MINUTES OF THE meeting
of the
ASSEMBLY Committee on Judiciary
Seventy-First Session
April 13, 2001
The Committee on Judiciarywas called to order at 7:36 a.m. on Friday, April 13, 2001. Chairman Bernie Anderson presided in Room 3138 of the Legislative Building, Carson City, Nevada, and by simultaneous videoconference in Room 4412 of the Grant Sawyer Office Building in Las Vegas, 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
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:
Speaker Richard Perkins, Clark County Assembly District 23
STAFF MEMBERS PRESENT:
Nicolas Anthony, Committee Policy Analyst
Risa B. Lang, Committee Counsel
Cindy Clampitt, Committee Secretary
OTHERS PRESENT:
Mr. Luther Mack, Vice Chairman, Nevada State Athletic Commission (NSAC))
Dr. Edwin “Flip” Homansky, NSAC Commissioner
Mr. Kirk Hendrick, Chief Deputy Attorney General, and legal counsel for the NSAC
Ms. Myra Sheehan, attorney and President, Nevada Trial Lawyers’ Association
Ms. May Shelton, representing Washoe County
Ms. Lucille Lusk, Nevada Concerned Citizens
Dr. Carlos Brandenburg, Administrator, Mental Health and Developmental Services
Dr. Betsy Neighbors, Director, Lake’s Crossing, and a licensed clinical psychologist
Mr. David Gibson, Clark County Public Defender’s Office
Mr. John Morrow, Washoe County Public Defender’s Office
Mr. John Olive, representing the Nevada Association of Listed Resident Agents
Mr. Mike Taylor, Corporate Advisory Service and Nevada Association of Listed Resident Agents
Mr. Scott Craigie, representing Alrus Consulting, which included CT Corporation Systems, Raleigh, North Carolina; Capitol Services, Inc, Austin, Texas; Corporation Service Company, Wilmington, Delaware; National Registered Agents, Inc, West Windsor, New Jersey; and National Corporate Research, New York, New York
Ms. Renee Lacey, Chief Deputy, Secretary of State’s Office
Mr. Scott Anderson, Deputy, Commercial Division, Secretary of State
Chairman Anderson offered opening remarks and opened the hearing A.B. 446.
Assembly Bill 446: Revises provisions relating to unarmed combat. (BDR 41- 1195)
Speaker Richard Perkins, Clark County Assembly District 23, testified that A.B. 446 was similar to legislation discussed during the 1999 legislature. He explained the bill authorized the Nevada State Athletic Commission (NSAC) to require the registration of certain television networks and sanctioning organizations. It required that certain information provided to the commission be kept confidential and changed the provisions relating to suspension of a license or permit issued by the commission.
Speaker Perkins noted several members of the Nevada State Athletic Commission (NSAC) were present to answer technical questions on the bill. He stated he was aware of at least one friendly amendment to A.B. 446.
Speaker Perkins stated the intent of some of the provisions of the bill would be to bring Nevada into compliance with a recent federal act and provide consistency with the model regulatory scheme in Nevada regarding unarmed combat. He commented the Nevada regulatory model was viewed throughout the world as the model by which other states and countries would set their own standards.
Mr. Luther Mack, Vice Chairman, NSAC, introduced Executive Director, Mr. Marc Ratner, Commissioners Glenn Carano, Amy Ayoub, and Dr. “Flip” Homansky, and from the Attorney General’s Office, Mr. Kirk Hendrick and Mr. Keith Kizer.
Mr. Mack testified that while all 14 sections of A.B. 446 were important to the commission, Sections 5 and 8 were necessary to keep Nevada known as the “Boxing Capital of the World.” Section 5 would make Nevada the first commission anywhere in the world to require sanctioning organizations and broadcast networks to provide important information to local licensing agencies.
Mr. Mack noted the commission was not asking for authority to license the entities, only the ability to require them to register with the commission. He added that step represented a “giant leap.” He explained many times sanctioning agencies came into Nevada and took hundreds of thousands of dollars from fighters’ purses without the state knowing exactly where the money was going. He added, Section 5 would allow the commission the ability to pass regulations specifying what information must be disclosed in Nevada.
Section 8 contained a confidentiality provision that was necessary for the NSAC to obtain true and complete information from applicants and licensees. The federal government had recently passed the “Muhammad Ali Boxing Reform Act.” That act contained a provision compelling promoters to disclose information to state licensing bodies. However, another provision provided that if the state licensing authority’s laws required that information to be made public, then the promoter did not have to provide the information to that state. Mr. Mack stated in those cases, the information could be provided to a private organization known as the Association of Boxing Commissions.
Mr. Mack said it would be an embarrassment to the commission and to the state if the needed information could not be provided to the state, but could be provided to a private organization. He suggested Nevada would be made a “second class” citizen to voluntary organizations. He reiterated Nevada was the “Boxing Capital of the World” and that title translated to millions of dollars each year of direct and indirect tax revenue for the state.
Mr. Mack stated major boxing events brought thousands of people to the state annually who all purchased boxing tickets that included a 4 percent tax, stayed in hotel rooms, ate in restaurants, attended shows and wagered in casinos and sportsbook. He noted a primary reason Nevada was the best was because the legislature gave the commission the necessary tools to regulate the sport.
Dr. Edwin “Flip” Homansky, NSAC Commissioner, thanked legislators who had sponsored A.B. 446. He provided written testimony (Exhibit C) for committee members.
Dr. Homansky stressed that boxing was a business that held “mega” fights in which the primary contestants would make approximately $20 million each, and in the same night, beginning fighters who started the show would make $400.
Dr. Homansky stated Section 5 would provide the authority for the commission to require registration from both the sanctioning organizations and broadcast networks. The intent was not to interfere or control either entity. Both served very valuable functions to the sport itself and to the participants. Sanctioning bodies ranked fighters on a worldwide basis and provided the championship format that fighters were anxious to participate in. The television networks provided the capital that was the driving force in the sport.
Dr. Homansky said the intent of the legislation requiring registration of the entities was that currently, there was no legislative way to oversee and regulate the sanctioning boards’ and networks’ efforts on behalf of fighters. If there were problems in terms of rankings, an inappropriate, mandatory opponent, or unqualified officials, A.B. 446 would provide an opportunity to address the issues with the world sanctioning bodies.
The television networks were an integral part of the contractual nature between the fighter and the promoter and must be registered. The commission could not monitor the best interests of the fighter if it did not know the full extent of the purses, where the money was coming from, or where it was going.
Dr. Homansky stated the commission had chosen the term “register” instead of “license” because it was more user-friendly, non-confrontational, and would accomplish the same purpose. He summarized, the intent of the bill was to allow the ability to regulate the sport and ensure it continued to flourish. The ultimate goal was safety and fairness for the boxer.
Assemblyman Nolan disclosed that for approximately eight years he had worked ringside with Dr. Homansky coordinating the medical safety and commented there were a few occasions where boxers had been injured and medical personnel were at the whim of managers regarding certain decision-making issues. He approved of the provisions of the bill.
Assemblywoman Angle noted the speakers had stated Section 5 was the most important section of the bill. She stated the language in that section stated, “may require. . .” which was permissive language. Dr. Homansky replied the bill was intended as a first step.
Mr. Kirk Hendrick, Chief Deputy Attorney General, and legal counsel for the NSAC, stated that the bill was a “baby” step and permissive ability was requested because the Nevada commission was the only one in the world to have taken that step. The effects would be felt in companies throughout the world. The commission only wanted to have the ability to register those companies availing themselves of Nevada’s resources.
Chairman Anderson stated page 5 of the bill would repeal the section of law that allowed the commission the ability to temporarily revoke and suspend a license. He asked why the commission no longer wanted that ability. Mr. Hendrick stated over the years as the statutes evolved pieces were added on and there were some sections that wound up not really accomplishing anything. Nevada Revised Statutes (NRS) 467.156 had some due process concerns. He explained the statute talked about suspending someone unless they requested a hearing. What the NSAC was requesting in Sections 10 and 12 of the bill would actually accomplish a more consistent approach to disciplinary actions and NRS 467.156 would no longer be necessary.
Chairman Anderson asked for confirmation that proposed amendments were forthcoming for the bill. Mr. Hendrick stated there were two friendly amendments contained on page 15 of the overview document (Exhibit D).
Assemblyman Gustavson disclosed he had a business relationship with Mr. Carano through his inter-session employment by the Silver Legacy Casino, but he was not affected any greater or lesser than anyone else by the bill.
Chairman Anderson asked for confirmation that the proposed amendments were simply technical adjustments. Mr. Hendrick replied that the first amendment was to Section 8 and would revise NRS 467.1005(1). When the bill was printed Mr. Kent Lauer, of the Nevada Press Association, voiced concern that the first clause within provision Section 8(c) was too broad. He commented the commission was not asking for any further confidentiality than what was needed to conduct its duties. The proposed amendment narrowed the focus to financial records only. Section 8(d) was tailored to that section as well.
The proposed amendment for Section 10 would make it clear that the commission did not have to go beyond the normal open meeting law requirements in statute for notice requirements. The section applied to disciplinary actions and the commission wanted to provide a licensee ten days’ notice and that provision would not affect the commission’s ability to schedule normal meetings with three days’ notice. Chairman Anderson stated notice was being changed from 30 days to 10 days and asked Ms. Lang if changing “shall” to “must” was acceptable. Ms. Lang replied it was.
Chairman Anderson closed the hearing on A.B. 446 and opened the floor for a motion.
ASSEMBLYWOMAN OHRENSCHALL MOVED TO AMEND SECTION 8 AND SECTION 10, AND DO PASS A.B. 446.
ASSEMBLYMAN GUSTAVSON SECONDED THE MOTION.
THE MOTION PASSED UNANIMOUSLY WITH ASSEMBLYWOMAN BUCKLEY AND ASSEMBLYMAN COLLINS ABSENT FOR THE VOTE.
Chairman Anderson stated he would talk to Speaker Perkins to ascertain if he wished to handle the bill on the floor, and otherwise, assigned Vice Chair Manendo to present A.B. 446 on the Floor of the Assembly.
Chairman Anderson opened the hearing on A.B. 535.
Assembly Bill 535: Reduces filing fees and requires court to waive court costs when petition is filed for adoption of child with special needs. (BDR 2- 988)
Ms. Myra Sheehan, attorney, and President, Nevada Trial Lawyers’ Association (NTLA), stated A.B. 535 requested that the fee for filing of special needs adoptions should be no more than $1. It was the policy of the state to encourage special needs adoptions and statutory law regulated and mandated that the Department of Child and Family Services should not charge parents who accepted a special needs child for the home studies. The bill would make that process consistent.
Ms. Sheehan noted the NTLA was requesting any fee for such adoption be waived, however, they had been told that some amount must be placed in the bill and that was why the $1 amount had been included.
She commented most judges already waived the cost of the filing, but at least one judge would not waive the fee unless the provision was contained in statute.
Mrs. Angle stated Section 8, subsection 8, waived court costs and asked if that was correct. Ms. Sheehan replied both filing fees and court costs would be waived under the provisions of the bill. She commented she could not recall a situation in which court costs had occurred. The bill drafters had added that section and it was consistent with the intent of the bill.
Vice Chair Manendo noted the bill reduced filing fees for special needs adoption and asked what the previous fee had been. Ms. Sheehan replied that currently the total fee was $98. She suggested the change would have an insignificant fiscal effect on the state.
Ms. May Shelton, representing Washoe County, stated that according to the Division of Child and Family Services approximately 200 special needs adoptions were done in 2000 and most of the judges in family courts waived the $98 for such adoptions.
Ms. Shelton clarified that under the Adoptions and Safe Families Act more adoptions would be needed and the permanency process would need to be done more speedily. She added, special needs children had a number of problems and the intent was to make the process as pleasant as possible for the adoptive parents.
Chairman Anderson further clarified that there were approximately 200 special needs adoptions in 2000 at a filing fee of $98 each and that fee was typically waived, thus there would be very little impact on the state.
Chairman Anderson specified the $1 fee required in Section 1 of the bill was present to avoid conflict with the state constitution that required a specific fee must be charged in all civil actions. Ms. Sheehan replied that was her understanding.
Ms. Lucille Lusk, Nevada Concerned Citizens, testified in support of A.B. 535 and in appreciation of the efforts of the Division of Child and Family Services in making special needs adoptions more accessible.
ASSEMBLYMAN CARPENTER MOVED TO DO PASS A.B. 535.
VICE CHAIR MANENDO SECONDED THE MOTION.
THE MOTION PASSED UNANIMOUSLY WITH ASSEMBLYWOMAN BUCKLEY AND ASSEMBLYMAN COLLINS ABSENT FOR THE VOTE.
Chairman Anderson assigned Mr. Carpenter to present the bill on the Floor of the Assembly and opened the hearing on A.B. 582.
Assembly Bill 582: Revises provisions pertaining to competency of defendants. (BDR 14-345)
Dr. Carlos Brandenburg, Administrator, Mental Health and Developmental Services, introduced Ms. Betsy Neighbors, Director, Lake’s Crossing Center.
Dr. Brandenburg explained that Lake’s Crossing was a secure, forensic facility that provided treatment for mentally disordered offenders. He added those individuals were usually in the criminal justice system where the issue of competency or incompetency was being raised by an officer of the court.
Dr. Brandenburg stated issues of competency were usually raised at the local level and at that level, an independent group of mental health professionals was ordered to decide the issue of competency by the district court, pursuant to NRS 178.4015. He added there were two criteria to judge the competency issue:
· Did the individual have sufficient mentality to understand the nature of charges against them; and
· Did the individual have the ability to aid and assist counsel in the preparation of their defense or in pronouncement of judgment.
If the individual was found competent to stand trial at the local district judge level, a trial was scheduled. If the individual was adjudicated incompetent to stand trial, they were then sent to the custody of the division administrator and placed in a secure facility as specified in NRS 178.425.
Dr. Brandenburg noted that once an individual was placed at Lake’s Crossing, they had a period of time to determine whether or not the individual was competent to stand trial; up to six months for felonies and up to three months for misdemeanors. Once the staff of Lake’s Crossing felt an individual had attained competency, or would never be competent to stand trial, a letter was written to the district judge. At that time the district judge appointed a Sanity Commission of three independent mental health professionals to examine the individual. The Sanity Commission submitted a report to the district judge making a determination of competency. Once the district judge received the report, he had 20 days to issue a determination. If the individual was found competent to stand trial, he was then sent back to the district court. If the individual was found incompetent, a determination was required of whether the individual would ever be competent in the foreseeable future.
Dr. Betsy Neighbors, Director, Lake’s Crossing, and a licensed clinical psychologist, provided her written testimony (Exhibit E) and explained the requirement of sanity hearings pre-dated the existence of Lake’s Crossing. Dr. Neighbors stated the competency determination process took a total of 70 days after the licensed professionals at Lake’s Crossing had already made a determination of the competency status of individuals. That meant the individual was required to wait in Lake’s Crossing for 70 days for a confirmation of a determination that had already been made by trained professionals.
Dr. Neighbors noted the changes proposed in A.B. 582 would allow the process to be done in less time and could potentially allow more space at the facility for others who needed care and detention.
Dr. Neighbors stated in FY1999 clients in the process spent 4,000 client-days at Lake’s Crossing, which she viewed as a substantial amount of time in the system, for a decision that had already essentially been made. In addition to the fact a client could move more quickly through the system, there were some flat costs of the actual evaluations performed by the Sanity Commission that could be saved. That cost throughout the next biennium was calculated to be approximately $188,000. She suggested those resources might be better spent on medication, treatment, and quickening the process through the criminal justice system.
Dr. Neighbors stated A.B. 582 included a provision that allowed a client an independent evaluation if they so wished. She added a similar allowance existed in the civil system for involuntary commitments.
Dr. Neighbors provided the committee with a summary of procedures from 18 other states (Exhibit F). She noted none of those states had a practice similar to Nevada’s current practice. She added the common practice was that when the treatment facility staff concluded the individual was ready to continue through the system, the court was notified through the administrator of the division of mental health or their designee, or similar language. A.B. 582 would allow Nevada to follow the common practice of other states.
Dr. Neighbors noted the facility had been making the determinations for rural counties for many years because licensed and trained forensic evaluators were not available in rural areas. In those instances, no Sanity Commission was involved. She provided letters from Judges Jack Ames and J. V. Sullivan in support of the bill (Exhibit G). She noted the proposed process would be the same as that currently used with clients from the rural counties. She commented a number of different types of evaluations were done for a variety of entities within the Lake’s Crossing facility.
Chairman Anderson complimented Dr. Neighbors and her staff for the difficult work they performed daily. He commented it was his understanding that current statute was somewhat out-of-date, the current practice for rural cases was similar to what was proposed in A.B. 582, and the bill would bring the statute up to the reality of what was really happening. Dr. Neighbors replied that regardless of whether the Sanity Commission was invoked for a specific client, full psychological, psychiatric, and psychosocial evaluations were done for every client in the facility and that included consideration of competency status. The bill would add no new tasks to the facility. Passage of the bill would simply mean that the evaluations done at Lake’s Crossing would go directly to the judges rather than to the Sanity Commission for their review.
Chairman Anderson asked if the intent of the bill would give judges thorough information for their misdemeanor or felony cases. Dr. Brandenburg replied that was a very good point. He explained in the current system, the staff who spent the bulk of their clinical hours with violent offenders were trained forensic examiners. Those examiners understood issues of amnesia, competency, and diminished capacity and the reports of those examiners did not currently reach the hands of judges. The reports of the independent examiners who spent only 30 to 45 minutes with the client would be sent to the judges.
Assemblyman Brower referred to the “Dusky Standard” described in Exhibit E and asked if the Sanity Commission seemed to be a misnomer. He stressed that to be declared competent, the individual had to understand the nature of the offense and be able to assist in their own defense. He asked if the Dusky Standard could ever cause a mentally retarded person to be judged incompetent. Dr. Neighbors replied that did happen. The facility did have clients committed who were developmentally disabled and she commented that disability might or might not interfere with competency. She added there were some special standardized instruments designed for assessment of individuals who might be mentally retarded. Mental retardation did not mean a person was automatically deemed incompetent.
Mr. Brower asked for confirmation that the person could be legally mentally retarded and yet based on the Dusky Standard be competent. Dr. Brandenburg stated that was correct and explained mental illness and incompetency did not necessarily go hand in hand.
Assemblyman Carpenter stated it appeared a client could still request an outside evaluation if they wished. He noted the client was required to pay for that evaluation and asked what would happen if they did not have sufficient funds to pay for the outside evaluation. Dr. Brandenburg replied the county would then be responsible for securing the competency determination for the client.
Chairman Anderson asked if Dr. Brandenburg was aware of any suggested amendments to the bill and he replied in the negative.
Mr. David Gibson, Clark County Public Defender’s Office, testified he had served as a trial deputy on the capital murder team for a number of years. In that capacity he had several defendants whom he had felt were incompetent and they were sent to Lake’s Crossing for a substantial period of time and in at least four instances, the Sanity Commission had adjudicated the client was competent to stand trial. Yet the treatment staff had felt, through their prolonged work with the client, that the client was incompetent.
Mr. Gibson noted the plea of not guilty by reason of insanity was no longer available. He stressed, with A.B. 582 the people who spent the most time with the client and understood the issue of criminal competency would submit the reports. He urged strong support of the bill.
Mr. John Morrow, Washoe County Public Defender’s Office, spoke in opposition to A.B. 582 and stated it was difficult to reconcile the difference in experiences between Clark County and Washoe County regarding issues of the bill. Washoe County had not had a problem with the Sanity Commission. He commented it might be that the members of the commission were different in each county. Washoe County viewed the work of the Sanity Commission as quality control on the work product of the institution.
Mr. Morrow concurred that the existing procedure was time consuming and cumbersome, but it seemed to work. He suggested the timeliness and review of records could be looked at without legislation.
The Chairman asked Dr. Neighbors to clarify for members of the committee, the current composition of the Sanity Commission, particularly between the Eighth and Second Judicial Districts. Dr. Neighbors stated the Sanity Commission actions were all performed in Washoe County because that was the location of the facility. Clark County clients were transported to the facility by airplane. Sanity Commission members were appointed from psychologists and psychiatrists from the Reno community. She suggested that since the professional individuals were local, when a Washoe County judge made an appointment to the Sanity Commission they might have a specific person in mind.
Mr. Carpenter asked if the fact that allowance was made for an individual to request an independent evaluation, with or without cost, added further protection under the current law. Mr. Morrow concurred, but stated, as a practical matter, he had never seen that done. He explained when the Sanity Commission judged someone competent the Public Defender’s Office proceeded under that premise. He added it was possible the issue of competency could be raised again at any stage of the proceedings.
Chairman Anderson closed the hearing on A.B. 582. He stated if the bill was passed, it would repeal the Sanity Commission, and there could be a second or third psychologist or psychiatrist, not a member of the treatment team, appointed and upon completion of the evaluation, the reports were required to be submitted to the court, which was not currently part of the process. The bill would solidify the current process for the rural counties and require the same process to be used in the Second and Eighth Judicial Districts. He urged support of the measure.
Mr. Carpenter noted there were many safeguards in the bill so he would support the legislation.
ASSEMBLYWOMAN ANGLE MOVED TO DO PASS A.B. 582.
ASSEMBLYWOMAN OHRENSCHALL SECONDED THE MOTION.
THE MOTION PASSED UNANIMOUSLY WITH ASSEMBLYMAN COLLINS ABSENT FOR THE VOTE.
Chairman Anderson opened the hearing on A.B. 617.
Assembly Bill 617: Requires certain persons to be certified to act as resident agents. (BDR 7-15)
Mr. John Olive, representing the Nevada Association of Listed Resident Agents, qualified his representation noting there were some members of the association that disagreed with his view. Mr. Olive stated some members had concerns over certain technical aspects of the bill. He welcomed them to address their issues.
Mr. Olive provided conceptual amendments (Exhibit H) that would not alter the intent of the bill as drafted. He provided a history of the genesis of the bill. Resident agents had been doing business in Nevada for nearly 100 years. As an industry, resident agents were charged with a responsibility to represent business entities and to accept service of process on their behalf within the state. He noted the legislative mandate was very narrow that required business entities to have a resident agent.
Over the course of the industry in the state, it had evolved to where a certain portion of businesses had taken on additional services and that had allowed for some potential abuse. Mr. Olive stated the association would like to create a board that could receive and address the complaints that might originate from businesses in Nevada where a corporate principal or a business entity’s principal had gone to the Secretary of State’s Office for redress of a problem. Mr. Olive noted the Secretary of State’s Office was not a regulatory agency of resident agents. The bill would allow a formal recourse for businesses organized under the laws of Nevada through the instrument of certification.
Chairman Anderson stated he had discussed the concept of the bill with Mr. Olive. He noted a few resident agents caused laws to be made for the regulation of all. Through the bill, Nevada would be the first state in the country to set a standard for resident agents outside those individuals who, by nature of license to practice law or as a certified public accountant or other licensing requirements, were already regulated. He added the bill had a very low Bill Draft Request number and yet when it was drafted as a bill, was very near the end of bills introduced indicating it was a complex issue.
Mr. Carpenter referred to Section 67, page 35, line 7, which stated, “All members of the board must be present to transact the business of the board.” He asked how practical that provision was. Mr. Olive replied that was one of the technical aspects of the bill, but from a practical standpoint it would be better to allow the business to go forward on a basis of majority of members present at a meeting. Mr. Olive stated he would support such an amendment.
Chairman Anderson asked for clarification that the language in Section 67, subsection 5, was typical language. Ms. Lang replied usually such language read, “A quorum of the board must be present to conduct business.” The sponsors of the bill had requested the specific language; however, it was not a problem to change the language if the committee wished to do so. Chairman Anderson stated the additional amendment should be added to A.B. 617.
Mr. Brower commented that John Fowler, an attorney in Reno, Nevada, had submitted an e-mail message to all committee members with suggested conceptual amendments to the bill. He submitted those suggestions as Exhibit I. He noted Mr. Fowler had made a technical suggestion regarding the exemption from certification of attorneys. Mr. Fowler had stated that although it was a good idea, it should be broader to encompass associations of attorneys, or a business entity set up by a law firm. He made the same suggestion regarding certified public accountants. Mr. Olive reported certified public accountants were included in Section 65 of the bill. He stated if the bill included an exemption for an individual attorney to act as a resident agent, it would make sense to extend that to firms. He added there were members of the resident agent industry that were opposed to creating an exception for members of the bar. He noted the reasoning was, that because the board would need to function based on the fees generated by members of the industry, exemptions would be counterproductive to that purpose.
Mr. Brower referred to Section 65, subsection 4, line 14, and noted another concern was raised regarding the reference to “temporary basis” and asked what that reference meant. Mr. Olive replied the language submitted to the bill drafters might have included the reference, but there was no current provision for a temporary resident agent and he would support a technical adjustment.
Chairman Anderson asked if the subsection included another technical change from 30 persons to 10 persons. Mr. Brower concurred. Mr. Olive stated he would sponsor removal of Section 65, subsection 4, and explained the idea was to eliminate the reference to a resident agent on a temporary basis.
Chairman Anderson asked if staff knew of any related category under the law that fell into the definition of a resident agent on a temporary basis. Ms. Lang replied there would be no problem with removal of the reference.
Mr. Brower relayed another concern raised by Mr. Fowler that referred to Section 63, page 33, line 43, in the section that defined resident agent and suggested there were certain types of organizations that would not fit within the definition. Mr. Fowler had cited examples of municipal organizations, political parties, and political action committees, which, in some cases, must appoint a resident agent. Mr. Olive replied the listed organizations had not been contemplated as coming under the terms of A.B. 617. He added if there were public sector specifications needed for the bill to go forward he would support the amendment. Mr. Brower stated he was neutral on the suggestion.
Chairman Anderson stated he did not feel there would be an objection from the sponsors of the bill to the first proposed amendment from Mr. Fowler. He noted the current language had been a suggestion of the Chair based on a desire that certain individuals who functioned as resident agents should not have to pay a double licensing fee for a part-time activity. He asked who would be in a law firm other than the licensed attorney who might fall in the category of the bill. Mr. Brower explained he was part of a law firm that acted as resident agents and, in fact, he acted as resident agent for at least one nonprofit organization. He was unsure whether the law firm or the individual attorney was listed as the resident agent. Mr. Brower stated it was usually the individual attorney or the law firm that was listed on the forms at the Secretary of State’s Office.
Mr. Brower noted the firms were businesses that were already licensed and regulated by the state and who were paying a fee for that privilege. He supported the exemption for lawyers and for certified public accountants. The Chair asked if the bill drafters could create language to clarify the intent as suggested by Mr. Fowler (Exhibit I) and Mr. Brower asked if political entities were given an exemption by Section 65, subsection 3, as that subsection referred to situations where the state, city, or county was designated as agent for service of process and he opined it was not the same issue as raised by Mr. Fowler.
Mr. Brower added he had not raised the last concern by Mr. Fowler in Section 65, subsection 5. Chairman Anderson read that concern from Exhibit I into the record. “Exempt a person acting on its own behalf if the person or entity complies with all Nevada laws concerning the person’s or entity’s appointment.” He stated, according to Mr. Fowler, that subsection should be changed to allow, “any officer, director, or stockholder, of any corporation, or manager, or member of a limited liability corporation, partner of a general or limited partnership, trustee of a business trust, or an employee of any of them paid a wage or salary for other duties they perform for the entity, all be exempted if they are the resident agent for their entities so long as they maintain a physical address in Nevada.” He commented that might be the very group of people the bill was intended to reach. Chairman Anderson stated if that group were exempted, it would circumvent the intent of the bill.
Mr. Brower stated A.B. 617 was aimed at regulating those who were in the business of acting as resident agents. He opined Mr. Fowler’s point was that if a business or other entity needed to designate a resident agent, but wanted to have one of its own employees perform that function, and they were located in Nevada, that they need not be regulated. He compared that situation with one where the business was outside the state but must have a resident agent in Nevada to perform those functions and should be regulated in accordance with the intent of the bill.
Mr. Olive opined Mr. Fowler’s intent was for those businesses that were domestic to the state of Nevada and maintained a physical address in the state and in all other ways were compliant with resident agent laws of the state, if it elected to represent itself as resident agent, it should be exempt from certification requirements. Mr. Olive stated he could concur with that suggestion. He explained if someone was in the business of being a resident agent and represented a certain number of entities other than their own, and required a fee for that representation, they should be certified and that complied with the bill.
Chairman Anderson summarized that while Mr. Olive would not like to see the extension of exemption to attorneys and certified public accountants, he understood that exemption going to limited liability corporations would be acceptable. The Chair expressed an initial concern there would be insufficient funds to operate the board, but apparently Mr. Olive would agree with most suggestions regarding amendments to the bill. Mr. Olive concurred, adding there was a specific concern that the fees collected as a result of the certification process must be sufficient to fund the operation of the board. That would be the sole reason that the association desired to retain attorneys, certified public accountants, title companies, and trust officers within the certification process.
Ms. Lang referred to Section 65, subsection 4, regarding resident agent “on a temporary basis.” She stated subsection 4 was intended to cover a resident agent acting for a number of persons. She recommended if subsection 4 was removed, something else would need to be added.
Chairman Anderson clarified, if Section 65, subsection 4, was removed in its entirety, it might raise a question about a person acting on their own behalf. Ms. Lang suggested Mr. Olive could explain if that subsection was intended for a different purpose. She recommended only the portion stating “on a temporary basis” should be removed.
Mr. Olive stated the bill needed to have some limit and those representing fewer than ten companies could be exempted. He added the word “temporary” had a time reference and that was really not the issue within the bill.
Mr. Olive stated the term “persons” was defined as used in Section 65, subsection 4, to include all pertinent business entities required to have a resident agent under Nevada law. The term should be amended to refer to persons and/or entities. Ms. Lang stated “persons” was defined in the initial portion of NRS and applied throughout NRS and that definition already included all the entities discussed relating to A.B. 617.
Mr. Carpenter referred to Section 69, that specified meetings of the board must be open and public, and further stated, “The board may hold a closed meeting to deliberate on a decision to be reached in any contested hearing of disciplinary action.” He commented the board should simply be made subject to the open meeting law. He noted members of the board received public funds in a roundabout manner.
Chairman Anderson asked staff for clarification on Section 69 of the bill. Ms. Lang stated part of the bill took language from NRS 656 dealing with the Certified Court Reporters’ Board. Mr. Olive stated he would support the bill as currently drafted because it allowed for closed deliberations in consequence of a hearing.
Mr. Carpenter stated he would support a private hearing for deliberations regarding disciplinary action, but the actual decision needed to be made in a public record. Ms. Lang stated that Section 69 simply allowed a closed meeting to deliberate on the decision, but the actual decision would have to be public. Chairman Anderson emphasized the language mirrored that of court reporters and information of a personal nature would still be held private in the event the board reached a decision of “no foundation” regarding an issue. Mr. Carpenter concurred, but stressed the decision must be made public and felt the bill should contain a statement that qualified that process.
Chairman Anderson asked if language could be placed in the bill, that “the board may hold a closed meeting or deliberation on the decision to be reached in any contested hearing or disciplinary action, which must be announced publicly.” Ms. Lang replied she would be happy to add an affirmative statement to the section.
Mr. Olive suggested one possible way to handle the issue was to include a statement that any announcement of the determination of the board must be made in compliance with the open meeting laws of the state.
Mr. Mike Taylor, Corporate Advisory Service and Nevada Association of Listed Resident Agents, stated a number of his concerns had been addressed. He acknowledged the work Mr. Olive had done on the bill.
Mr. Taylor noted the bill called for a member of the board to be a member of the bar. He suggested it would be better if the board member was a member of the Attorney General’s Office. Chairman Anderson asked which section Mr. Taylor was referring to and Mr. Taylor stated one section listed who should be a member of the board. Chairman Anderson referred to Section 66. Mr. Taylor stated the section referred to the board membership including:
Chairman Anderson stated the reference to a member of the bar association was being deleted in proposed amendments from Mr. Olive and the designated member would be a person appointed by the Governor because it would be inappropriate for members of the bar to sit on such a board. It would be appropriate for the Governor to make such an appointment.
Mr. Taylor referenced the fee structure and noted from reading the bill he was not clear on what it would cost his company to certify with the board. He explained he had seven employees and on one hand he was being told it was $500 for the company and on the other hand he was being told it was a fee for each employee, which could be as high as $7,000 per year. Chairman Anderson referred to Section 80 of the bill that stated: “A fee for original application must be not less than $500 nor more than $1,000; and for renewal of certification, not less than $500 nor more than $1,000.” Mr. Olive explained the intent in drafting the fee structure language was that there not be a fee for each individual. The term applicant applied to the company as a whole. A range was included to allow the board latitude in establishment of fees related to the issue of the board being self-funded.
Chairman Anderson restated the intent of the fee structure was targeted to corporations or companies. That was the reason Section 65, subsection 4, was being reduced from an agent for not more than 30 persons to an agent for not more than 10 persons.
Mr. Taylor asked for clarification that his company would require certification, not each individual employee. The Chair concurred.
Mr. Scott Craigie, representing Alrus Consulting, which included CT Corporation Systems, Raleigh, North Carolina; Capitol Services, Inc, Austin, Texas; Corporation Service Company, Wilmington, Delaware; National Registered Agents, Inc, West Windsor, New Jersey; and National Corporate Research, New York, New York, explained those were new clients who had not been monitoring legislation such as A.B. 617. Mr. Craigie stated each of the companies had from 6,000 to 40,000 corporate entities that they worked with inside the state.
Mr. Craigie stated no other state in the nation had created a regulatory scheme over such entities. He noted the companies he represented were concerned that the bill would drive up costs, add bureaucracy, and were surprised that the legislation was being introduced in Nevada, a state that was always trying to encourage new companies or corporations to move into the state. He stated other alternatives were open including adding language within regulations of Secretary of States’ Offices that provided oversight to ensure resident agents were acting appropriately.
Mr. Craigie stated Mr. Kent Jordan, Vice President and General Counsel of Corporation Service Company, had asked him to tell the committee that, “Creating the whole new structure was like trying to kill a fly with a neutron bomb.” Mr. Craigie commented the industry saw the bill as a massive regulatory piece.
Mr. Craigie stated, in his experience, Nevada had aggressively worked to have corporations brought into the state. The present and former Secretaries of State had specific promotional packages they used. He read from the header on the Web page for the Secretary of State: “Why incorporate in Nevada? No corporate income tax, no taxes on corporate shares, no franchise tax, no personal income tax, no Internal Revenue Sharing Agreement, nominal annual fees, minimal reporting and disclosure requirements, stockholders are not public record.”
Mr. Craigie stated Nevada did receive a significant revenue stream from the various filing requirements. One example was the 24-hour expediting of incorporation services and it was a huge revenue generator that had aided the 1991 Legislative Session. Fees were charged for a variety of services. He said there were other benefits to Nevada being in competition with Delaware to be recognized as the number one state in which to incorporate. He noted the corporations in Nevada brought talent, expertise, and corporate business to Nevada. Nevada had a very good body of corporate and case law producing support for the legal community.
Mr. Craigie stated he was not an expert on resident agents, but he had some experience as a regulator. On page 35 of the bill, costs included members’ salaries, travel, support staff, and application requirements. He commented it would add fees and costs to incorporating in Nevada and created a barrier for new enterprise. The funds were being spent on one board instead of having them placed into the General Fund.
Mr. Craigie addressed concerns regarding regulatory standards. Enforcement systems would be needed because page 37, lines 22 and 23 required certain standards that must be critically evaluated and judged. On page 39, lines 10 through 24 included a number of issues concerning willful behavior, unworthiness, incompetency, and unprofessional conduct. He noted those were worthy standards, but they came at a cost. He asked if the problems and abuses were widespread enough to justify the legislation.
Page 40 required significant processing. Lines 1 and 2 required the board or any of its members who became aware of any disciplinary grounds to initiate action. Regulations would be needed at some point. Line 8 specified hearings to be held, the ability to impose fines, and many categories that would require some case law within the system.
Section 85 stated the board could hold hearings allowing deposition of witnesses. Mr. Craigie stated the bill initiated a large bureaucracy and the mechanism would grow, as would the jurisdiction.
Mr. Craigie said his clients opposed the bill because if it was passed in Nevada, where there had been an open attitude toward new corporations, it would be picked up in other states as well.
Chairman Anderson acknowledged he had an ongoing concern about resident agents since 1993 when someone appeared before the Assembly Judiciary Committee asking for an opportunity to hold resident agents to a higher level of responsibility because of substantial losses they had incurred.
The Chair stated a question remained that since there was significant growth in resident agents in Nevada the message should be sent that when someone incorporated in Nevada there was a modicum of performance that was expected. He noted Nevada had extremely high incarceration rates and was the first state in the nation to move to a higher standard for driving under the influence standards.
Mr. Craigie stated there was nothing wrong with a requirement of professional conduct for an entity that provided professional services. It seemed A.B. 617 was a very serious direction for the state to take with establishment of a full regulatory entity. He stated what had worked in other states was to have the first point of contact the Secretary of State’s Office, because it was a constitutional office at the highest level of government to regulate the industry.
Mr. Carpenter asked, considering Mr. Craigie’s testimony, what effect A.B. 617 would have on large corporations that acted as resident agents. He asked what fees would be required. Mr. Olive stated the fees paid by a resident agent company doing business in Nevada would be the same, regardless of the size of the company.
Mr. Olive contested Mr. Craigie’s testimony that multi-state corporations would have less desire to incorporate under Nevada law. He stated the bill would have the effect of elevating the level of responsibility of resident agents and thereby the level of performance of resident agents in the state. It would not have a chilling effect on the desire of business people to enter into business in Nevada. Because of the tax laws and statutes, Nevada continued to be one of the strongest corporate havens within the country. He noted the bill was a natural evolution of the sophistication of the industry.
Mr. Carpenter clarified his understanding of the answer to his question, that a large corporation representing many entities would pay the same fee of $500 to $1,000, as would a small business. Mr. Olive concurred.
Chairman Anderson closed the hearing on A.B. 617.
Chairman Anderson summarized: Mr. Brower had raised several suggestions on behalf of Mr. Fowler, Mr. Olive had provided conceptual amendments, and Mr. Craigie had raised questions of several hazards to the legislation. He commended Mr. Olive for his hard work on the bill. He stated the bill was breaking new ground.
Chairman Anderson re-opened the hearing on A.B. 617.
Ms. Renee Lacey, Chief Deputy, Secretary of State’s Office, introduced Mr. Scott Anderson, Deputy, Commercial Division, Secretary of State. Ms. Lacey noted Mr. Craigie represented some very large resident agents who brought a substantial amount of business to the state. Secretary Heller’s concern would be that of whether the state would lose a substantial amount of revenue. She added the office had information on the number of complaints regarding resident agents received by her office. She clarified the Secretary of State did not regulate resident agents. The Chair stated the complaint statistics would be helpful to the committee.
Mr. Scott Anderson stated relatively few complaints were received by the office regarding resident agents. He noted in meetings with the Nevada Bar Association earlier in the year, they had had no complaints regarding resident agents. The Chair asked how many complaints were received. Mr. Anderson replied he had received two complaints against resident agents within the last year and one of them was passed to the district attorney’s office.
The Chair asked what types of complaints were received. Mr. Anderson related one complaint concerned the amount of fees charged and the company had been told to take the complaint to private counsel. Another concerned a corporation that felt it did not receive the service they required from their resident agent. The Chair asked if it was possible the small number of complaints reflected the fact that there was no structure for complaints to be filed. Mr. Anderson replied that was possible; however, the office received complaints regularly for a variety of reasons and the complainants were directed to their counsel but, if fraud was involved, those were directed to the district attorney in Washoe or Clark Counties.
Chairman Anderson closed the hearing on A.B. 617. He acknowledged the number of complaints was small and the bill would require a standard of behavior for resident agents. He stressed the bill could be a means to bring closure to the status of resident agents who did not fall into other areas of licensing.
Mr. Brower noted several different amendments had been discussed and he would be more comfortable if he could see a revised version of the bill prior to taking action.
Chairman Anderson asked if committee members would be more comfortable if the bill was moved with amendments as suggested by Mr. Brower, Mr. Olive, and those of open meeting requirements. He stated after adoption of the amendments, the bill would be placed on the Chief Clerk’s desk for the purpose of review in a first reprint.
VICE CHAIR MANENDO MOVED AMEND AND DO PASS A.B. 617.
ASSEMBLYWOMAN MCCLAIN SECONDED THE MOTION.
The Chair assured the committee that if the bill was successful, it would be placed on the Chief Clerk’s desk allowing proper review of amendments.
Mr. Carpenter commented issues had been raised to which he would have preferred further testimony, but with opportunity to review the amendments he could concur. He suggested the Secretary of State needed more input and Mr. Craigie and those he represented needed to present more substantial objections.
Chairman Anderson noted if the bill passed out of committee others would recognize the legislation as a serious matter.
Mr. Gustavson stated he appreciated all the work on the bill, but did not see the need for creation of such a large bureaucracy for such a minimal number of complaints and was opposed to the bill.
Mrs. Angle stated she would be voting no on the bill because the attitude of the “Delaware of the West” competition was good for the state and nothing should be done to jeopardize that standing.
Chairman Anderson clarified the proposed amendments to A.B. 617.
Mr. Brower stated language was needed that reflected the different forms the legal entities of a law firm could take.
Chairman Anderson continued with proposed amendments.
· Section 65, subsection 4, reduced the number of persons represented from 30 to 10, although there was a suggestion the section be removed in its entirety.
Ms. Lang clarified the determination during discussion was to only take out the language of “on a temporary basis.” Subsection 5 would not be changed.
The Chair continued with amendments.
· Section 68, page 35, clarified that a quorum of the board needed to be present to conduct business;
· Section 69, clarified further in part 2, to state in the affirmative that any disciplinary action had to be announced in public following open meeting laws but allowing personnel deliberations in private;
· Section 78, clarified a natural person or corporation and specified the hours of operation between 8 a.m. and 5 p.m.
The Chair asked if the time restriction prevented someone who might wish his/her hours to be extended from doing so. Mr. Olive replied the specified hours only represented suggested business hours.
Ms. Ohrenschall stated she would vote for the bill in committee but would reserve her right to change her vote on the floor.
THE MOTION PASSED ON A ROLL CALL VOTE WITH ASSEMBLYMEN BROWER, CARPENTER, CLABORN, MANENDO, NOLAN, OCEGUERA, AND ANDERSON, AND ASSEMBLYWOMEN KOIVISTO, MCCLAIN, AND OHRENSCHALL VOTING AYE. ASSEMBLYMAN GUSTAVSON AND ASSEMBLYWOMAN ANGLE VOTING NAY AND ASSEMBLYWOMAN BUCKLEY AND ASSEMBLYMAN COLLINS ABSENT FOR THE VOTE. THE MOTION PASSED WITH TEN IN FAVOR, TWO NOT PRESENT FOR THE VOTE, AND TWO NAYS.
Ms. Ohrenschall disclosed that since the original bill discussed attorneys as part of the action, she was a member of the State Bar of Nevada and she would not be affected in any way, any differently than any other member.
Mr. Brower made the same disclosure and added his firm acted as resident agents and he personally acted as resident agent in at least one instance.
Chairman Anderson recessed the committee at 10:46 a.m. after announcing the committee would reconvene in work session on A.B. 294.
Chairman Anderson reconvened the meeting at 10:48 a.m.
Assembly Bill 294: Revises provisions pertaining to sealing of juvenile records. (BDR 5-690)
Mr. Nick Anthony, Senior Research Analyst, Legislative Counsel Bureau, stated A.B. 294 centered on the proper age to seal juvenile records, for which crimes, and whether the records should be sealed automatically. All parties agreed that some amendatory language was needed, but supported the bill. There was no opposition.
Three proposed amendments were included as part of Exhibit J. They were submitted by:
· Ben Graham, Clark County District Attorney’s Office;
· Robert Tueton, Chief Deputy, Clark County District Attorney; and
· David Gibson, Clark County Public Defender, who proposed an oral amendment to page 2 lines 40 through 49 and page 3, lines 1 and 2, adding conceptual language that would only seal the record if the offense would be a felony if committed by an adult.
Chairman Anderson asked for clarification that Exhibit J, page 2, represented amendments proposed by Mr. Graham and Mr. Anthony concurred. The Chair asked which amendments Mr. Tueton proposed. Ms. Lang stated that most of what Mr. Graham was requesting was included in Mr. Tueton’s proposed amendments. Mr. Graham objected to the language in Section 3. All of Mr. Tueton’s suggestions went to Section 3 of the bill as well.
Chairman Anderson asked if the committee accepted the amendatory language of Mr. Tueton would it cover the concerns of Mr. Graham as well. Ms. Lang replied Mr. Graham’s and Mr. Gibson’s concerns were encompassed within the amendments proposed by Mr. Tueton.
Mr. Carpenter asked for clarification that Mr. Gibson’s concerns were covered. Ms. Lang referred to the last entry on the last page of Exhibit J (3) which was Mr. Gibson’s concern and the committee could choose whether to go with the suggested language in 3(a) or 3(b).
Chairman Anderson clarified the choice was:
A. “If a child is adjudicated delinquent for any offense involving the use or threatened use of force or violence which, if committed by an adult, would be a felony, any records pertaining to that act must not be sealed”; or
B. “If a child is adjudicated delinquent for sexual assault, battery with intent to commit sexual assault, lewdness with a child, or for any offense involving the use or threatened use of force or violence which, if committed by an adult, would be a felony, any records pertaining to that act must not be sealed.”
He stated in (A) all felonies would be sealed and in (B) the sexual assault and battery with intent to commit sexual assault and lewdness with a child would be exempted from being sealed.
Ms. Lang stated both referred to records that may not be sealed. (A) referred to an act involving threatened use of violence and (B) referred to specific sexual offenses and also referred to any threat or use of violence. She opined the main concern was that the offense would have been a felony if committed by an adult.
ASSEMBLYMAN CARPENTER MOVED TO AMEND AND DO PASS A.B. 294 WITH AMENDMENTS AS SUGGESTED BY MR. TUETON AND THE CHOICE OF 3(B).
ASSEMBLYMAN NOLAN SECONDED THE MOTION.
The Chair asked if there were any perceived problems in bill drafting and Ms. Lang replied in the negative. The Chair recognized the amendments were conceptual amendments and would be made to conform with Legislative Counsel Bureau standards.
Vice Chair Manendo asked for clarification that all the proposed amendments would be included and the only choice to be made was between 3(a) and 3(b). Chairman Anderson stated lines 3 through 20 would restore the language to be deleted, but changed the jurisdiction. Assemblyman Bache had reviewed and concurred with the proposed amendments.
THE MOTION PASSED UNANIMOUSLY WITH ASSEMBLYMAN COLLINS AND BROWER AND ASSEMBLYWOMAN BUCKLEY ABSENT FOR THE VOTE.
The Chair announced the work session for April 16, 2001, would be broken into at least three documents. Mr. Anderson noted the committee had been provided a list of bills on the board and announced if there were other bills that members of the committee wished to be considered, the member must discuss them with the Chair prior to the work session.
Ms. Ohrenschall respectfully requested the committee to consider a vote on A.B. 436 and A.B. 437. The Chair assured her there would be opportunity to make the request on April 16, 2001.
Chairman Anderson opened the hearing on A.B. 548.
Assembly Bill 548: Revises provisions governing agencies eligible to receive distribution of proceeds of administrative assessments. (BDR 14-1438)
The Chair stated A.B. 548 had been agendized on behalf of the Budget Division. He noted no one appeared or had signed in with interest in the bill. He explained the bill added the Advisory Council for Prosecuting Attorneys to the list of eligible entities regarding distribution of proceeds of administrative assessments.
The Chair stated the bill would be held until April 16, 2001. Chairman Anderson thanked the committee and staff for all the hard work in meeting the approaching bill deadline.
Chairman Anderson adjourned the meeting at 11:02 a.m.
Cindy Clampitt
Committee Secretary
APPROVED BY:
Assemblyman Bernie Anderson, Chairman
DATE: