SENATE COMMITTEE ON GOVERNMENT AFFAIRS

MINUTES OF THE

SENATE Committee on Government Affairs

Seventy-First Session

March 7, 2001

The Senate Committee on Government Affairswas called to order by Chairman Ann O'Connell, at 2:05 p.m., on Wednesday, March 7, 2001, in Room 2149 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to the Grant Sawyer Office Building, Room 4406, 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 Ann O'Connell, Chairman

Senator William J. Raggio, Vice Chairman

Senator William R. O’Donnell

Senator Jon C. Porter

Senator Joseph M. Neal, Jr.

Senator Dina Titus

Senator Terry Care

GUEST LEGISLATORS PRESENT:

Senator Dean A. Rhoads, Northern Nevada Senatorial District

STAFF MEMBERS PRESENT:

Kimberly Marsh Guinasso, Committee Counsel

Juliann K. Jenson, Committee Policy Analyst

Laura Hale, Committee Secretary

OTHERS PRESENT:

Michael Oswalt, Controller, Board of the Public Employees’ Benefits Program

Tess Harrer, Student, Orovada School, Orovada

Danielle Black, Student, Orovada School, Orovada

Meg Lambert, Student, Orovada School, Orovada

Amber Griggs, Student, Orovada School, Orovada

Noelle Whipple, Student, Orovada School, Orovada

Elizabeth Van Der Hook, Student, Orovada School, Orovada

Melyssa Armstrong, Student, Orovada School, Orovada

Jim Dexter, Student, Orovada School, Orovada

Raymond Williams, Lobbyist, Nevada Association of Mortgage Brokers, President, Las Vegas Mortgage Company

Joel F. Hansen, Concerned Citizen

Leo D. Davenport, Lobbyist, Nevada Association of Mortgage Brokers, GFD Investments

Kathy Hunsaker, President, First City Capital

Kami L. Dempsey, Lobbyist, Las Vegas Chamber of Commerce

Mary Lau, Lobbyist, Retail Association of Nevada

David L. Howard, Lobbyist, Reno Sparks Chamber of Commerce

Renee L. Lacey, Chief Deputy Secretary of State, Office of the Secretary of State

Charles E. Moore, Securities Administrator, Securities Division, Office of the Secretary of State

Janine Hansen, Lobbyist, Nevada Eagle Forum

Carole Vilardo, Lobbyist, Nevada Taxpayers Association

Stephanie Tyler, Lobbyist, Nevada Bell

Cynthia Messina, Public Information Officer, Public Utilities Commission of Nevada

Rob Smith, President, Roofing and Contractors Association of Nevada

Rosalind Tuana, Executive Director, Board of Examiners for Social Workers

Dorothy B. North, President, Board of Examiners for Alcohol and Drug Abuse Counselors

Marvin Leavitt, Lobbyist, City of Las Vegas

Colleen A. Wilson-Pappa, Lobbyist, Clark County

Rebecca B. Flynn, Management Analyst, Business License, Clark County

Doug Walther, Chief, Office of Business Finance and Planning, Department of Business and Industry

L. Scott Walshaw, Commissioner, Division of Financial Institutions, Department of Business and Industry

Stephanie D. Garcia, Lobbyist, City of Henderson

Margaret A. McMillan, Lobbyist, Sprint

Rose E. McKinney-James, Lobbyist, Clark County School District

Chairman O’Connell opened the hearing on Bill Draft Request (BDR) 23-542.

BILL DRAFT REQUEST 23-542: Revises provisions relating to public employees’ benefits program. (Later introduced as Senate Bill 298.)

Michael Oswalt, Controller, Board of the Public Employees’ Benefits Program, testified on behalf of Jan Marie Reed, Executive Officer, Board of the Public Employees’ Benefits Program, to request introduction of the bill draft request.

SENATOR CARE MOVED TO INTRODUCE BDR 23-542.

SENATOR O’DONNELL SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

*****

Chairman O’Connell opened the hearing on Senate Bill (S.B.) 152.

SENATE BILL 152: Designates Orovada series soil as official state soil. (BDR 19-722)

Senator Dean A. Rhoads, Northern Nevada Senatorial District, testified that 15 other states have state soil, and introduced students from Orovada School to testify.

Tess Harrer, Student, Orovada School, Orovada, testified soil maintains air quality and sustains all life and many city dwellers think food comes from supermarkets. She said the students support a Declaration of Soil Dependence, also known as the “Nitty Gritty.” Ms. Harrer explained only planet Earth has dirt with organic nutrients that sustain life. Further, she said, soil has many uses, including building material, and is responsible for storing and recycling more than three times the carbon of all the earth’s vegetation put together. She said only topsoil can adequately support life; one square foot of soil contains more species of living microorganisms than all the living animals in the rainforest. Ms. Harrer concluded it takes 500 years to produce 1 inch of soil, and only a few minutes to lose it all.

Danielle Black, Student, Orovada School, Orovada, testified Orovada soil is 50 percent sand, 20 percent silt, 11 percent clay, and has been the unofficial state soil for about 25 years. She added 15 other states have legislatively established state soil. She continued, Orovada soil is found in Northern and Central Nevada, grows most crops common to Nevada, and is considered prime farmland due to its mixture of volcanic ash that reduces the amount of water needed to grow crops in Nevada. Ms. Black presented a model of dirt, indicating the gray lumps were volcanic ash.

Meg Lambert, Student, Orovada School, Orovada, explained food is what you get when you cross a farmer with soil; even McDonald’s cheeseburgers, fries, and cokes. Amber Griggs, Student, Orovada School, Orovada, told the committee civilizations depend on the quality of soil to grow their food and great civilizations of the Middle East that existed 2000 to 5000 years ago have disappeared due to poor conservation techniques, like overgrazing and deforesting. Ms. Griggs said the Orovada students believe contemporary farmers and ranchers use the latest technology and scientific information to make better-informed decisions about their soil because they know healthy soil is the key to their livelihood.

Noelle Whipple, Student, Orovada School, Orovada, explained farmers use pipelines in trenches to eliminate erosion by providing a barrier between moving water and soil. She said they also cement ditches in many places to conserve water and protect soil from dangerous washout which can remove tons of soil and do irreversible damage. She continued, pivot sprinkler irrigation is also used to automatically control the flow of water, depending on the type of soil, and “speed-bumps” are created using a variety of materials to slow the flow of creeks to protect streambeds. Ms. Whipple explained by mixing the previous year’s crop with topsoil, the organic matter increases water retention. She said some farmers voluntarily create buffer zones along streams that protect the soil and provide a wildlife habitat. Ms. Griggs (she chimed in) said another method of conservation is to use polymers that have virtually eliminated erosion. When water combines with these polymers, a blanket is created to protect the soil and they also keep the water crystal clear.

Elizabeth Van Der Hook, Student, Orovada School, Orovada, said farming and ranching benefit wildlife. She claimed cows have gotten a bad rap and the Orovada students think cows are soil-producing machines because manure creates greener grass. She explained root systems of riparian grass need to be chewed sometimes for the plant to survive. She added manure is a fertilizer and can also benefit fish. Ms. Van Der Hook concluded, wildlife in Nevada has increased by more than tenfold over the last 150 years.

Melyssa Armstrong, Student, Orovada School, Orovada, testified Nevada has a higher urban population, per capita, than any other state in the nation with significant non-agricultural uses of land that can be balanced by farming and ranching that sustain life for all. She said the Orovada students received letters of support from conservation groups, farmers, cattlemen, and former U.S. Senator, Richard Bryan. Ms. Armstrong concluded, healthy soil means healthy food and healthy food means healthy people. Jim Dexter, Student, Orovada School, Orovada, presented an Orovada soil monolith pulled from a pit in Orovada and shows various levels of soil.

SENATOR RAGGIO MOVED TO DO PASS S.B. 152.

SENATOR CARE SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

*****

Chairman O’Connell opened the hearing on BDR S-759.

BILL DRAFT REQUEST S-759: Makes various changes relating to Airport Authority of Washoe County. (Later introduced as Senate Bill 299.)

Senator Raggio presented the BDR on behalf of Senator Townsend and himself. He explained it would add a member to the Washoe County airport board to avoid even numbers and tie votes. He said it would also designate an additional appointing authority and clarify the method of removal of any member of the board.

SENATOR RAGGIO MOVED TO INTRODUCE BDR S-759.

SENATOR CARE SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

*****

Chairman O’Connell opened the hearing on S.B. 198.

SENATE BILL 198: Establishes bill of rights for persons whose financial or other business records are subject to examination by regulatory governmental agencies. (BDR 19-53)

Chairman O’Connell provided written disclosure (Exhibit C) regarding a potential conflict of interest on this bill, and stated Senator Raggio would chair the hearing.

Raymond Williams, Lobbyist, Nevada State Association of Mortgage Brokers, President, Las Vegas Mortgage Company, provided background on the bill, noting that disclosure of information from the Division of Financial Institutions (DFI) examination reports was prohibited, apart from discussion with an attorney. Senator Raggio noted that it would be a part of the record and that Mr. Williams would be given a waiver to enable testimony.

Mr. Williams testified Assembly Bill (A.B.) 64 of the Seventieth Session requires that mortgage brokers receive written policies and procedures of the DFI for examinations; to date, nothing has been received.

ASSEMBLY BILL 64 OF THE SEVENTIETH SESSION: Revises provisions relating to mortgage companies and loans secured by liens on real property. (BDR 54-1204)

Mr. Williams provided examples of examinations that have been made and noted they are redundant with certified public accountant (CPA) audits required for mortgage brokers at a cost of $8,000 to $12,000 that are sent to the state. He said there is an additional cost of $170 per year for the state to review financial statements again, and then the examiners come in at $40 per hour to review financial statements a third time.

Mr. Williams claimed the qualifications of examiners are not up to the specifications of the CPAs who have already performed audits. He said lenders who determine whether to approve loans have stringent quality control procedures to ensure conformance with the Real Estate Settlement Procedures Act of 1974 (RESPA), and other federal regulatory standards. He added consumers are protected through federal regulations that limit the amount of fees that can be charged by mortgage brokers.

Mr. Williams testified concerns with S.B. 198 include the hours billed by the DFI, the ambiguity of violations that are reported, and the general behavior of examiners. He claimed there has been consistently abusive and intimidating behavior in the view of many mortgage brokers. He explained average examination for a small mortgage company is about 8 hours, if there are no problems, and another 8 hours are spent in preparation of the examination report of about five pages that includes a lot of routine verbiage about the process and statutes that should not take a lot of time. Furthermore, Mr. Williams claimed during the 8-hour examinations, the examiners leave the office, there is no control over their behavior, they deal with other cases on the broker’s time, and the broker is billed $40 per hour for their services.

In addition to the billing, Mr. Williams said citing violations is a problem also, as identified in a March 5, 2001 memo to Senator O’Connell (Exhibit D. Original is on file in the Research Library.). He said his examination began after he had been doing loans for only about 8 months and there was not a lot going on. Mr. Williams said he appealed this examination that took place in 1998 because he was billed for 96 hours, which he thought was extremely excessive. Mr. Williams said when the examiner first came into his office, he requested to see all employee contracts. Mr. Williams said he was not sure this was appropriate and asked the examiner if he could call his attorney. According to Mr. Williams, the examiner replied that if Mr. Williams called his attorney, he would have more problems and that a subpoena could be issued. Mr. Williams claimed he was trying to be cooperative, but it was a very intimidating situation.

Mr. Williams continued to describe this examination, stating after a couple of hours, he asked the examiner how it was going, and was told he was going to have to “get out [his] checkbook.” According to Mr. Williams, this phrase was said to other mortgage brokers as well. He said he could not have done that many things wrong in such a short time, and in the end, there were no violations he was actually cited for.

Mr. Williams said the biggest problem was the hearing and appeals process. He said he had a problem with cutting a check to the state for 96 hours at $40, or $3600, for services that were not rendered. Mr. Williams testified that he submitted to DFI a $2400 check based on his calculations, that was returned. He said he was considered late in payment, his license was suspended, and although he was still allowed to operate, the state records, technically, showed suspension. Mr. Williams claimed he was trying to comply, but did not want to overpay.

The hearing was in April 1999, and Mr. Williams said he went in to see Deputy Commissioner Lyndon Evans and said he wanted a working relationship, but this was unfair. Mr. Williams said he agreed, in negotiation, to 60 billable hours and the hearing was cancelled. He said the problem is he was guilty until proven innocent. He reported the alleged violations cited in the examination report were later removed by the deputy commissioner.

In response to a question from Senator Care, Senator Raggio explained the guidelines of this bill are similar to those used by the tax commission requiring regulatory staff to act courteously and fairly, to develop and explain their procedures, to provide notices for review and appeal, and to provide written instructions regarding the rights and responsibilities of regulated persons.

Joel F. Hansen, Concerned Citizen, testified support for the bill as a concerned citizen and attorney who has represented various businesses on these kinds of issues. He said the Nevada “Taxpayers’ Bill of Rights” (Nevada Revised Statutes [NRS] 360.291), referenced by Senator Raggio, does not stand up in court because there is no “cause of action” language. He explained if a state agency is in violation, there are no consequences.

Mr. Hansen proposed an amendment to add “cause of action” language to the bill (Exhibit E). Currently, agencies have administrative review boards Mr. Hansen said he thinks are unconstitutional because they combine legislative, executive, and judicial power within one body. He claimed although these review boards are supposed to be independent, they are not because the members are too close to agency staff. He stated the only option is to appeal to district courts that do not have a jury and the judge is limited in the scope of the review.

Mr. Hansen suggested subsection 3, section 9 of the bill, regarding “minimum documentation,” needs to be defined. He said the Department of Taxation has no list of records to be kept by regulated persons provided ahead of time. Mr. Hansen asserted there should be some language in the bill that agencies have to notify, ahead of time, what records need to be kept. He offered to submit a written amendment.

Mr. Hansen continued, suggesting subsection 7, section 13, appears to take out the “guts of the bill” regarding any tax problem. Kimberly Marsh Guinasso, Committee Counsel, Legal Division, Legislative counsel Bureau, clarified the cited language does the opposite of what Mr. Hansen interpreted. Regarding the Taxpayers’ Bill of Rights, Mr. Hansen said the Department of Taxation is out of compliance with subsection 1, section 10, regarding adoption of regulations by regulatory agencies. He claimed the Department of Taxation basically thumbed its nose at this and the Legislature should check back with them and make sure they follow it.

Leo D. Davenport, Lobbyist, Nevada Association of Mortgage Brokers, GFD Investments, provided written testimony listing his various affiliations and reporting alleged abuses by the DFI examiners (Exhibit F). Responding to a question from Senator Care, he claimed an examiner once created an audit out of a telephone conversation.

Kathy Hunsaker, President, First City Capital, provided background information and a summary of mortgage brokers’ concerns (Exhibit G). She added, mortgage brokers are being held to standards of other institutions, such as banks, that should not apply. Kami L. Dempsey, Lobbyist, Las Vegas Chamber of Commerce, testified support for this bill because, she said, it balances the need for examiners to be able to do their job with the rights of business people.

Mary Lau, Lobbyist, Retail Association of Nevada, also testified support for the bill. She said it is appropriate people are advised of their rights because the regulations mostly hit small businesses that do not have the advantage of CPA representation. David L. Howard, Lobbyist, Reno Sparks Chamber of Commerce, also testified support for the bill and asked why the Department of Taxation would be exempt. Senator Raggio responded that the Department of Taxation is covered under the “Taxpayers’ Bill of Rights.”

Senator Raggio clarified for Senator Neal that the Gaming Control Board would be included as a regulatory agency under this bill. Senator Neal commented this bill could weaken the ability of agencies to deal with the issues assigned to them under statutes, particularly, with the State Gaming Control Board keeping out mob influence. He suggested if the appeal process from this bill is implemented, it could wreak havoc.

Renee L. Lacey, Chief Deputy Secretary of State, Office of the Secretary of State, provided a proposed amendment to exclude the Office of the Secretary of State from the requirements of this bill (Exhibit H). She testified the Securities Division of her office conducts criminal investigations as well as compliance audit investigations for broker dealers and investment advisors. Also, Ms. Lacey said the requirements of the bill would have a profound fiscal impact on the Securities Division, as reflected in the submitted fiscal note (Exhibit I).

Ms. Lacey explained prior notice of investigations is not provided due to federal securities laws and the manner in which these investigations are conducted. She claimed there have not been many complaints and there are over 90,000 broker dealers, investment advisors, and sales representatives that would have to be provided a pamphlet explaining the bill of rights, and that would likely generate more questions.

Charles E. Moore, Securities Administrator, Securities Division, Office of the Secretary of State, testified there is no objection, from his office, to the recording of investigations, even in the case of criminal investigations. He said the primary concern is the number of people who would need to be notified; the 90,000 regulated persons are not just in Nevada, but throughout the United States. He interpreted the bill would also require notification to persons who may be running a security scam, which also causes concern.

Ms. Lacey stated the fiscal note (Exhibit I) includes an impact on the notary division, of her office, of about $5000 per year to prepare pamphlets, and reiterated her request for the whole office to be exempted. She said A.B. 253 would give her office regulatory authority over athlete’s agents who may also require information.

ASSEMBLY BILL 253: Enacts Uniform Athletes’ Agents Act. (BDR 34-992)

Mr. Moore stated the Office of the Secretary of State does not audit the same companies that the DFI audits. He said there are about 800 branch offices of brokerage firms, and about 90 investment advisors, that are located within the boundaries of the state of Nevada. He said the goal is to audit all of these entities on a 2- to 3-year cycle. He added that audit fees are limited under Nevada Administrative Code (NAC) 90.323; the maximum fee is $500 and the minimum is $200. With regard to their request for exemption, he said the difference between his office and the DFI is volume. He reported currently, the Office of the Secretary of State conducts approximately 90 audits per year.

Senator O’Donnell asked if the Office of the Secretary of State would entertain an amendment requiring them to send out a bill of rights to anyone they intended to audit. Mr. Moore said another provision of the statute regulating his office is that they are not required to notify people in advance of an audit because if a 30-day notice were given, there would be an opportunity to “cook the books” or destroy records. He said their concerns relate to audits and criminal investigations, and under the definition of “regulated person,” the targets of their criminal investigations would also receive this bill of rights.

Senator O’Donnell asserted a distinction can be made between criminal investigations and audits, and criminal investigation could be excluded from the pre-notification requirement.

Mr. Moore cited NRS 90.410, which specifically allows audits to be conducted without prior notice. As a CPA, he stated he does not think there should be advance notice. He added, if there is a problem with the conduct of an investigator, it should be reported to the office and it can be worked out.

Senator Neal expressed concern an agency would have to justify why they investigate somebody before they even start the investigation, adding that proposals in the past about these issues have not gone this far. He said a regulated person could hold up the bill of rights before the audit, and lawsuits could be caused in trying to carry out regulatory work. Senator Neal concluded, as written, S.B. 198 is ill-advised, because these records are subject to examination.

Ms. Lacey suggested subsection 3, section 9 of the bill, regarding “minimum documentation,” could result in court cases in the middle of an investigation. In reference to subsection 11, section 9, regarding “laws or regulations “ of “doubtful validity,” Ms. Lacey said the current laws are not of doubtful validity unless a court overturns them. Senator Raggio suggested submission of an alternative amendment that specifically limits areas Ms. Lacey believes should be excluded.

Janine Hansen, Lobbyist, Nevada Eagle Forum, testified support for the bill. She cited a case in which her brother had been investigated and was not given access to important information about procedures of the Occupational Safety and Health Enforcement Section of the Division of Industrial Relations of the Department of Business and Industry. Ms. Hansen claimed the “Nevada Operations Manual” for the Occupational Safety and Health Enforcement Section shows it was not following statute, code, or its own procedures. She concluded the bill should have language that ensures access to key information.

Ms. Hansen claimed the term “regulated person,” as used in subsection 7, section 1 of the bill, is offensive to free and sovereign citizens. She reiterated earlier testimony that the bill contains no remedy in case of violation by the bureaucracy. She added the Nevada Constitution guarantees the right to trial by jury, even with civil cases, and claimed this has been denied in the regulatory process. Ms. Hansen concluded the state bureaucracy needs to be held accountable by the Legislature, just as the Internal Revenue Service (IRS) has been held accountable by the United States Congress, because people cannot get justice through the administrative courts.

Carole Vilardo, Lobbyist, Nevada Taxpayers Association, testified support for S.B. 198. Stephanie Tyler, Lobbyist, Nevada Bell, also testified support for the bill, and inquired what information would be supplied in pamphlet form, to regulated persons, in addition to the bill of rights. Senator Raggio explained that it would include non-technical descriptions of adopted regulations or ordinances.

Cynthia Messina, Public Information Officer, Public Utilities Commission of Nevada, testified support for the bill and proposed amendments (Exhibit J) for language insertion in subsection 4, section 9 of the bill, and the addition of the Public Utilities Commission of Nevada to the list of entities under subsection 2, section 13, of the bill. Rob Smith, President, Roofing and Contractors Association of Nevada, also testified support for the bill and encouraged adoption with provisions.

Rosalind Tuana, Executive Director, Board of Examiners for Social Workers, provided written testimony (Exhibit K) and requested exclusion of client records, clinical records, and/or health records; or exemption for all occupational boards from the requirements of the S.B. 198. Dorothy B. North, President, Board of Examiners for Alcohol and Drug Abuse Counselors, also stated a concern about the ability to conduct investigations and testified support for the proposed amendment to exclude occupational boards from this bill.

Marvin Leavitt, Lobbyist, City of Las Vegas, testified general agreement with the provisions of the bill, but has concerns regarding privileged licenses and making available certain information. For example, he said if methods were accessible to regulated persons, they could possibly find a way around audits. Also, he stated concerns about childcare licenses because the safety of children must be protected. Mr. Leavitt also mentioned a concern with paragraph (d), subsection 5, section 9, of the bill regarding the provision of copies of any documents or audio recordings to the regulated persons. He concluded some of the provisions would have unintended consequences of limiting the ability to provide for public health and protection, and if a complaint is received, he noted, it is not usually a case where prior notice of investigation should be provided.

Colleen A. Wilson-Pappa, Lobbyist, Clark County, testified agreement with Mr. Leavitt’s statements. She reported Stan Olsen, Lobbyist, Las Vegas Metropolitan Police, asked to put a statement on the record that the Las Vegas Metropolitan Police generally support the intent of the bill, but are concerned about the effect on their ability to do criminal investigations. Rebecca B. Flynn, Management Analyst, Business License, Clark County, testified agreement with Ms. Wilson-Pappa, and requested exclusion from the provisions of the bill.

Doug Walther, Chief, Office of Business Finance and Planning, Department of Business and Industry, testified on behalf of several agencies that have concerns about the weakening effects of the bill on investigations. He noted problems appear to be limited to the mortgage industry, with the exception of the one occupational health and safety case mentioned. He stated A.B. 64 was passed last session to change the way the mortgage industry is regulated; there has been an adjustment period, and some of the changes are still being implemented. Further, he said examination procedures that are being implemented by the DFI should help.

Mr. Walther said this bill would affect several agencies within the department, as well as other divisions. Noting, most agencies do occupational and professional licensing and review the fitness of people to serve in those areas, Mr. Walther stated support for exemptions for occupational and professional boards, which would also exempt mortgage brokers.

Senator Raggio asserted some of the examples given in testimony may not be characteristic of the general behavior of state officials, but too often, some “super-officious” individual causes a bad reaction and it should not be tolerated. Mr. Walther expressed his belief that most of the time, state officials are acting in good faith and to the best of their abilities. He reiterated there are fundamental changes from last year’s bill that need to be worked out, and in cases of extreme behavior on the part of examiners, the director’s office should be contacted to work things out.

Mr. Walther stated his concerns with the bill. He said the requirement that the state give advance notice of an exam or audit weakens the effectiveness because a regulated person could destroy records or abscond with money. With regard to subsection 11, section 9 of the bill, on “doubtful validity,” he said the legislative and judicial process is supposed to weed out laws of doubtful validity or effect and it is not necessary to state that specifically. He asserted that state officials should be able to proceed on the basis that the law tells them what to do.

Mr. Walther testified the requirement for creation and dissemination of an informational pamphlet would have a fiscal impact to print and mail hundreds or thousands to all regulated persons; a fiscal note will be prepared by his office. He also stated concern with subsection 3, section 9 of the bill regarding “minimum documentation.” He said this is not generally an unreasonable requirement, but when you get into an examination and see a red flag, you need to be able to follow a lead that may uncover fraud.

L. Scott Walshaw, Commissioner, Division of Financial Institutions, Department of Business and Industry, testified if the committee proceeds with the bill of rights, it should be in a separate statute, because chapter 239 of NRS applies to different issues. He explained that when a depository financial institution receives a request from any quarter, that statute is designed to set forth standards under which personal financial information is divulged, and the provisions in this bill would confuse the purpose of that chapter. Mr. Walshaw stated additional concerns about providing a list of items to be reviewed to the licensee under subsection 4, section 9, because if something was left out in error, the licensees could argue that they have no accountability on that issue.

Mr. Walshaw further explained his agency shares examining and supervisory responsibilities with the federal government, which operates under a different set of rules and regulations. He also stated a concern with the use of the examination report, which could be used as a competitive tool in a manner to legitimize a regulated operation. Mr. Walshaw emphasized his agency does not recommend any of the entities it regulates. He agreed to submit a draft of a document the DFI is working on addressing examination policies and practices for all non-depository institutions.

In response to earlier testimony requesting an amendment to “put teeth in the bill,” Mr. Walther called attention to sections 20 and 21 of the bill that provide for penalties and consequences in cases of violation. Senator Raggio clarified, section 19 provides for injunctive relief, and section 21 sets the penalty of misdemeanor for any violation.

Mr. Walshaw pointed out many things discussed in the bill of rights section are already specifically addressed, either in the administrative procedures act or within the body of a specific statute that has jurisdiction over a particular licensee. The terms and conditions under which a licensee may appeal certain actions taken by the regulatory authority are set forth, he said. Responding to questions, Mr. Walshaw said companies are regulated depending on the nature of their businesses, and those determinations have been made with the adoption of various chapters of NRS that state agencies are charged to administer. He added, the draft of DFI regulations would go through a workshop process with the industry preliminary to having a regulatory hearing that would move to adopt any regulations regarding examination practices and procedures. He concluded the regulations would be not only for mortgage brokers, but for all of the regulated entities, with the exception of the depository institutions who already have such procedures in place.

Stephanie D. Garcia, Lobbyist, City of Henderson, testified support for the intent of the bill, and acknowledged shared concerns with those expressed by Mr. Leavitt.

Chairman O’Connell closed the hearing on S.B. 198 and opened the work session, beginning with S.B. 22.

SENATE BILL 22: Revises provisions relating to retrofitting of governmental buildings for energy efficiency. (BDR 28-288)

Chairman O’Connell noted Senator Raggio’s previously stated concern regarding the state debt limit, and his suggestion that the $5-million limit in current statute be left in place. Senator Porter noted the amendment under Tab A of the work session packet appropriately addressed his earlier concerns.

Ms. Guinasso reported a communication from Brett Kandt, Deputy Attorney General, Government Affairs Section, Office of the Attorney General, who is assigned to retrofit contracts. She stated he has a concern with the bill language on using an amount equal to the savings and energy costs to purchase the electricity or natural gas, from the renewable systems and to pay the additional cost of the retrofitting. Continuing, Ms. Guinasso reported Mr. Kandt and bond counsel wanted to clarify, in the section, any savings realized could only be used for those purposes after any debt is retired, pursuant to the section.

Senator Titus inquired what the point of the bill would be if the $5-million limit stayed in place, and section 13 was removed. Senator Raggio stated it would be inappropriate, at this time, to increase the amount in the bill, because the overall debt limit has nearly been reached.

In response to a question from Senator Neal regarding authority of a state agency, Ms. Guinasso clarified the effect of the amendment, as follows:

It restricts their authority, in that, if they did incur any debt to pay for the original retrofitting project, that debt would need to be satisfied before they used any savings in energy costs for any other purpose, as delineated in paragraphs (a), (b), and (c).

Senator Raggio suggested the bill be held over to confer with Senator Townsend, the primary sponsor, to see if he still wants it processed with the proposed amendments and the $5-million-debt limit. There were no objections to this suggestion.

Chairman O’Connell closed the discussion on S.B. 22 and opened S.B. 121 for discussion.

SENATE BILL 121: Makes various changes concerning recording of public meetings and attendance of workshops. (BDR 19-32)

Margaret A. McMillan, Lobbyist, Sprint, testified support for the bill. Mary Lau, Lobbyist, Retail Association of Nevada, provided a written copy of testimony (Exhibit L) in support of the bill. Rose E. McKinney-James, Lobbyist, Clark County School District, also testified support for the bill. Stephanie Tyler, Lobbyist, Nevada Bell, noted many supporters were in attendance earlier and provided written testimony (Exhibits M through P). Ms. Tyler also testified support for the bill and suggested counties could help out small local governments to access technology.

Senator Neal suggested local governments be given free Internet service. Ms. McKinney-James volunteered Clark County School District to help find a way to share technical resources with smaller communities.

Senator Raggio asserted the intent of the bill is good, but said he could not support the measure in its current form, given the concerns expressed. He suggested the committee draft a resolution, as proposed earlier by Thomas J. Grady, Lobbyist, Nevada League of Cities and Municipalities. Senator Raggio concluded it would not be practical to mandate the requirements of the bill at this time, and many local governments would need to be exempted.

Senator Titus stated that what seemed to be the greatest concern is meeting preparation, and suggested the agenda-posting part of the bill could be kept in and the other elements could be addressed through a resolution. Senator O’Donnell reiterated his earlier suggestion for a central repository, and volunteered to work on this issue and report back to the committee.

Chairman O’Connell closed the discussion on S.B. 121 and opened S.B. 228 for discussion.

SENATE BILL 228: Authorizes state controller to appoint persons to certain positions in unclassified service of state. (BDR 18-663)

SENATOR NEAL MOVED TO INDEFINITELY POSTPONE S.B. 228.

SENATOR TITUS SECONDED THE MOTION.

THE MOTION CARRIED. (SENATOR O’DONNELL VOTED NO.)

*****

Chairman O’Connell opened A.B. 22 for discussion.

ASSEMBLY BILL 22: Amends charter of City of Las Vegas to extend terms of municipal judges. (BDR S-858)

SENATOR PORTER MOVED TO DO PASS A.B. 22.

SENATOR TITUS SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

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Chairman O’Connell opened S.B. 96 for discussion.

SENATE BILL 96: Makes various changes to provisions relating to disclosure of improper governmental action. (BDR 23-450)

Chairman O’Connell agreed to hold the bill for 1 week, at Senator O’Donnell’s request, with no objections. The meeting was adjourned at 4:59 p.m.

RESPECTFULLY SUBMITTED:

Laura Hale,

Committee Secretary

APPROVED BY:

Senator Ann O'Connell, Chairman

DATE: