ASSEMBLY COMMITTEE ON JUDICIARY

MINUTES OF THE meeting

of the

ASSEMBLY Committee on Judiciary

Seventy-First Session

May 1, 2001

The Committee on Judiciarywas called to order at 8:00 a.m. on Tuesday, May 1, 2001. Chairman Bernie Anderson presided in Room 3138 of the Legislative Building, Carson City, Nevada. The meeting was simultaneously videoconferenced in Room 4401 of the Grant Sawyer Office Building, Las Vegas. 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

Mrs. Sharron Angle

Mr. Greg Brower

Ms. Barbara Buckley

Mr. John Carpenter

Mr. Jerry Claborn

Mr. Don Gustavson

Mrs. Ellen Koivisto

Ms. Kathy McClain

Mr. Dennis Nolan

Mr. John Oceguera

Ms. Genie Ohrenschall

COMMITTEE MEMBERS ABSENT:

Mr. Tom Collins (excused)

GUEST LEGISLATORS PRESENT:

Assemblyman Doug Bache, District 11

Senator Dean Rhoads, Northern Nevada Senatorial District (Elko, Humboldt, Pershing, parts of Eureka, Lander Counties)

STAFF MEMBERS PRESENT:

Nicolas Anthony, Committee Policy Analyst

Risa B. Lang, Committee Counsel

Deborah Rengler, Committee Secretary

OTHERS PRESENT:

Don Ashworth, Probate Commissioner, Eighth Judicial District Court, Las Vegas

Mark Solomon, Member of Probate Committee, Lionel, Sawyer & Collins

Robert DeLett, Probate Section, Nevada Bar

Michael Alonso, Attorney, Jones Vargas, Reno

Matt Woodhead, representing self

Frank W. Daykin, National Conference of Commissioners on Uniform State Laws (NCCUSL)

Guy Louis Rocha, Assistant Administrator for Archives and Records; Department of Museums, Library and Arts - Nevada State Library and Archives

John Paul Deley, Electronic Records Archivist; Department of Museums, Library and Arts - Nevada State Library and Archives

Kathleen Delaney, Deputy Attorney General, Bureau of Consumer Affairs, Las Vegas

JoAnn Gibbs, Senior Deputy Attorney General

Doug Busselman, Executive Vice President, Nevada Farm Bureau Federation, Sparks

Jim List, Chairman, Nevada Seed Council, Lovelock

Joe Guild, Nevada Cattlemen’s Association

John Sande, Nevada Bankers’ Association, Jones Vargas, Reno & Las Vegas

Andrew List, Policy & Research Coordinator, Nevada Association of Counties (NACO), Carson City

Stephanie Licht, Legislative Consultant, Nevada Wool Growers Association, Spring Creek

Chairman Anderson made opening remarks and noted a quorum was present. Chairman Anderson opened the hearing on S.B. 33 and drew attention to the explanation of the bill provided by the Legal Division (Exhibit C).

Senate Bill 33: Revises various provisions governing probate. (BDR 12-853)

Don Ashworth, Probate Commissioner, Eighth Judicial District Court, began reviewing S.B. 33 section by section (Exhibit D) with a brief explanation as to how each change affected the appropriate section of the Nevada Revised Statutes (NRS). He said there was a division in the probate and trust section since it encompassed both Title 12 and Title 13; but Title 12 did not apply to Title 13 and vice versa unless so referenced. Mr. Ashworth said many people believed if they had a will, there would be no probate; that was not correct. If there was a will, there was probate by testacy. If there was no will, the person would die intestate and the legislature would decide how the estate would be distributed.

Chairman Anderson asked if the bill had been discussed among practitioners in that area of the law. Mr. Ashworth believed there would be no further discussion on the items covered in the bill. In 1997 a probate committee was formed, chaired by Gardner Jolley in the Las Vegas area; S.B. 33 came through that committee.

Mark Solomon, member of the probate committee, agreed with Mr. Ashworth.

Assemblywoman Angle said she understood the reason to set up a living trust was to avoid probate; how were trusts and probate related? Mr. Ashworth said under NRS 164.010 a living trust was not subject to jurisdiction of any probate court in Nevada until the trust was confirmed. If a living trust was drafted and did not transfer the assets to the trustee of the trust, nothing was really done; everything would need to be probated to move the assets into the trust.

Assemblyman Nolan questioned page 10, line 11, where a registered/certified mail notice was required when a claimant was rejected by the trustee; was that time period too short? Mr. Solomon said the provision applied to creditors who were owed money, it did not affect beneficiaries. After receipt of the rejection of claim, the creditors would have 60 days to file an action and collect their money. Mr. Ashworth said a claim form would have been submitted with pertinent information regarding the claim, the notice referenced on page 10, line 11, was strictly a rejection of that claim.

Robert DeLett, Nevada Bar Probate Section, believed the practitioners would be comfortable with the bill. In answer to Assemblyman Nolan’s question, it should be noted that part of the trust process included a notice filed by the trustee to known creditors and publication of a notice in the newspaper that would allow known creditors a 90-day period to file a claim before the notice of rejection, which then gave those creditors a 60-day period to dispute the rejection; totaling approximately six months to complete the action.

Michael Alonso, attorney with Jones Vargas, submitted an amendment (Exhibit E), which included language on electronic wills.

Matt Woodhead, attorney, specialized in high-end trust, estate and tax planning. He gave a brief overview of the amendment (Exhibit E). Current law allowed attested wills and holographic wills, which included “will or execution formalities” to assure the wills were actually signed by the person in question. The proposed amendment had three components:

(1) There must be a mechanism or system where a will could be executed electronically and a single unalterable record would be created; this requirement came out of the Uniform Electronic Transaction Act (UETA).

(2) The electronic will must be electronically signed by the testator as well as include authentication characteristics. Authentication characteristics as proposed were some measurable biological or physical action that was unique to a particular individual that could be recorded in electronic form; this biometric authentication could be a fingerprint, a retinal scan, a palm scan, a facial recognition, or a digitized signature.

(3) A nexus must be provided to Nevada for individuals who might execute a will while out of the state. Most states had some form of law stating a will was valid if executed in the state where executed or valid under the laws of the state of residency. Similar laws were needed for electronic wills.

Mr. Woodhead said electronic wills were not only a convenience to citizens, but also a recognition the world was changing. Soon, as evidenced in the need for S.B. 49, all legal transactions could be conducted electronically. Nevada had been a leader in the trust estate-planning environment; they should be a leader in this as well.

Assemblyman Carpenter asked if S.B. 33 opened up opportunities for “other realities to come into play,” such as deleting a wife and kids from an existing will. Mr. Woodhead believed it would provide an opportunity for the individual to alter his/her will in a fashion that would actually provide more security; a person could change his/her will by just handwriting the changes (holographic will). It did not create any additional opportunity for someone to be influenced or take inappropriate actions; it could provide an additional opportunity to make sure the will was sound.

Frank Daykin, National Conference of Commissioners on Uniform State Laws (NCCUSL), said there was no conflict between S.B. 33 and S.B. 49 in relation to the creation and execution of wills, codicils or testamentary trusts, since S.B. 49 excluded those items, leaving those matters to the jurisdiction of the individual states through the probate codes.

Mr. Ashworth did not agree with the proposed amendment (Exhibit E) as submitted by Mr. Alonso. Mr. Ashworth felt there were problems regarding the testation of witnesses. There could be problems determining whether the individual was executing the will under undue influence; was the person mentally competent when he/she executed the will. There was no way with an electronic document that could be determined without testimony to the fact. Mr. Ashworth opposed the amendment.

Chairman Anderson asked Mr. Ashworth if he had reviewed S.B. 49. Mr. Ashworth had not reviewed S.B. 49, but he would relay information to Gardner Jolley, Chairman of the Probate Commission, and prepare a document with his concerns.

Chairman Anderson asked for further testimony on S.B. 33. There being none, he closed the hearing on S.B. 33 and stated it would be put on the work session document.

Chairman Anderson opened the hearing on S.B. 49. An explanation of S.B. 49 (Exhibit F), prepared by the Legal Division, was submitted to the committee by Chairman Anderson.

Senate Bill 49: Adopts Uniform Electronic Transactions Act. (BDR 59-258)

Frank Daykin said Congress enacted a statute (E-Sign) making electronic records and electronic signatures valid for commercial transactions. States who adopted the Uniform Electronic Transactions Act (UETA) complied with the federal statute and the state statute would then preempt the federal statute in that state. Section 22, page 3, line 18, said the bill did not require any document or transaction to be prepared or conducted electronically; documents could still be handwritten. What S.B. 49 did was validate those documents that were electronic. Section 22, subsection 2, said the bill applied to those parties who agreed to conduct business by electronic means; one party could not force another to use electronic means, they must agree. Even if a party agreed “generally,” that party could refuse any particular transaction under subsection 3. UETA applied to both commercial and governmental transactions.

Chairman Anderson asked if S.B. 49 would force the state to use only electronic forms. Mr. Daykin said the state, as one of the parties, could not force anyone to use only an electronic form. E-Sign specifically said by adopting the UETA the states would govern what happened within their state; transactions between the states and the federal government would be another matter. Under the Supremacy Clause, the state law could not govern the federal government.

Chairman Anderson asked if S.B. 49 would affect uniform code laws. Mr. Daykin replied yes, as far as any other uniform acts were concerned. Mr. Daykin recommended a deletion of line 8 on page 3 to be consistent and appropriate with S.B. 33.

Guy Louis Rocha, Assistant Administrator for Archives and Records, Department of Museums, Library and Arts - Nevada State Library and Archives, said the public records law did not address the definition of electronic records. Those records would eventually come to the Archives, requiring the need for further legislation in 2003.

John Paul Deley, Electronic Records Archivist, Department of Museums, Library and Arts - Nevada State Library and Archives, supported the UETA and knew it would be important for commercial transactions in the state. His concern was with governmental transactions and the requirement of the State Archives to preserve records created electronically. There would be a number of issues such as records integrity and how the records would be authenticated. A.B. 266 dealt with electronic notary and verification of electronic signatures. The creation of electronic signatures would create new types of records associated with them. Agencies would need to identify the content, context, and structure of the records and what would be needed to prove the trustworthiness of the record. Mr. Deley wanted to clarify the four definitions of electronic record, record, transaction, and certification/documentation (Exhibit G).

Chairman Anderson verified Mr. Rocha and Mr. Deley were not proposing an amendment, but anticipated a need for further amending the statute if the bill went forward. Mr. Deley wanted their concerns on record but did not want to place any obstacles in the way of the current UETA; this may involve future amendments to NRS 52, NRS 239, or NRS 378. Mr. Rocha said amendments had been discussed with Senator Mark James, but could wait until 2003 and then stated, “This will be a compelling issue as we move further into the 21^st Century.”

Assemblywoman Buckley said she did some research regarding the E-Sign Act and the UETA; she distributed two documents (1) E-Sign and UETA; What Should States Do Now, prepared by the National Consumer Law Center (Exhibit H), and (2) The Need to Protect Consumers – Especially Low-Income Consumers – from UETA (Exhibit I). Ms. Buckley had also talked to the Attorney General’s Office, which was why there were proposed amendments to be submitted by the Attorney General’s Office (Exhibit J).

Kathleen Delaney, Deputy Attorney General, Bureau of Consumer Affairs, said the amendments proposed by the Attorney General’s Office (Exhibit J) retained protections for the consumer already contained in the federal E-Sign Act. There were two areas of considerable concern: (1) E-Sign Act contained language what would allow its provisions to be displaced by the UETA, losing consumer consent and document integrity provisions, unless the UETA was amended to expressly state otherwise; and, (2) E-Sign Act allowed electronic notices to be substituted for written notices only after a consumer gave detailed consent in each instance, but there were certain exceptions in federal law since Congress recognized electronic delivery did not provide the same assurance of receipt as the mail did.

Ms. Delaney stated that, in the future, consent by the consumer to deal electronically might be implied simply by the consumer’s prior experience communicating on-line or a signature on a “boilerplate” contract at the beginning of a relationship. The first proposed amendment contained simple language saying that nothing in the UETA was intended to “modify, limit or supercede” particular sections of the E-Sign Act that provided specific consent by the consumer. The second amendment dealt with the UETA’s lack of exemptions for key consumer notices.

Assemblywoman Buckley believed the amendments were important. “We want to encourage commerce, but we want to be careful that we are not rushing so fast that we don’t add consumer protections in our law.” Ms. Buckley believed the proposed amendments (Exhibit J) from the Attorney General’s Office were in agreement with Exhibit H; the amendments condensed the 50 pages into 1 page by referencing the consumer protections in E-Sign.

Assemblyman Carpenter asked if Amendment Two, subsection (e) of the Attorney General’s amendments (Exhibit J) dealt with commerce, not consumer benefit. Mr. Carpenter believed those documents listed in subsection (e) were already being handled electronically; commerce moved fast. Ms. Delaney said the exemptions listed in subsection (e) were the exact wording currently in the federal law.

Assemblyman Oceguera said the subsection specifically related to the emergency services field because those documents needed to be with a vehicle for immediate retrieval in certain situations. Chairman Anderson commented on similar hazardous studies for the Assembly Committee on Transportation for trains.

JoAnn Gibbs, Senior Deputy Attorney General, had no further comments.

Mr. Daykin emphasized to Assemblywoman Buckley that the transactions must be voluntary; Section 22, subsection 3, stated a person “may refuse to conduct other transactions” electronically. It went on to say that right could not be waived “by agreement.” Mr. Daykin believed the uniform act went a long way to protect “voluntariness” and even if caught in an initial agreement, the person could “renounce” the agreement. The person could not “bind himself in advance not to renounce it.”

Assemblywoman Buckley maintained the consumer protections in the E-Sign Act were important; she wanted to combine the amendments with the bill. Chairman Anderson asked Mr. Daykin to review the Attorney General’s proposed amendments, which he agreed to do.

Mr. Alonso believed S.B. 49, Section 20, subsection 2(c), line 8, page 3, as referenced by Mr. Daykin, should be deleted, whether S.B. 33 was passed or not.

Chairman Anderson asked for further testimony on S.B. 49. There being none, he closed the hearing on S.B. 49.

Chairman Anderson assigned S.B. 49 and S.B. 33 to a subcommittee of Assemblyman Oceguera (Chair), Assemblywoman Buckley and Assemblywoman Angle, to look at how the two bills fit together, the amendments, and concerns of those who testified.

Chairman Anderson opened the hearing on S.B. 88.

Senate Bill 88: Provides for creation and foreclosure of liens for farm products. (BDR 9-643)

Doug Busselman, Executive Vice President, Nevada Farm Bureau Federation, read from a prepared statement (Exhibit K) in support of S.B. 88.

Senator Dean Rhoads, Northern Nevada Senatorial District, discovered Nevada’s lien laws needed to be strengthened after numerous instances where seed growers lost a great deal of income due to delays and bankruptcies of production facilities.

Chairman Anderson asked how the statutes were not protecting the growers.

Mr. Busselman related information regarding a particularly bad circumstance, where it was learned Nevada’s agricultural lien laws were not as protective as other states’ laws. S.B. 88 was fashioned after a California statute, which had proven successful for California producers.

Jim List, Chairman of the Nevada Seed Council, read from a prepared statement (Exhibit L) that outlined problems experienced in the last couple of years. Jim List believed S.B. 88 would accomplish two purposes: (1) The statutory lien protection for agricultural products would bring Nevada in line with surrounding states such as California, Oregon, Washington, and Idaho, all of which had statutory lien protection for growers and producers; and, (2) S.B. 88 would provide growers with control over their crop by ensuring payment.

Joe Guild, President, Nevada Cattlemen’s Association, supported S.B. 88 and referred back to Chairman Anderson’s question regarding why current statutes did not protect Nevada’s growers. There was no statutory lien protection, consequently putting the growers in an unsecured position. Nevada had uniform commercial code provisions that covered secured transaction situations that might have helped the seed growers, but probably not. NRS 108 did not have an agricultural lien. S.B. 88 added that lien protection.

Chairman Anderson asked if there was any “downside” or negative side; who would be harmed by S.B. 88.

John Sande, Nevada Bankers’ Association, was neutral on S.B. 88. He believed S.B. 88 would give a priority to agriculture products similar to laws in the surrounding states. The only potential harm would be to those who processed the seeds; the seeds could not be pledged to a bank for a loan without a waiver from the grower. There was coverage under the uniform commercial code; but a financing statement would need to be filed with the Secretary of State, signed by the processor and grower that would give the grower protection. With S.B. 88, the grower would have an automatic lien as long as he filed the appropriate form with the Secretary of State within 45 days. The processors might be hurt, but the growers would benefit.

Mr. Guild clarified the various deadlines and procedures outlined in S.B. 88.

Assemblyman Carpenter asked for clarification of the phrases “attaches to the delivery.” In one section it stated the lien would attach when the product was delivered; in the next section it stated the lien would attach after the last delivery in a series. Assemblyman Carpenter believed the wording was contradictory and needed strengthening.

Mr. Guild said the lien was for the entire harvest or for every delivery. The grower would be protected if he filed a lien for every truckload.

Chairman Anderson recessed for Legislative photos.

Chairman Anderson reconvened the meeting noting a quorum was present and reopened the hearing on S.B. 88.

Andrew List, Policy & Research Coordinator, Nevada Association of Counties (NACO), read a prepared statement (Exhibit M) in support of S.B. 88 with statistics regarding the agricultural economy in Nevada. Andrew List discussed S.B. 474 that revised provisions of the Uniform Commercial Code (UCC) governing secured transactions and included a reference to a “farm lien law” that would bring S.B. 88 into the UCC and protect Nevada growers out of state.

Chairman Anderson asked if Andrew List believed S.B. 88 and S.B. 474 were linked together. Andrew List said they were “semi-linked” together. S.B. 88 stood on its own and would work with products out of state, even without S.B. 474. S.B. 474 amended the UCC in Nevada, made reference to a farm lien law, and made it “cleaner.”

Mr. Guild was prepared to answer Assemblyman Carpenter’s question on the potentially conflicting language on page 2, lines 26 and 27, and lines 35 and 36. The reason for allowing the lien to be completed 45 days after the “last delivery in a series” was to provide the grower time at the end of the harvest instead of interrupting the harvest to file the paperwork after each delivery.

Chairman Anderson asked if that would give the lien holder less time to react rather than more time to react, putting him in a tighter financial situation. Mr. Guild said it could tighten the filing period for a grower. Chairman Anderson asked, depending on the length of the season or the type of crop affected, who would be hurt and who would be helped. Mr. Guild said S.B. 88 was not talking about other crops, just the seed crops that came out of the fields in “lots.” Chairman Anderson cautioned that S.B. 88 would affect not just the seed growers; it would also affect other crops. Although S.B. 88 was based on the need of the seed grower, it was important not to hurt other agricultural producers in some unintended way. Mr. Guild did not believe any growers in the state would be hurt.

Assemblyman Carpenter understood S.B. 88 was to protect the farmers but in some circumstances they could be hurt. Hopefully, the farmers would know S.B. 88 was in effect and they needed to file the lien with the Secretary of State. Chairman Anderson expected the various groups to make their members aware of their rights and how the new laws would affect them. Mr. Guild said seminars were already in the planning stages regarding the new law and how it would help farmers and ranchers in the state.

Andrew List addressed Assemblyman Carpenter’s concerns about the attachment date on a series of deliveries. Andrew List said the lien would “attach” on the last date of delivery but would apply to all deliveries in that series of deliveries. The amount of the lien would extend to the entire contract amount.

Assemblyman Carpenter said the language said “the date of the last delivery”; if that was the intent, the bill should say it applied to all the deliveries. Risa Lang, Committee Counsel, agreed with Andrew List that the lien attached on the day of the last delivery but applied to the series of deliveries.

Stephanie Licht, Nevada Wool Growers Association, supported S.B. 88.

Chairman Anderson asked for further testimony on S.B. 88. There being none, he closed the hearing on S.B. 88 and assigned it to the next work session.

Chairman Anderson adjourned the meeting at 11:00 a.m.

RESPECTFULLY SUBMITTED:

Deborah Rengler

Committee Secretary

APPROVED BY:

Assemblyman Bernie Anderson, Chairman

DATE: