, the court may order a reasonable sum . . . ."

Senator Care suggested the effective date of the bill be amended to read, " . . . becomes effective the first of October, or becomes effective in those cases where the complaint was filed after the first of October."

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Chairman James referred to S.B. 493, stating he has reservations regarding this bill because it would be adopting two different types of law in different parts of the state.

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The final bill addressed by Chairman James was S.B. 514.

Per Chairman James’ request, Brad Wilkinson, Committee Counsel, Legal Division, Legislative Counsel Bureau, explained that when the judges requested to delete sections 3 and 9 of the bill, they were seeking an option in their pension plan that would mirror option 2 of the Public Employees’ Retirement System (PERS) plan, and this is already included as part of the PERS plan.

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There being no further business to come before the committee, Chairman James adjourned the meeting at 10:52 a.m.

RESPECTFULLY SUBMITTED:

Jo Greenslate,

Committee Secretary

APPROVED BY:

Senator Mark A. James, Chairman

DATE: