MINUTES OF THE SUBCOMMITTEE
OF THE SENATE committee on Judiciary
Seventy-First Session
April 12, 2001
The Subcommittee of the Senate Committee on Judiciarywas called to order by Chairman Mark A. James, at 11:29 a.m., on Thursday, April 12, 2001, in Room 2149 of the Legislative Building in 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 Mark A. James, Chairman
Senator Mike McGinness
Senator Valerie Wiener
STAFF MEMBERS PRESENT:
Bradley A. Wilkinson, Committee Counsel
Allison Combs, Committee Policy Analyst
Ann Bednarski, Committee Secretary
OTHERS PRESENT:
Kevin Higgins, Chief Deputy Attorney General, Insurance Fraud Control Unit for Industrial Insurance, Office of the Attorney General
James E. Farnan, Assistant Special Agent in Charge, Federal Bureau of Investigation, Las Vegas
Todd Shipley, Sergeant, Reno Police Department
Adam Wygnanski, Detective, Sex Offenders Unit, Reno Police Department
Richard Fitzpatrick, President, Internet Business Association of Nevada
JoNell Thomas, Lobbyist, American Civil Liberties Union of Nevada, and Nevada Attorneys for Criminal Justice
Sara Jones, State Librarian and Administrator, Nevada State Library and Archives, Department of Cultural Affairs
Martha Gould, Concerned Citizen
Linda Deacy, Library Director, Douglas County Library
Mary Lau, Lobbyist, Retail Association of Nevada
Fred L. Hillerby, Lobbyist, American Council of Life Insurers
Robert Gastonguay, Lobbyist, Nevada State Cable Telecommunications Association
Chairman James opened the meeting referring to this committee as the “Internet and High-Tech Crime Subcommittee” and began with asking Kevin Higgins, Chief Deputy Attorney General, Insurance Fraud Control Unit for Industrial Insurance, and Office of the Attorney General, to come forward and discuss S.B. 551.
SENATE BILL 551: Makes various changes concerning computers, technology, Internet and crimes against children. (BDR 15-442)
Mr. Higgins said the bill was a result of the Advisory Board for the Nevada Task Force for Technological Crime established by the Legislature during the 1999 session. Mr. Higgins had prepared a folder containing several documents pertinent to S.B. 551 (Exhibit C). The Governor, he said, had appointed the board to study Internet problems, specifically fraud, he said. He announced the board members included were Senator Valerie Wiener and Assemblyman Bernard (Bernie) Anderson.
The thrust of the bill, Mr. Higgins said, deals with the Electronic Communications Privacy Act (ECPA) and regulates how governmental agencies obtain certain information, primarily e-mail information, from Internet service providers and referred to the “Quick Reference Guide, ECPA-Stored Wire and Electronic Communications,” (Exhibit C, page 2). Mr. Higgins said several years ago the format used was the wiretap indicating this represents an extremely high standard for law enforcement to obtain information. He stated this requires subpoenas and search warrants as part of the information gathering process. He said currently Nevada does not have the subpoena authority and this is one of the areas addressed in the bill.
The second objective of S.B. 551, he noted, is the problem of cyber-stalking and legal penalties for this Internet crime because stalking is a crime in Nevada but cyber-stalking currently is not. Mr. Higgins said Federal Bureau of Investigation (FBI) agents from the Las Vegas office were present to address the issue of cyber-stalking. He described Internet stalking with examples of e-mail or website advertising done to lure children, or place people in a position of possible harm. He explained currently these acts are not crimes in Nevada and legislation is necessary. Children are of particular concern because they are victims of pedophiles who meet them on the Internet and obtain information currently not protected, but should be. He said the trend is growing in Nevada and cited an article in Newsweek, “The Web’s Dark Secret,” March 19, 2001 (Exhibit C, pages 3-8), which explores exploiting children on the Internet. He cited another story featured in a Reno paper on the same subject: “Rabbi arrested in Internet Sex Case,” April 8, 2001 (Exhibit C, page 9). Mr. Higgins reported this happens every day and Nevada needs the tools to combat it.
Mr. Higgins continued, stating S.B. 551 also addresses the sale of goods to minors over the Internet, the use of computers as a condition of parole and probation, and a requirement for public libraries and schools to adopt policies for access and control of use of the Internet. He announced several people were present representing the libraries. He said the librarians proudly told him they had a policy in place and, therefore, had already complied with those sections of this bill.
Mr. Higgins said the folder he provided contains an outline of S.B. 551, a copy of it, and an explanation of proposed amendments to it (Exhibit C, pages 10‑33). He then went on to explain each section and amendment proposed for S.B. 551. He said section 1 of S.B. 551 authorizes the Office of the Attorney General to adopt regulations concerning the Internet service provider records. He talked about a time when Senator Neal was receiving racist/hate mail on his Senate Web account. Mr. Higgins explained in order for law enforcement to track those kinds of messages back to the sender, the service provider must have a record of which message came from which subscriber. He said large website providers do this on a regular basis but smaller ones routinely do not. Tracking is accomplished simply by turning software to the “on” position, he stated.
Section 1 of the bill, he said, authorizes and regulates the use of this software. In addition, this section allows law enforcement to issue subpoenas in compliance with ECPA, which he said simply allows law enforcement to ask for information, and if they are denied, a court procedure can follow.
Mr. Higgins next discussed section 4 of S.B. 551 dealing with the luring of a minor by using a computer or electronic device. He said pedophiles often lure children for sexual or pornographic material and whether an act is committed or not, luring children becomes a felony crime.
He continued, noting the sale of tobacco or alcohol products to minors over the Internet is codified in S.B. 551. He said this part of the bill is satisfied with a signature. Chairman James asked if it already is a crime to sell these products to minors. Mr. Higgins explained it amends and expands the existing law to include the Internet sales to minors.
Mr. Higgins stated section 12 of the bill allows the courts, as a condition of probation or parole, to prohibit use of the computers and computer-related equipment. He said people convicted of hacker crimes go right back to using the computer for the same illegal activity. Some, he said, are hired as Internet security specialists, comparing this practice to banks hiring bank robbers to operate their security systems. Chairman James asked for clarification about computer use for convicted computer hackers. Mr. Higgins explained they could be hired for their oral expertise and instruction, but if so ordered, a condition of their probation or parole could forbid use of the computer. He added denying access to the computer is not a mandatory condition of probation, rather, an option available to the court. Mr. Higgins said, “From the high-tech law enforcement community perspective, it does not make much sense to prosecute these people and allow them then to have the tools of the trade back.”
Mr. Higgins said section 29 addresses policies and standards for libraries to limit access of children to obscene materials on the Internet. He announced he was the former chairman of the Washoe County Library Board; therefore, he knew the library already had adopted a policy to protect children. He said the state librarian was present as was the former director of Washoe County Libraries. Mr. Higgins said he was aware they would be requesting local control of their own Internet policies, which, he added, is the preference of the President’s Commission on Libraries. Mr. Higgins continued schools are the issue in section 30 of S.B. 551, which is similar to section 29. He said the schools are already in compliance with the mandates of the law to protect children from abuse on the Internet, explaining parents decide what type of Internet access is permitted to their children.
Mr. Higgins next went on to the proposed amendments to S.B. 551 (Exhibit C, pages 32-33). He said the amendments take care of some issues raised by law enforcement after the bill was drafted. The first proposed amendment deals with undercover sting operations on the Internet wherein an alleged child, solicited by a pedophile, might actually be an officer posing as a minor. The amendment makes the “intent” to engage in illegal activities with a minor child a crime.
Chairman James asked why it is necessary to have a newly defined crime of cyber-stalking. Mr. Higgins said the current law against stalking infers or implies direct contact. He uses an example of following someone to the laundromat, for example, and then confronting them there, or “hanging out” at their place of employment and harassing them. Mr. Higgins said by adding the sentence, “Using the Internet or electronic mail for the purpose of harassing . . . is also stalking,” eliminates the defense of “no direct physical contact.” He continued a problem existed in prosecuting cyber-stalking crimes because the defense is posed as, “How am I stalking you by putting your face on an Internet page?” Chairman James responded, “The definition of stalking is willfully or maliciously engaging in a course of conduct that would cause a reasonable person to feel terrorized, frightened, intimidated, or harassed [NRS 200.575].” He continued the definition of “course of conduct” is, “A pattern which consists of a series of acts over time that evidence a continuity of purpose.” Mr. Higgins replied if he were arguing a case before the Supreme Court, he would contend the definition includes cyber-stalking. But, he continued, the intent of the bill was to ensure indirect or cyber-stalking is included.
Chairman James said his problem with defining a separate crime of cyber-stalking is it excludes other types of indirect stalking not involving a computer, which then provides the argument, “That’s not in the definition.” Chairman James said a defendant in an indirect stalking crime could say, “The Legislature has decided to define this crime very specifically regarding the instrumentality that is used.” He said he believed the definition of stalking, “without lawful authority, willfully and maliciously engages in a course of crime,” encompasses the use of a computer. He cited the example of a man placing a former girlfriend’s picture, address, and phone number on the Internet with the message, “I want to be raped,” as a caption as clearly falling within the definition. He said, whether the man performed this act on the Internet or posted the same information on a wall somewhere, indicated the same malicious intent to harm or place this woman in danger. He said enacting this law as proposed may actually provide a defense if it is drafted specifically in regard to the use of a computer.
Senator McGinness said he recalled testimony where a person would go into someone’s home, making it clear someone had been there by leaving something on a dresser, for example, and it was considered stalking because the objective was aimed at terrorizing someone. He added he agreed with Chairman James’ opinion about being too specific about computer use to define indirect stalking. Senator McGinness said he felt the current definition of stalking was broad enough to include computers and nothing additional needed to be added.
Senator Wiener suggested the input of law enforcement officials, who were present, would be helpful to the committee. Bradley A. Wilkinson, Committee Counsel, added the draft of this bill does not change the definition of stalking but rather adds, “If the crime of stalking is committed with the use of an Internet or network site there is an increased penalty for that.” He said the actual crime would remain the same; he claimed if the objective was to change the current stalking definition with S.B. 551, it was not translated into the bill.
Chairman James asked what the penalty was for aggravated stalking. Mr. Wilkinson responded it was a gross misdemeanor crime for subsequent offenses. Chairman James clarified stalking of a spouse, or parent of a mutual child is a Category B felony offense on second occurrence. He asked Mr. Higgins if the intent of bill is to make any cyber-stalking on the Internet a Category C felony in all circumstances. Mr. Higgins replied affirmatively. Chairman James clarified, “Just by using the computer, the offense is more serious?” Mr. Higgins stated he thought stalking was more serious on the Internet because the numbers of people who have access to it increases the potential for harm.
Chairman James discussed the conditions required to make a legal charge of “aggravated” stalking. He said substantial bodily harm or death increased the charge, as did, “stalking a former spouse or someone with whom you have a child.” He verified with Mr. Higgins that this bill adds the upgrading of the charge to aggravated stalking by what you are doing, specifically, using the Internet, as opposed to who is the victim. Chairman James said it should not matter how stalking is done, stating it is already covered in current statute. He said the question becomes should it automatically become a felony crime to use the computer. He used an example of sending letters to someone compared to sending them e-mail communications with the same content. One form of stalking is a misdemeanor, the other is a felony, Senator James said. Mr. Higgins said it is easier to remain anonymous using e-mail, and causes a greater degree of fear to victim. Also, he said, millions of people potentially have access to Internet information. Chairman James said he understood the potential of the use of the Internet to bring harm to someone, and concurred with Mr. Higgins it has a greater risk of being more serious. He suggested adding to the existing statute, “The use of a computer or the Internet automatically increases the penalty for stalking.” Mr. Higgins agreed it would satisfy the intention of S.B. 551.
Chairman James then addressed the prohibition of computer use as a condition of parole or probation for cyber-stalkers or computer hackers. He asked if the prohibition portion of S.B. 551 was a mandatory condition of parole and probation. He queried if the judge has the option of waiving the condition only if extraordinary circumstances are found and recorded by the court? He asked Mr. Higgins to clarify. Mr. Higgins used the analogy of “tools of the crime,” stating this area is one of great frustration in legal circles in many states because convicted computer hackers are released and usually immediately return to work in the computer industry. Chairman James asked the FBI agents in Las Vegas to comment on the subject.
James E. Farnan, Assistant Special Agent in Charge, Federal Bureau of Investigation, Las Vegas, said he is responsible for a wide variety of programs and admitted his technical knowledge about specific computer things is limited. He did say, the Internet is a tool with many implications of problems not yet totally identified. He listed data alteration, improper use of e-mail, hacker penetration, software piracy, and other intrusion matters. Mr. Farnan said this technology is still new and frustration comes with ever-increasing problems associated with it.
Chairman James asked him specifically about limiting the ability of an ex-convict who has committed Internet crimes. He wanted to know if former hackers are employed by law enforcement agencies for their expertise and, if so, is it considered an extraordinary circumstance. Mr. Farnan answered affirmatively stating a professional hacker, “Simply knows more than some of the law enforcement agents who are trying to address the problem.” He said there are times when hackers are used to identify other hackers and assist in attacking the problem. Chairman James suggested changing language in bill to include “assist law enforcement in investigating and prosecuting Internet or computer crimes.” He immediately added big corporations, for security reasons, might have the same interest in hackers as law enforcement does, stating corporate security needs might also constitute “extraordinary circumstances.” He said he was sure businesses would be prosecuting people for privacy and security claims.
Mr. Higgins said he felt the primary intent of this section of Senate Bill 551 is directed at the pedophile who has potentially accrued thousands of sources for his illegal acts on the computer. Chairman James said he understood but had to consider the “unintended consequences” of the bill, because he explained, as written, everyone who has been involved in a computer crime is swept into the limitation clause. He recognized the need for some work on the language of this amendment.
Senator Wiener announced a member of the tech crimes committee was from the Clark County School District. She asked if his input about children’s exposure to the Internet and crimes committed by its use would affect the “extraordinary circumstances” wording in question. She said schools are big users of Internet services and conceivably could be prey for hackers, using an example of someone coming in to alter school records or coaching the students on how to access the records. She cited an incident where a substitute teacher came into a classroom for two hours, long enough for the students to hack in and change records. Schools, she said, now have protocols to avoid hacking; and she added, this protection is, “way ahead of their time.”
Chairman James stated his objective for this subcommittee meeting was to vote on some amendments, and, make some recommendations to bring to the full judiciary committee.
Senator Wiener then questioned the disparity in the penalties for selling cigarettes and alcohol to minors, one being a gross misdemeanor and the other a misdemeanor when both penalties involve selling products illegally. Neither Mr. Higgins nor Mr. Wilkinson could answer, and suggested the penalties should be the same: misdemeanors for both types of sales to minors for the first offense. Chairman James asked what the penalty was for the first offense of selling tobacco to a minor not using the Internet. Mr. Wilkinson said it is a fine of not more than $500 and a civil penalty of not more than $500. Chairman James pointed out selling tobacco in person to minors is not even a misdemeanor crime, yet selling it on the Internet is a gross misdemeanor crime. Mr. Higgins said he believed the intent of this discrepancy between the two types of illegal sales was to encourage tobacco companies and alcohol companies to adopt broad sales policies affecting all their distributors. Mr. Wilkinson suggested the language could be changed to be more consistent with the existing law. Mr. Higgins added the drafter of the bill intended to make it a crime to sell alcohol and tobacco to minors over the Internet, and said he would drop penalty sections of the bill, if necessary, to save the portion criminalizing sales of these products on the Internet. Chairman James said it has to be modified to be consistent with existing law regarding illegal sales to minor persons.
Todd Shipley, Sergeant, Reno Police Department, stated he was the detective in charge of the computer crimes unit. He said the Reno Police Department supports S.B. 551 and its amendments with the changes suggested by this subcommittee.
Adam Wygnanski, Detective, Sex Offenders Unit, Reno Police Department, stated he was the detective in charge of the regional sex offender unit. He said there is an increase of sex offenders using the computers for solicitation of minors. He supported S.B. 551, adding, it is an advantage to take a proactive position rather than a reactive one.
Agent Farnan then voiced support of S.B. 551. He suggested, in conjunction with other local, state, and federal agencies, the need for a task force for Nevada to proactively identify and investigate computer violations.
Chairman James then asked if there was anyone who wanted to speak against S.B. 551. In Las Vegas, Richard Fitzpatrick, President, Internet Business Association of Nevada, said it is difficult to oppose the bill because its intent is good and protects young children who are computer literate and computer active. But, he continued, much of the draft of this bill is written to penalize crimes more severely than they are punished when committed without the use of a computer. He used an example of ordering something by telephone as opposed to ordering the same thing online, adding the penalty should be the same no matter what means was used, if it is illegal.
Mr. Fitzpatrick stated tobacco, alcohol, and stalking are treated more suspect, more evil, and more severely penalized if they involve use of a computer or the Internet. Maybe, he suggested, including the Internet as a potential place where these crimes occur, and are, therefore, punishable by law, would make the bill something his organization could support. He disagreed with making stalking, for example, a worse crime if it is done on the Internet. He said if Internet tracking is being used, it is far more difficult to remain anonymous using the Internet or e-mail.
Mr. Fitzpatrick said he also opposed prohibiting people on parole or probation from using a computer; he stated, by definition, a computer could be a calculator or cash register or any number of electronic devices. He added there is a long history in his business of using those convicted of computer crimes as experts to protect their business interests. He reported, at a recent meeting of the International Association of Gaming Regulators, they were instructed to hire computer hackers for protection and a security safeguard as interactive gaming becomes a reality. He says they were told, “No one is better.” He asked for a “level playing field,” stating S.B. 551 is not written to achieve its intent. He said the Attorney General’s Office had too much power over Internet service providers. As written, he concluded, his organization could not support it.
Chairman James thanked Mr. Fitzpatrick and stated he felt the subcommittee had already addressed many of his concerns. He concurred their effort is to make Internet crimes consistent with the same crimes not involving computer use. He said he recognized the need to define terms, and the seriousness of crimes committed with use of a computer.
Chairman James explained the differentiations necessary to codify crimes against children such as luring a child, and luring a child for sexual reasons, without their parents’ knowledge. Mr. Higgins added kidnapping is included in the differentiations. Chairman James acknowledged the inclusion and stated he thought this part of the bill worked well. He agreed however, with Mr. Fitzpatrick, as drafted, S.B. 551 gives the Attorney General’s Office a broad amount of power.
Mr. Higgins defended this stating the Attorney General’s Office has the right to come in and meet with service providers and determine appropriate procedures for keeping records. He said to properly deal with Internet problems, the Attorney General’s Office needed to have a “give-and-take” relationship with Internet service providers, and suggested after 6 months the appeal process could be employed for inappropriate powers. Mr. Higgins added he felt the time required to look at several technical issues would be an enormous task for the Legislature.
Chairman James stated, “We think it’s too broad.” He added he felt Mr. Higgins had a good idea of what the task force on Internet Crimes was seeking and asked him to go back and refine the bill. He said the “broad band of power” would cause a lot of problems pointing out the attorney general’s power was the subject of most of the issues and questions brought forward by the subcommittee and those testifying. Chairman James concluded his comments stating further modifying S.B. 551 would make it more likely to be enacted. Mr. Higgins agreed to work on it immediately.
Chairman James then questioned the issue of wiretapping. Sergeant Shipley explained, “Unless there is an exclusive set of provisions and unless they are listed, we wouldn’t be able to apply to the court system for permission to do a wiretap.” Chairman James asked if subpoena for wiretap had to be issued by a court or could a sheriff issue it. Sergeant Shipley said, currently law enforcement is able, for example, to go to a utility company and ask who has power service or telephone service at a specific address. This is accomplished he explained, by a signature on the request from someone in law enforcement. On the Internet however, he said, there are very specific provisions within ECPA of what can be subpoenaed, and what requires a search warrant, adding some information is not available even with a search warrant. He said, the ability to use federal subpoena powers is needed. Mr. Wilkinson interjected, “Basically, it is a policy decision.” Chairman James asked about consistency, “What do we do elsewhere in the law for this kind of information?” Sergeant Shipley said there are circumstances where the state law allows obtaining information on subscribers to utilities containing “loose language” about Internet providers. He said the Public Utilities Commission and Internet service providers do not wholly agree on this issue, stating the language needs to be cleaned up. Mr. Higgins added the wording has to be in agreement with ECPA standards, warning there were several limitations.
JoNell Thomas, Lobbyist, American Civil Liberties Union (ACLU) of Nevada, and Nevada Attorneys for Criminal Justice, said she wrote a long letter regarding the problems with S.B. 551 (Exhibit D). Ms. Thomas stated she is particularly bothered by the parole and probation provision included in the draft of the bill. She added the bill is not limited to computer crimes, rather the use of a computer in a crime. She urged giving district court judges the discretion to determine reasonable conditions of parole or probation. Ms. Thomas claimed the language does not specifically identify what harm is being addressed. Mr. Fitzpatrick, she continued, brought the issue of communicating over e-mail instead of by telephone or conventional mail and she concurred with him, the wording of this bill criminalizes some innocent acts in an effort aimed at the illegal acts of pedophiles. She said she did not believe this was the intent of this bill. Ms. Thomas said several other provisions need work and agreed to meet with anyone to work on S.B. 551. She mentioned the sections of the bill addressing luring, commenting sometimes people are lured without sexual intent, suggesting the need for clarification. She submitted her letter of recommendations on S.B. 551 for consideration by the committee (Exhibit D).
Chairman James said Ms. Thomas made some good points and suggested she meet with Mr. Higgins and his staff to improve the language of this bill. He added he concurred the subject of luring for sexual or nonsexual intent had to be clarified. On the issue of parole and probation in regard to computer use, Chairman James announced changing the wording from “shall” to “may,” and adding “the exception of cases involving the luring of a child,” would clarify the intent of this proposed law.
Next, Chairman James asked the librarians to come forward to testify, adding, he had already drawn lines through those sections of the bill that deal with libraries. Sara Jones, State Librarian and Administrator, Nevada State Library and Archives, Department of Cultural Affairs, said she appreciated Chairman James’ comments. She said libraries clearly understood an access policy addressing children’s use was critical. Ms. Jones said many mechanisms are in force to control use of the computer. She requested libraries be allowed to continue to implement and enforce their own standards which, she said, already comply with standards proposed. Chairman James agreed with Ms. Jones and stated he did not want libraries to be part of a crime statute. Ms. Jones submitted a copy of library policies (Exhibit E. Original is on file at the Research Library.).
Martha Gould, Concerned Citizen, came forward to voice concern about wording on page 20 of S.B. 551, which describes materials used as, “anything that is capable of being used or adapted to arouse interest.” She said teachers and librarians use everything “under the sun” to arouse interest in children to learn. Ms. Gould said, “If you want to strike this whole thing, that would not make me unhappy.” She added she felt the task force on high-tech crime did an extraordinary job, stating the advent of cyberspace and technology changes the rules of the game. She continued one area not yet been addressed is the “hate sites” and “hate chat rooms.” Ms. Gould said these websites incite violence. Chairman James agreed, he stated, however, hate sites and hate chat rooms concern a First Amendment issue and are not the focus of this bill.
Linda Deacy, Library Director, Douglas County, said the library spends more time on Internet policy and children’s issues related to the Internet than on any other item. Ms. Deacy requested the Internet policy for children regarding libraries be treated differently than other policies, giving consideration to meeting rooms, unattended children, and printed materials. She felt these issues were integral to the library’s operation and were best handled at the local level with guidance from the state librarian. Ms. Deacy submitted a document stating her position (Exhibit F). Chairman James assured Ms. Deacy the word “library” would be stricken from this bill, as libraries should not be responsible for defining alleged criminal activities.
Chairman James closed the hearing on S.B. 551. He suggested the subcommittee decide on its recommendations before the meeting continued on other issues.
Based on testimony presented at the subcommittee hearing and the ensuing discussion on it, the committee chose to recommend the standing judiciary committee change, clarify, and refine to definitions regarding legal authority, luring, criminal intent, consistent penalties for sales of tobacco products and alcohol to minors, and penalties and conditions of probation and parole associated with criminal activity on the Internet or computer-related operations.
CHAIRMAN JAMES MOVED TO AMEND AND DO PASS S.B. 551, INCLUDING RECOMMENDATIONS TO THE SENATE COMMITTEE ON JUDICIARY.
SENATOR WIENER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman James introduced discussion on S.B. 48, previously heard in the full committee.
SENATE BILL 48: Prohibits various acts related to Internet, networks, computers and electronic mail. (BDR 15-259)
Mary Lau, Lobbyist, Retail Association of Nevada, said concerns of the membership of her organization regard statements of privacy practices. Ms. Lau continued the word “must” (page 2, section 4, subsection 2) poses a problem. She referenced the Gramm-Leach-Bliley Act (GLBA), the Federal Privacy Laws, and said those laws were less specific and contained operational latitudes. One suggestion she offered was to change subsection 2 of S.B. 48 to say, “A statement of privacy practices must clearly indicate the intended use of information including the sharing with affiliates or third party licensees.” She continued, explaining:
The words “each intended purpose,” [used in S.B. 48] unfortunately, “intended” purposes change often, and if very specific, what you have is businesses you may have purchased [that] aren’t listed, or contract changes for handling transactions, and third party affiliates and this type of information.
Mr. Fitzpatrick stated his concern is similar to Ms. Lau but much broader in scope. He said his organization:
Really opposes the concept of setting Nevada out as having a significant disadvantage that if a company is incorporated here, has his website here, uses one of our Internet service providers, that they are held up to a different standard . . . But, with our Internet industry growing, [and] with our economy expanding, [it] puts our businesses at a significant disadvantage.
The definition, he continued, includes those businesses physically present here in Nevada, and those incorporated here. Nevada enjoys a significant business of incorporating businesses physically located throughout the world, he said. He said all of those businesses would be required to follow a “unique set of rules” on their websites. Mr. Fitzpatrick added the Internet service providers located here are competitive, stating one of the members of his organization is hosting over 3000 websites for people from 12 different countries. He explained all of these subscribers would have to comply with Nevada law on disclosure instead of the law of their own state or country. He claimed this would put all website businesses at a very significant disadvantage. Mr. Fitzpatrick said he believed in privacy practices, but stated:
I would hope those in the glass house that support this bill would look at the legislative website. It does not have a privacy statement, and it takes my personal information. It took my credit card to subscribe to this service. The state treasurer doesn’t have a disclosure statement, [neither does] the comptroller, Clark County, [or] Washoe County. If the government wants to begin somewhere, perhaps the appropriate place would be with governmental websites in this State.
Mr. Fitzpatrick added to penalize private businesses in Nevada, or those desirous of coming to Nevada, by having a different set of rules will strongly negatively affect the potential for economic expansion.
Robert Gastonguay, Lobbyist, Nevada State Cable Telecommunications Association, addressed the subcommittee stating his organization “mirrors the statements having been imposed before you previously.” At the original hearing, he said, the cable operators, including Cox Cable and AT&T who also operate websites, had a national policy linking a privacy statement to their website. He said to bear the cost of adding an individual state privacy statement would not be conducive to our business.
Fred Hillerby, Lobbyist, American Council of Life Insurers, said the issue he has with S.B. 48 is a Federal law fondly called, “GLBA,” Gramm-Leach-Bliley Act, enacted in 1999, also known as the Financial Services Modernization Act. He said under this act, financial institutions and insurance companies comply with a set of privacy requirements involving electronic transmissions and the use of the Internet. He continued S.B. 48 proposes another set of standards to be used when, in fact, this Federal law will be implemented in the state of Nevada. Mr. Hillerby wanted the committee to be aware that A.B. 618, the Insurance Commissioner’s Bill, covers many issues including privacy and disclosures affecting insurance, banking and financial institutions.
ASSEMBLY BILL 618: Makes various changes relating to the regulation of insurance. (BDR 57-564)
Mr. Hillerby suggested the committee consider exclusion of these businesses from S.B. 48 as they are already covered by other legislation. Chairman James stated the committee would look at the federal act.
Mr. Higgins said the Office of the Attorney General supports S.B. 48, section 7, the denial of service, provision of the bill. He said the denial of service provision is important for law enforcement. He cited the acts of a teenage computer hacker who literately shut down eBay and Ameritrade by “pinging” their sites. Mr. Higgins said for law enforcement purposes it is important to have a definition of “denial of service,” and criminalize it in Nevada.
Sergeant Shipley said the Reno Police Department also is in support of the “denial of service” clause in section 7 of S.B. 48. He said it currently is not defined in the statutes; and, therefore, has been problematic for prosecution. Specifically, he said, the “harmed at $500 or more” (S.B. 48, section 6, subsection 6, paragraph (b)) needs more definition because, he said, it is difficult to determine a dollar value on loss of business when someone totally stops your business. He suggested the subcommittee treat the denial of services sections of the bill separately, and consider passing those sections of the bill.
Chairman James announced he wanted to refer S.B. 48 to the full committee without recommendation from the subcommittee.
CHAIRMAN JAMES MOVED TO REFER S.B. 48 TO THE FULL COMMITTEE WITHOUT RECOMMENDATION.
SENATOR WIENER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman James adjourned the subcommittee meeting at 1:15 p.m.
RESPECTFULLY SUBMITTED:
Ann Bednarski,
Committee Secretary
APPROVED BY:
Senator Mark A. James, Chairman
DATE: