MINUTES OF THE
SENATE Committee on Commerce and Labor
Seventy-First Session
April 16, 2001
The Senate Committee on Commerce and Laborwas called to order by Chairman Randolph J. Townsend, at 7:18 a.m., on Monday, April 16, 2001, in Room 2135 of the Legislative Building, Carson City, Nevada. The meeting was video-conferenced to the Grant Sawyer Office Building, Room 4401, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Randolph J. Townsend, Chairman
Senator Ann O’Connell, Vice Chairman
Senator Dean A. Rhoads
Senator Mark Amodei
Senator Raymond C. Shaffer
Senator Michael A. (Mike) Schneider
Senator Maggie Carlton
GUEST LEGISLATORS PRESENT:
Senator Bernice Mathews, Washoe County Senatorial District No. 1
STAFF MEMBERS PRESENT:
Crystal McGee, Committee Policy Analyst
Scott Young, Committee Policy Analyst
Jude Greytak, Committee Secretary
OTHERS PRESENT:
Richard Hall, American Sign Language Interpreter
Danell Fanning, representing the Interpreter Bill Committee
Steve G. Holloway, Lobbyist, Associated General Contractors - Las Vegas
Rose E. McKinney-James, Lobbyist, Clark County School District
Fred Smith, Construction Manager, Clark County School District
Scott M. Craigie, Lobbyist, Liberty Mutual Insurance Group, Alliance of American Insurers, and Sterling Energy Group Systems
Cliff King, Appeals Panel for Industrial Insurance, Division of Insurance, Department of Business and Industry
John P. Sande lll, Lobbyist, AON Risk Services, Harrah’s Entertainment, and International Game Technology
Robert A. Ostrovsky, Lobbyist, Nevada Resort Association
Pat Coward, Lobbyist, Washoe County, and Nevada Association of Realtors
Bobbie Gang, Lobbyist, Nevada Women’s Lobby
Lawrence P. Matheis, Lobbyist, Nevada State Medical Association
Barbara J. Gruenewald, Lobbyist, Nevada Trial Lawyers Association
Helen A. Foley, Lobbyist, PacifiCare/Secure Horizons, and representing Nevada Association of Health Plans
Donna Sweger, Supervising Attorney, Nevada Attorney for Injured Workers, Department of Business and Industry
Danny L. Thompson, Lobbyist, Nevada State American Federation of Labor and Congress of Industrial Organizations (AFL-CIO)
John E. Jeffrey, Lobbyist, Southern Nevada Central Labor Council, and Southern Nevada Building and Construction Trades Council
Linda L. Sheldon, Lobbyist, Great Basin Primary Care Association
Fred L. Hillerby, Lobbyist, Nevada State Board of Dental Examiners, and Nevada State Board of Nursing
Dennis J. Arch, D.D.S., Member, Board of Dental Examiners of Nevada
Robin Keith, Lobbyist, Nevada Rural Hospital Project Foundation
Joel F. Glover, D.D.S., Chairman, Legal and Legislative Affairs Committee, Nevada Dental Association
Caroline Ford, M.P.H., Assistant Dean, Director, Center for Education and Health Services Outreach, School of Medicine, University of Nevada
Elizabeth Gilbertson, Lobbyist, Hotel Employees and Restaurant Employees Welfare Fund
James L. Wadhams, Lobbyist, Nevada Dental Association
Bobbette Bond, Member, Nevada Culinary Union
John Hunt, representing Board of Dental Examiners of Nevada
John DeGracia, Concerned Citizen
Anthony J. Wren, Certified General Appraiser
Joan Buchanan, Administrator, Real Estate Division, Department of Business and Industry
Julie A. Wilcox, Lobbyist, Southern Nevada Water Authority, and Las Vegas Valley Water District
Charles W. Joerg, Lobbyist, Nevada Manufactured Housing Association
K. Neena Laxalt, Lobbyist, Nevada Podiatric Medical Association
Mark D. Rawson, D.P.M., President, Nevada Podiatric Medical Association
John Ellerton, M.D., Vice Chief of Staff, University Medical Center
Louis Ling, General Counsel, State Board of Pharmacy
Samuel P. McMullen, Lobbyist, Retail Association of Nevada
Keith W. Macdonald, Executive Secretary, State Board of Pharmacy
Donald Jayne, Lobbyist, Nevada Self-Insured Association (NSIA) #200
Jon B. Wellinghoff, Lobbyist, Green Energy Business Council of Nevada, and Sierra Concepts Incorporated, and Vulcan Power
Judy L. Stokey, Lobbyist, Sierra Pacific Power Company, and Nevada Power Company
Duane Nelson, Director, Transmission Business Development, Sierra Pacific Resources
Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection (Consumer’s Advocate), Office of the Attorney General
Mr. Neill Dimmick, Director of Regulatory Operations, Public Utilities Commission of Nevada
Renny Ashleman, Lobbyist, Southern Nevada Home Builders Association
Raymond Bacon, Lobbyist, Nevada Manufacturers Association
Terry E. Page, Lobbyist, Sterling Energy Systems
Mary Lau, Lobbyist, Retail Association of Nevada
Carole Vilardo, Lobbyist, Nevada Taxpayers Association
John O. Swendseid, Attorney representing Southern Nevada Water Authority, and Truckee Meadows Water Authority
George Caan, Director, Colorado River Commission
Joyce A. Newman, Lobbyist, Utility Shareholders Association of Nevada
Terry K. Graves, Lobbyist, Basic Management Incorporated
Robert L. Crowell, Lobbyist, Sierra Pacific Power Company, and Nevada Power Company
James A. Bell, P.E., Director, Public Works Department, City of North Las Vegas
John Sullard, City Manager, Boulder City
Robert Gastonguay, Lobbyist, Nevada State Cable Telecommunications Association
Charles K. Hauser, Lobbyist, Las Vegas Valley Water District, and Southern Nevada Water Authority
Marvin Leavitt, Lobbyist, City of Las Vegas
James J. Spinello, Lobbyist, Clark County
Mary Henderson, Lobbyist, City of Reno
Kurt R. Segler, Lobbyist, City of Henderson
John Berkich, City Manager, Carson City
William E. Isaeff, Lobbyist, Special Assistant to the City Manager, City of Sparks
Warren B. Hardy ll, Lobbyist, Southern Nevada Building and Construction Trades Council, and Southern Nevada Central Labor Council
George Lyford, Director, Special Investigations, State Contractors’ Board
Nancy Salmon, Chief of Unemployment Insurance Contributions, Employment Security Division, Department of Employment, Training and Rehabilitation
Dennis Haney, representing State Contractors’ Board
Robert C. Maddox, Lobbyist, representing Nevada Trial Lawyers Association
R. Scott Rasmussen, Lobbyist, Nevada Subcontractors Association
Mark H. Fiorentino, Lobbyist, American Consulting Engineers Council of Nevada
Bill M. Welch, Lobbyist, Nevada Hospital Association
Kathy Apple, R.N., M.S., Executive Director, Administration, Nursing Practice, Discipline and Monitoring, State Board of Nursing
Richard Schlegel, Executive Director, Nevada Nurses Association
Doreen Begley, Lobbyist, Nevada Hospital Association
Christine Sawyer, R.N., representing Service Employees International Union
Carin R. Franklin, Lobbyist, Operating Engineers, Local 3, representing Washoe Registered Nurses
Robert E. Shriver, Executive Director, Division of Economic Development, Commission on Economic Development
Brenda J. Erdoes, Legislative Council, Legal Division, Legislative Counsel Bureau
Chairman Townsend opened the hearing with Senate Bill (S.B.) 245.
This portion of the hearing was translated into American Sign Language by interpreter, Richard Hall, for the benefit of the hearing impaired.
SENATE BILL 245: Provides for regulation of interpreters for persons who are deaf or whose hearing is impaired. (BDR 54-231)
Scott Young, Committee Policy Analyst, Research Division,
Legislative Counsel Bureau, stated Ms. Fanning is now going to propose a
certification chapter, similar to the type of arrangement currently in the law
for respiratory care therapists under chapter 640B of Nevada Revised
Statutes (NRS) (Exhibit C).
He stated Exhibit C is for reference only; the provisions would
come from the
bill. He said the provision dealing
with the board would not be used, and those dealing with qualifications and
exemptions would go into a chapter similar to chapter 640B of NRS.
Senator Bernice Mathews, Washoe County Senatorial District No. 1, stated she supports S.B. 245 and also supports the changes proposed for the chapters. She stated the bill will probably have to be referred to the finance committee.
Chairman Townsend responded they are trying to avoid referring to the finance committee, if possible. He noted if they mandate school districts or courts to use persons who are certified, they will have to send the bill to the finance committee, because it will then have a financial impact on government entities.
Danell Fanning, representing the interpreter bill committee, the drafters of S.B. 245, testified they have met with representatives in Las Vegas and in Reno. She said the committee and the deaf community are in full support of changing S.B. 245 from creating a board of interpreters to license interpreters for the deaf and hearing-impaired to creating a registration certification process following the example of chapter 640B of NRS.
Chairman Townsend explained the practice of respiratory care, under chapter 640B of NRS (Exhibit C), lists the general requirements and specifically details how a certification is attained. He said the specific qualifications and certification guidelines are proposed to be modeled after those for respiratory care practitioners as in NRS 640B.110. He quoted from NRS 640B.110, “Qualifications; certification required; prohibited acts,” in paragraph (d) of subsection 1, “Be certified by the National Board for Respiratory Care or its successor organization.” He asked Ms. Fanning who the national organizations for the hearing impaired are.
Ms. Fanning stated the committee proposed three
organizations and a skills evaluation tool be used to certify
interpreters: The Registry of
Interpreters for the Deaf (RID), which is a national organization of and for
interpreters of American Sign Language (ASL); the National Association of the
Deaf, which is the largest constituency organization for deaf and
hearing-impaired Americans and also certifies interpreters; the National Cued
Speech Association, which certifies transliterators for those people who use
cued speech and read lips; and finally, the Educational Interpreters
Performance Assessment, a tool for
assessing the proficiency skill levels of interpretersforhearing-impairedchildren
and young adults in educational settings, could be employed to assess interpreters’ skill levels.
Chairman Townsend asked if the interpreter would have to be certified by one of those entities. Ms. Fanning answered “Yes, by one of those four bodies.”
Chairman Townsend asked Senator Mathews if the judicial branch, the school districts, and others would be required to use a certified interpreter.
Senator Mathews answered, Yes, they will be required to use certified interpreters, and the school districts have some concerns because they believe the fees may increase. She stated the possible increase in cost will be justified because they will know the interpreters are qualified. She stated it is possible the schools may have to pay a dollar more an hour for the service and added the school districts might come to speak against S.B. 245 because of the possible cost increase.
Chairman Townsend stated the committee has not had time to review the bill. He said the testimony was, for him, “remarkably compelling,” that persons who needed interpreters were not provided the kind of communication opportunities the rest of us take for granted. He recalled from testimony, the terror of the person faced with a medical difficulty, and not understanding; and the boy who did not understand the laws, or what the police were trying to tell him.
Senator Mathews commented instances such as those are why she was willing to sponsor the bill. She said a young lady called her who had problems when an interpreter misinterpreted what she wanted. Senator Mathews stated the bill will ensure the interpreter will be a professional who is accountable to a national committee, like a registered nurse. She added, she is not requiring interpreters for the hearing-impaired to attend a specific school, but, only to have passed a certification. She said the entities employing these interpreters will have to pay for the expertise.
Ms. Fanning stated the group is asking for the courts and the medical community to be using only certified interpreters by 2003, and schools to follow by 2007. She stated they feel this is a sufficient amount of time for people to prepare if this is mandated.
Chairman Townsend stated the year 2003 comes after the next biennium. He asked if it was necessary to send the bill to the Senate Committee on Finance since the implementation is after the next session.
Mr. Young stated he believed, because the effective dates will not impact current budgets, the bill probably does not need to go to the finance committee. He said he would check the information so an appropriate referral can be made.
Senator O'Connell noted if they were going to appoint a board, then an appropriation would be needed.
Chairman Townsend replied no, the provision establishing a board of interpreters would be deleted from S.B. 245 and certification would be approved through existing national organizations. He explained, someone who is an interpreter would receive certification from one of the four entities, documentation which the interpreter would then provide to the employer, guaranteeing they have met a certain standard.
Senator O'Connell asked if the bill specifies where these people will have to be on staff. Senator Mathews answered the bill tells from where interpreters must get their certification.
Senator O'Connell asked if the bill would mandate who has to have a certified interpreter on staff. Chairman Townsend stated there would be no staffing, but what the bill would require is after 2003, if the judiciary and the medical community use interpreters, they would have to use someone who is certified. Also, he continued, after 2007, if the school districts use an interpreter, they would have to use someone who is certified.
Senator Mathews reiterated there would be no board created. Ms. Fanning stated each of the four certifying bodies they propose using provides a card showing the level for which each interpreter is certified.
Chairman Townsend said the motion would be to “gut” the bill as a whole and insert language to the effect interpreters for the hearing-impaired used by the judiciary or the medical community after 2003 would be required to have a certification from one of the four aforementioned national groups; and after 2007, the educational community who uses interpreters would also be required to use individuals so certified.
Senator O'Connell asked why they would make the education system different from the judiciary or medical community. Ms. Fanning responded, one of the reasons is the school districts are the largest employers of interpreters and they feel they will need time to prepare their interpreters and get them to the skills levels needed by 2007. Senator O'Connell commented, “That is 6 years.”
Senator Mathews stated she was not pleased with the length of time, either. However, she added, if it is what the community wants, she would accept it.
Chairman Townsend suggested, since there is no fiscal note, they consider making 2003 the deadline for all three communities; and if it should prove unworkable, the next session can adjust it.
Senator Amodei stated all the input he received on the bill was positive. He said, however, the education people are concerned about the impact on their budgets. He suggested possibly allowing the judicial and medical communities an opportunity to put this system into practice first and use their experiences to help the education community to phase in the program afterward. He reiterated the education community is the largest purchaser of interpreter services.
Senator Mathews responded the most important reason for enacting this legislation is to provide opportunities and correct interpretation for school children.
Ms. Fanning stated she feels if interpreters are already working in the school districts, they should be able to start this program now. She explained the reason they chose these dates was in consideration of the feedback they received from the schools. She stated she would prefer the date be changed to 2003.
Senator Amodei said he agrees with Ms. Fanning, however, he stated, he is attempting to avoid a referral to the finance committee where they would have to find funding for the schools. He suggested it may be the best service to this legislation to leave the extended time so communities can prepare for the change instead of rushing the issue and facing opposition due to financial concerns.
Chairman Townsend stated if the committee uses the July 1, 2003, date, the legislation will be outside the budget cycle and would allow time for the administration to put it in their budget. Senator Mathews concurred.
SENATOR O'CONNELL MOVED TO AMEND AND DO PASS S.B. 245, statiNG the amendment would include gutting the bill and setting the date for July 1, 2003, to require certification for all interpreters used by the Judiciary system, the medical system, and the educational system.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman Townsend closed the hearing on S.B. 245 and opened the hearing on S.B. 44.
SENATE BILL 44: Revises provisions governing consolidated insurance programs. (BDR 53-445)
Steve G. Holloway, Lobbyist, Associated General Contractors - Las Vegas testified he supports S.B. 44. He presented the committee with a document, which describes consolidated insurance programs and outlines the Associated General Contractor’s supporting view of S.B. 44 (Exhibit D).
Rose E. McKinney-James, Lobbyist, Clark County School District, stated S.B. 44 has a potential to eliminate an opportunity for the Clark County School District to save money. She said the district is doing what it can to strengthen its fiscal position. Specifically, she said, a recent audit suggested they maintain and explore multiple projects options. She added, though they have had difficulty identifying opportunities to use this option, based on the audit recommendation, they wish to retain the option.
Fred Smith, Construction Manager, Clark County School District, testified none of the construction projects, until now, have addressed a consolidated insurance program. He said, to date, they have required all of their contractors and subcontractors to provide their own insurance. He noted a recent audit identified consolidated insurance programs (project owner-purchased “wrap up” insurance) as having a potential to save money in their construction program. He stated, at this time they have not addressed the specifics of implementing such a program; they would like to keep the option open.
Senator O'Connell said she is concerned they may be trading costs for safety. She noted the incident at the Venetian Resort Hotel Casino where they had a consolidated program and an accident killed three people.
Scott M. Craigie, Lobbyist, Liberty Mutual Insurance Group, Alliance of American Insurers, and Sterling Energy Systems, stated those deaths at the Venetian were under a warp-up insurance program. He said S.B. 44 would undo S.B. 133 of the Seventieth Session, which the committee passed because of those deaths.
SENATE BILL 133 OF THE SEVENTIETH SESSION: Establishes provisions governing consolidated insurance programs. (BDR 53-384)
Mr. Craigie explained the components addressing these issues in S.B. 133 of the Seventieth Session were having certified and experienced safety officers on‑site 100 percent of the time, and having claims officers on-site 100 percent of the time. Mr. Craigie recalled testimony from the interim committee [Legislative Committee on Workers’ Compensation] where a person was sent to the wrong claims officers and the wrong network of health care service providers. He stated the 1999 Legislature wrote the law to correct these kinds of problems. Mr. Craigie noted they have had difficulty finding people in Nevada with the levels of qualifications needed, and they had to bring in the person who ran the consolidated insurance program safety system on the semiconductor project in Texas to oversee the Fiesta Palms project [new Palms Hotel and Casino being built by the former owner of the Fiesta Hotel and Casino in Las Vegas]. He restated the deaths at the Venetian did not occur under the program created by S.B. 133 of the Seventieth Session, which, he noted is a much more effective law than what existed at the time of the Venetian accident.
Cliff King, Appeals Panel for Industrial Insurance, Division of Insurance, Department of Business and Industry, testified they currently have three consolidated insurance programs for large construction projects approved since passage of S.B. 133 of the Seventieth Session: Fiesta Palms, Turnberry Place [high-rise condominiums and London-themed resort], and Green Valley Ranch Station Casino. He stated, under S.B. 133 of the Seventieth Session, if there is one person on the job site, it must be a safety officer; if there are two people on the job site, the second one must be a claims administrator; after those two are on the job site, then you can allow construction employees on the job site.
Mr. Holloway stated their concern is not single projects, but “rolling” wrap-ups [select insurance coverage on multiple site, on-going construction projects purchased by the project’s owner rather than by individual contractors and subcontractors], which will become effective October 1, 2001. He said the law requires one safety person always on-site when workers are present for a wrap‑up. He stated a rolling wrap-up could cover 16 projects spread throughout the county, and one person cannot cover such a rolling wrap-up.
Mr. Craigie stated the law requires a safety person, full-time, on the construction site during all hours in which there is construction. He noted if the construction activities occur 24 hours a day, three 8-hour shifts of authorized insurance representatives would be needed to cover. He stated under S.B. 133 of the Seventieth Session, in the application to become an authorized wrap-up insurance program site, you must define the contiguous site for the construction project. He said each site is required to define a contiguous location on a rolling wrap, and each site must have a safety officer on-site for every hour work is being done.
Mr. King stated the safety programs and the safety personnel must be approved by the Division of Industrial Relations. He said the resumes of the inspectors, as well as the entire safety program, are strictly monitored and regulated by the Occupational Safety and Health Enforcement Section (OSHES).
Senator Schneider asked how many sites are currently operating under this new system and what is the cost. Mr. King stated there are presently three approved consolidated insurance programs. Mr. King said he did not understand the question regarding the price.
Senator Schneider stated he was told the contractors are concerned about the cost. Mr. King replied the premiums are bid by the contractors. He added the law requires a pre-bid conference, a discussion with each of the subcontractors, and then each contractor submits his or her own bid. He said the price is between the insurer, the general contractor, and the owner. He added, there have been some questions regarding how much money should be deducted for an insurance program from self-insured contractors. This, he said, is negotiated between the general contractor, the owner, and the individual subcontractor.
Mr. Holloway stated contractors are not given the opportunity to bid on the insurance premiums on a wrap-up. He said contractors would choose to use their own insurance if they were given the choice, rather than use a wrap-up, because the wrap-up is disruptive to their own insurance programs and disruptive to their safety programs. He stated the real question is, How does the insurance division verify the threshold amount has been reached? He said the contractors have no voice in the premiums. He said they either take the job and deduct their workers’ compensation and safety costs from the bid, or they do not take the job. He stated he believes the insurance division does not verify the threshold has been reached.
Mr. King stated they receive the application from the insurer, which includes the breakdown of costs. He said they do verify they have reached the $150 million threshold, which is a part of the application process.
John P. Sande lll, Lobbyist, AON Risk Services, and Harrah’s Entertainment, testified S.B. 133 of the Seventieth Session was a very contentious bill and ultimately a compromise was reached. He noted section 7 of S.B. 44 contains various provisions, especially safety. He stated he is presently working on an application for an owner-controlled insurance program (OCIP) project, and there is a lot of attention paid to the selection of the people who oversee safety and claims administration. He declared last session a deal was made, which put into law new requirements for a project, including a $150 million threshold, and also a delay in the issue of rolling wraps. He suggested they did not like it at the time, but they went along with it in an effort to compromise. Now, he contends, it is a bad precedent, especially since nothing has happened in the last 2 years, to come back this session and “chip away” at the deal. He stated these are the reasons he opposes this bill.
Robert A. Ostrovsky, Lobbyist, Nevada Resort Association, responded they would like to be on record, as owners of these projects, as opposed to S.B. 44. He stated if rolling wraps are the target of this bill, the association members believe this bill goes way beyond the mark. He said the law is relatively new, and noted the association has three incomplete projects now, and they are being asked to roll back this law to a time prior to last session. Mr. Ostrovsky suggested the alternative would be to wait another session and see what the results of these programs are. He commented the programs were not satisfactory prior to the 1999 legislation, however, he said he believes they are a long way from knowing what the final impact of that legislation will be. He suggested they wait, so they can take advantage of some of the rolling-wrap programs because they are cost‑effective methods in the construction of large projects and large remodeling projects. He urged the committee to vote against the passage of S.B. 44.
Mr. King stated S.B. 44 changes the threshold. He said none of the projects currently approved would qualify under the new threshold.
Mr. Holloway stated, in the spirit of compromise, the contractors he represents are willing to leave the threshold on single project wraps at $150 million, where it is now. He added their biggest concern is rolling wraps. He suggested their agreement was to hold off for 2 years to see how the wrap-ups worked and revisit them if there were problems. He suggested there have been problems throughout the United States. He stated the federal government prohibits wrap-ups in their entirety; 20 states prohibit wrap-ups completely; and 15 states severely restrict rolling wrap-ups. He stated their concern is rolling wrap-ups, and they are willing to leave the threshold where it is now.
Senator Schneider suggested the committee amend S.B. 44 with Mr. Holloway’s suggestion to leave the threshold amounts the same.
SENATOR SCHNEIDER MOVED TO AMEND AND DO PASS S.B. 44.
Chairman Townsend clarified the amendment would change page 2, lines 30 and 31, to leave the thresholds at $150 million.
SENATOR SHAFFER SECONDED THE MOTION.
Senator O'Connell asked if the major change with the amendment would be to stop any rolling wrap-ups, but would not change a single site project.
Mr. King answered yes, that is what the bill would do. He added S.B. 44 redefines estimated total cost, removing the costs of the real estate, fixtures, and furniture that are part of the current estimated cost. He suggested this change would still have an impact on the current owner-controlled insurance program projects. He said all of section 6 of the bill changes the price, noting, for example, it deletes the cost of acquiring real property on which the project will be located, and the costs of acquiring equipment and furnishings for the project.
Mr. Holloway stated the threshold amount was intended to be based on the estimated cost of construction. He noted the definition which resulted included the cost of the land and the cost of furnishing the building once it is completed, which are not part of the cost of construction. But, he stated, it left out labor and materials, which are part of the cost of construction. He asserted the actual cost of construction is covered by an owner-controlled insurance program and is what should be used to determine the threshold.
Mr. Craigie maintained they used the entire cost of the project as the standard written in S.B. 133 of the Seventieth Session. He stated it was approved by the interim committee this way, and was made law this way.
Mr. Holloway recommended the cost of construction exclude extraneous costs having nothing to do with what is covered by the owner-controlled insurance program. But, he suggested, they would be willing to compromise and reiterated he remains concerned about what rolling wraps will do to safety programs throughout the construction industry.
Chairman Townsend asked if there were any other questions or testimony. No one responded. A vote was taken.
THE MOTION CARRIED. (SENATOR TOWNSEND VOTED NO.)
*****
Chairman Townsend closed the hearing on S.B. 44 and opened the hearing on S.B. 85.
SENATE BILL 85: Creates commission to study disparity in compensation based on differing genders, races or national origins of employees in public and private employment. (BDR S-452)
Senator Carlton outlined, the bill was modified from the initial bill draft request (BDR), as a whole, to aim at only state employees and to perform a study. She explained a commission would be established, which would be responsible for acquiring the funding through gifts and grants to perform the study. She noted if the committee felt the $10,000-fiscal note would prevent the bill from succeeding, a grant or foundation gift would be available to fund the commission.
Chairman Townsend stated, when he first heard the bill, he was concerned about privacy issues. He noted they heard testimony from Washoe County, which had been through this program using the Hay Group [management consultants] in crafting an analysis of the situation in Washoe County. He stated he called the Washoe County manager who assured him of the value of a study. Specifically, he said, the study had been part of the collective bargaining process with both sides agreeing to accept the results. He noted they also agreed on how they would perform the study. He stated, less than 20 percent of Washoe County employees from the study were determined to be above the acceptable salary range, and less than 20 percent were below the range. He noted during the 2 years of the study, they set aside dollars to accommodate any changes found to be necessary.
Chairman Townsend continued, at the end of the study, the persons who were below the range were paid retroactively to bring them into the appropriate rate scale. The money needed to do this, he reiterated, was accumulated during the course of the study. He added the persons who were determined to be above their ranges were not penalized, but did not receive bonuses or cost-of-living allowances at the same rate as the other employees, in order to eventually bring them into their ranges. He said the Washoe County manager told him some people complained and some employees were happy. Chairman Townsend concluded, now the employee pay is much more equitable. He added the financial issue was simpler than he had previously thought and noted, the bill allows 60 days after July 1, 2001, and provides for a 13-member committee. He said if the committee decides to remove the fiscal note, then it will have to change the language regarding how the members are paid.
Senator Carlton stated she would adjust the language needed to accommodate removing the fiscal note.
Senator O'Connell asked if this bill affects the school
districts. Senator Carlton answered,
no, only state employees. Senator
O'Connell rephrased her question,
asking if the school district might be affected because it receives funding
from the state. Senator Carlton said
they intentionally left the school districts out of the bill.
Chairman Townsend asked if the school district was included in the Washoe County study. Pat Coward, Lobbyist, Washoe County, answered no, only the bargaining group mentioned.
Bobbie Gang, Lobbyist, Nevada Women’s Lobby, testified the school districts’ employees are not included. She stated they fall under a system separate from the state personnel system and are not currently covered in the state’s classification and compensation system.
Chairman Townsend suggested there would have to be a separate mention of the school district in the bill if the committee wanted them included in the study. He added teaching and non-teaching staff fall under separate agreements. Senator Carlton clarified the school district would need to be added to the external component of the bill to ensure they would be one of the comparisons for the model. Chairman Townsend suggested if the committee wanted the non-teaching school district staff in the bill, then they would have to create a separate situation, because the school district employees would have to be compared to each other, and not to the state employees. Senator Carlton suggested this would require two baseline studies with a comparative value. She suggested if they built it into the external review, they could get some good information on the school districts and how they compare to the state.
Senator O'Connell inquired if the school districts’ non-teaching employees are similar enough to state employees to make a comparison. Senator Carlton stated the point system for evaluating each job compares how they fit within the classification system and if they would need to be adjusted.
Chairman Townsend read from page 6 of the working document (Exhibit E) under subsection 2 of section 3, “The study required by subsection 1 must include an external market review comparing compensation paid to employees of the state to compensation paid to employees of local governments and private businesses who are employed in similar positions or in positions that are not similar but require equivalent composites of skill, effort, responsibility and working conditions.” He asked Mr. Coward if this language describes how the study in Washoe County was conducted.
Mr. Coward answered the Hay Group conducted a study which was similar to a study performed by Nevada Bell for their employees. He explained they have certain criteria, looking at the job content, the breadth of the job, responsibility, et cetera, and to develop the parameters; and then they compare these to like jobs. He suggested they must have data available allowing them to then compare these to jobs in the private sector. He opined it was an innovative approach. He noted the consultants also teach the administrators how to continue the program after the study is completed. He concluded the program was very successful.
Chairman Townsend asked if Nevada Bell used the Hay Group for its study. Mr. Coward answered, yes.
SENATOR CARLTON MOVED TO AMEND AND DO PASS S.B. 85, NOTING the provision FOR compensation of the commission be funded by gifts, grants, or donations, AND ADDING The school district to the external market review.
Chairman Townsend asked if this would remove the fiscal note. Senator Carlton answered, yes.
SENATOR AMODEI SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RHOADS AND SENATOR O’CONNELL VOTED NO.)
*****
Chairman Townsend opened the hearing on S.B. 99.
SENATE BILL 99: Makes various changes to provisions relating to prompt payment of claims to providers of health care. (BDR 57-132)
Chairman Townsend stated a proposed amendment is available in the packets (Exhibit F). He noted this committee had already voted to amend and pass S.B. 99 on April 10.
Senator O'Connell stated they worked with several people who were concerned with section 17 of the original bill, which dealt with workers’ compensation issues. She explained they felt the language was unclear and did not want an extension on the time period in which the workers’ compensation system would be required to pay a doctor. She stated the language drafted by Legislative Counsel Bureau to clarify this is presented in the document titled, “Amendment to Senate Bill 99 Proposed by Senator O'Connell” (Exhibit G). She noted the language change states the doctors will be paid within the 60-day limit.
Crystal McGee, Committee Policy Analyst, directed the committee to view item 7 on the first page of the document, “Summary of Amendments” (Exhibit H). She stated they deleted subsections 1, 2, and 3 of Section 18 of Amendment No. 19, and added new language. This change, she said, was voted on and approved in the committee’s prior work session. She said the new subsection would state an insurer has 30 days to accept or deny a bill, and 30 days to pay. Ms. McGee stated if they do not need additional information, the healthcare provider would be paid by the sixtieth day. She noted it was brought to their attention, if the insurer requests additional information and does not receive the additional information, under this language, there are no parameters, and it is likely the insurer would deny the bill for accident benefits. Therefore, she stated, language was drafted (Exhibit F) saying: you receive the bill on day 1; the workers’ compensation insurer has 20 days to request additional information; the healthcare provider has 20 days to provide that information; and then, the insurer has 20 days to pay after the information is received. She elucidated, with the addition of this new language, whether you need additional information or not, the healthcare provider must be paid within 60 days. Ms. McGee clarified the difference is, if the bill is not paid by the sixtieth day, when you have requested additional information, interest will begin to accrue on the fortieth day rather than the sixty-first day. She suggested this provides an additional incentive for the insurer to pay, if they have received the additional information.
Senator O'Connell explained she told the people who requested the bill, if they would testify there was no need to include workers’ comprehension in the bill because people were being paid in a timely fashion, she would remove it. She noted those people declined, and therefore, she suggested, this is something the committee should address. She stated the burden will fall on the health care provider to ensure insurers receive the information they need in order to process claims.
Lawrence P. Matheis, Lobbyist, Nevada State Medical Association, testified the association has reviewed the proposed changes and agrees with the recommendations. He noted he believes this was the best possible legislation for the purpose, and the only other resolutions would be found in regulations or in the courts.
Mr. Ostrovsky testified he opposes the proposed changes. He explained workers’ compensation is more than claims for medical services; it also includes determinations of how much time off an employee should have, whether the employee is entitled to light duty, and whether the employee should return to work. He asserted delays in such information getting to the insurer is substantial and significant and goes well beyond decisions made on paying a medical provider. He declared the penalty in the bill language says they will not receive interest, and he noted they currently do not receive interest. He suggested if a provider of health care fails to furnish the additional information requested, they would not be entitled to any compensation. Mr. Ostrovsky stated if the insurer is required to pay in a timely fashion, and the provider does not get the information to them within the 20-day limit, the insurer should not have to pay the bill. He said he recognized this would be a drastic measure; however, he suggested, this amendment is one-sided on behalf of the medical community. He recommended the committee consider a much heavier penalty for the health care providers who do not comply with the time restrictions.
Barbara J. Gruenewald, Lobbyist, Nevada Trial Lawyers Association, came forward and testified in support of the proposed changes to S.B. 99.
Helen A. Foley, Lobbyist, PacifiCare/Secure Horizons, and representing Nevada Association of Health Plans, testified because the amendment only applies to accident benefits, her clients have no objections.
SENATOR O'CONNELL MOVED TO AMEND AND DO PASS S.B. 99, NOTING THE MOTION includes the amendment presented by Ms. McGee, which replaces amendment No. 19.
SENATOR SCHNEIDER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Townsend opened the hearing on S.B. 154.
SENATE BILL 154: Establishes limits on attorney’s fees for representing injured employee to obtain workers’ compensation benefits. (BDR 53-447)
Senator Schneider stated after the previous hearing on S.B. 154 [February 16], it was determined injured workers need an attorney to assist them in the process. He said they also determined a 10 percent fee was not adequate, though, he added, in every other state there is a restriction on attorney fees. He stated he had worked with the business community and the objective is to get more money “in the injured worker’s pocket.” He proposed an amendment (Exhibit I) where the business community would fund a free attorney. He commented an injured worker now pays about 33 percent of the claim in attorney fees. He restated his objective is to get another 33 percent in the injured workers’ pocket and still allow them legal representation to help them through the difficult process.
Mr. Ostrovsky stepped forward to support S.B. 154. He explained the injured workers’ attorney’s office is currently funded through an employer and insurer assessment. He stated the Nevada Resort Association businesses understand the assessment would increase if the bill passes, but they do not know how much. He stated they would be willing to assume those additional costs for free legal council for every injured worker. He stated they are in favor of their workers receiving the largest amounts possible. He added, these injuries usually involve permanent disabilities and commented they believe the past representation from the office of injured workers has been good. He also said he believes that office is substantially under-funded and suggested it needs a considerable revamp under this bill.
Donna Sweger, Supervising Attorney, Nevada Attorney for Injured Workers, Department of Business and Industry, said this is the first time she has seen the proposed amendment (Exhibit I). She stated, Nancyann Leeder, Nevada Attorney for Injured Workers, previously submitted a fiscal note, which would be minor compared to this new amendment (Exhibit I). She stated, currently they represent approximately 40 percent of the injured workers at the appeals’ office level. She noted this amendment says it is not within their discretion, and they would be required to represent any injured worker without cost at the district court andthesupremecourt,aswellasthehearings’office. Currently,
she explained, they only represent at the appeals’ office level and it is at their discretion whether or not they pursue a case to the next level.
Chairman Townsend asked, if the committee gave the Nevada Attorney for Injured Workers the discretion to limit venues, would they then be able to provide a fiscal note. He asked if she would need time to contact Ms. Leeder. Ms. Sweger responded, “Definitely.” Ms. Sweger noted this amendment (Exhibit I) is quite different from the bill she had previously reviewed. She said the original bill only limited the fees for private attorneys who currently represent workers at the hearings’ office, the appeals’ office, and the Nevada Supreme Court. Ms. Sweger stated, the original fiscal note addressed the fact if the law limited private attorneys’ fees, then the Nevada Attorney for Injured Workers’ caseload could increase by 30 percent.
Chairman Townsend suggested, because no one has had an opportunity to review the proposed amendment (Exhibit I), Ms. Sweger should contact Ms. Leeder and try to estimate a fiscal note to address the proposed amendment and then return to the committee with the information.
Danny L. Thompson, Lobbyist, Nevada State American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), testified his organization earlier opposed S.B. 154, and the new proposed amendment (Exhibit I) raises more concerns. He noted every injured worker should be represented, and if the workers could get their entire award, it would be ideal. He stated, since you do need an attorney at the appeals’ level, if the Nevada Attorney for Injured Workers currently represents 40 percent it would mean a 60 percent increase in the assessments to the employers to fund the program. He stated he is concerned the price will be so high the assessed parties will ask to reduce benefits so the cost will go down. He recalled the situation prior to 1993, expressing the opinion he has no desire to reexperience it. He testified they do not support limiting an employee’s option, and in section 6, the amendment even disallows an employee’s representative from representing him or her at the hearings-level hearing. He reiterated they oppose the amendment, based on the two mentioned issues alone. He added he is interested to find out what the Nevada Attorney for Injured Workers says this amendment would cost.
Ms. Gruenewald testified the Nevada Trial Lawyers Association opposes this amendment (Exhibit I) and opposes S.B. 154. She commented during the workers’ comprehension reform over the past 10 years, not one proposal suggested the reform was needed because of the workers’ compensation attorneys. She said, currently the fees for private attorneys are paid by the claimant, so nothing is paid by the insurer or employer for this. She stressed, the decision to retain a private attorney is a free choice made by the injured worker. Ms. Gruenewald asserted, many times a private attorney has more time and manpower to pay more attention to the details of the case. She remarked the purpose of S.B. 154 is to prevent attorneys from representing injured workers, and she declared, it is what the employers and insurance companies want. She insisted people come to her office because they feel they have not been properly represented. She voiced, the purpose of this legislation is not to help the claimants but to prevent private attorneys from helping the claimants. She urged the committee to vote against this amendment and to vote against S.B. 154.
Chairman Townsend suggested the committee postpone the hearing on S.B. 154 so they would have the financial impact figures from Ms. Sweger before voting.
Senator Schneider reiterated the goal of the legislation is to put more money into the injured worker’s pocket. He stated business now pays and they will still pay if the bill is passed. He stated he remembers reducing benefits in 1993 and said he recognizes those benefits have not been returned to the same level as they were before that cut.
Mr. Thompson stated they have similar concerns with the labor commissioner. He said the Legislature charges the labor commissioner with issues to enforce, and yet he has to justify his staff expenses before budget committees. Mr. Thompson said they believe the labor commissioner’s office is seriously understaffed, which is demonstrated by their 2000-case backlog. Mr. Thompson asserted, if S.B. 154 became law, the Nevada Attorney for Injured Workers would also have to justify their new increased budget, and that office too, may become overwhelmed. He reiterated the worker should have the choice and he restated his labor association members oppose this legislation.
Ms. Gruenewald suggested the proposed amendment (Exhibit I) to S.B. 154 might be unconstitutional, because, she said, “You cannot deprive claimants the right to choose their own attorney.”
John E. Jeffrey, Lobbyist, Southern Nevada Central Labor Council, testified the labor council is opposed to S.B. 154.
Chairman Townsend postponed the hearing on S.B. 154 and opened the work session on S.B. 133.
SENATE BILL 133: Authorizes board of dental examiners to issue limited number of licenses without examination each year to dentists licensed in other jurisdictions. (BDR 54-241)
Senator Carlton directed the committee to review page 2 of the proposed amendment (Exhibit J), the regional board section of the bill, which was previously not supported by the Board of Dental Examiners of Nevada or the Nevada Dental Association, and has now been changed. She stated they have addressed the issues regarding the assurance dentists are qualified, and properly tested. She pointed out, in paragraph (b) of subsection 1 of section 1, the word “percent” was omitted and needs to be added after the number ”50”; and subsection 2 of section 1 requires applicants to pass a written examination regarding state regulations and laws. She stated they could waive the clinical portion of the certifying examination, which would be replaced by other stipulations in the bill; there would be a $750 fee for this. She continued, there is all new language on page 3, regarding specialist’s license and the fees are added to this section, as well as section 3, the restricted, geographical license.
Senator Carlton stated dental hygienists have been added to section 3. She noted the lack of available dental hygienists is also a problem in some rural communities in Nevada and adding them to the restricted license section may help alleviate the shortage. She continued, on page 4, line 35, they have corrected the language for the “private practice of dentistry”. She stated, on page 6, the final section, section 6, she would like to change the proposed amendment from the effective date of July 1, 2001, to an effective date of October 1, 2001, to allow the Board of Dental Examiners of Nevada the opportunity to prepare for the changes.
Senator Carlton stated she would like to sunset section 2, the regional board section, to October 2005. She also asked to sunset the urban component to October 2005. She stated, with the new dental school and with new dentists coming into southern Nevada, this may be a valuable part of this legislation. She suggested sunset provisions would give them the opportunity to evaluate how this legislation has effected the rural communities, the specialists, and the urban areas. She opined this is good legislation with good public policy, has good safeguards, and makes sure the examinations and background checks are handled. Senator Carlton asked Ms. Shelton if she felt the components addressing the needs of the rural communities have been addressed.
Linda L. Sheldon, Lobbyist, Great Basin Primary Care Association, testified they are comfortable with the rural section of the bill. She suggested there have been some concerns regarding the urban portions of the legislation, but she believes the compromise is worth it if this bill will help attract dentists to the rural areas of Nevada.
Fred L. Hillerby, Lobbyist, Nevada State Board of Dental Examiners, testified the state board is still concerned regional boards will not protect the patients as well as the state board, historically, has. He stated the Western Regional Examining Board removes the incentive to attract dentists to rural Nevada. He explained, if a dentist is required to pass a board examination which has a 95 percent pass-rate, or commit to practice in Rural Nevada for three years; he believes dentists will choose to pass the board instead of choosing a 3-year commitment to practice in rural Nevada. He said, in an informal survey they noted the Las Vegas telephone book has dentists’ advertisements on 54 pages; there are 70 who advertise they will take most insurances; 10 will see you the same day; 82 will see you in an emergency; 24 will see you evenings and weekends; 66 are advertising for new patients; and 9 are advertising for Medicaid patients. He stated this suggests the access issue is not as clear as previous testimony suggests. Chairman Townsend asked if they had phoned any of the dentists advertised in the phonebook. Mr. Hillerby replied no; they did this survey on Easter Sunday when most dentists do not work.
Dennis J. Arch D.D.S., Member, Board of Dental Examiners of Nevada, testified the board opposes the regional board-related portion of S.B. 133. He stated, however, the new amendments regarding the rural initiative and the specialist initiative are good. He said if they allow the regional board examination licensure provision, the rural initiative will be negated. He asserted if they can easily pass the Western Regional Examining Board examinations, they would choose to set up more lucrative practices in urban areas. Mr. Arch reminded the committee, over the last 5 years, they have increased the dental population in Nevada by 35 percent. He suggested no regional examination could keep up with the explosive population growth in southern Nevada. He repeated, the board does not agree with the regional examination portion of the bill. He asked Senator Carlton to clarify the sunset provision she proposed.
Senator Carlton replied she realizes the concerns, but stated her whole objective is to increase access to dental care. She said she plans to work closely with the board and the association to monitor the situation and to ensure there is no “floodgate” problem. She said she does not believe this will occur. She commented if there is a problem with the rural component, she would be there to step forward and reevaluate the situation and to introduce new legislation to alleviate the problem. She restated she has made a commitment to assure the rural component is addressed. Senator Carlton said she would be the one to move the sunset date up from 2005, if it is needed, giving them two sessions to ensure the plan is valid.
Mr. Arch expressed the Board of Dental Examiners of Nevada is not an arm of the dental population, but is there to protect the public interests; the board has no proprietary interest. He suggested the proposals are initiated by those with proprietary interests; and it is the responsibility of the Board of Dental Examiners of Nevada and the committee to protect the public interests.
Robin Keith, Lobbyist, Nevada Rural Hospital Project Foundation, testified she is also concerned about the rural component, but does not know what the answer is.
Joel F. Glover, D.D.S., Chairman, Legal and Legislative Affairs Committee, Nevada Dental Association, testified the goal of the Nevada Dental Association is to provide dental service access in rural and urban populations. He stressed the original amendments would have done so, but the amendments, as they are now, will not. He suggested the new amendments will not improve access, especially in the rural areas.
Chairman Townsend asked if the original amendment Mr. Glover mentioned was available. Senator Carlton suggested he was probably referring to the lined-out portions of Exhibit J, which is a revision of a previous amendment presented by Senator Shaffer.
Caroline Ford, M.P.H., Assistant Dean, Director, Center for Education and Health Services Outreach, School of Medicine, University of Nevada, testified, with S.B. 133 they have attempted to increase access for both rural and urban dental providers, but said she felt the rural community access provision was not very strong. She suggested the only way to increase the number of rural dental practices is to provide monetary incentives, which is being addressed in S.B. 403.
SENATE BILL 403: Enacts Frontier and Rural Health Care Improvement Act of 2001. (BDR S-942)
Ms. Ford stated S.B. 403, has an enhancement to the Nevada Health Service Corps (of the University of Nevada School of Medicine) for dentists and dental hygienists.
Elizabeth Gilbertson, Lobbyist, Hotel Employees and Restaurant Employees Welfare Fund, insisted this is a huge public policy issue; both the rural and the urban areas need dentists. She noted the population growth in Nevada has “exploded”; so the ratio of dentists to population is a net loss. She said, statewide population growth is 66 percent, and Clark County population growth is 86 percent. She said the pass rates on the Nevada State Board of Dental Examiners’ tests have been the historic mechanism for controlling the number of dentists in Nevada. She noted the most recent statistics from the American Dental Association say the pass rate for the Western Regional Examining Board is 91 percent; for the Central Board (Central Regional Dental Testing Service Incorporated), it is 87 percent; for the Southern Board (Southern Regional Testing Agency Incorporated), it is 87 percent; for the New England Board (North East Regional Board of Dental Examiners), it is 62 percent; and for Nevada, the pass rate is 41 percent. She added the Nevada pass rate statistics came from the Nevada dental board. Ms. Gilbertson stated the absolute number of dentists relative to the population is lower in the western states than it is anywhere else. She commented both the rural and urban areas need to be served, and the consequences of failing to provide service severely limits access to care for thousands of people in Nevada.
James L. Wadhams, Lobbyist, Nevada Dental Association, commented the statewide population increased 100,000 last year, which is 5 percent of a 2‑million population base; the number of dentists increased by 109, on a base of approximately 700, which is an increase of 14 percent. He stated these figures show the allegation population growth is exceeding the growth in the number of dentists is not correct. He mentioned dentists realize the population growth makes Nevada an attractive place to set up practices. He suggested the statistics show dentistry is discovering Nevada. He voiced the board’s amendments will facilitate new dentists coming to Nevada.
Bobbette Bond, Member, Nevada Culinary Union, testified the amendments originally proposed by the dental board were good solutions to the need for more dentists in rural Nevada and would help increase the number of dental specialists in Nevada. She asserted, however, there is no solution in the dental board’s amendments to address the urban problem of lack of access. She said she believes Senator Carlton’s attempt to rectify the situation is a good start. She added, having sunset provisions to assure monitoring occurs and supporting further incentives for rural practices are positive steps. She noted they had earlier presented statistics to support their position asserting there is a public policy problem throughout Nevada.
Chairman Townsend stated though five of the committee members are from rapidly growing urban centers, it is important they do not forget the rural areas. He commented the rural county populations are often dependent on things are outside of the control of the governing bodies, such as the price of gold, and the committee should support them.
Senator Rhoads asked to see the amendment presented by Senator Shaffer.
Senator Carlton asked the audience to respond whether they agree or disagree with the 2-year and 5-year commitment.
Ms. Gilbertson answered yes.
Mr. Arch asked if Senator Carlton is referring to the 5-year credentialing, 2-year temporary license, and unrestricted license after 2 years provisions. Senator Carlton answered yes. Mr. Arch testified he dislikes this the least of the two proposals.
Mr. Wadhams stated yes, the Nevada Dental Association would support it if the dental board supported it.
Senator Carlton suggested they substitute the “5-year, 2-year” language they had earlier worked out (Exhibit K) into the regional board component. She commented it seems as though they have finally found something most will support, and which she believes would provide for public safety, and would have the same recommendations and requirements as the regional board, and they would still be under the examinations and licensure fee of $750. She noted dentists would still be required to take the test and the board regulation examination. Senator Carlton asked Senator Rhoads if he would feel comfortable with that. Senator Rhoads answered in the affirmative.
SENATOR CARLTON MOVED TO AMEND AND DO PASS S.B. 133 WITH CHANGES TO INCLUDE amendING with sections 1 and 3 OF THE PROPOSED AMENDMENT (EXHIBIT J); substitutING section 2 with the document (Exhibit K) pertaining to the 5 yearS’ experience, AND 2-year-temporary-to-permanent-licensure section; makING sure all sections apply to the existing examination fee of $750 AND COMPLY WITH chapter 631 of NRS and the Regulations; and USING the suggested language THE COMMITTEE discussed earlier.
SENATOR AMODEI SECONDED THE MOTION.
John Hunt, representing the Board of Dental Examiners of Nevada, suggested changing paragraph (b) of subsection 1, section 1, in the proposed changes (Exhibit J) to reinstate struck language: “Be examined by the board on his practical knowledge of dentistry,” adding “or a person has 5 years experience,” and leaving the complaint provisions. Then, he said, you could strike “Pass the Western Regional Examining Board with a score of at least 50 percent.” He stated this would cover it all, without complicating the language. Mr. Hunt suggested if the bill required a dentist to have 5 years of clinical experience or pass the board examination, then this could help solve the urban problem as well as induce dentists to go to the rural areas. He noted he wrote the original geographical restrictive license section and the specialist section, and those sections have no time requirement. He suggested the way in which the bill is currently amended, there is no incentive for dentists to set up practices in rural areas.
Senator Shaffer expressed concerns regarding the 5-year provision, which prohibits complaints. He noted Nevada has more complaints against dentists than other states.
Senator Carlton said she believed the board would use substantiated complaints and the finalized resolution of complaints as a guideline, as the committee had previously discussed.
Mr. Hunt stated the board would not be interested in unjustified complaints; it would only examine a person against whom an action was taken by the board. He said any pending disciplinary actions would also be examined, and could be grounds for not issuing a credential.
Mr. Arch asked if the effective date could be moved from October to January, to give the board time to prepare.
John DeGracia, Concerned Citizen, testified he is a recent graduate of dental school and has taken the Western Regional Examining Board tests, the California board (Dental Board of California), and the Nevada board examinations; and successfully passed them all. He stated the Western Regional Examining Board is by far the simplest board to pass. He said the majority of people who take that board pass it without any difficulty. He stated the Western Regional Examining Board is a 4-day board examination and most people complete it in 2 days.
Senator Carlton stated they have removed that component from the bill.
Ms. Bond asked for clarification if this revision would have a sunset provision. Senator Carlton answered she has now reconsidered the sunset provision because of the change in times. She noted there will still be chances to discuss the issue in 2003 and 2005, and she restated she will remain involved in the issue. Senator Carlton proposed they eliminate the sunset provision because it addresses a section, which has now been removed.
THE MOTION CARRIED UNANIMOUSLY.
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Mr. Young asked for clarification, they will use the document “Proposed Amendment for Senate Bill 133” (Exhibit J); restore line 33 on page 2, which reads, “be examined by the board on his practical knowledge of dentistry”; strike line 34 and replace with the 5-year language and “no substantiated complaints.” Senator Carlton clarified, the clinical examination shall be waived if the stipulations of the 5-year clean record and 2-year residency here in the state have been met. Senator Carlton added, if they do not comply with those standards, then they would have to take the clinical examination. She restated the 5-year and 2-year stipulations eliminate the clinical examination.
Chairman Townsend elucidated the disqualifying factor will be disciplinary action and not complaints.
Mr. Hunt reiterated they would also like to include language regarding pending disciplinary action. He noted if someone plans to “move in the middle of the night,” they will say they do not have any actions taken against them, but they could have pending complaints, and the board would also look at those. Senator Carlton noted they had previously agreed on perusal of pending actions and it would be included.
Chairman Townsend closed the hearing on S.B. 133 and opened the hearing on S.B. 307.
SENATE BILL 307: Provides for employment of special investigator to assist commission of appraisers of real estate. (BDR 54-1062)
Anthony J. Wren, Certified General Appraiser, directed the committee to view page 3 of a prepared handout (Exhibit L), which indicates there are approximately 884 appraisers in Nevada. He pointed out in the handout, if licensing fees are increased by $100 each, the total projected annual revenue from fees collected would be $81,150; and if licensing fees are increased by $125 each, the total would be $101,438. He noted these figures do not reflect an increase in fees for temporary permits. He stated there are approximately 150 temporary permits, which would increase the first figure to $84,000 and also increase the second figure.
Mr. Wren directed attention to the next page of the handout (Exhibit L), which is a breakdown of fees in the rest of the Western United States. He noted in the West, appraisal fees for trainees range from $50 to $230; licensed residential fees range between $75 and $267; certified residential and certified general fees range between $75 and $305. He then referred to the current fees in Nevada, he noted the first listing for interns is incorrect on the handout (Exhibit L), which says $87.50, but is actually $75 per year, paid every 2 years. He continued, license fees in Nevada are currently $125; certified residential is $125; and certified general is $175. He stated with the proposed increases of either $100 or $125 per year, interns would then be between $137.50 and $150, licensed would be between $225 and $250, certified residential would be between $225 and $250, and certified general would be between $275 and $300 per year. He contended this would not be a burden on licensees or the holders of certificates. He suggested now fees paid by Nevada appraisers are at the low end of the Western United States’ figures, and the increases would still keep the price below the high end.
Joan Buchanan, Administrator, Real Estate Division, Department of Business and Industry, testified her division provided the data for Mr. Wren and therefore, she agrees with the numbers. She added, if the increase occurs by regulation, as Chairman Townsend had suggested, it should be referenced in NRS 645C.450. She noted the maximum per-year increase allowance should also be noted in chapter 645C of NRS, along with a paragraph on the commitment of the funds for the staff reviewer.
Mr. Wren suggested language for chapter 645C of NRS: “to offset increased expenditures to meet federal requirements, federal requirements, as well as, provide expanded program development. The appraisal fees shall be increased as referenced revisions in NRS 645C.450. All such fee increases shall be deposited to a special non-general fund account, and the funds shall be for the sole purpose of employment, training, and work of a staff reviewer position, which will be dedicated strictly to working within the scope of NRS 645C and any other use deemed appropriate by the commission.”
Chairman Townsend recommended rather than setting a fee, the Legislature set a cap on fee increases at $125 per year, to be determined by the commission, depending on the budget needs. This, he added, would remove the fiscal note by saying the funds will not be taken from the General Fund, but would be generated by fees. Chairman Townsend then recommended they include the language Mr. Wren proposed to target needs, based on the fee increase the commission determines.
Senator O'Connell stated the information the insurance division provided was in response to a request from the committee, so the committee could determine how much the increase would generate. She said “up to” or “not to exceed” is the language they generally use, so the discretion of the agency can be exercised in order to accomplish the task.
SENATOR O’CONNELL MOVED TO AMEND AND DO PASS S.B. 307.
SENATOR AMODEI SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
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Chairman Townsend opened the hearing on S.B. 345.
SENATE BILL 345: Revises provisions relating to provision of water service in certain mobile home parks. (BDR 40-957)
Chairman Townsend stated Senator O'Connell had earlier asked Julie Wilcox to provide specific information for additional charges relating to mobile home park hook-ups, and for Mr. Joerg to provide a breakdown of the developer’s costs.
Julie A. Wilcox, Lobbyist, Southern Nevada Water Authority, and Las Vegas Valley Water District testified, when the water providers in southern Nevada set connection charges, there is an equity issue; they look at every type of user. She stated they have now determined there are zoning changes affecting the original connection charge formula, which they negotiated a year ago. These zoning changes alter how the formula affects some parks built for rental. She concluded, therefore, Mr. Joerg has agreed to withdraw his bill until they can further investigate the water usage and review the equity situation with mobile home parks. She added the most appropriate way to solve the problem will probably be at the local level.
Charles W. Joerg, Lobbyist, Nevada Manufactured Housing Association, testified an agreement had been made with the water district to review the issue. He stated the water district has committed to work with the Nevada Manufactured Housing Association to resolve the problem at the local level.
Senator O'Connell asked if the water district would be looking at the problem in the same perspective as apartments.
Mr. Joerg replied it has not yet been determined. He added there is a current attempt to equalize the apartment rates with some of the mobile home park rates. He stated he believes they will try to change the fees based on water usage.
SENATOR O’CONNELL MOVED TO INDEFINITELY POSTPONE S.B. 345.
SENATOR SCHNEIDER SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CARLTON WAS ABSENT FOR THE VOTE.)
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Chairman Townsend opened the hearing on S.B. 405.
SENATE BILL 405: Makes various changes relating to practice of podiatry. (BDR 54-38)
Senator Carlton stated the concerns Mr. Matheis had raised for the Nevada State Medical Association have been addressed in the proposed amendment (Exhibit M). She said this is the recommendation she makes to the committee.
K. Neena Laxalt, Lobbyist, Nevada Podiatric Medical Association, testified an amendment was presented by Senator Rawson (Exhibit N); the association agrees with this proposal, which is stated in their document (Exhibit M). She said the Nevada Medical Association proposed three changes (Exhibit O). The first, she stated, relates to the standard of care, and the association supports the proposed change. She continued, the Nevada Medical Association also proposed removing subsection 1 of section 3 on page 2, line 27, and the Nevada Podiatric Medical Association disagrees with such a change because it would restrict the podiatrists’ eligibility to be on hospital staffs. She said the last change proposed by the Nevada State Medical Association relates to malpractice and the Nevada Podiatric Medical Association agrees with the Nevada Trial Lawyers this is an unnecessary change.
Ms. Laxalt continued, the final proposed amendment was presented by the Nevada Trial Lawyers Association, regarding the location in which amputation surgery would be performed. She said the Nevada Trial Lawyers did not want these procedures performed in an office setting and the Nevada Podiatric Medical Association concurred. To paragraph (j) of subsection 1 of section 1 of S.B. 405, where it provides a podiatrist authority to amputate a toe, the podiatric association recommended adding language stating: “only if the procedure is performed in a medical facility pursuant to NRS 449.0151, numbers 1 and 8.” Ms Laxalt stated NRS 449.0151 is the definition of a medical facility. She added number 1 of NRS 449.0151 is a hospital and number 8 is a surgical center. She restated, the Nevada Trial Lawyers had recommended these two locations would be the only facilities in which a podiatrist could perform an amputation.
Mark D. Rawson, D.P.M., President, Nevada Podiatric Medical Association, testified the association reviewed the amendment proposed by the Nevada State Medical Association, and though they had concerns, they agreed to compromise in an effort to maintain good working relations. He stated the podiatric association approved the first section of the medical association’s amendment, because the podiatrists want to meet or exceed their standard of care. He stated the summary document (Exhibit M) represents a good compromise and the Nevada Podiatric Medical Association supports it.
John Ellerton, M.D., Vice Chief of Staff, University Medical Center, expressed strong opposition to legislation dictating the credentialing of physicians, allied health professionals, or anyone else in a hospital. He asserted the section in the bill which says a podiatric physician will not be discriminated against will put the medical staff in a very difficult position. Dr. Elerton opined it could cause a “war.” He stressed, they cannot accept a licensing body’s suggestions as to who should be credentialed; the hospital medical staff must be responsible for those decisions. He asserted the hospital must protect patients and maintain the quality of the medical staff. He said there will be problems with that section in preserving the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) certification of University Medical Center. He stated the hospital has reviewed this section with its legal counsel who agrees there will be problems. He restated they have to maintain the standard. He urged removal of the section of the bill “that inserts” the podiatrists in the medical and dental staff.
Mr. Matheis stated the compromise makes sense; if the scope of practice is increased to include something previously only a licensed physician could do; it must meet the standard of care. He suggested the section requiring the procedure be performed in a licensed facility raises the comfort level. He stated they agree with Dr. Ellerton, the second proposal by the Nevada State Medical Association is unacceptable. He said the Nevada Trial Lawyers felt, by using the medical malpractice definition in NRS 41A.009, they might upset the balance of the medical and dental legal screening panel. He suggested the compromise moves things along and puts things on appropriate record.
SENATOR CARLTON MOVED TO AMEND AND DO PASS S.B. 405, WITH the amendment TO be the suggestions presented on the last page of the document presented by the Nevada Podiatric Medical Association (Exhibit M).
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SCHNEIDER AND SENATOR AMODEI WERE ABSENT FOR THE VOTE.)
*****
Chairman Townsend opened the hearing on S.B. 544.
SENATE BILL 544: Makes various changes to provisions governing practice of pharmacy. (BDR 40-400)
Louis Ling, General Counsel, State Board of Pharmacy, presented two documents: the first titled, “Points of Support of S.B. 544” (Exhibit P); the second titled, “Amendment to S.B. 544” (Exhibit Q). He stated the amendment to S.B. 544 (Exhibit Q) is in addition to the proposed Amendment Number 197 (Exhibit R), which was proposed by the Senate Committee on Commerce and Labor. He stated the other amendment they would like to offer is based on the committee’s concern the $10,000 fine might be too high, and a proposed tiered structure for fines is outlined in the amendment (Exhibit Q). He explained the amendment proposes a two-tiered structure, a $5000 maximum fine for cases involving prescriptions or patient care, which comes to the board through consumer complaints, and a $10,000 cap for any other cases such as business practices, record keeping, and controlled substances violations, which are nonconsumer-related complaints.
Mr. Ling explained the other handout (Exhibit P), shows the relationship to fines levied by the Board of Pharmacy compared to other boards in Title 54 of NRS. He pointed out the highest fine cap is $15,000, there are 8 or 10 other boards with a $10,000 cap, and another 12 boards have a $5000 cap. He noted the proposed, tiered structure would fall squarely within the caps already set for most of the Title 54 of NRS boards. He exclaimed the State pharmacy board is at the very low end of the range now with a $1000 cap. He suggested what they are asking for appears reasonable in relation to what the legislature has already granted to the other Title 54 of NRS boards. He stated State Board of Pharmacy had tried to speak with representatives of the Retail Association of Nevada and had provided them a copy of these amendments last Thursday. He added the State Board of Pharmacy had asked the retail association to provide themwithacopyoftheiramendments bylast Fridaybut neverreceivedthem.
Mr. Ling stated he was just presented with a copy of the Retail Association’s amendment (Exhibit S), so he has not had an opportunity to read it.
Chairman Townsend asked Mr. Ling how the State Board of Pharmacy came up with the concept, “$5000 for each count of an accusation,” commenting, “This is terrible language.” Mr. Ling replied this is statutory terminology and the statute refers to “accusations” and so they have to use the term.
Chairman Townsend asked why a consumer complaint is $5000 and nonconsumer complaint $10,000. He asked Mr. Ling to explain the difference.
Mr. Ling explained the concern raised by Senator O'Connell at the previous work session was the $10,000 fine seemed to be too high for misfill errors, where the pharmacy has made an error. He noted the pharmacy and the pharmacist would be disciplined. He pointed out these mistakes comprise the majority of the cases with the State Board of Pharmacy. He stated he understood Senator O'Connell was concerned about $10,000 being too high a fine for these misfill errors, so they had put them in the lower level of the tier at a $5000 fine. He stated Senator O'Connell had also expressed, for the business and record keeping cases, $10,000 might not be enough to send a message to people who are misusing their licenses. But, he stated the State Board of Pharmacy had determined, by reviewing other Title 54 of NRS boards, $10,000 would be in line.
Samuel P. McMullen, Retail Association of Nevada, stated the retail association did respond to the State Board of Pharmacy on Thursday, telling them they did not believe their amendment incorporated all the previous discussions. Mr. McMullen asked Mr. Ling if he had received an answer from them.
Mr. Ling stated they received an E-mail, but he believed it had not included the amendment they were just presented (Exhibit S).
Mr. McMullen stated the retail association believed, within the amendment presented by the State Board of Pharmacy (Exhibit Q), the $10,000 amount is too high, and the $5000-level fines are too broadly defined. He asked for consideration for the programs a pharmacy undertakes to actively try to comply with the laws. He suggested there may be a need for a third tier which would not exceed $1000, based on a good training program. Then, he said, the pharmacy, at least, would not always be fined the maximum amount. He stated he drafted the amendment (Exhibit S) where the highest fine would be for diversion of controlled substances or dangerous drugs. He said the fine should be no more than $2000 for an infraction which is only a technical violation in filling a prescription, which would involve the public safety, but is not a major violation. Mr. McMullen suggested, in the past, the maximum allowable fine amount was always used, and never reduced for variable circumstances. He commented the fact the board always fined the maximum amount may be due to the fact the maximum fine was only $1000. However, he stated, they fear the new higher fines will not be used on a discretionary basis, but regularly used at the maximum amount.
Mr. Ling commented on Mr. McMullen’s amendment. He noted the State Board of Pharmacy hears very few cases involving the diversion of controlled substances. He stated the major portion of their work involves consumer complaints: people who have not received the correct drug, received someone else’s drug, or similar complaints. He stated the State Board of Pharmacy amendment addressed the consumer complaints, which is what they handle most, and what he understands to be of the greatest concern to the committee. He stated a new document was just presented (Exhibit T) which has to do with the cigarette bill and is unacceptable to the State Board of Pharmacy. He expressed their bill has been available since May and it seems unfair to introduce these new changes without having an opportunity to review them.
Chairman Townsend asked what this has to do with cigarettes. Mr. McMullen explained the language they previously referred to is on page 2 of the document (Exhibit T), which has to do with compliance programs by retailers, and in this case, pharmacies. He directed the committee to look at section 5 of NRS 202.2493, which codifies the principles they believe relate to fining by the State Board of Pharmacy. He stated, based on this language the fines should not be as high if: the pharmacy had no knowledge of the sale; the pharmacy has carried out all the programs to train their employees based on the State Board of Pharmacy’s guidelines; and the pharmacy has an active compliance program. He asserted there should be some credit for this and it has been their impression there has not been.
Chairman Townsend asked Mr. Ling what percentage of the complaints coming to the State Board of Pharmacy originates from consumers. Mr. Ling answered about 90 percent of the board’s actions have to do with consumer complaints. Chairman Townsend asked what the biggest portion of those involves. Mr. Ling answered the biggest portion is misfilled prescriptions that have caused harm. Chairman Townsend asked what is within their current authority to fine under those conditions. Mr. Ling answered $1000. He elucidated the board can fine $1000 per count in the accusation. He added, in most cases, there is only one count against a pharmacy and potentially multiple counts against the pharmacist or others who may have been involved.
Chairman Townsend asked if these mistakes could be serious problems. Keith W. Macdonald, Executive Secretary, State Board of Pharmacy, responded yes, there have been people who were killed by an error from a pharmacy mistake. He testified they recently mitigated damages in a case where the wrong strength of prescription blood thinner Coumadin caused inter-cranial bleeding and killed a woman. Mr. Macdonald said they do not feel $1000 fine is sufficient in such a case.
Mr. McMullen stated there are pharmacists who are disciplined, and every sale is counted as an accusation. He suggested there should be some credit given to the pharmacy for compliance programs and training programs undertaken by the pharmacy, and those programs should have some impact on fines. He asserted they are not saying these issues are not serious and public safety is not important. He stated they had originally proposed a three-tiered system, which included a capped fine taking into account a good-faith effort on the part of a pharmacy taking an assertive policy towards training.
Chairman Townsend asked Mr. McMullen how much is it worth for the woman who died from the Coumadin prescription. Mr. McMullen answered he thought they were talking about diversions being the highest level. He added there is clearly a need to raise the fine for public safety when things really go wrong. But, Mr. McMullen suggested, there should be a lower level for the less significant violations, such as technical and paperwork violations, which are not on the same scale. He said he thought there should be at least three different levels of fines, including a $1000 fine for a minimal infraction. He noted the reason he only listed two scales on his document (Exhibit S) was because he was under the impression the State Board of Pharmacy would not be willing to accept any good-faith smaller fee for lesser violations. He said he had hoped the board would more clearly define what the three levels would be, and they had only presented a two-level tier.
Senator O'Connell recalled Mr. Ling had mentioned 90 percent of the State Board of Pharmacy complaints were from misfiled prescriptions. She asked how many complaints it would be. Mr. Ling stated they prosecute about an average of 70 cases per year. He mentioned these numbers are rising as the population grows. He noted the highest year to date had about 90 cases.
Senator O'Connell asked what portion of the 90 percent of consumer complaints would be significant. Mr. Ling answered the number of cases where there are significant injuries averages only about three or four per year. He stated he has had two cases where the person died in the past 9 years. He said most of the harm is caused by strength errors. Those, he noted, have a low potential for harm as long as the patient did not take the prescription for very long. He stated the most dangerous cases involve where the person got the wrong drug or someone else’s prescription.
Mr. Ling pointed out the matrix on the last page of the chart (Exhibit P), shows how the board fines consumer complaints. He noted these complaints were received and investigated. He stated there is a set structure of actions for complaints up to a certain level of harm. Mr. Ling noted the fines are very low to start, for example: “ingested with no potential for harm,” if a prescription was the wrong strength and the consumer only took one tablet, discovered the error, and there is no real potential for harm, then the fine is lower. He continued, when the error has caused a patient discomfort, a negative outcome, or an institutional intervention such as an emergency room visit or hospitalization, the board would hold a hearing.
Mr. Ling said the reason for the hearing is to determine what happened, why, and who is responsible. He added the consumer is also afforded the opportunity to testify at these hearings. Mr. Ling commented the board has one of these hearings scheduled for next week concerning an 82-year-old man who was hospitalized for 5 days and nearly died due to a prescription error. He said the board will be giving his family the opportunity to make a presentation regarding how the error affected their lives. And, he asserted, after this process is completed, the most the board can fine the pharmacy at fault is $1000.
Senator O'Connell asked if the person who has been harmed receives any of the fine, or does the fine go into the General Fund. Mr. Ling answered all of the money goes to the General Fund. He added, the State Board of Pharmacy does not get the fine money either. Senator O'Connell commented this means the person who has been injured receives nothing unless the case is taken to court. Mr. Ling answered, “Correct.” He added they have no restitution powers. He opined he is not sure the board would want to have those powers. He said the board is not a court of law and is not able to try a personal injury case. He suggested the evidence the board receives is only to explain the circumstances and is not sufficient to try a personal injury case as in a civil court.
Mr. McMullen stated the matrix (Exhibit P) generally relates to the activities of the pharmacist. He added there is an overarching violation for the pharmacy. He asserted there should be some distinction for the pharmacy violation when there is a significant compliance program as compared to a pharmacy taking no preventative measures. He suggested there would be an advantage to a system where there are incentives for doing the right thing as opposed to penalties for doing the wrong things. He declared the previous testimony appears to support the proposed three levels of fines, which would add a lower level for minor violations. He added, he does not have the expertise to determine how those levels would be assigned. Mr. McMullen suggested a second level for where the pharmacy has no compliance program and to also include serious or potential injury. He continued there should be the greatest level of fines against diversion of controlled substances. Mr. McMullen concluded the association had hoped to discuss these ideas with the State Board of Pharmacy but were unable to negotiate.
Senator O'Connell stated some amount should go to the person who has been harmed. She commented the most severe penalty the board has is suspending or revoking a license. She opined a $10,000 fine might not be enough for some cases involving dangerous drugs.
Mr. McMullen suggested the occupational operating boards are not good places for taking testimony regarding injury. He stated they should be experts on what should have been done and how it should have been done correctly. He said they should oversee compliance, and ensure the procedures are professionally managed. He suggested the issue of restitution would involve a whole different type of expertise and would require medical experts and other issues the board is not equipped to handle.
Chairman Townsend said the committee had, for the first time, created a benefit penalty in worker’s compensation. He stated if they decided to create a restitution system for the State Board of Pharmacy, then they would take the appropriate testimony needed. He stated either a statute was violated or not. He continued, if you violated a statute relative to a prescription, it is medically determined what can happen. This, he added, is not what the error did do to you, but what the potential damage is under the pharmacy code. He stated, if there was a $10,000 fine, the injured party would get the money. He suggested the other reason for a $10,000 fine would be the diversion of controlled substances. Chairman Townsend stressed the penalty for diversion of a controlled substance should not be negotiable due to the severity of the issue. He continued, the paperwork errors should not be considered a cost of doing business, but the fines should not be too large either. He reiterated, a diversion of controlled substances and a party who has been given the wrong prescription, even if no harm occurred, are serious issues. The Chairman concluded, “If we cannot trust the person who fills our prescription, whom can we trust?”
Mr. McMullen stated he agrees with Chairman Townsend’s statement, but added they were looking for a lower end fine for minor violations. Chairman Townsend commented, now the large retail chains have bought out the smaller businesses, a $1000 fine does not affect them much. He suggested if a technical violation is only $1000, it becomes a cost of doing business, which, he added, is the point the board is making. He asked the committee if they would want to raise it.
Mr. McMullen stated the retail association would be willing to raise the fine for a minor violation to $2500. He noted a minor violation would not involve significant bodily harm or injury, but said they would need to consider what violations would fall in the category. He added they could have two more levels, or fines up to $10,000.
Chairman Townsend said he does not want to get into the area of prejudgment, with a trial and experts.
Mr. McMullen stated the association had suggested the suspension of the right of a certificate holder to practice not exceed 2 years, and the language be changed in paragraph (f) of subsection 1 of section 12, to $2500. He added he is also concerned about attorney’s fees. He stated the board currently charges attorney’s fees. He noted if the pharmacists think they will be responsible for the full fine amounts, they must consider whether they can defend themselves, because the process is costly. However, he added, they would not want to allow the board to award an attorney fee on a conviction, because it would be an incentive to penalize. He concluded those are the amendment changes in which there could be compromises.
Mr. Ling stated the original intent of the bill was to raise the fining authority from $1000 to $10,000, with no tiers. He suggested it might be the best solution, because other boards do not have tiered systems, only a maximum, and the boards determine the level of the fine. He commented the pharmacy board already has a variable scale in place for fining.
Chairman Townsend stated he would be in favor of raising the limit to $10,000, and would agree not to legislate a tiered structure, assuming there would be an understanding that this maximum would only be fined for diversion of controlled substances or if a person received the wrong drug. He warned other boards not following the suggested guidelines have been harshly dealt with.
Mr. Ling commented two of the three members of the State Board of Pharmacy’s disciplinary team are presently seated at the testimony table, and they had heard his statement. He added they will take this information to the board meeting next week.
Chairman Townsend stated he is only offering this to the committee. He stated the Legislature tries to trust the boards and give them flexibility, based on the technical nature of the issues presented.
Senator O'Connell stated her concern is she was told the State Board of Pharmacy normally fines everyone who comes in.
Mr. Ling stated most of the cases are fairly routine, where the pharmacist simply made a mechanical error, and they deserve a small fine. He commented it is unfortunate most of the discussion has focused on the fines. He said the main public service the board performs is to put a pharmacy on probation, requiring the pharmacy to write out its policies and procedures, to report back to the board, and have the pharmacy repair its computer systems, or add to its computer systems. He expressed these services are much more valuable to the public than the fines. He stated they need the larger fine, on occasion, if there is a grievous error. Mr. Ling pointed out in a case where a person dies, a $10,000 fine or a $1 million fine would not bring the person back, but the board’s mission is to try to ensure the error does not occur again. He said the board asked for the increase in the fines because they are fighting diverters and other things, and they needed to have flexibility. He added the board has expressed its frustration over the very low fine, for example, when they have to tell the family of someone who has died the most they can do is fine $1000.
Senator O'Connell asked if the board could take a pharmacy’s license. Mr. Ling stated the board is extremely cautious about affecting the license of a pharmacy. He stated the board does have the authority to revoke a license, but to do so would inconvenience thousands of patients. Mr. Ling said the board has rarely suspended pharmacy licenses because it creates difficulties for the patients. He stated the board suspended the license of one pharmacy clearly operating outside the public’s interest, after the pharmacy was brought before the board four times and the pharmacy was not fixing the problem, and it was dangerous. Mr. Ling said this was a small, privately run pharmacy with an operator who was not able to manage the business. He suggested if they closed down one of the big chain pharmacies, they would create a huge problem. Mr. Ling stated they like to work with the businesses, and added they have a good relationship with the larger chain stores, and instead of fining them they prefer the business fix the problem.
Mr. McMullen suggested the reason the board always levied the maximum fee was probably because the maximum was only $1000 and this is not likely to be the case with the higher maximum of $10,000. He asked the committee to regulate the levels of violations, “so everyone knows what to expect.”
Mr. Macdonald stated the committee had asked the pharmacy
board to provide a history of fines and violations. He said he promises, if the bill passes, to keep
records of fines and violations over the following year and provide them to the
committee. He offered, this information
would help the committee determine if the board fines fairly or not.
Chairman Townsend read from Nevada State Board of Pharmacy proposed amendment document (Exhibit P): “In all death cases resulting from inappropriate drug therapy a board hearing will occur.” He asked Mr. Macdonald to explain this. Chairman Townsend stated this seems minor in a case where someone has died. He asked why the board would not, at the minimum, suspend or revoke the license for a period. He said it sounded as though the board was more concerned with inconveniencing the public who will have to get their prescriptions filled elsewhere than with the person who has died.
Mr. McMullen stated there would be fines imposed on the pharmacist and on the pharmacy, and in an egregious situation, the fines should be higher. He added what they are more concerned with is what the ranges will be for different types of violations.
Chairman Townsend suggested the parties get together and come to a compromise, and present it to the committee. Chairman Townsend reopened the hearing on S.B. 154.
Donna Sweger, Supervising Attorney, Nevada Attorney for Injured Workers, returned to testify. She stated it is hard to even estimate what the cost change could be if it becomes mandatory for the Nevada Attorney for Injured Workers to represent every client to the Nevada Supreme Court. She commented everyone would choose to exercise the right to go to the Nevada Supreme Court, even if the case has no merit. Chairman Townsend asked if the committee removed the provision from S.B. 154, would the bill become more workable.
Ms. Sweger answered, then they would have to allow injured workers the option to choose private attorneys to represent them. Ms. Sweger added the client might not want to be represented by the Nevada Attorney for Injured Workers (NAIW), because the client and attorney do not agree with the way the case is handled Also, she stated, there would be a legal conflict if the Nevada Attorney for Injured Workers could not represent an injured worker from the NAIW office, due to a conflict of interest, but would be required to represent them under this law. She noted there would also be a constitutional problem if the NAIW attorney could not represent an injured worker and the person was not allowed to retain a private attorney. Ms. Sweger stated, currently they mainly represent clients at the appeals office level, and it is at their discretion whether they take the case to district court or the supreme court, and occasionally, to the hearings office level. She said an appeals office-level case takes an average of 15 hours, and it takes 50-75 hours for a supreme court-level case, which they do not often do. She stated if they had to represent all clientswhowanttogotothesupremecourt,theirbudgetwouldhavetobe
increased an estimated ten times. She noted the office’s current budget is approximately $2.3 million; ten times would be $23 million, so the increase would be substantial.
Senator Schneider commented Ms. Sweger had referenced $23 million and asked if her state office could represent people for less money than private attorneys. Ms. Sweger answered she has not compared those figures. She stated if every client had to be represented by her office, and could not hire a private attorney, every client, or a large majority of the clients who lost at the appeals office level would want to take his case to the supreme court. She stated the man-hours involved in preparing district and supreme court briefs would require a huge increase in staff. Ms. Sweger restated, now they basically only represent at the appeals office level, and in some cases, in district court.
Senator Schneider suggested NAIW does not want to do this because of the money. He said he wants to take the $23 million the private industry is getting for representing people and put it in the injured worker’s pocket. He added businesses have told him they would pay for this. Ms. Sweger responded they are not saying they cannot do this, but added it would be a huge increase in cost. She said by eliminating private counsel, it would mean they would have to represent at every level in order to guarantee a person the right to representation. She pointed out there are not a lot of private attorneys who will take a case all the way to the supreme court either.
Mr. Ostrovsky stated his understanding is the 2000/2001 budget for the Nevada Attorneys for Injured Workers is $1,773,083. He noted in earlier testimony it was stated this is 40 percent of injured worker representation. He said if he multiplies the budget by two and one-half, he gets $4.5 million, which means a $2.7 million increase, and is only a 10 percent increase over the current Division of Industrial Relations (DIR) assessment, if they round off the numbers. He noted those are the kinds of increased costs he had testified he would be willing to support. He stated he does not believe every case goes to the supreme court. He said they could amend the bill to say there would be mandatory representation until the injured workers’ attorneys, using their reasonable judgment, determine the case no longer has merit. He said at that point, the bill could say a person could hire a private attorney. He noted private attorneys also sometimes say no to cases.
Ms. Gruenewald elucidated what Ms. Sweger has been saying: the amendment states Nevada Attorney for Injured Workers shall represent all claimants, which means it is mandatory they take the case to the supreme court if the claimant requests it. She stated the way the system is set up now, the NAIW can choose whether to take the case up, because there are private attorneys available; and if NAIW decides not to go to the supreme court, the claimant can choose to negotiate with a private attorney. She asserted in this amendment and bill, they are taking away from the claimant the right to choose. She remarked, in 1995 this Legislature took away the right for the claimant to choose his or her own doctor. She declared now they are asking to take away the right for a claimant to choose his or her attorney. She noted there are no claimants testifying there is a problem with private attorneys. She emphasized this is public policy they are contemplating, and this public policy has not been proposed by the injured worker; it has been proposed by the insurer. She stated if you take away the claimants’ right to choose their attorney, this might be unconstitutional.
Senator Schneider stated he had E-mailed the legal department and Brenda Erdoes (Legislative Counsel, Legal Division, Legislative Counsel Bureau) had said she could probably adjust the bill so it is constitutional. He added the bill was not drafted at the suggestion of insurers, but was drafted at his own request. He stated he is trying to get more money for the injured workers.
Ms. Gruenewald stated the United States Constitution gives us the right to contract, and you would be taking the claimant’s right to contract with a private attorney.
SENATOR SCHNEIDER MOVED TO AMEND AND DO PASS S.B. 154 WITH PROPOSED AMENDMENT NO. 58 (EXHIBIT I).
SENATOR O’CONNELL SECONDED THE MOTION.
Chairman Townsend commented there had been a lengthy debate regarding eliminating the injured workers attorney in order to get more money out of the system and let the private sector decide whether there was a claim worth pursuing. He said the committee had not passed that bill. Ms. Sweger added she was happy to hear the insurers are satisfied with their representation. She stated she would never say they are not willing to do this, but only wanted to point out the problems and say the costs would increase dramatically.
Senator Rhoads asked if there is a fiscal note. Senator Schneider answered Mr. Ostrovsky had indicated what he thought it would cost, adding the business community had said they would like to fund this. Senator Schneider opined this is a huge step for injured workers.
Chairman Townsend asked Mr. Ostrovsky to repeat his earlier testimony regarding the fiscal impact of the bill. Mr. Ostrovsky stated the current budget is about $1.8 million, which he got from the executive budget. He stated, NAIW had testified earlier they represent about 40 percent of the claimants. He said he estimated a new budget allocation of $4.5 million, which is a $2.7 increase over current budgets. He stated the total DIR assessment against insurers is about $27 million, which includes the Nevada Attorney for Injured Workers. He stated to garner an additional $2.7 million from the DIR assessment would be about a 10 percent increase in fees.
Mr. Jeffrey stated the Nevada Attorney for Injured Workers does not represent claimants until they reach the appeals level. He stated there are unions who represent their members at the hearings level. He noted when they say NAIW represents 40 percent, they mean 40 percent of those who appeal. He added they rarely represent at the hearings level. This bill, he stated, would require NAIW to represent every injured worker claim at the hearings level and also take the cases to the supreme court. He suggested there is no way to even estimate the increase in costs. He stated he believes there would be considerably more than a 10 percent increase in the assessment.
Senator O'Connell stated Mr. Ostrovsky had said the business community was in support of the bill, and asked him if the Chambers of Commence had also made a commitment regarding this bill.
Mr. Ostrovsky stated he does not know if the chambers would be in favor of the bill and suggested there may be others who would like to come to the table. He stated he had calculated the increased costs of caseload growth in the Nevada Attorney for Injured Workers’ office, based on if they go from the 40 percent they currently represent to 100 percent. He added if there are additional duties, there would be additional costs.
Mr. Thompson testified almost all of the 120 different organizations represented by the AFL-CIO have someone who goes with the employee to the hearings level. He stated, for the state to undertake this would substantially increase its costs and would be extremely difficult to calculate. He added, representatives from organizations also help the claimant through all of the other preliminary meetings involving the case. He stated the bill would require the Nevada Attorney for Injured Workers to not only represent an injured worker at the hearing level, but it would also require them to represent the claimants in any negotiations, settlements hearings, or other meetings relating to their cases. This bill, he stated, would require the NAIW to meet with the claimants throughout the whole process, from the very beginning. He concluded, this would require a substantial amount of time and resources.
Ms. Gruenewald stated half of her practice is at the hearings level and half at the appeals level. She said Mr. Ostrovsky had only calculated figures concerning the appeals level, because it is the only level the NAIW currently represents. She stated, you would have to double those figures to include the hearings level, double them again to include district court, and double them again to include the supreme court.
Chairman Townsend commented Senator Schneider’s intent to get more money to the claimants should be applauded, but the way this can be accomplished is still in question. He suggested Mr. Ostrovsky had possibly underestimated the extent of the costs.
Donald Jayne, Lobbyist, Nevada Self-Insured Association (NSIA) No. 200, testified when Mr. Ostrovsky represents the Nevada Resort Association, he represents the majority of the Nevada Self-Insured Association members. Mr. Jayne said though he does not have a formal poll of the members, whatever public policy is passed would be paid for in assessments by their group.
Mr. Ostrovsky reminded the committee they have attempted to solve this problem in the past by funding the Nevada Attorney for Injured Workers’ office, as a way of providing a free service so the worker can get more of the settlement money. He interjected he believes an attorney who provides legitimate representation does deserve to be compensated. He noted there are many other ways to handle representation, and perhaps they may need to revisit the issue of how they may best represent injured workers to make sure they are fairly represented and get the most money. He concluded there are various ways of compensating people who represent these individuals; this is not the only way.
Senator Carlton expressed she is very much in favor of the claimants getting the most money possible, but said she does not believe taking their right to choice of counsel away is an option. She stated she cannot support this measure on those grounds.
THE MOTION FAILED. (SENATOR TOWNSEND, SENATOR O’CONNELL, SENATOR AMODEI, AND SENATOR CARLTON VOTED NO.) (SENATOR SHAFFER WAS ABSENT FOR THE VOTE.)
*****
Chairman Townsend opened the hearing on S.B. 372.
SENATE BILL 372: Revises provisions governing portfolio standards for renewable energy resources and imposition of civil penalties by public utilities commission of Nevada. (BDR 58-287)
Jon B. Wellinghoff, Lobbyist, Green Energy Business Council of Nevada, Sierra Concepts Incorporated, and Vulcan Power, stated:
This amendment was one we just drafted to take care of the language you were concerned with, Senator, at the work session last Thursday, regarding the penalty. And we had Sheri [Sheri Asay, Committee Manager, Senate Committee on Commerce and Labor] type that up and it will be a proposed addition [Exhibit U].
Scott Young, Committee Policy Analyst:
If, I might also explain, we do have in the packet Amendment No. 224 [Exhibit V] which was prepared after one of our initial hearings, and there were some changes made, or suggested, in the last hearing. On the committee’s version, I handwrote those in. We were not able to get an electronic version of this. However, those changes do not reflect on the public’s copy. The public’s copy, however, does contain those changes on the title page for S.B. 372. The document just passed out to you [and] I believe Mr. Wellinghoff was referring to [Exhibit U], would amend subsection 7 of Amendment No. 224, also [includes] some language presented last time and there just wasn’t space to handwrite it on your copy of Amendment No. 224.
Chairman Townsend stated:
What we are going to do, so we’re not jumping all around, we’re going to take the Amendment No. 224 in your packet [Exhibit V] and we’ll use it as our frame of reference. . . . Okay, on the first page it says, “Delete and use Mr. Ashleman’s language.” Is that correct? Is that what you’re saying, Mr. Young?
Mr. Young answered, “Yes.”
Chairman Townsend asked, “And Mr. Ashleman’s language is where?”
Mr. Young answered:
It is behind the yellow sheet. You’ll see a yellow sheet that has language from Mr. Lynn [Ronald L. Lynn, Lobbyist, Clark County, and Nevada Organization of Building Officials] [Exhibit W]; and then behind it there is a proposed amendment from Sierra Pacific [Resources] [Exhibit X]; behind it another yellow sheet, and then Mr. Ashleman’s language [Exhibit Y]; and, although I’m jumping ahead a bit, just behind Mr. Ashleman’s language, there was a revision to Mr. Ashleman’s language Mr. Lynn submitted [Exhibit W], immediately behind the document from Mr. Ashleman [Exhibit Y], that has the handwritten “4-12-01” in the upper left‑hand corner.
Chairman Townsend said:
I’m trying to use [Amendment No.] 224 as a frame of reference . . . Mr. Ashleman’s language . . . is the one saying, “local Governments in Counties over 100,000 shall revise building and energy codes so new residential and commercial construction achieves at least an average reduction in energy consumption of 10 percent compared to those adopted by July 1, 2002 [Exhibit Y].
Mr. Young replied, “Correct, this is what is being proposed to put into section 1 of Amendment No. 224.”
Chairman Townsend clarified, “So we take all of section 1 out and we use . . . [Mr. Ashleman’s language (Exhibit Y)].”
Mr. Young replied, “Correct.”
Chairman Townsend continued:
Then we go to section 2, where it says, “The program.” Instead of saying, “must provide the customers of the utility with an option of paying a higher rate,” change this to “may provide”. Okay, it is already in the amendment.
Mr. Young responded, “Correct.”
Chairman Townsend continued:
Then we go over to page 3 of the amendment and it says, “The portfolio standard must set aside no less than [(a)] Five percent,” add “per year” [to] “. . . of the total amount of electricity annually consumed by customer of an electric utility or alternative seller in this state.” Then it goes down and breaks it out according to the years. Then it goes over to page 4, which continues with the breakout per year of the phase-in. Section 3 says “The . . . portfolio standard must provide . . . electric [power] . . . procured from a renewable system . . . or alternative seller pursuant . . . contract with a third party, the term of the contract may not be less than 10 years,” [adding] “if the third party so chooses.” Okay, and then over on page 5, we have sub [subsection] 6 bracketed and it says, “replace,” and then, I believe, Mr. Wellinghoff, [in] this sub [subsection] 7, it says, “The commission shall determine a mechanism.” So, you take all the fines [wordage] out and replace it with this language [Exhibit U]: “such mechanism may include but is not limited to assessing a per kilowatt hour fee for each kilowatt hour from renewable energy system not sold by the electric utility or alternative seller as required by the portfolio standard of the particular year if the commission makes a finding that sufficient energy from renewable is not available to the utility or the alternative seller in a particular year, then no penalties should be assessed for that deficiency.” This is the language you want to replace in sub [subsection] 7. Correct?
Mr. Wellinghoff replied:
Correct, Senator. And the last sentence was added to take care of the concerns of a number of the senators regarding insuring that if they just couldn’t find the renewables, that there wouldn’t be a penalty.
Chairman Townsend asked, “Ms. Stokey, is this [Exhibit X]from both companies? Is this the one?
Judy L. Stokey, Lobbyist, Sierra Pacific Power Company, and Nevada Power Company, replied, “Yes, we supplied Mr. Young with a marked up amendment, but that [document], we handed out today [Exhibit X], is basically a summary.”
Chairman Townsend stated:
The amendment behind the second yellow sheet [Exhibit X] proposes to change all of that. So, in the first portion, section 1, which we’re taking out, but it is irrelevant, because your point here is anyone who serves an electric customer should be bound by these standards. Is that your point? Okay, then it says, “new penalties are no longer a deterrent, they would far exceed reasonable levels.” So, I think the language [in] section 1 has been removed and the proposal is to use this [Exhibit U]: “The commission shall determine an enforcement,” and if there’s not renewable available, you can’t be found in violation. Then, over here it says, “directs the Public Utilities Commission [of Nevada] to establish building construction codes [Exhibit X]. There may be a more important state agency. We’ve solved that, we believe, by the language provided by Mr. Lynn, out of southern Nevada [Exhibit W]. Are you familiar with it? Do you have a copy? In other words, we keep the state out of building codes. We put it at the local level. Mr. Lynn worked with all the building departments, including the rural folks, and provided the extra language. . . . Okay, we’ve taken that section out. So, we’re over on section 3, “The commission shall establish a portfolio for domestic energy . . . sold . . . if self generated.” I thought we took that out. Isn’t it out in the proposed version here under [Amendment] 224? . . . And perhaps, Ms. Stokey, you can point me in the right direction. It says “section 3” on your amendment, and it says “standard for domestic energy that sets forth the minimum percentage of the total electricity sold, self-generated or self‑procured,” must be derived from renewable. What section is it in the amendment? Or, is it just in the bill?
Ms. Stokey replied, “I believe it is in the bill, Senator.”
Chairman Townsend stated, “Okay, I see. Okay, is this current language? And you’re proposing to change current language to include domestic.”
Duane Nelson, Director, Transmission Business Development, Sierra Pacific Resources, elucidated:
I underlined “domestic” to point out the word is already in current statute and it has raised some confusion about what it means. . . . Somebody even suggested it might even mean residential energy only. So, the explanation on the right is to offer this is something that may need to be addressed. It’s not a lot of heartburn on our part.
Chairman Townsend stated:
No, but I think the point is well taken. That’s already in the law. It says, “The Commission shall establish a portfolio standard for domestic’ energy.” Do we all know what it means, even though it has been in the law a while?
Mr. Wellinghoff stated:
We went through pretty extensive regulations with the commission and this particular word was not questioned for interpretation. I don’t have any problem taking it out. I don’t think it matters, one way or the other, leave it in, take it out; it’s all the same. It means, you know, all the energy sold in the state, that’s what it means.
Chairman Townsend restated, “When they’re talking domestic, you’re meaning internal to the state of Nevada. Foreign would be outside the state?”
Mr. Wellinghoff answered, “Correct.”
Chairman Townsend stated:
And then you go on down to your proposal, saying it applied to each utility, whoever provides it. Then it continues to clarify each utility, no matter who it is, would be meeting those [portfolio standards].
Chairman Townsend continued:
Okay, I’m unclear. Your next thing, where it says, “The company believes that a 5 percent portfolio is too aggressive . . . lead to unnecessary high costs for consumers. A requirement that avoids creating an artificial shortage . . . for renewables and consequently allows bid to compete against the energy market should be adopted.” I’m not clear on the goal you’re trying to establish here.
Mr. Wellinghoff replied:
The requirement drafted right now, starting with 5 percent, and growing to 15 percent, would yield an artificial shortage for renewables in the state of Nevada. That artificial shortage will lead to market power on the part of the renewables, and [they could] demand any price they want. This can be addressed in a number of ways, but [we] wanted to bring it to your attention this is going to cost the consumers [a] significant amount of money if we’re required to go out and seek 5 percent of our resources, our energy, with renewables, and take any bids. It’s going to be high. The numbers are, in the first year, we’re looking at about 430 megawatts of renewables. To compare it to numbers: Sierra [Pacific Power Company] has a record for the percentage of energy they buy. It’s one of the top in nation, if not the top. And we only have about 100 megawatts. So we’d have to increase that by 400 percent.
Chairman Townsend said:
Okay, well, let me ask you this: I don’t necessarily disagree with your numbers. What I’m concerned about is this concept of an artificial shortage. You’re buying 50 percent of your power on the open market now, and there isn’t enough. There’s a shortage in the marketplace now. Why do you think this would be artificial?
Mr. Wellinghoff answered:
The shortage we’re contemplating will be dealt with over the next few years. This renewable requirement will not be dealt with. If we maintain the 5 percent, and grow it, as is contemplated in the bill, to 15 percent, will not be out of the shortage for a long time,because it will be near impossible to meet it, unless something magical happens.
Chairman Townsend stated, “I think there’s a caveat in this proposal, there wouldn’t be any penalty if it wasn’t available.”
Mr. Wellinghoff replied:
That addresses a concern of the companies. I’m trying to address a concern of the customers. . . . If you insulate us from all fines and you insulate us from all [losses], we can pass through all costs, we might say, “Hey, we’re fine with it.” But, we also want to represent the customer’s interest and this will drive significant increases to the customer. We have actually talked with some people about the costs, and they’re looking pretty high. Some testimony you’ve received here doesn’t give us enough information to price it all out, but . . . it was quoted that on-peak [it] would be competitive. We don’t know it would be off-peak. It might be quite high, off-peak. And we might be forced into paying a lot more for that energy than we can get, off-peak, for instance, and that’s much of the year in southern Nevada. Peak is only over a few months. Yes, it’s very expensive during those few months, but if we have to buy capacity the rest of the year to fund these projects, it could be very expensive.
Chairman Townsend asked, “Where are you now, relative to this standard? What percent of your . . . total load is renewable?”
Mr. Wellinghoff answered,
In northern Nevada . . . we have about 9 percent of our portfolio in renewable, with the existing geothermals, primarily. In southern Nevada, it’s negligible. Again, we talked about solar last week. If you take the solar issue out of it altogether, leaving the solar in is impossible to me, [if you] take the solar out, it’s still impossible, because we have such high numbers with this 5 percent starting out. Again . . . 430 megawatts the first year, starting with basically nothing.
Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection (Consumer’s Advocate), Office of the Attorney General, stated:
I would just like to address the cost issue. We believe the standards in the bill are appropriate. And I would note for the southern Nevada service territory, Nevada Power [Company] service territory, the initial law was passed in 1997 and there have been no efforts made that are tangibly visible by the company to meet those standards. I think if there had been a forthright effort to attempt to grow the portfolio of renewables between ‘97 [1997] and 2001, the state would be in a much better position now. I think we’ve heard adequate testimony this, acting as an incentive to develop cost-effective and reliable, renewable resources, is in the state’s best interest. And I just will let others who are more directly involved with the companies address the cost issues. But, we believe the standards are appropriate. We don’t believe it will disadvantage consumers on the basis of price.
Scott M. Craigie, Lobbyist, Sterling Energy Systems, testified:
Again, the issue here is the portfolio standard itself. [It] is what is going to drive the financing that is going to bring in, on the solar side with the technology we represent, this particular source at a level where it will get into the market price, 12 cents on-peak. And it is precisely why this standard needs to be here. Now, we are realistic, and we wanted to accommodate the needs of this panel, and frankly, the whole system, in case this system, this portfolio standard, doesn’t deliver enough capacity. And that’s why the second half of the amendment Mr. Wellinghoff has offered is in there, so that the PUC [Public Utilities Commission of Nevada] can take a look, and determine whether or not there is adequate capacity available, and if it’s not, walk away from it.
Chairman Townsend said:
There’s Mr.
Dimmick, Mr. Wellinghoff, Mr. Page, Mr. Craigie, and Mr. Hay, all of whom have
either been staff OCA [Office of Consumer Advocate] or commissioner at some
level.
So let me ask this: Under
the deferred energy amendment the Senate adopted on Friday, and will presumably
be passed out of this house on Tuesday, under this proposal, and I think this
gentleman’s [Mr. Nelson’s] concern was, How do we pass that on? That’s a purchase power contract, and would
then go in front of the PUC [PUCN] under the deferred energy account. There
is no different
standard for a purchase power agreement for a renewable source or a
nonrenewable source, unless I’m reading something into this, or not picking up
something.
Mr. Hay answered, “That’s correct, sir.”
Chairman Townsend, asked, “Is this the way you see it, Mr. Dimmick; since you’re the guy [who] has to rule on this stuff?”
Mr. Neill Dimmick, Director of Regulatory Operations, Public Utilities Commission of Nevada, responded:
I think there’s a mixture of several issues we’re talking about. One is if the contract will have to pass the test. But then we come to the second threshold, if the contract is necessary to meet a mandated renewable standard, then you have the issue as to whether or not . . . you can reject the contract because of the price. If the company is asked to go out and find the renewables to meet the standard; the renewable is offered, it’s offered at a price, [a] contract is written, then we are now locked in that price, which because, if there is a market shortage for a period of time, an extra cost could be extracted and will be passed on to the rate payers through deferred accounting. So, the issue becomes some kind of test of reasonableness of a contract, and it’s going to come into conflict with a standard requiring they procure this type of renewable.
Chairman Townsend stated:
Let’s flip it around and say it’s not part of the DEAA [deferred energy accounting adjustment] and there is some forward mechanism allowing the commissioner to review it so the company would not be put in harm’s way, but there would be some reasonableness as predetermined. In other words, if it’s 40 percent more, obviously it would be unreasonable. But if it’s [deemed to be] within an acceptable range by the commission, there could be an acceptable level. I mean a level of acceptance, which would then be put in deferred energy when they sign a contract. So they wouldn’t be guessing in the dark, at the same time putting too much of a burden on the consumer, because it’s part of a blended rate. You’re only talking [about] 5 percent. It’s not as if we’re going to up the cost of energy even more. My concern is when the next blip comes on the energy screen, how much of this can we control? And it’s why I believe somehow our local control becomes important, particularly in our rural Nevada setting where they’re actually making money using wind out on some of the farms. Do you get a sense of, if there was some predetermined or preauthorized contract before, they would incur a contract and then go in and have to fight for it?
Mr. Dimmick replied:
I would think if the commission were given the flexibility to establish rules or guidelines for such contracts, either through establishing [a] tariff mechanism, or [by] establishing some kind of posted level comparing things, for example, in California, [in] many QF [qualifying facilities’] contracts, their price is pegged to a natural gas price. So there are ways to make comparisons, and say no more than X percent more than a natural gas-related type of pricing mechanism . . . [There] could be something established which would give the company something to shoot against, and then would not hold them to [a] standard of having to pay exorbitant prices and then pass them on to customers. So some reasonable limit on pricing, but obviously, at least initially there might be, it would have to be more, maybe, than the marginal price of energy for natural gas. But there are vehicles that can be done, but I would suspect the commission would need authority to do it through regulation.
Mr. Wellinghoff stated:
I think we’re getting a little bit away from what I think was the intent of the bill, and what I think will be the ultimate implementation of the bill, based upon the testimony this committee has had so far. And I think you make a good point. Number one: this is such a small percentage of the total, even if incrementally the rates under this portion, [are] somewhat incrementally higher than the rates in the general portfolio [of] the utility, it’s not going to make a substantial difference overall. Number two: I think you had testimony a number of the technologies are competitive. And number three: you’ll have a number of technologies competing against each other. So I think, to put any cap on this would be in many ways self-defeating. And I think, perhaps, my colleagues from Sierra [Sierra Pacific Resources] don’t completely understand the bill, because it’s not based upon peak load; it’s based upon energy. And as such, I can’t come up with 430 megawatts at 5 percent initially, because . . . you’d have to have over 7000 average megawatts in this state and you don’t. So, I’m not sure where we’re getting the 430 megawatts at 5 percent. I think it’s substantially lower. And so when you’re looking at that as the first increment, I don’t see it as; number one, increasing consumer prices substantially, if at all; and number two, given the competition you’ll have in the number of renewables between biomass, geothermal, solar, and wind, that competition will, in fact, act as an item to keep prices down. I just don’t see price caps serving us here or serving us in the gas area either. Nevada Power, last summer, paid 26 cents a kilowatt-hour for energy for natural gas. You’ll never see those prices from any of these renewables.
Chairman Townsend said:
Let me get back to you, sir [Mr. Nelson]. Your objection is: number one, you don’t want to be stuck, I guess, with any, shall we say, stranded costs, if this is not passed through, if it’s mandated. Is that a fair assumption?
Mr. Nelson answered:
That is a fair assumption. But given the discussion on A.B. 369, I am assuming it isn’t the issue at hand. I’m assuming if we bring a contract forward and it’s signed or approved by the commission, that that will be passed on to the customer. So I’m now focusing on the concerns for the customer, and stand by my previous comments.
Chairman Townsend stated:
Because, based on what we gave you in 369 [A.B. 369], I would hope you don’t have any more concerns. . . . All right committee, on the proposed amendment, it would read as follows, you would remove section 1, which takes out the standards for building and you would replace it with . . . Mr. Ashleman’s language [Exhibit Y], amended by Mr. Lynn [Exhibit W], saying, “local governments in counties over 100,000 shall revise [their] building and energy codes . . . residential and commercial . . . achieves . . . an average energy reduction . . . of 10 percent.”
Renny Ashleman, Lobbyist, Southern Nevada Home Builders Association testified:
The amendment Mr. Lynn furnished to the committee [Exhibit W], after my remarks [Exhibit Y], is the one we are currently recommending to the committee. It follows immediately in your package. . . . We corrected the word, “sufficient,” twice to “efficient.” With that correction, we are in agreement with Mr. Lynn’s amendment.
Chairman Townsend responded:
Okay then, let me rephrase. We would replace section 1 and say: “All counties and their incorporated cities whose population is 100,000 or more shall adopt model construction and energy codes that regulate the design of energy sufficient buildings and installation of energy sufficient mechanical, lighting and power systems for all new construction.” And that is the one you and Mr. Lynn are now in agreement on.
Mr. Ashleman responded, “Yes, but we must change the word ‘sufficient’ to ‘efficient.’”
Chairman Townsend replied, “Yes, on energy-efficient buildings and energy‑efficient mechanical.”
Senator O'Connell asked:
Renny [Mr. Ashleman], when you all were looking at the building on this, because we still don’t have other than pretty much people’s guesstimates [on] the cost on this, do you know how much it will increase the cost of a home?
Mr. Ashleman responded:
The initial increase of the cost of a home will run about $300 to $400 per home on this. And that’s to attain the 10 percent average we were talking about, by sometime next year. The ultimate cost, because these codes are being evolved and worked on, and we know where some of the ones going to be adopted down the line will be quite substantially higher, [and] because we’re talking about going down several years, we don’t know. But we’re talking $2000 to $5000 potential from these codes over the next, let’s say, 7 to 10 years, Senator. Which is a considerable hit, but given the cost of energy, might be something the consumer would find to be a decent trade-off. . . . They’re still evolving, because, of course, the builders and the people who have the ideas [of] how to improve these things try to make them cost-effective.
Chairman Townsend stated:
Okay, so we take out section 1 and replace it with Mr. Lynn and Mr. Ashleman’s proposal [Exhibit Y]. Then we go to page 3, [of Exhibit V], which has the 5 percent per year and then the escalating systems there. Then we go to page 4, which puts in, “if the third party so chooses” on 10 years. Then we go to page 5 and we place into sub [subsection] 7 the proposed amendment [Exhibit U], which has the commission determining a mechanism for enforcement, and with . . . if there is nothing available, they should be not assessed for the deficiency. . . . I guess this would be the way it would look after all of the pasting.
Mr. Wellinghoff asked, “Did we want to talk about the in-state issue? Chairman Townsend answered, “Yes.”
Mr. Wellinghoff stated:
We’ve had some discussions with Brenda Erdoes [Legislative Counsel, Legislative Counsel Bureau] with respect to the removal in the amendment of “in-state,” and wondering where it came from. Apparently, it did come from the Legislative Counsel Bureau, which indicates they had some concerns it would be unconstitutional, and [they] pointed out to me this morning a U.S. Supreme Court case, apparently, where the state of Oklahoma attempted to ensure 5 percent of the coal burned in their coal fired power plants came from Oklahoma, and the U.S. Supreme Court apparently struck it down.
In discussing it with Ms. Erdoes, I have proposed an amendment that would, I think, take care of the problem, would still limit the amount of in-state renewables utilized for satisfying the portfolio standard on the one hand; on the other hand, it also will take care of a number of the concerns of Sierra [Sierra Pacific Resources] and perhaps others, with respect to the price, because it will provide for more competition from renewables as well.
I would propose . . . to look at the bill itself. Let’s look at page 4 of the bill, and I can walk you through a very simple amendment. On page four of the bill [S.B. 372], subsection 4 of section 3, line 18. At line 18, after the words, “January 1, 1997,” simply add the words, “from a dedicated transmission or distribution line,” period. And apparently it is acceptable to Ms. Erdoes. It’s acceptable to me . . . .
Actually there would be . . . two other changes. You still would keep the amendments in 224 [Amendment No. 224], take out the words “in state,” as well. I want to make that clear. The amendments in 224 deleting the words, “in this state,” will still be part of the amendments, but you would also add the phrase, “from a dedicated transmission or distribution line,” period, at the end of line 18. And it will allow for out-of-state renewable resources to be provided into the state for meeting the portfolio standard, but will require them to be, in essence, on a dedicated line. And, in fact, there’s some precedent for this, from Nevada to California for geothermal systems in Dixie Valley, they are currently providing power to the Bishop area in California on a dedicated line, and had to do so to qualify, I think to be [a] QF facility in the state of California.
Mr. Craigie stated, “And just for the record, Mr. Chairman, Sterling Energy has signed off on that proposal, as well.”
Mr. Nelson stated, “This change, essentially, first adds confusion to the issue, but essentially leaves the requirement at . . .“
Chairman Townsend interrupted, “Which change?”
Mr. Nelson answered:
The change Mr. Wellinghoff just proposed we add, “from a dedicated transmission or distribution line.” What it would do, it seems on the surface having seen this for the first time right here, we wouldn’t be able to import renewable energy from another state if the . . . transmission line was used for another purpose. And so, therefore, it would have to be a dedicated line, [a] new transmission line, to another state, if we’re going to get the renewable from outside the state or it will have to be within the state. So in effect, it requires the . . . new renewables be from within the state. It’s the same end result. I can’t see another way around it, looking at it very quickly. I’d be happy to discuss this with people if they could convince me otherwise.
Chairman Townsend stated, “The goal was to jump-start our local renewable industry.”
Mr. Nelson responded, “And I have no issue with that.”
Chairman Townsend added:
And we have
no way, under legislative counsel, who suggested this language, to do that
because of the constitutional issues under
the commerce clause and this other court case, this Oklahoma [and] Wyoming coal
case. And I don’t know the name of it,
but it came up this morning.
Mr. Wellinghoff stated:
And again, Mr. Nelson indicating it won’t happen, in fact, it has happened in the state. We have a dedicated line [which] goes from Dixie Valley into California. So we already have an example where we’ve done it here. [It] doesn’t mean Utah, Arizona, Oregon, and California can’t do it for us as well. So it certainly is possible, in fact, not only is [it] possible, but it has happened with respect to a Nevada facility serving in California.
Raymond Bacon, Lobbyist, Nevada Manufacturers Association, stated:
Looking through the recommendations from utility [sic], we would have to support this, in general. In particular, one of the things I want to point out is they have deleted the solar section, and while solar is maybe in many respects . . . getting to the point where it may be price-competitive, it also causes some different problems for the utility, which tends to run the cost of everything else up. The solar portfolio, when it’s at its peak generating stage, is not at the peak consumption stage during major portions of the year. So what happens, from my background in dealing with utilities as customers, is it means your peaking power is going to wind up having a shorter duration, having to have a shorter demand cycle for it, and will drastically elevate the cost of your peaking power. So, while Mr. Craigie’s technology, the solar thermal, is a little bit more stable, the photovoltaics actually enhance the problem and make the problem of generation and supplying a stable load from the utilities substantially worse. I think Mr. Nelson can address that; he has some load profile details.
Chairman Townsend elucidated:
Some of your members would like to leave the grid because prices are too high and reliability may be a concern; but when we have something that might be helpful to the issue over the long term, you think the cost is too high.
Mr. Bacon replied:
I think that . . . what happens is, your load profile stays up 2 or 3 hours after the solar generation capability has died, and so consequently, this chunk of the load profile, you have to make up with peak power, and it becomes, “Will we stay in the system or leave?” [It] doesn’t matter. You have just taken that portion of the portfolio and substantially added to the cost of the peak power because . . . as this goes down, you’ve still got to find something to make up that load profile.
Terry E. Page, Lobbyist, Sterling Energy Systems, commented:
In my 20 years of experience, clearly, the sun and the heat of the day spikes the needle peak in southern Nevada and the Southwest. Certainly the peak does fall off, as the sun tends to go down, and the solar generation falls off. I think these are issues, clearly, the PUC [PUCN] can sort through when these kinds of contracts come to them to make the determination this truly can be counted as peak power for the price comparisons necessary for the PUC’s [PUCN’s] final approval before the utility is allowed to contract with the energy.
Mr. Wellinghoff added:
Another factor, I’ve seen Sierra Pacific’s chart of this, and it is true, perhaps, when the sun goes down, solar cells are no longer producing, and there still may be somewhat of a persistent peak, but what they have not taken . . . into account is the thermal flywheel effect of buildings. And with that thermal flywheel effect, if you’re operating the solar on your chillers flat-out, you can carry yourself over some period of time into that peak period when the sun is down. So it’s not necessarily true at all they are inconsistent as far as their timing of the solar utilization of the solar and the peak period, number 1. And number 2, it is also not correct, in my opinion, that there would be substantial additional costs by requiring the solar.
Chairman Townsend summarized:
On the proposed changes, using Mr. Lynn’s language in the beginning, using the remaining language in here, and then replacing 7 [section 7] with the proposed language, and then adding the “dedicated transmission line” for constitutional purposes, what’s your pleasure? If you move the bill, [do] you amend it the way it was proposed, to amend including all of these changes which are Mr. Lynn’s, Mr. Ashleman’s, the changes in our amendment, plus the proposed section to give the commission an enforcement mechanism through regulation without penalizing anyone for not getting there because it wasn’t available, and the dedicated transmission issue for constitutional purposes?
SENATOR SCHNEIDER MOVED TO AMEND WITH THE AFOREMENTIONED CHANGES AND DO PASS S.B. 372.
SENATOR AMODEI SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR O’CONNELL VOTED NO.)
*****
Chairman Townsend reopened the hearing on S.B. 544.
SENATE BILL 544: Makes various changes to provisions governing practice of pharmacy. (BDR 40-400)
Keith W. Macdonald, Executive Secretary, Nevada State Board of Pharmacy, testified they met with the parties and reached an agreement. He stated the group agreed to retain the changed language in paragraph (c) of subsection 1 of section 12 of NRS 639.255 in the amendment proposed by the Nevada State Board of Pharmacy (Exhibit Q), which changes section 12 of S.B. 544; this would leave the proposed language “to be determined by the board.” He added the group also agreed to forgo the 2-year limitation. He said they agreed each count of an accusation under paragraph (f) would be subject to a fine of $10,000. He stated they agreed upon new language to be placed in a new paragraph (h), “The Board of Pharmacy shall, by regulations, set standards for fines and other disciplines under this subsection.” He stated the Board of Pharmacy would then, by regulation, meet with the industry and set those standards, so everyone understands what the board would be doing in the future.
Senator O'Connell asked Mr. Macdonald to explain, “for each count of an accusation.” Mr. Macdonald explained, unfortunately, “accusation” is the term they must use regarding actions they take.
Chairman Townsend asked if the term “accusation” had been investigated and is the correct term for actions to be taken. Mr. Macdonald elucidated, after an investigation, a legal document called “an accusation and intended action” is publicly filed and taken action upon.
Mary Lau, Lobbyist, Retail Association of Nevada, testified though the association is not completely in favor of the bill, they are willing to accept the amendment and work with the commission during the regulatory process.
SENATOR O’CONNELL MOVED TO AMEND with the suggested language from the Executive Secretary of the Nevada State Board of Pharmacy AND DO PASS S.B. 544.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Samuel P. McMullen, Lobbyist, Retail Association of Nevada, added a statement regarding S.B. 544. He stated the group had agreed the regulation would also include mandatory consideration of the compliance of the pharmacy as evidence, but not as protection, regarding potential violations. He said, also, the regulation would determine the range of violations.
Chairman Townsend opened the hearing on S.B. 425.
SENATE BILL 425: Makes various changes concerning regulation of certain public utilities operated by certain governmental entities. (BDR 20-1243)
Carole Vilardo, Lobbyist, Nevada Taxpayers Association, testified:
I think, probably, Mr. Swendseid and I have been working on the amendments. I’ve given you a summary sheet of what my amendments do [Exhibit Z]. [There are] a couple of things I would like to point out, if I may. It appears there has been some agreement or arrangement reached and I am more than happy to accept Mr. Swendseid’s amendments, the deal with the CRC [Colorado River Commission], which would then eliminate what I proposed to have renumbered as 2 through 4. I’d be happier with 2 through 4, but in the interest of getting someplace on the amendments. . . .
John O. Swendseid, representing Southern Nevada Water Authority, and Truckee Water Authority, stated, “My amendments are 5 pages on both sides, and at the top it says ‘4-16-01 jos’ [Exhibit AA]”
Ms. Vilardo continued:
One of the major differences, which is a policy issue for this committee, between the amendments dealing with the counties, the cities, and the general improvement districts, is the fact in my amendments, there are two things happening: one is if you, in effect, have to provide service or expand your service, there are very specific procedures you go through. It also does not allow you to displace an existing service unless two thirds of a board declare an emergency and that I would envision as something whereby the existing service provider is on the verge of a bankruptcy or does not have the financial backing to expand out into service it needs. The bill has a preamble, which puts it to the 253 committee [Legislative Committee to Study the Distribution among Local Governments of Revenue from State and Local Taxes, as created by S.B. 253 of the Sixty-Ninth Session].
SENATE BILL 253 OF THE SIXTY-NINTH SESSION: Creates legislative committee to study distribution among local governments of revenue from state and local taxes. (BDR 17-193)
Ms. Vilardo continued:
It exists for just 2 years, until there is a report back about how we should handle the tax implications. It does allow services provided by our local government to be provided interjurisdictionally if they have the same governing body. It allows a local government to expand current service if it’s contiguous to an existing development. The act is sunsetted. There is one provision I did leave out; and it was a provision that saying, . . . “any contracts that have been ended . . . prior to April 1, are not subject to these limitations.” John [Mr. Swendseid] has the language we had both previously agreed to. I can go into more detail section-by-section, but I was hoping by giving you a cover sheet, it might help [Exhibit Z].
Senator Carlton stated:
Carole [Ms. Vilardo], thank you very much for this sheet [Exhibit Z]. It does help. I just have a question on section 9 [Exhibit Z]: “Allows a local government to expand their current service if it is contiguous to an existing development.” Could you explain it to me, please?
Ms. Vilardo answered:
Let’s say you have a housing project that’s been put up, and the local government, through July 1, when this actually kicks in . . . has run service to most of . . . the units that have been built in the development, but there are then additional houses which will be built after that which were not hooked up. You don’t want to stop them from being able to expand what would have been a normal service area for them. Not trying to stop them to that. The two points, and the reason for having this bill before you are: one, we need to know what the tax implications are, and there are some, depending on what happens, either this session, or if not this session, next session, some very serious tax consequences that range from how you are going to distribute if a plant suddenly becomes situs to one county, instead of having line-miles attributed out. I think the other thing that is of concern to me, which is where John [Mr. Swendseid] and I differ on the amendments and most of the local governments do, I believe it is very important you not displace existing service for multiple reasons, and they are tax reasons.
One of the things we have going right now is the discussion that we may be flat on revenue. If you go in and displace, before we know exactly what’s going to go on, you are then, if you displace public with private, while we’ve made arrangements for franchise fees and property taxes to be worked out through inter-local agreements, you have not solved the issue of sales taxes, any of the local business licenses, you have not solved the problem of . . . a private company called “public utility” that would not be able to support its workforce, and then you’re going to have a reduction on the business license tax that goes to the state. It’s almost impossible to figure out how to get those squared away. They’re not as clear-cut as making arrangements for a franchise fee and a property tax you would be calculating out. But you have a whole host of taxes, and so, I also add provisions where you do not displace, unless there’s an emergency.
Mr. Swendseid testified:
I’m here representing the Truckee Meadows Water Authority and the Southern Nevada Water Authority. We have passed out a set of suggested amendments to S.B. 425 [Exhibit AA]. They’re on white paper, Carole’s [Ms. Vilardo’s] starts with green paper; ours are just white. The purpose of our amendment is to not change the powers local government has or subject local government or anyone else to any new regulation. It is just to change procedure, and specifically to address the concern Senator O'Connell mentioned at the time this bill was heard by the committee, to make it clear we will study the impact on taxes of local government getting into a business formally done by a private company. And in the meantime, we will hold governments receiving property taxes and franchise fees harmless. And that’s all this bill does. It doesn’t change powers. It just makes sure we hold governments harmless for the taxes. I do want to mention two . . . technical things about the amendment. On page two [of Exhibit AA] . . . the number 2 (a), where it defines affected political subdivision, and it says, “means any political subdivision,” it should say “the state and any political subdivision.” Because, Ms. Vilardo pointed this out, we do mean to hold the state harmless too. The state gets a property tax, and if a local government gets into business a private company used to have, we will hold the state harmless. A similar change, and on the copy I gave to your secretary, I’ve marked these changes in by hand. But a similar change goes into section 3, section 4, and section 5, and those deal with counties in the first section 2, and then [in section] 3 is cities, [in section] 4 is general improvement districts, and [in section] 5 is the CRC [Colorado River Commission]. So, in all of them we mean to hold [the] state harmless.
Mr. Swenseid continued:
The other technical thing I wanted to mention, and I think this is accurate, is Ms. Vilardo would agree with the provisions in my bill, in section 5, which says the CRC will hold governments harmless with respect to the taxes, and also the amendment number 7, which is the effective date she already spoke of, amendment number 7 is on page 5, which is to grandfather contracts entered into before April 1 of 2001. The difference between our amendments and Ms. Vilardo’s, the only substantial difference, is what she said; our amendment would not change the powers local governments have today. Her amendment would change the circumstances under which a local government could get into telecommunications, electricity, or a cable TV [television] business, and generally, allow them to get into it only in situations where there is an emergency, or where a finding is made that it will not harm the private provider.
Mr. Swenseid continued:
I just want to point out . . . there are circumstances where it will be to everyone’s benefit for government to get into a business, maybe even where it hurts a private provider. And they’re the things you don’t think about right now. But just a couple of examples are: Local government police and emergency forces may want to get together to have some common means of telecommunications. Under Ms. Vilardo’s bill, if they haven’t already got it, they could only do it if they find it’s either an emergency, or it won’t hurt the local telecommunications provider, and you might not be able to find that. I mean, maybe for the police to all have a common frequency for their cellular that’s run by a government, is going to hurt the private provider and it’s not an emergency. Under her amendment, you might not be able to do it.
Mr. Swendseid concluded:
Another area we see in telecommunications is we have people in the water and sewer business and when they’re putting in pipe, sometimes they think it’s a handy time to put in conduit for fiber optics, if it ever becomes necessary, or ever becomes something needed. Well, if it turns out that will affect the local telecommunications provider, all of the sudden you have to be able to make one of her two findings to put in that fiber optic, and it may not be in the best interest of government and citizens to do it. So, our suggestion is to stick with existing law, insofar as authority of local government to act goes, and put in the new procedure to hold harmless on taxes. We have discussed our language with representatives of Sierra Pacific Power and Nevada Power, and believe they are in agreement with the language in our proposed amendment. We worked on it over the weekend and think we came up with something that works for them.
George Caan, Executive Director, Colorado River Commission, testified:
We support the amendment Mr. Swendseid discussed. We have prepared a fiscal note (Exhibit BB) with respect to your earlier amendment and the original bill. I won’t go into it in great detail unless the committee would like me to discuss it. But I wanted to let you know, with the proposed amendment Mr. Swendseid alluded to, this fiscal impact is not relevant to that amendment, only the original bill and the first amendment proposed.
Joyce A. Newman, Lobbyist, Utility Shareholders Association of Nevada, stated:
With respect to the public policy issues being discussed here today, we think it’s very important for this body to look at some of those issues when we have local governments or state governments competing with private companies. Some of the issues we think are important, some of which are contained in this bill, are the various kinds of things we see playing out in California right now. I have found it very interesting to see that in Los Angeles, for example, the Los Angeles Department of Water and Power, it’s been discovered, has been . . . allegedly overcharging customers, as have the private companies who are providing generation, allegedly, down there. But because it’s a government agency, there is no one, including the Federal Energy Regulatory Commission, who has jurisdiction to order any refunds. So, those are the sorts of issues. As you know, shareholders have been at risk, both from having their dividends not paid, as well as having the stock price decline. Those are people who, one could argue, have made an affirmative decision to purchase that stock; but one is a customer of a government entity providing similar services, and one doesn’t have that choice. So we think those are some of the issues that need to be addressed on a continuing basis by this body, and some of those issues are contained in this bill today.
Terry K. Graves, Lobbyist, Basic Management Incorporated, stated:
Our concerns dealt with whether the existing customers the Colorado River Commission has had some 40 to 50 years would be brought in under the PUC [PUCN] purview, and I believe these amendments do take care of that issue. So, my client is probably satisfied, then, with the amendment.
Robert L. Crowell, Lobbyist, Sierra Pacific Power Company, and Nevada Power Company, stated, “Mr. Swendseid accurately related our position.”
James A. Bell, Public Works Director, City of North Las Vegas, stated:
We do support and agree with John Swendseid’s compromise language. With that, we would support the bill changes. We feel, also, cities need to be looking forward to improving service by allowing innovations and that’s why we would want the language John Swendseid has placed for that innovation.
John Sullard, City Manager, Boulder City, testified:
What I’ve heard this morning, since we are also a municipal provider of electricity and also a customer of the CRC, we feel the amendments proposed fit equitably into our program and we support the amendments.
Chairman Townsend clarified:
Does everyone understand there are two amendments? So, when somebody says, “We support the amendments,” if we could differentiate, if you support one over the other or both, it would be helpful. Have you seen either one of the proposed amendments in southern Nevada?
Mr. Sullard answered, “Yes, I saw one of Carole Vilardo’s. I haven’t seen the one presented this morning.”
Robert Gastonguay, Lobbyist, Nevada State Cable Telecommunications Association, stated, “The Nevada State Cable Telecommunications Association supports Ms. Vilardo’s position with regards to cable television.”
Charles K. Hauser, Lobbyist, Las Vegas Valley Water District, and Southern Nevada Water Authority, testified:
We support Mr. Swendseid’s amendments. We particularly are glad we were able to come to an agreement on the Colorado River Commission piece. The other pieces on local government do have me concerned. We support Mr. Swendseid’s position because it does not enlarge or restrict the current powers they have. One political subdivision I don’t represent often, but they meet at the water district, is called SNACC [Southern Nevada Area Communications Council], and in Clark County, that’s a bunch of the governments and the police department and that’s their radio communication; and I certainly would hate to have this bill restrict their ability to expand the radio communication, the communication of the police and the fire and all that. And so, that’s why we support Mr. Swendseid’s proposed amendments.
Marvin Leavitt, Lobbyist, City of Las Vegas, stated, “Yes, to Mr. Swendseid’s amendments.”
James J. Spinello, Lobbyist, Clark County, stated:
Ditto. In terms of one of the comments made earlier by Mr. Swendseid, I think I’d like to make it clear, when he was talking about a water company putting in conduit for fiber optic, it would be for its own use rather than to go into the fiber optic business. But, I think that at a time where, quite frankly, we were looking at some potentially serious consequences to our community, to limit our options right now, I think, is something we really need to be circumspect about. I’m not aware we’re looking at getting into businesses to compete in any kind of wild manner. Any of the conversations I’ve heard or been a party to in that regard, have really been kind of as fall-back, safety net kinds of prospects. So I think it’s real important to remember that as we consider this kind of bill. We support Mr. Swendseid’s language.
Mary Henderson, Lobbyist, City of Reno, stated:
This is going to be the “ditto group,” I think. We, of course, support Mr. Swendseid’s amendment. I think Carole [Ms. Vilardo] brought out a very good point: this is a very serious policy consideration. It’s not that local governments are asking for more power, they’re just asking to have the power they have already be left with them to make those kinds of tough decisions, if we need to in the next couple of years. And I would hope, I know you don’t have time today to get into that sort of policy discussion, but it’s something that needs to occur, I think, in a much broader sense, versus just trying to work on this particular bill today. So, again, we would agree with the Swendseid amendment.
Kurt R. Segler, Lobbyist, City of Henderson stated, “[I am] . . . probably the last of the “ditto brigade” here. We too support Mr. Swendseid’s amendment . . . . It would continue to allow us to have the powers we have currently in our charter.”
John Berkich, City Manager, Carson City, stated, “[I am another] member of the ‘ditto choir.’”
William Isaeff, Lobbyist, Special Assistant to the City Manager, City of Sparks, stated:
We support the Swendseid amendments. [The] City of Sparks is a member of the Truckee Meadows Water Authority, and [we] believe the proposed amendments adequately, now protect the newly created Truckee Meadows Water Authority and its acquisition of the Sierra Pacific water business. And [we] believe the other issues are more appropriate for an interim study, as suggested in the legislation, and therefore, we support only the Swendseid amendments.
Senator Carlton asked, “Maybe I’m confused, but is the study still here? Did I miss something earlier? I want to make sure it’s still in there.”
Ms. Vilardo answered, “For the record, the study on taxes [from] the 253 committee is here. Both sets of amendments agree to that same language.”
SENATOR O'CONNELL MOVED TO AMEND AND DO PASS S.B. 425 WITH MS. VILARDO’S AMENDMENT.
SENATOR SCHNEIDER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman Townsend opened the hearing on S.B. 380.
SENATE BILL 380: Revises provisions relating to contractors. (BDR 32-944)
Warren B. Hardy ll, Lobbyist, Associated Builders and Contractors, testified the proposed amendment (Exhibit CC) addresses the concerns of the committee. The amendment deletes on page 1, lines 16-20; and page 2, lines 1-7. He said members of his organization felt the process of pulling a permit for construction at the local level affords sufficient guarantees to ensure a contractor or subcontractor possesses a valid license, without placing the responsibility on the contractors’ board. He assured the committee the bill does not remove the obligation of the contactor to guarantee payments to the trust funds or any additional wages and benefits required by law.
John E. Jeffrey, Lobbyist, Southern Nevada Building and Construction Trades Council, stated the problem regarding this type of legislation is the general contractor is the only person who has control over which subcontractors will be on the job and if they are financially responsible. He asserted this bill takes the incentive away from the general contractor to be certain they have legitimate subcontractors who pay their bills. Mr. Jeffrey stated he believes this bill could be detrimental to the financial responsibility of the construction industry.
Nancy Salmon, Chief of Unemployment Insurance Contributions, Employment Security Division, Department of Employment, Training and Rehabilitation, stated, when the bill was first introduced, the department had no position because there was a payment verification process included in the bill. She expressed if the payment verification process is amended out, there would be a potential adverse impact on the timely payment of unemployment insurance benefits, and the unemployment insurance tax rate structure for contributing to Nevada employers. Ms. Salmon added, benefits must be paid whether or not taxes are paid. She offered some construction industry statistics relating to the unemployment insurance program, generated by their current payment verification process. She stated the construction industry accounts for approximately 11 percent of registered Nevada employers and pays approximately 11 percent of the total covered payroll in the state. However, she stated, the construction industry accounts for 25 percent of the unemployment claims that are filed annually; 18,760 claims of the 76,000 total annual unemployment claims are from the construction industry. She stated “blocked” claims, where wages are not reported, total about 6 percent of the claims filed for all employers. She noted even with their deterrent in place, approximately 22 percent, 960 of those blocked claims, are in the construction industry. She added, these claims must be investigated to locate the wages and the delay for claimants to receive their first payment is an average of 20 days. Ms. Salmon concluded, as of December 31, 2000, the construction industry accounted for 30 percent of the total unemployment insurance fund accounts receivable, $1.9 million.
Mr. Hardy stated the goal is to remove the requirement for one business to be responsible for the obligations of another business. He noted chapter 612 of NRS contains sufficient remedies of collection for delinquent subcontractors. He restated, the point they are trying to make in S.B. 380 is one business should not be responsible for the legitimate obligations of another business. He added they could continue the language regarding amounts payable for unemployment compensation by removing section 2 of NRS 612.687, which states contractors are liable for all the contributions. Then, he stated, under that revision, the contractor would still be required to withhold sufficient money for the contract or require a surety bond, but would not be responsible for the payments. Mr. Hardy reiterated they believe this bill would shift regulatory responsibility. He stated sometimes a small business may be unable to verify these matters.
SENATOR SCHNEIDER MOVED TO DO PASS S.B. 380.
SENATOR O’CONNELL SECONDED THE MOTION.
No vote was taken on this motion.
Dennis Haney,
representing State Contractor’s Board, stated they support the amendment. He said the requirement for the board to
receive evidence there is payment of employment security tax if they have a
business license is unworkable. He
noted, in Clark County and possibly in other counties, contractors do not get a
business license before they get their contractor’s license. Also, he added, if you have a new business,
there is no evidence to
provide. He suggested subsection 2 of
section 2 of S.B. 380 should be removed. He stated the amendment Mr. Hardy suggested (Exhibit CC)
is appropriate.
Chairman Townsend stated he wants to be certain everyone is talking about the same thing. He said he had annotated subsection 2 of section 2 of NRS 612.687, noting they could not pull the permit without it. He asked Mr. Hardy if that was their intent with the amendment.
Mr. Hardy answered Yes, that was the board’s intent. He noted previous testimony suggested when a permit is pulled, there are sufficient safeguards in place to guarantee the business tax is paid. He added, it did not apply to the unemployment benefits issue. He stated the board’s position is there are currently remedies in chapter 612 of NRS providing for the unemployment division to implement regulatory enforcement responsibility without shifting the responsibility to the employer. He stated their amendment recommends the removal of section 2.
Chairman Townsend stated if they remove section 2 of S.B. 380, nothing remains. Mr. Hardy responded section 2 shifts the obligation to verify these things to the contractor’s board. Chairman Townsend asked if they only wanted to leave lines 12 and 13. Mr. Hardy responded they would also leave the portions of the bill which repeal sections of NRS.
Danny L. Thompson, Lobbyist, Nevada State AFL-CIO, stated they are concerned about the repealed sections of NRS. He said this would affect the unemployment section of the law. He noted a lot of subcontractors come in from out of state. He stressed, if employment security loses the collection mechanism, and the money is not collected from subcontractors, it will affect the rates of all employers, not just contractors. He added this could cause the rate to change to make up for uncollected funds, because benefits have to be paid to employees who are laid off.
Mr. Hardy stated his organization believes the businesses that are not paying should be prosecuted to the full extent of the law. He restated, they are opposed to making one business responsible for the financial obligations of another business.
Chairman Townsend stated, if you take out section 2, Mr. Haney will be satisfied. But, he added, the employment security department still has a concern with repealing sections of NRS. Ms. Salmon answered, “Correct.”
Chairman Townsend asked Ms. Salmon if she believes there are enough safeguards in the law to allow the Employment Security Division to go after businesses that do not pay.
Ms. Salmon responded they use all the collection tools they have available to pursue these debts. She stated, earlier the Department of Taxation and the Contractors’ Board testified the general contractor has some control of what happens on the job. She said for this reason NRS 612.687 was added, to allow the contractor options to fulfill the obligations to guarantee taxes are paid. She stated though she does not know to what extent this change will impact the trust fund, and the shortage will be spread out over the trust fund pool.
Senator Schneider asked Mr. Thompson if he would agree with the removal of section 2.
Mr. Thompson answered, no. He stated he believes if they lose the current enforcement mechanism for subcontractors who do not pay, those numbers will significantly increase. He noted the Employment Security Division uses these mechanisms now. Mr. Thompson added the Employment Security Division budget would have to be increased because they would have to do more than they are now doing to collect these funds. He explained the general contractor is currently responsible for the payment. He added, if contractors come from out of state and leave without paying, every other employer in the Nevada will have to make up the difference, which he concluded, is the reason for their opposition to the bill.
Mr. Jeffrey explained when a general contractor contracts with subcontractors, the information is available from employment security whether their premiums are current. He stated the contractor can choose not to hire a subcontractor if the contractor is afraid he may have to pay the subcontractor’s bills. He said the mechanism is in place now, but he does not know if it would remain if S.B. 380 passed and portions of the NRS are repealed.
Ms. Salmon stated, under current law they utilize a certification process where they can afford prime contractors the ability to protect themselves from potential liability. She noted in 1990, they processed 225 certifications; in 2000 they processed 4703 certifications. She noted this indicates prime contractors are utilizing this process. She expounded due to this they were able to collect approximately $492,000 in outstanding taxes during 2000. She concluded they cannot project the additional impact of potential nonpayment of unemployment insurance taxes if there is no verification process.
Mr. Hardy asserted this is a larger policy decision, as to whether a business should be responsible for the obligations of another business. He stated his family was in the automotive business in Nevada for 43 years and at no time were they ever responsible for the financial obligation of their parts wholesalers. He expressed that is the policy at issue. He stated he understands the concerns, but added this is a broader policy question.
Mr. Haney stated he had a conversation with Mr. Jeffrey and Senator Schneider and they do not have an objection to the removal of section 2 of the proposed bill. He stated they are concerned with the “repealer” portion.
SENATOR SCHNEIDER MOVED TO AMEND AND DO PASS S.B. 380. WITH THE AMENDMENT TO REMOVE SECTION 2.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CARLTON VOTED NO.)
*****
Chairman Townsend opened the hearing on S.B. 516.
SENATE BILL 516: Makes various changes concerning contractors and constructional defects. (BDR 54-1452)
Chairman Townsend stated they all agree the goal of S.B. 516 is to get the homes fixed if there are problems and at the same time preserve peoples’ rights. He interjected, the details are much more difficult to accomplish. He drew attention to a proposed amendment presented by Mr. Fiorentino (Exhibit DD). He stated the first part of the bill is the preamble, which they have discussed at great length. He said the preamble suggests using the contractors’ board as a means for the consumer to seek immediate attention to a complaint. He continued, if the complaint is deemed valid by the board, all parties are contacted and a time limit is placed on resolution. He said, then the problem must be repaired to an appropriate standard. He stated if it does not solve the problem, then a consumer’s right to litigate remains in place. Chairman Townsend commented the matter becomes more complex when it involves a homeowners’ association and or a developer. He said there was discussion regarding the problem that when a complaint is filed, the contractors’ board only has jurisdiction over licensees and not over developers. He said the language in S.B. 516, sections 1-9 is the repair portion of the bill. He stated he likes section 13 because it requires everyone be notified, so no one will be able to say they did not know. He added they would retain the current statutory authority under chapter 40 of NRS for litigation rights. Chairman Townsend stated perhaps developers should have a place to go for assistance if they are accused. He suggested a possibility would be for the contractor’s board to license developers. He stated, a portion of the language on the geotechnical soils issues agreed to by Mr. Lynn and all the building inspectors (Exhibit EE) should be in this bill. He concluded this is where they left off last time. Chairman Townsend asked Mr. Lyford how this mechanism would work for the consumer.
George Lyford, Director, Special Investigations, State Contractors’ Board, testified the State Contractors’ Board will contact the contractor for a consumer who has made a legitimate effort to remedy the situation. He stated the contractor will be notified there is a complaint, and the board is attempting to validate it. He said, if the complaint is validated, the board will issue a “notice to correct.” He interjected, the problems arise when a complaint cannot be validated with only what can be seen; the board will not do any destructive testing. Mr. Lyford continued, if nothing is done when they issue the “notice to correct,” a board hearing is scheduled. He commented contractors who have reached the stage of receiving a “notice to correct” rarely repair before the hearing. He said during the board hearing, contractors usually argue the defect is not their fault. He said, then the contractors request access so their experts can investigate the situation, which can delay the process by 30 days.
Chairman Townsend stated the board should have authority to make the decision to repair without allowing a delay from the contractor’s experts.
Mr. Lyford continued, if the contractor does not repair the problem after the board has made the determination the defect should be repaired by the contractor, then the board will take action against the contractor’s license. He added the board has to give the contractor due process.
Chairman Townsend commented the due process is sometimes abused when dueling experts indefinitely delay the process. He stated the board is the expert in these matters, and they have the statutory authority to make a ruling. He added if the contractor does not want to repair the defect, then they can go before the Supreme Court. He commented the point is to get people to change their behavior before the problem has to go to litigation.
Dennis Haney, representing State Contractors’ Board, stated the board has this procedure now with present law.
Chairman Townsend elucidated the State Contractors’ Board has statutory authority to act and S.B. 516 would codify the current mechanism.
Mr. Haney stated the authority is already in code in NRS 624.3017, which has a clause for disciplinary action when a contractor has built something below the general trade standard or below the standards of adopted building codes. He suggested if they want to do this, they should put it in chapter 40 of NRS and not in chapter 624 of NRS. He said this would require an opportunity for repair before litigation is allowed to commence.
Chairman Townsend commented the goal is for the problem to come before the board first. He stated the board can author an opinion to repair, or the contractor’s license will be in jeopardy.
Mr. Haney said the issues are more complicated then that. He explained the board’s investigator goes out and, after consulting with his supervisor, can issue a “notice to repair.” He stated when the issue comes before the board, the board accepts the investigator’s finding that there was below-standard workmanship, and the contractor’s license is subject to being taken. He added, often the contractor is allowed another 30 days to repair the problem, because the goal of the board is have the repairs made for the homeowner.
Chairman Townsend asked Mr. Haney how the prohibition against litigation before the owner makes a complaint to the board will affect the contractors’ board.
Mr. Haney answered if the board gets a complex case, it could mean the time otherwise spent in a court would be needed for the board’s investigator to investigate the problem.
Chairman Townsend restated there will not be any dueling experts. He said if they preclude a consumer from filing a lawsuit before they go to the board, then the board’s decision will be considered definitive. He said if the board determines the contractor must repair, and he does not, then his license is either revoked or suspended. Chairman Townsend stated, then either or both the contractor and the consumer have a right to go into litigation. He inquired why there is a $20-million fiscal note. Chairman Townsend asked, “Who are you hiring?”
Mr. Haney stated what was outlined earlier would be a minor part of what S.B. 516 entails. The mechanism they had just discussed would only require a small addition to their present duties.
Senator O'Connell stated, in the $16-million construction defect case mentioned in previous testimony, the homeowner still did not have their property repaired. She commented the $8 million dollars the homeowners received did not take care of the repair, which is what the committee wants to address. She added, the attorney had testified he was not trying to get repairs made, only to get money to the homeowners. Senator O'Connell noted the money they received was not enough to repair. She asked what is the point of going through the stress of a trial when the problem is not solved.
Senator Shaffer suggested there is no way to stop a homeowner from suing.
Mr. Haney stated the board does not have the expertise to investigate all the problems. He noted they are equipped to deal with things that can be seen, but their investigators do not do destructive testing such as opening a wall to inspect its construction.
Chairman Townsend stated there is an issue to be resolved as to what the board can do when there are latent defects and the problem is not obvious. He stated in a complex case that goes to litigation, the other issue is how does the homeowner get enough money to fix the problem.
Robert C. Maddox, Lobbyist, representing Nevada Trial Lawyers, testified the objective in his cases is always to get the homes fixed. He stated they would consult with experts to determine what amount is needed, including attorney’s fees, to fix the problem. He stated he will not recommend a settlement if it is less then the amount needed to repair. He commented in his cases, the homes almost always get fixed.
Chairman Townsend asked Mr. Maddox what is the mechanism when a homeowners’ association believes there is a problem throughout the complex and comes to him, but not all the homeowners participate in the suit. Chairman Townsend asked if the homeowners who did not participate in the board action are notified of an offer to settle from the developer.
Mr. Maddox answered yes, under a recent amendment to chapter 116 of NRS, the board has to notify every member of a settlement offer.
Chairman Townsend asked if they are told whether the settlement offered would be adequate to fix the problem.
Mr. Maddox answered he does not know if it is in statute, but added he would always offer that information to the client. He added, since their objective is to get enough money to get the problem fixed, the homeowners within the association are advised if the settlement seems to be less than will required to fix the problem. He stated, then there would be discussion regarding whether they think they will be able to get the additional money required to fix the problem. He explained the developer tenders the defense to their insurance company, the insurance hires a lawyer, and they bring in the subcontractors. He added one of the main purposes of the developer’s insurance company is to raise between 40 percent and 60 percent of the settlement from the subcontractor’s insurance. He noted the experts for the homeowners’ association will typically make a recommendation for a repair based on how it should have been done right the first time. Mr. Maddox continued, in the course of the mediation, the experts for both sides will meet and often agree a less expensive method of fixing the problem is appropriate.
Mr. Haney stated all the subcontractors in the construction project should be contacted at the beginning of the process so they are afforded the opportunity to repair the problem before litigation begins.
Chairman Townsend suggested section 13 of S.B. 516 addresses the issue, by saying the board will notify all the subcontractors as soon as a complaint is filed. Mr. Haney suggested they could require the general contractor to notify all his subcontractors. Chairman Townsend explained they want the board to notify the subcontractors because the general contractor may not do it or could miss a subcontractor.
Mr. Maddox suggested, the Nevada Trial Lawyers Association does not believe it would be good to force a complex case to go before the contractors’ board before pursuing litigation. He noted they refer workmanship-issue cases to the contractors’ board. He stated the large-scale cases would not be possible for the contractors’ board to handle for several reasons. He noted developers are not necessarily licensed contractors and the contractors’ board only has authority over licensed contractors. Also, he said, the contractors’ board would have to hire experts to analyze extremely complex problems. He stated the most important reason the contractors’ board would not be able to handle the complex case is because of the insurance issue. He explained the larger developers who may encounter multimillion-dollar problems are most likely to refer these issues to their insurance carrier rather than use their own money to repair the problem. Mr. Maddox stated the contractors’ board has no authority over insurance carriers.
Scott R. Rasmussen, Lobbyist, Nevada Subcontractors Association, testified the proposed legislation would require the individual subcontractors to do their own repairs, and therefore the cost would be shared by the subcontractors who did the work. He added the cost would be reduced if the subcontractors did their own work, because they would not include any profit in the price. He suggested the goal of the legislation is to get the people who did the work to fix the problem, rather than someone else doing the repairs or going into litigation. He continued, section 10 of S.B. 516 addresses the issue of complex cases, which allows the board to hire independent investigators when needed. He added the subcontractors would be willing to increase their fees to cover these added expenses to the contractors’ board. He noted most developers are licensed; adding all general contractors and subcontractors are licensed, and they can be brought before the State Contractors’ Board. Mr. Rasmussen asserted he would like to see the people who built the building have an opportunity to repair any problems. He concluded the point of this legislation is to reconnect the homeowner and the person who built the home so problems can be resolved.
Mr. Maddox stated, 2 years ago the Legislature developed a new protocol to deal with construction defect cases. He stated, in complex cases the lawsuit is filed, and then a series of procedures are required and often there is no further litigation. He said in this process, a series of inspections takes place, including some destructive testing. Then, he continued, the developer and subcontractors can make an offer to the homeowners. He said the statute clearly states the developer can make an offer to repair the problem. He asserted he knows of no situation where developer made an offer to fix the problem rather than tender the defense to their insurance companies. He pointed out, if the developers want to make an offer to fix the problem, they have a clear opportunity under existing law.
Senator Schneider stated he has a letter from a homeowners association represented by Mr. Scott Canepa, regarding a current construction defect case in Las Vegas. Senator Schneider stated according to the letter, the developer acknowledged there were roof leaks and attempted to repair them twice. He said when the second repair leaked, the developer contracted a third party to investigate and repair the roof at the expense of the developer. He noted Mr. Canepa had attempted to engage the homeowners association in a lawsuit in 1995, but failed. In 1998, Senator Schneider continued, in the middle of the process, Mr. Canepa was able to entice the board into suing the developer without a vote of the membership. Senator Schneider interjected he believes this to be against the law, and possibly interfering with a contract is also illegal, because there was truly an effort by the developer to repair. Senator Schneider read an excerpt from the letter:
Upon receipt of this letter, your company is to cease and desist any further repairs on the buildings. You are further advised that no one from your company or any of its representatives or subcontractors have authority to go onto the site for any reason without prior written consent. Please, also be advised that all further communications with the association or individual board members or homeowners must be made through this office.
Senator Schneider stated this was clearly, in his opinion, interfering with a contract; and was cutting off the builder who was attempting to make repairs and who had even hired an independent third party to make repairs. He continued, in the letter Mr. Canepa demanded copies of any and all subcontract agreements for any and all subcontractors who performed services or provided materials be turned over; copies of all insurance agreements be turned over; copies of all documents evidencing the builder and developer and their status; and additional named insured parties on any policy of insurance issued in favor of the subcontractors be turned over. Senator Schneider stressed, “This is the real world.” He added, this builder is one of the good builders. He said the builder’s work has been interfered with. Senator Schneider stated he has another letter from the same builder who is in the middle of a lawsuit at the same time he was attempting to make repairs, without notice to any homeowner. Senator Schneider asserted the goal of this legislation is to get homes fixed.
Mr. Maddox stated Mr. Canepa is a very ethical attorney. He noted, requesting documents, as in the letter Senator Schneider cited, is specifically authorized by statute. He stated, though he does not have information regarding the specific case in the letter from which Senator Schneider quoted, he does know of a roof-defect case in Las Vegas. In that case, an order was entered, which set up an inspection schedule, and the builder was sending workers onto people’s roofs without notifying them, which frightened the homeowners. Mr. Maddox said the special master in the case found the builder in violation of the order, and ordered the builder to conduct his inspections and any repairs in accordance with the procedures outlined in chapter 40 of NRS. He restated he does not know the circumstances of the case Senator Schneider referenced, but would be willing to get Mr. Canepa so he could explain them.
Mr. Haney stated there is a difference between a complex case and the regular cases the board can address. He said if the committee expects the state board of contractors to handle complex cases, there will be a fiscal note so they can hire special investigators. He continued, currently the state board is not set up to handle complex cases. He reiterated whether a construction-defect lawsuit is filed or not, the board can hear a case.
Chairman Townsend quoted from NRS 116.3115, subsection 9:
The association shall provide written notice to the owner of each unit of a meeting at which an assessment for capital improvement or the commencement of civil action is to be considered or action is to be taken on such an assessment at least 21 calendar days before the meeting. Except as otherwise provided in this subsection, the association may commence a civil action only upon a vote or written agreement of the owners of units to which at least a majority of the votes of the members of the association are allocated. The provisions of this subsection do not apply to a civil action that is commenced: (a) By an association for a time-share project . . . ; (b) To enforce the payment of an assessment; (c) to enforce the declaration, bylaws or rules of the association; (d) To proceed with a counterclaim; or (e) To protect the health, safety and welfare of the members of the association. If a civil action is commenced pursuant to this paragraph without the required vote or agreement, the action must be ratified within 90 days after the commencement of the action by a vote or written agreement of the owners of the units to which at least a majority of votes . . . are allocated.
Chairman Townsend continued, these are complex cases and this is something the committee must deal with. He suggested the following issues should be in S.B. 516: The entire section Mr. Lynn drafted; amend the surety bond requirements for all contractors to require their bonding companies to be at least “A-rated” or better; increase the upper-limit bonding requirement from $100,000 to $250,000 or $500,000; all holders of new licenses issued after May 1, until they have established a satisfactory record, will be required to post a performance bond for each project; and any licensee against whom a disciplinary action has been taken, will be required to post a performance bond based on a percentage of the contract, with the percentage to be set by the contractors’ board depending on the violation. He added, they should change the language on lines 11 and 12 of the preamble to accomplish the goal of getting the homeowners and builders to cooperate to provide an opportunity to repair defects. Then, Chairman Townsend continued, he would codify the existing provisions of the contactors’ board, keeping sections 1-10, and if it needs to increase part of the licensing, then the funds will have to be provided. He stated, the following sections will remain: section 13; sections 16 through 21; section 22, where they can not employ a consulting firm if they are related; sections 24 through 27; section 32, which removes the mediation; section 33; definitely section 40; and sections 41 through 44.
SENATOR O’CONNELL MOVED TO AMEND WITH THE AMENDMENTS SUGGESTED BY SENATOR TOWNSEND AND DO PASS S.B. 516
SENATOR SCHNEIDER SECONDED THE MOTION.
Mark H. Fiorentino, Lobbyist, American Consulting Engineers Council of Nevada, stated he was not sure if his amendment had been considered (Exhibit DD).
Chairman Townsend stated, because Mr. Fiorentino’s amendment addresses chapter 40 of NRS, and because these changes go with changes to chapter 116 of NRS, he will include this discussion when they hear S.B. 421, which has a waiver from the deadline.
SENATE BILL 421: Makes various changes to provisions governing common- interest communities. (BDR 10-446)
THE MOTION CARRIED (SENATOR CARLTON VOTED NO. SENATOR SHAFFER WAS ABSENT FOR THE VOTE.)
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Chairman Townsend opened the hearing on S.B. 418.
SENATE BILL 418: Makes various changes to provisions governing sale of real property. (BDR 54-159)
Pat Coward, Lobbyist, Nevada Association of Realtors, presented a proposed amendment to S.B. 418 (Exhibit FF). He asked the committee to remove subparagraph (1) of paragraph (a), subsection 4, section 1, because the language is too broad. He said this would leave subparagraph 2, which says, “A source reasonably believed by the licensee to be reliable.”
Senator O'Connell asked why this requires a two-thirds vote. She asked if it increases fees.
Mr. Coward answered, no. He stated there is no money involved. He explained when a new licensee passes the 90-hour training, the current law says within a 2-year period a licensee must acquire 30 hours of continuation training; this bill reduces that time to 1 year. He commented the first year is the most vulnerable time for a new agent. Mr. Coward continued, the rest of the suggested amendments are technical corrections. He stated the bill had only named the real estate broker and a salesman associate and they had intended to include a new broker‑salesman in the 1-year continuing education requirement. Mr. Coward also asked to move the effective date in section 4 to July 1, 2002, in order to give the real estate division time to make changes to their mainframe system.
Senator Carlton commented the different renewal time for every year would double the fee, because previously the fee was only collected every 2 years.
Mr. Coward stated these renewal fees will not be a large amount. He stated the new licensees were more concerned with paying for the 30 hours of continuation training in half the time.
SENATOR SCHNEIDER MOVED TO AMEND WITH THE AMENDMENT PROVIDED BY THE NEVADA ASSOCIATION OF REALTORS AND DO PASS S.B. 418.
SENATOR O’CONNELL SECONDED THE MOTION.
Chairman Townsend disclosed his wife is a real estate licensee, but S.B. 418 should not affect her any differently than it affects any other licensee.
Senator O'Connell disclosed her husband is a real estate broker.
THE MOTION CARRIED. (SENATOR AMODEI AND SENATOR RHOADS WERE ABSENT FOR THE VOTE.)
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Chairman Townsend opened the hearing on S.B. 423.
SENATE BILL 423: Revises provisions governing issuance of license to practice as professional nurse or practical nurse or certificate to practice as nursing assistant to person who has been issued corresponding license or certificate in another jurisdiction. (BDR 54-1081)
Fred Hillerby, Lobbyist, Nevada State Board of Nursing presented a proposed amendment to S.B. 423 authored by the Nevada Hospital Association and supported by the Nevada State Board of Nursing (Exhibit GG).
Chairman Townsend asked if this is the proposed amendment from Mr. Wadhams. Bill M. Welch, Lobbyist, Nevada Hospital Association, answered, yes.
Chairman Townsend read the proposed amendment (Exhibit GG).
Kathy Apple, R.N., M.S.; Executive Director, Administration, Nursing Practice, Discipline and Monitoring, State Board of Nursing, testified the amendment to be added to Section 1 of S.B. 423 allows the board of nursing to enter into the 15-state interstate compact for multi-state practice. She stated paragraph (a) of the proposed amendment (Exhibit GG) ensures if the state board enters into a multi-state agreement, licensure requirements will be substantially equivalent to requirements in Nevada. She commented they would never support something which would lower standards. She said this gives them the ability to withdraw. She concluded, paragraph (b) of the proposed amendment ensures the practice privilege for nurses from other states is within the nursing board’s jurisdiction.
Senator O'Connell stated she has had numerous calls from nurses who oppose S.B. 423. She asked Ms. Apple to explain why she thinks they may object.
Richard Schlegel, Executive Director, Nevada Nurses Association, stated the association had submitted written testimony mentioning concerns at an earlier hearing. He said they also have concerns regarding the interstate compact, because this amendment would authorize the State Board of Nursing to enter into a compact with other states and Nevada’s legislators were never given the opportunity to review the agreement document.
Doreen Begley, Lobbyist, Nevada Hospital Association, stated because of concerns raised during the initial testimony, she contacted all the other states that are part of the compact. She submitted a document (Exhibit HH) including letters from nursing boards in Utah and North Carolina, which state the fear‑based, anticipated problems have not occurred in the states that already have mutual recognition. She added she also had supportive correspondence from every other state participating in the compact. Ms. Begley pointed out on her map, illustrating participants across the country (Exhibit GG), Arizona has recently entered into the agreement without objection. She added she just returned from a rural tour of Nevada, including Hawthorne, Yerington, Fallon, Lovelock, Winnemucca, Battle Mountain, and Incline Village, where she found total support from every rural hospital she visited. She noted there is summary of the difference between mutual recognition and the state board’s current licensure process in the Nevada State Board of Nursing report (Exhibit GG). Ms. Begley concluded the Nevada State Board of Nursing has received calls from nurses who support S.B. 423.
Christine Sawyer, R.N., representing Service Employees International Union (SEIU), testified SEIU has over 8000 health care workers in the Las Vegas Valley. She stated SEIU is opposed to S.B. 423, and the proposed amendments. She said the amendments are not specific enough. She added she found it highly objectionable for the State Board of Nurses to use their newsletter to “push their agenda.” She concluded, there are many nurses in the southern part of Nevada who object to S.B. 423.
Carin R. Franklin, Lobbyist, Operating Engineers, Local 3, representing the Washoe Registered Nurses, testified they oppose S.B. 423 and its amendments. She stated she worked in Arizona and there are differences between state requirements. She said Arizona did not require continuing education credits; Nevada requires 30 credits every 2 years; California requires 30 also. She noted this will make it easier for nurses to come into Nevada but it will also make it easier for Nevada nurses to leave. She concluded it is not very difficult to get licensed in Nevada and someone who wants to practice here should have to go through the process.
Ms. Apple stated, regarding the continuing education issue, all states have an on-going competency mechanism, but some may be different.
Senator Carlton stated these arguments seem similar to those expressed over S.B. 133. She noted nurses can come to Nevada through a temporary licensing procedure without making any changes in the law. She added they would still be monitored by the State Board of Nursing. She commented she is uncomfortable with the uncertain safety and quality-of-care issues.
Chairman Townsend asked for a motion and none was offered. He opened the hearing on S.B. 558.
SENATE BILL 558: Strengthens protection of patents and trade secrets. (BDR 52-1480)
Robert E. Shriver, Executive Director, Division of Economic Development, Commission on Economic Development, presented a proposed amendment drafted by a working group of interested parties (Exhibit II. Original is on file in the Research Library.) He testified there was discussion over sections 4 and 5, and the group had decided to delete those sections in an attempt to get the bill moving. He continued section 2 was slightly amended. He stated they also agreed to retain section 3 and section 6 with some proposed changes, and there was agreement to leave section 2 in the bill.
Brenda J. Erdoes, Legislative Counsel, Legal Division, Legislative Counsel Bureau, testified Legislative Counsel Bureau is unable to draft the bill as the parties had agreed because section 2 must now be deleted due to the proposed changes to sections 3, 4, and 5. She elucidated, section 2 explains the qualifications for being a Nevada resident or business, and because the language referencing Nevada residency is being deleted, section 2 is unnecessary.
John P. Sande lll, Lobbyist, International Game Technology, testified they agree with the amendments discussed in the group.
Senator O'Connell asked Mr. Sande to explain what the bill will now do.
Mr. Sande responded section 3, in the proposed amendments, allows the employer to have the rights of a patentable invention. He explained, until now, Nevada law has deferred to common law, and there are now Nevada statutes referring to this issue. He stated the working group removed the “Nevada business” language and added “employer” to cover research and development divisions of larger non-Nevada-based businesses. He continued, the new interpretation in section 6 will strengthen Nevada’s industrial espionage law.
SENATOR O'CONNELL MOVED TO AMEND WITH THE PROPOSED AMENDMENT BEFORE THEM (EXHIBIT II) AND DO PASS S.B. 558.
SENATOR SCHNEIDER SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SHAFFER WAS ABSENT FOR THE VOTE.)
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Chairman Townsend opened the hearing on S.B. 309.
SENATE BILL 309: Makes appropriation to Division of Emergency Management of Department of Motor Vehicles and Public Safety to purchase equipment that will provide emergency power supply for pumps that push fuel into Clark County. (BDR S-1158)
Chairman Townsend stated:
Senate Bill 309, regarding the issues of the transmission of fuel from California to Nevada [was] introduced by Senator Coffin. And because the issue is one dealing with electricity, and the ability to move . . . fuels, Senator Coffin brought it to this committee. It does possess a large appropriation, which means finance [Senate Committee on Finance] would have to rule on it anyway. And since today is the last day we can rule on a bill, it would be appropriate for the bill, because of the money, be sent to finance [Senate Committee on Finance]. We can do so without recommendation. At that point, they can deal with it, and if [we] so chose, we can get them to refer it back for the policy statement. And if it is all right with the sponsor, then that’s what we ought to do.
SENATOR CARLTON MOVED TO DO PASS AND RE-REFER S.B. 309 TO THE SENATE COMMITTEE ON FINANCE.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR O’CONNELL AND SENATOR RHOADS WERE ABSENT FOR THE VOTE.)
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Chairman Townsend adjourned the hearing at 4:19 p.m.
RESPECTFULLY SUBMITTED:
Jude Greytak,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE: