MINUTES OF THE
SENATE Committee on Commerce and Labor
Seventy-second Session
March 21, 2003
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 7:04 a.m., on Friday, March 21, 2003, in Room 2135 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to the Grant Sawyer State Office Building, Room 4412, 555 East Washington Avenue, 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 Warren B. Hardy, Vice Chairman
Senator Ann O'Connell
Senator Raymond C. Shaffer
Senator Joseph Neal
Senator Michael Schneider
Senator Maggie Carlton
STAFF MEMBERS PRESENT:
Scott Young, Committee Policy Analyst
Courtney Wise, Committee Policy Analyst
Kevin Powers, Committee Counsel
Johanna Downey, Committee Secretary
Laura Adler, Committee Secretary
OTHERS PRESENT:
Steve McCauley, Chairman, Nevada Athletic Trainers Association
David Noble, Assistant General Counsel, Public Utilities Commission of Nevada
Debra Jacobson, Director of Government and State Regulatory Affairs, Southwest Gas Corporation
Scott M. Craigie, Lobbyist, American Resort Development Association, Farmers Insurance Group, KLVX and KNPB Public Broadcasting, and Sprint Nevada
George A. Ross, Lobbyist, The McMullen Strategic Group, AIG Claim Services Incorporated, and Las Vegas Chamber of Commerce
Robert A. Ostrovsky, Lobbyist, Cox Communications Company
Chris MacKenzie, Lobbyist, Counsel, American Express
James F. Nadeau, Lobbyist, Washoe County Sheriff’s Office
James L. Wadhams, Lobbyist, Coalition for Fairness in Construction
Margi A. Grein, Lobbyist, Executive Officer, Nevada State Contractors’ Board
Jake L. Parmer, Lobbyist, Nevada State Contractors’ Board
Robert C. Maddox, Lobbyist, Nevada Trial Lawyers Association
Susan Fisher, Lobbyist, City of Reno
Marsha L. Berkbigler, Lobbyist, Charter Communications
Andrew L. Barbano, Lobbyist, City of Reno Citizens Cable Compliance Committee
Charles L. McCubbins, President, Com-Star Cablevision
Dan Musgrove, Lobbyist, Director, Intergovernmental Relations, Clark County
Robert Gastonguay, Lobbyist, Executive Director, Nevada State Cable Telecommunications Association
Chairman Townsend opened the meeting with Bill Draft Request (BDR) 58-261.
BILL DRAFT REQUEST 58-261: Revise provisions governing regulation of telecommunications services. (Later introduced as Senate Bill 400.)
SENATOR HARDY MOVED TO INTRODUCE BDR 58-261.
SENATOR O’CONNELL SECONDED TO MOTION.
THE MOTION CARRIED. (SENATORS SHAFFER, NEAL, AND SCHNEIDER WERE ABSENT FOR THE VOTE.)
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Chairman Townsend said the proposed amendments to Senate Bill (S.B.) 27 are in the workbook (Exhibit C. Original is on file in the Research Library.).
SENATE BILL 27: Provides for regulation of athletic trainers. (BDR 54-5)
Steve McCauley, Chairman, Nevada Athletic Trainers Association, said they and Nevada Chiropractic Association, and Nevada Physical Therapy Association have agreed on the amendments (Exhibit C) to the bill with some changes. He reviewed the changes to the bill for the committee.
Senator Carlton said she agreed with the amendments.
Chairman Townsend noted there was no established cap for their fee. He said there would need to be a fee cap in the bill, as the committee has never processed a bill without a cap. Mr. McCauley said they based a budget (Exhibit C) on an initial application fee of $200, and $150 for renewal. Chairman Townsend suggested the cap be set at $250 to allow wiggle room, if needed, before the next session.
Mr. McCauley stated the budget had been prepared by Kathy Ong of Hobbs Ong and Associates. Senator Carlton stated with the name and reputation behind the budget, the association was in good shape.
Chairman Townsend noted, in addition to the amendments, the fee cap must be included. He said the fiscal staff would have to review the bill to go into the budget because they are using a deputy attorney general.
SENATOR CARLTON MOVED TO AMEND AND DO PASS S.B. 27.
SENATOR HARDY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Townsend opened the hearing on S.B. 125.
SENATE BILL 125: Revises provisions relating to certain final orders and permits for public utilities. (BDR 58-488)
David Noble, Assistant General Counsel, Public Utilities Commission of Nevada, said the proposed amendment was a result of meeting with representatives from Nevada Power Company, Sierra Pacific Power Company, Newmont Mining Corporation, Barrick Goldstrike Mines, Reliant-Mirmont, Nevada Resort Association, and Nevada Energy Buyers Group. He said the bill would change procedures for approval of eligible customers switching to new providers.
Mr. Noble said currently customers who have left the system and want to return would have to go through the entire process again, even though the terms and conditions are identical. The amendments would smooth out the process. He pointed out there was no effective date in the bill. He asked that it be made effective upon passage and approval to expedite the changes.
Debra Jacobson, Director of Government and State Regulatory Affairs, Southwest Gas Corporation, said the amendment is an enabling amendment to grant a natural gas utility the ability to establish a separate deferred or balancing account. It is a balancing accounting treatment now being used in California and Arizona.
Senator Neal asked if the consumer advocate gave testimony on this bill.
Mr. Noble said the Bureau of Consumer Protection was informed of the meeting, but given the subject matter of procedural aspects, they did not attend. However, Susan Fisher of Barrick showed the amendments to Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection (Consumer’s Advocate), Office of the Attorney General, who was in line with the proposed changes.
Chairman Townsend said the proposed amendment from the commission includes being effective upon passage and approval. The Southwest Gas Corporation amendment enables the authority to deal with deferred accounts as established by the commission.
SENATOR O’CONNELL MOVED TO AMEND AND DO PASS S.B. 125.
SENATOR SCHNEIDER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Townsend opened the hearing on S.B. 133. He noted the proposed amendment (Exhibit C) has been agreed to by all interested parties, and replaces the entire bill.
SENATE BILL 133: Revises requirements for certain licenses to practice medicine if applicant intends to practice medicine at certain mental health centers under certain circumstances. (BDR 54-508)
SENATOR O’CONNELL MOVED TO AMEND AND DO PASS S.B. 133.
SENATOR CARLTON SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Townsend said they would take up S.B. 255. He reviewed the proposed amendments (Exhibit C) to the bill. He asked for clarification regarding the telephone calling guidelines. He said he understood if the bill is amended, it means a business is allowed to call you because you have a relationship with them, and you have not asked them not to call. However, if another business wants to solicit you, they can only do that if you have put your name on a list.
SENATE BILL 255: Makes various changes relating to telecommunications. (BDR 52-133)
Kevin Powers, Committee Counsel said, “That is the way the amendment is set up.”
Chairman Townsend pointed out the proposed amendment (Exhibit C) as to correct an oversight, which would have precluded emergency services from calling a person at home to warn them of a danger in their area.
Scott M. Craigie, Lobbyist, American Resort Development Association, Farmers Insurance Group, KLVX and KNPB Public Broadcasting, and Sprint Nevada, stated he had a letter (Exhibit D) from the Association of Public Television Stations expressing concern the bill would hurt public broadcasting, which relies on telephone solicitations for a portion of their funding.
Mr. Craigie also noted proposed amendments (Exhibit E) to allow telemarketers to promote tourism in Nevada, and to exclude from the “do call” list persons having a prior business relationship with the solicitor. He said the timeshare industry in Nevada creates $350 million in new time-share sales, and of that 150 are in Nevada. This activity supports many other industries in Nevada.
George A. Ross, Lobbyist, The McMullen Strategic Group, AIG Claim Services Incorporated (AIG), and Las Vegas Chamber of Commerce, stated his clients feel that an existing business relationship should justify the ability to call. He recommended in section 15, subsection 2 of the bill to change “and” to “or.” This would enable companies with an existing business relationship to make calls to those customers concerning items of possible benefit to them such as updating insurance coverage.
Senator Carlton wanted to know to whom the bill would apply once the changes were made.
Chairman Townsend explained the only way a business would be allowed to call an individual at their residence would be if there were a business relationship that was about to terminate, unless the consumer chose to place their name on a list called a “do-call registry.” He said the proposed amendment would remain in place except for individuals who, by their definition, have a preexisting business relationship. If the consumer asked not to be called, the business would have to honor their request.
Senator Carlton asked if being a member of an organization such as the Girl Scouts was a business relationship, and how that would be addressed. She also questioned being called at home by her union to be reminded of meetings and events.
Chairman Townsend said the nonprofit side was somewhat comfortable with their position relative to the language of the 18-month period. As for the union, that would be a preexisting relationship.
Robert A. Ostrovsky, Lobbyist, Cox Communications Company, said under section 15 there would be three tests regarding whether or not the call could be made. Test number one is it a public utility/telecommunications company, community and television company, and financial institution. Test number two would be for terminating service. Test number three would be if there was a preexisting relationship. He said each is a stand-alone test under section 15.
Mr. Ross said his clients were concerned the list under number one might be restrictive, and if a company did not fall into one of those categories, it would be excluded from the ability to use the “do-call registry” to market, and possibly be a disadvantage to the company with its competitors.
Chairman Townsend said he did not want anyone precluded from calling a customer if their insurance was about to lapse or their lights would be shut off, and telephoning them was the last effort of contact. He said he considered these situations were important, and did not want that changed. He stated he would leave the issues up to the committee, because outside of the public safety issue, he would not support any of the other proposed changes to the bill. Chairman Townsend stated whatever the committee decided he would support the bill, because he believed there was a collective wisdom.
Mr. Ostrovsky said calls not for the intended purposes covered in section 11 of the bill are not restricted by the bill. In other words, the language does not restrict calls from your union or your volunteer organization.
Chris MacKenzie, Lobbyist, Counsel, American Express, said his client opposes the bill. He said a major constitutional concern is infringement of commercial free speech. He said a “do-not call” list would be a more reasonable approach to restricting commercial free speech.
Chairman Townsend stated, on advice of Legislative Counsel regarding free speech, he requested the strongest defensible bill possible. He reiterated to the committee that he would support the language by the Washoe County Sheriff’s Office, but the rest he would not. He said he would support whatever the committee decides once the bill is processed.
Senator Hardy said he would like clarification regarding the charitable issue such as the Boy Scouts who do a “Friends of Scouting” fundraiser drive every year.
Chairman Townsend asked counsel if a person donates to an organization does that establish a preexisting business relationship. He wanted to know what the relationship would be if a person does not donate.
Mr. Powers responded:
I think Senator Hardy identifies the issue as whether or not that type of call from a charitable organization would qualify under the definition in section 11 of telemarketing call. I don’t believe under the current language that it would qualify because you’re not soliciting the person to purchase, lease, invest in, or otherwise acquire goods or services. However, it may be an important amendment to make that clear in the language of the bill. If they’re asking for just a simple donation without any exchange dealing with goods or services, then it probably would not qualify under the language of the bill as a telemarketing call. However, if they’re actually asking the receiver of the call to acquire or purchase goods or services, then yes, it would come under the telemarketing-call definition in this bill. Then the next question would be whether or not they had a preexisting business relationship with the receiver of the call, and that would determine on the amendment here on how you define a preexisting business relationship.
Senator Hardy said he wanted to get the answers to his concerns on the record:
I think section 11 is good. It takes care of most concerns. But, I would be more comfortable if we had something in there to clarify that issue. The second question, Mr. Chairman, I’m not quite clear in the distinction between what Mr. Ross was talking about, and what we saw in Mr. Ostrovsky’s amendment. … It seems Mr. Ostrovsky’s amendment speaks directly to what Mr. Ross was talking about. Certainly, that’s a preexisting business relationship with your insurance agent. I understand needing the distinction of “or,” ¼ that’s clearly the way it’s written in my mind. I’m also sympathetic to the issue raised by American Express, but at some point we have to address these issues. Finally, we did not give our counsel an opportunity to address the question that came up during the hearing with regard to jurisdiction. ¼ There was testimony that we did not have the jurisdiction to stop most of these calls anyway. So what we’re doing here would, essentially, have no effect in real life; and would like Mr. Powers to address that.
Mr. Powers stated:
Senator Hardy’s concerns rise from a common need that if an out‑of-state entity made a call into this State, that this State would not have personal jurisdiction over that out-of-state entity in order to prosecute or bring civil action by the attorney against the out‑of‑state entity. When we’re dealing with personal jurisdiction by one state over an out-of-state entity, it all turns on a constitutional test and a due process cause that deals with minimum contacts. And minimum contact is determined on a case‑by-case basis. But, generally, if a person out of state purposefully avails themselves of the opportunity to conduct business within one state, then that person has a sufficient minimum contact with that state in order to have civil action brought against them in that state. So, if a telemarketer out of state made calls into Nevada, that telemarketer would be purposefully availing themselves of the benefits and protections of the laws of this State in actually engaging in business in this State. So, generally, this State would be able to assert personal jurisdiction and bring a civil action against that individual. Again, it all turns on a case-by-case basis, but I assume most telemarketers would not be making a single call into this jurisdiction. And even a single call under certain circumstances would be sufficient to create a personal jurisdiction. I believe the issue is less of a constitutional personal jurisdiction issue, and more of the cost of enforcing it, and trying to track down the individual to actually enforce the civil judgment against them.
Mr. Ostrovsky said he would like counsel to comment on whether “or” adds anything to the bill. He said he did not think it did.
Mr. Powers responded:
On that issue, Mr. Chairman, I think the “or” in the context of the bill as presently written makes a substantial difference. What happens is that right now, in order to qualify for the exemption under section 15, the telemarketer has to meet all three of the qualifications in that section. Once you put the “or” in, then each of those becomes a separate exemption. So for example, with the “or,” any telemarketer that is a public utility, telecommunications company, or financial institution in subsection 1 would be completely exempt from the requirements. They wouldn’t even have to have a preexisting business relationship. They just would not be subject to the “do-call registry” requirements.
Chairman Townsend said he wanted to know how insurance would be defined under this bill.
Mr. Ross said parts of AIG Claim Services are clearly a financial institution, because they do have the whole Sun-America Retirement Annuity program, and they do have some other banking-type activities. He said parts of AIG Claim Services are clearly an insurance entity.
Mr. Powers said:
May I add too, that I think the intent of Mr. Ostrovsky’s amendment is to create an exemption for a preexisting business relationship, regardless of the entity that has the preexisting business relationship with that customer.
Mr. Ostrovsky stated their intent is if there is a preexisting business relationship of any kind, not qualified by what type of company, they would have the right to call within the 18-month period as long as they met the other standards of notification.
Chairman Townsend said he wanted to know if Mr. Ostrovsky indicated he wanted to remove section 15 entirely, because the only way there would be a need to call someone to tell them they are being terminated, is to have a preexisting relationship.
Mr. Ostrovsky responded the intent was to leave in section 15, as there are a number of different standards under which they could call. The exclusions under which a business could call would be public utilities, preexisting business relationship, and termination of business. He corrected himself and said preexisting business relationship includes termination of service.
Mr. Ross said his preference in section 15, line 32, was to change “and” to “or.” He said if it is correct that Mr. Ostrovsky’s amendment is not restricted to those four categories of companies, but applies to a preexisting business relationship with other types of companies as well.
Chairman Townsend said he thinks Mr. Ostrovsky’s intent is independent from this definition. A preexisting business relationship would allow for certain things. He said the reason to take out the termination is that if there were one you would automatically qualify. Mr. Ross stated knowing that it is not restricted to those four, he can support the bill.
Mr. Ostrovsky said the first section was left in, and on page 4, section 15, line 32, “and” was deleted. It was thought by adding the new section on preexisting business relationship, it was a stand-alone test.
Mr. Powers stated:
Mr. Chairman, I think it was just a policy decision for the committee, and that once they make that policy decision, then we can draft the language accordingly. At issue here is essentially, we are gutting and replacing section 15. And the policy choice is, it’s four types of entities listed here, plus a preexisting business relationship will equal the exemption, or just simply a preexisting business relationship equals the exemption. That’s the policy decision the committee has to make.
Chairman Townsend said if the efforts by Cox Communications Company were to fit in the context of what was attempted here, that would preclude some of the clients Mr. Ostrovsky represents.
Senator O’Connell wanted to know how the public would be notified of this.
Mr. Powers said, “It is page 4, section 13 of the bill, line 11. The attorney general shall: Publicize the existence of the ‘do-call registry.’”
Senator O’Connell said the attorney general would first publicize the existence of the “do-call registry.” Then the attorney general could start collecting fines for the overhead when people call in to report.
Chairman Townsend said on page 2, line 37 of the bill, it was requested to change 9 p.m. to 8 p.m. He said amendment B would strike section 15, and make it a preexisting relationship.
Senator Neal said he would like to add Mr. Ostrovsky’s amendment, strike section 15, and add the Washoe County Sheriff’s Office amendment regarding local public agencies and public safety.
SENATOR NEAL MOVED TO AMEND AND DO PASS S.B. 255.
Senator Hardy asked to have charitable organizations included, and to change 9 p.m. to 8 p.m.
Senator Neal said he agreed.
SENATOR HARDY SECONDED THE MOTION.
Senator Hardy emphasized his intent in seconding the motion is the business relationship is clearly defined as the policy discussed, and that charitable groups are specifically exempted from the bill.
Mr. Powers added:
There is one other component from all the amendments that have been proposed that hasn’t been discussed by the committee, and wouldn’t be covered by the charitable or preexisting business relationship exemption. It is the proposal that a telemarketer offer to a subscriber a vacation package to a destination in this State. That was just another one of the proposed amendments, and I want to be clear.
Senator Neal stated that was not included in his motion.
THE MOTION CARRIED. (SENATORS TOWNSEND, SHAFFER, AND CARLTON VOTED NO.)
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Chairman Townsend said he wanted everyone to know he would support the bill on the Senate Floor, but he did not like the amendments. He said, personally, he does not like telemarketers calling as though they were old friends, or giving the impression they are part of a law enforcement organization or the armed services when in fact, they are not. He stated that behavior is completely offensive to him, and that is where his intensity comes from regarding the bill.
James F. Nadeau, Lobbyist, Washoe County Sheriff’s Office, said often the local collective bargaining unit would contract with a telemarketer. He said they are making an effort to narrow the contracts to making clear the solicitation is on their behalf, and there are no misrepresentations. He said there are many groups soliciting funds by utilizing a law enforcement agency’s name, and have absolutely no relationship with the collective bargaining unit or the agency. They are soliciting money for a fabricated organization. He said he encourages people to get a call-back number, and check with the local entity the solicitor represents to verify the association. Mr. Nadeau said he understood the Chairman’s concern, and would pass on his concerns.
Senator Shaffer said he wanted it on the record that he would support the bill on the Senate Floor, even though he voted no in committee, because he did not like the way it was cut up.
Chairman Townsend said regarding S.B. 273, he had amendments drafted for the purpose of taking items out of another bill to include in this one, but did not want to do that until Senator Schneider was ready with his issues.
SENATE BILL 273: Requires contractor or his representative to be present at certain inspections conducted at residence or appurtenance that is subject of claim for constructional defect. (BDR 3-252)
Senator Schneider said that addresses the inspections for presentation to a homeowners’ association, and that would really start the lawsuit. He stated it is important that a third set of eyes be present during an inspection. He said he would be working closely with Kevin Powers on the language.
Chairman Townsend said to Mr. Powers the concern was with the language indicating a filing first under chapter 40 of Nevada Revised Statutes (NRS) starting litigation. He said this is not the intent of the bill, and wanted the language to provide the contractor an opportunity to be present for inspection long before litigation. Chairman Townsend referenced key points in the workbook (Exhibit C) regarding S.B. 273. He recommended the committee familiarize themselves with those things not addressed in S.B. 241, that are found in sections 13, 41, 44, and 45 of S.B. No. 516 of the 71st Session, and sections 9, 23, 24, and 25 of A.B. No. 133 of the 71st Session. He said section 13 of S.B. No. 516 of the 71st Session dealing with increased bonding requirements and ratings for licensees was beneficial and should be amended into this bill. Section 41 deals with scheduling meetings, how a homeowners’ association would better define health, safety, welfare, members of the association, and specific time frames on how an action is dealt with at an association level. Sections 44 and 45 are about drainage and soils, and section 45 is the governing body of each city and county that shall adopt ordinances to ensure the prevention and mitigation of harm to a building or structure caused by water that is standing under the building. Section 9 of A.B. No. 133 of the 71st Session talks about notice, and more importantly, it talks specifically about if the contractor is threatened or initiates legal proceedings against a claimant. He said if someone actually went through the process, filed a claim, the contractor cannot come back and threaten them in any way. Section 23 covers when an association brings an action relative to the process of a common-interest community, how it is done, when to vote, and what it does. Sections 24 and 25 are a continuation. He asked the committee to look specifically at those sections for purposes of adding to S.B. 273.
Scott Young, Committee Policy Analyst, said section 9 of A.B. No. 133 of the 71st Session might be more appropriately considered with S.B. 241, because it presupposes a notice and right-to-repair section.
Chairman Townsend said, if those people are interested in that, then they need to look at section 9 of A.B. No. 133 of the 71st Session, because it is more definitional to what is proposed in S.B. 241 regarding claimant and contractor. He asked Mr. Wadhams as the proponent of S.B. 241, to look at section 9 to see if it adds clarification, because those were issues that occurred in southern Nevada, and it was best placed in S.B. 241.
SENATE BILL 241: Makes various changes to provisions governing certain claims for constructional defects. (BDR 3-156)
James L. Wadhams, Lobbyist, Coalition for Fairness in Construction, indicated the area where it states the claimant is not required to provide the notice tends to undermine the intent. Mr. Wadhams said there should at least be a notice so there is the opportunity to make repairs. He added it would seem everything should be overridden if there were criminal conduct.
Chairman Townsend said S.B. 273 would be scheduled for another day to give all parties time to work on the language. He opened the hearing on S.B. 241. He said the issue was simple. The language drafted was not appropriate since language already existed. Another issue in the proposal was the board has the ability to recover all administrative, investigative, and legal costs from the contractors, necessary to carry out the provisions in S.B. 241.
Margi A. Grein, Lobbyist, Executive Officer, Nevada State Contractors’ Board, said Chairman Townsend had stated the issues fairly.
Chairman Townsend said the proposed amendments (Exhibit C) include removing reference to the Nevada Supreme Court, adding board and employee language, and allowing the board to recover of costs for administrative, investigative, and legal requirements to carry out the provisions of the bill. Mr. Wadhams said the amendments were favorable and he supported the bill.
Jake L. Parmer, Lobbyist, Nevada State Contractors’ Board, said everyone was talking about the same thing.
Chairman Townsend said he would like to know the status of analysis of the disposition or regulatory action relative to the list (Exhibit F) provided by those individuals involved in multiple actions.
Ms. Grein said the list is not complete, but could give the committee what she has compiled to date. She said she has someone continuing to work on gathering the information. She added that a problem was the individual’s name was not necessarily the name on the license, or an individual filed rather than an association. She noted that up to 1999 the State Contractors’ Board did not have the ability to continue hearing a disciplinary matter unless it involved a life‑safety issue, and the statute of limitations ran out. Ms. Grein said most of the cases were fairly old going back to 1993 and 1994. She said it was also a different board than it is today, and now the board is more involved. She said many contractors already had their licenses pulled for not posting a bond when a complaint was made, leaving the board with very little they could do.
Chairman Townsend said everyone should make sure they do not lose sight of the fact that things can go wrong and do need repair. Keeping that in mind in regard to bonding, make sure there is money so the problem can be fixed. He added that Ms. Grein should think about ways to track bonding, licensure, and contractors who just walk away and do not renew their license.
Ms. Grein said as a result of last session regarding pools, the State Contractors’ Board raised the bond to $500,000, and also changed the rating of the bonding company.
Chairman Townsend said something to keep in mind from the debates on these bills is that the board’s jurisdiction is limited to things built. That is where there is a shift to local government and other entities that have jurisdiction over related areas. He said to be aware the board cannot fix everything, and the State Contractors’ Board should get focused on the backlog of problems, and do what they can in that area.
Senator Hardy said to note in the list how many cases went to a jury, and how many were otherwise resolved. Mr. Ross said the document does not indicate whether there was a settlement, or if the case went to verdict.
Robert C. Maddox, Lobbyist, Nevada Trial Lawyers Association, responded to Chairman Townsend’s inquiry that it would not be difficult to include in the chart whether the complaint was resolved by settlement or verdict. He said to Senator Hardy that the majority of cases settle without going to trial.
Senator Hardy said it was important to determine the complaints filed. In some cases it may be found the complaints were never filed. He said he thinks it is a legitimate issue that of the complaints filed, there has never been a settlement under chapter 40 of NRS. He said chapter 40 of NRS is a black hole where things go in, but do not come out. This needs to be looked at to address solutions and resolve them once and for all.
Chairman Townsend requested Ms. Grein return with recommendations from the board to make the State Contractors’ Board more efficient as relates to the law. He said it was recommended to remove section 41 from S.B. 241 regarding the court; adding the non-liability for civil action in performance in good faith, scope, and duties; and give the board the ability to recover administration, investigative, and legal costs necessary to carry out S.B. 241. The authority to adopt regulations and assess reasonable fees to carry out the duties of sections 27, 31, and 52, and the effective date of these sections should be no sooner than October 1, 2003.
Senator Hardy stated it is a very important and difficult issue, and there is a need to be careful about putting obstacles in the way of home owners. By the same token, the issue of conscientious good contractors not able to access insurance must be addressed with the related causes. He said he thought the bill balanced the issues. Senator Hardy said the bill should include immunity for the State Contractors’ Board to bring it in line with the State Board of Nursing guidelines, funding costs, time frame regulations, and section 31 with everything except “the removal of results of an investigation are not admissible in court,” and clarify this as a remedy also available to home owners.
SENATOR HARDY MOVED TO AMEND AND DO PASS S.B. 241.
SENATOR SCHNEIDER SECONDED THE MOTION.
Senator O’Connell said although it does not say it in the bill, she would assume all decisions by the State Contractors’ Board would be handled in good faith.
Chairman Townsend said the language comes from many of the State boards, and will be clarified by committee counsel. He said this would provide the court the parameters in which someone would not be held liable. He emphasized it had nothing to do with the board. If someone who is sued goes to court, this is the standard by which the court would hold them.
THE MOTION CARRIED. (SENATOR CARLTON VOTED NO.)
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Chairman Townsend opened the hearing on S.B. 278.
SENATE BILL 278: Revises provisions relating to powers of certain local governmental entities to provide services of community antenna television system. (BDR 58-1127)
Senator Neal said this was enabling legislation and did not change anything, but would allow local government flexibility to deal with cable companies. He said for example, Cox Communications Company has a 20-year contract with Clark County. He said as things change over the years, the bill would give the county some flexibility in negotiations with cable companies.
Chairman Townsend said he wanted to know what process local government used in negotiating contracts with cable companies.
Susan Fisher, Lobbyist, City of Reno, said she did not know how the negotiation process worked, but the agreements are long-term.
Chairman Townsend asked for an explanation of how the process was handled by staff, a committee, or some other method. Ms. Fisher said for Reno, the staff handles negotiations, and then makes the recommendations to the city council and they vote.
Marsha L. Berkbigler, Lobbyist, Charter Communications, said the contracts are very long-term. She did not know of any for less than 18 months. Ms. Berkbigler said negotiations can take a long time. South Lake Tahoe took 18 months, and they have been negotiating with Douglas County for 3.5 years. She said around the country the typical contract is for 15 years. Sometimes they are negotiated in 10-year terms with 5-year extensions, with another 5‑year extension beyond that. Ms. Berkbigler said part of the contract is based on what the community wants, such as three public access channels within the first 5 years, and something else the next 5 years. It is based on what the community wants the company to provide, like upgrades based on feasibility and cost.
Chairman Townsend said the franchise fee is capped at 5 percent by law. He wanted to know if it was also negotiable.
Ms. Berkbigler said it could be. She said from Charter Communication’s perspective they just give it to them. An exception is Lyon County who perceived the 5 percent as a hidden passthrough tax to their constituents, and wanted the franchise fee left at 3 percent. She said sometimes a company asks for a kicker clause that says in the event the Federal Communications Commission or the federal government in some way increases the percentage, then their percentage can automatically be increased during the terms of the franchise. She said some companies do not agree to the kicker, but Charter Communications always agrees.
Mr. Ostrovsky said another thing about the 10-year with 5-year renewals is they all have some standard service requirements. At the end of the term, before the renewal, the company would have to have met certain standards, whether it be service or upgrade standards. The reason for long-term contracts is because of the great costs involved in providing the initial service. He said Charter Communications recently spent over $4 million upgrading service in the Reno area.
Chairman Townsend said he wanted to know what the debate was about in Clark County when the renewal with Cox Communications Company came up about 3 years ago.
Ms. Berkbigler said there is a whole process of public hearings. She said a lot of communities bring in a community-needs assessment consultant to give them the opportunity to look at the whole picture, see the needs, and decide on the standards to be met. By the time it gets to the council for approval, all the public process is over and people are either for or against the decision. There may be some people who say they do not like a particular cable company. They want to go back to the one they had, or have another come into the community. Most of the negotiations are completed by the time it is presented to the city council.
Andrew L. Barbano, Lobbyist, City of Reno Citizens Cable Compliance Committee, said there was a well-organized and outspoken community group in Las Vegas that wanted a stipulation built into the franchise agreements with Cox Communications Company, that there would be a set of public access stations. The group was rebuffed, and there is no public access in the area with the exception of Boulder City.
Chairman Townsend said he wanted to know who rebuffed the citizens’ group.
Mr. Barbano said in usual negotiations the stipulation for public, educational, and government access channels are built into the franchise agreement. It is done at that point in the process. He said all the franchises in the Clark County area were renegotiated in 1998. The community group was rebuffed at every point along the way during negotiations of the franchise agreement.
Chairman Townsend said there are elected officials, and it is a process. He said that should be a complaint taken to the elected county commissioner.
Senator Neal said what happened in Clark County was the Legislature put in a stipulation after people had been selected, giving them a monopoly. He said unless the Legislature makes a change to give that power back to the commissioners to utilize pressure and act on the public’s desires, Cox Communications Company has a 20‑year uninterrupted run. Senator Neal emphasized the Legislature needed to act now, because when information is controlled, the citizenry suffers. He pointed out the Las Vegas area has over 1.4 million people with no public access channel for them to speak on public issues. He noted this was a controlled situation of public opinion. He said he strongly supports the public’s access to public television.
Ms. Berkbigler said access to public channels is a decision of local government. They get to decide if they want a public access, educational, or governmental channel, or all three. When the cable company provides those channels, the local government could decide whether or not to open them to public access programming. She said government access is any government entity, such as a school board or any quasi government entity, which could put information across that particular channel. Ms. Berkbigler said public access channels are not left to the cable company, and nothing in the bill would alter that in any way, because the local government makes that decision.
Senator Neal said based on what was said, there would be no reason for Ms. Berkbigler to oppose the bill. Ms. Berkbigler said her concern had nothing to do with access, but whether it would assist local government.
Senator Neal said it would give local government flexibility to deal with cable companies on a more even footing by removing the population restriction so smaller communities can be considered. Ms. Berkbigler said if Las Vegas wanted to go into the cable business, then the cap, in theory, would prohibit them. She said removal of the cap would not provide leverage to a local government in renegotiations with a cable company regarding public access channels should the bill pass. Senator Neal stated, “I think we will.”
Mr. Ostrovsky said under old law and federal law, local government could enter the cable business, but there are a lot of hoops to go through first.
Senator Hardy said Boulder City, Laughlin, and Mesquite have cable access. He wanted to know what the process would be to create an access channel. Mr. Ostrovsky said citizens could go to their local representatives and/or government to request access, and the original contract would have to be reviewed. The local government could also request the use of an existing channel, or some of the bandwidth currently in use.
Ms. Berkbigler said cable companies do negotiate when local governments decide their needs have changed regarding the mix of channels and services. She said some local governments do not like to do public access because the law is clear about not being able to control the programming.
Charles L. McCubbins, President, Com-Star Cablevision, said he was a local cable consultant, and has owned, operated, franchised, and maintained cable systems across the country. He said he has yet to come across a bill with a cap on the ability of anyone to come into a municipality where you could not do it. There are situations where in the event the cable operator defaults, goes bankrupt, or does not provide uninterrupted service, some municipalities have taken over the cable system with the stipulation that they pay fair market value. He said he did not know how Cox Communications Company got away with not providing access. Cox Communications Company should have stipulated that they do this around the country, and should have come forth to the City of Las Vegas with the growth potential. It is costly, and yet it is not that costly for the revenue generated in a rapidly growing community. Mr. McCubbins said a renewal period of 3 to 5 years is not uncommon, and that gives the local governing people an opportunity to say they want to upgrade. That should have been done for the people in Las Vegas.
Senator Hardy said that insight is something that should be taken to Cox Communications Company.
Mr. Ostrovsky pointed out there are additional costs such as studios, cameras, lights, sets, supporting equipment, plus an analogue station to air the programs between channels 2 and 99. He said these channels are hard to come by and costly, and do affect the subscriber’s rates. He said Cox Communications Company tries to give a community what it wants for what they are willing to pay.
Senator Neal said the community is limited to the city council and the county commissioners. Mr. Ostrovsky said he agreed.
Mr. Barbano said he agreed the bill was enabling legislation. He said he read the entire 1997 record and could not find a good reason for enacting the legislation in the first place, and the people suffer now because of it. He said the more flexibility given to local government, the better able they can react to changes or lack of proper service. He said in that respect it can affect a franchiser who wants to reopen the franchise to establish public access, and in that context, Senator Neal’s goal could be met.
Chairman Townsend stated everyone seems to be jumping all over as to what the bill is intended to do. He said there is no public access channel in the south, except for Boulder City. That is part of the negotiations between local government and the cable company. There is no preclusion from local government negotiating, demanding, or cajoling, to get a public access channel. He said there is no preclusion from the shortness or length of an agreement or extension; those are all negotiated items. Chairman Townsend said Senator Neal feels his constituents did not get a fair shake in those negotiations for the purpose of a public access channel. The cable company said they are very costly and that is one set of facts. Chairman Townsend said in the north they are told there is a Charter Communications financial situation. He did not know what that had to do with anything, because either the customer likes the service or they do not. He said the same rules apply in the north regarding the city council and county commission to negotiate under the same rules.
Senator Neal said the contract cannot be terminated, so the only thing was to create flexibility for local government to deal with the situation. Chairman Townsend pointed out local government flexibility is still dependent on the contents of the contract.
Mr. McCubbins said action on the bill is imperative because the local government has an obligation to their community to provide a service. He said if the cap is removed, then local government would have the opportunity to participate, and that would be significant in northern Nevada, and help southern Nevada in the future. He said the bill prohibits participation; however, the bill does allow purchase of the cable service by the community should the cable operator no longer provide the service, or go bankrupt, or want out of the area.
Dan Musgrove, Lobbyist, Director, Intergovernmental Relations, Clark County, said he might be able to clear up some questions. He said the current franchise agreement between Cox Communications Company and all five southern Nevada jurisdictions include the provisions of a digital channel designated for community access, but no funding mechanism was provided, so there was no capital to operate the channel. He said agreements require that all five governmental entities agree in order for the channel to be activated. This arrangement exists because the cable system knows no boundaries, so the whole area gets the same programming. He said community access channels across the country are starting to become controversial because of community standards and what is allowed on that channel. He said in Las Vegas there are vivid billboards advertising in-room strippers, and hotels that say, “No ifs, ands, or butts.” In terms of the United States Supreme Court, community standards are pretty liberal in Las Vegas. That aside, a regional franchise jurisdiction task force was put together involving all five governments to solicit proposals from private groups wanting access to the community channel. Mr. Musgrove stated no viable proposals have been submitted to date, therefore no request to activate the channel has been made.
Chairman Townsend said he wanted to know what cap the bill removes. Mr. Barbano said the caps of 25,000 and 50,000 prohibit communities over those sizes from entering into a community antenna television network. He said removing the cap would allow communities like Reno, Las Vegas, and other areas to acquire that system.
Ms. Berkbigler said the cap was part of legislation impacting all aspects of telecommunications and cable access television was included under the broad definition of telecommunications, because Churchill County was already in the telecommunications business and wanted to protect their interests.
Chairman Townsend said the purpose of the bill was because Clark County wanted to be in the cable business to go head-to-head with Prime Cable.
Robert Gastonguay, Lobbyist, Executive Director, Nevada State Cable Telecommunications Association, said when A.B. No. 508 of the 69th Session was enacted, Clark County was not trying to be in the cable business. He said it was a broadband bill dealing with telecommunications and cable television. At the time it was thought the failure of many communities across the country in business along with the existing franchise operator should be prohibited.
Chairman Townsend said he wanted to know where in the bill it said a local government cannot take over a cable company if it goes bankrupt.
Mr. McCubbins said the bill only stipulates a municipality cannot obtain a license to operate that service, and that is what is trying to be eliminated. He said under the right circumstances that community should be allowed to operate. He said the bill does not permit that. He said the bill precludes the City of Reno from taking over should something happen to Charter Communications.
Chairman Townsend said he did not read the bill that way. He said for the benefit of public purpose, the municipality would simply find a buyer.
Ms. Berkbigler said she agreed with Chairman Townsend. She added that should Charter Communications go bankrupt, they would sell the system or operate it under the bankruptcy court. She said the scenario had nothing to do with the bill, or whether or not the city could take over the system, the federal bankruptcy court would simply operate the system.
Mr. Barbano said the purpose of the bill is that Charter Communications is in serious financial trouble, and service is affected in Reno. He said as the law stands now, there is very little the City of Reno could do if the system falls apart in any way.
Chairman Townsend said he would like legal counsel, Mr. Powers, to answer the statement made by Mr. Barbano, and refuted by Ms. Berkbigler, that the bankruptcy court would not be able to continue operation. Chairman Townsend noted that Adelphia Entertainment Network continues its service through bankruptcy court under chapter 11. He said he would like to know what would happen under current law.
Mr. Powers said:
There are two separate issues being discussed. If a cable system goes into bankruptcy, the federal bankruptcy law controls who and how the cable system is operated. What we’re discussing here doesn’t have anything to do with that federal bankruptcy law, and who and how the system is operated in bankruptcy. What this bill does is remove a restriction on the power of the local government to sell the cable TV services to the public. If a company were to go into bankruptcy, if Charter were to go into bankruptcy, they would continue to operate under federal bankruptcy law, and eventually that system would be sold to another entity. Currently, under State law, the system could not be sold to the City of Reno, because of the restriction on State law. If this bill were to pass, then the City of Reno could be a potential buyer for a bankrupt Charter Communications. If this bill doesn’t pass, then it would have to be sold to a private company.
Ms. Fisher said she wanted it on the record that Mr. Barbano is not speaking for the City of Reno:
With all due respect to Mr. Barbano, I do want to clarify on the record that he is not speaking on behalf of the City of Reno. He is a representative of a citizen’s advisory board. He is very knowledgeable on the issue, but he is not speaking on behalf of the city council. The city council for the City of Reno has formally adopted a position of support for this bill, simply because we like enabling legislation.
Ms. Berkbigler said:
I need to take clear exception on the record since Mr. Barbano continues to insist that Charter’s financial condition in someway impacts our operation in Reno. That is not true, it has already been read into the record stated on numerous occasions that we have over the last 3.5, maybe 4 years now put about $400 million into the greater Reno market. We continue to operate that in an upgraded fashion. We continue to process our upgrades. Nothing that has happened with Charter Corp’s financial condition has in any way impacted the operations of the cable system in Reno. And, there is no evidence of that. The federal law says that a cable company must be in substantial noncompliance. We are not, we have never been. We continue to operate our system. Do we have customers who are unhappy with us? Absolutely, we do. We have been disrupting service, because we’ve been upgrading; customers don’t like that. But, we continue to move forward in the process. We continue to provide the services requested by our customers, and nothing that Charter Corp’s financial condition may or may not be, has in any way, or will in any way, impact negatively the operations of Charter Communications in the greater Reno market.
Senator Carlton said she would like the secretarial staff to insert the statements made by Senator Shaffer and Senator Townsend on S.B. 255. She said even though she voted against the bill in committee, she wanted to retain the option of voting for it on the Floor of the Senate.
Chairman Townsend said there being no further business, the meeting was adjourned at 9:51 a.m.
RESPECTFULLY SUBMITTED:
Laura Adler,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE: