MINUTES OF THE ASSEMBLY COMMITTEE ON JUDICIARY Sixty-eighth Session June 5, 1995 The Committee on Judiciary was called to order at 7:46 p.m., on Monday, June 5, 1995, Chairman Anderson presiding in Room 332 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Bernie Anderson, Chairman Mr. David E. Humke, Chairman Ms. Barbara E. Buckley, Vice Chairman Mr. Brian Sandoval, Vice Chairman Mr. Thomas Batten Mr. John C. Carpenter Mr. David Goldwater Mr. Mark Manendo Mrs. Jan Monaghan Ms. Genie Ohrenschall Mr. Michael A. (Mike) Schneider Ms. Dianne Steel Ms. Jeannine Stroth COMMITTEE MEMBERS EXCUSED: Mr. Richard Perkins GUEST LEGISLATORS PRESENT: Lieutenant Governor and President of the Senate Lonnie L. Hammargren STAFF MEMBERS PRESENT: Dennis Neilander, Research Analyst Patty Hicks, Committee Secretary OTHERS PRESENT: Mrs. Helen Leveille, President, Nevada Public Land Access Coalition, Inc. Mr. Stan Warren, Sierra Pacific Power Company Mr. Richard Atkinson, Manager, Financial Services, Sierra Pacific Power Company Mr. Gordon DePaoli, Esq. Ms. Lucille Lusk, Nevada Concerned Citizens Mr. Brian Lusk, Nevada Concerned Citizens Mr. Frank A. McRae, Manager, Governmental and Regulatory Affairs, Nevada Power Company Mr. Greg Harwell, Nevada Automobile Association ASSEMBLY BILL NO. 642 - Changes manner of perfecting and giving notice of security interests in property of public utilities. Mr. Stan Warren, Sierra Pacific Power Company, testified in support of A.B. 642. Mr. Warren advised the request came late in the session and he met with interested parties, i.e., Secretary of State, Nevada Association of Counties, county recorder and other utilities. Mr. Gordon DePaoli will explain the proposed amendments, attached as (Exhibit C). Mr. Richard Atkinson, Manager, Financial Services, Sierra Pacific Power Company, testified in support of A.B. 642. Around 1991-1992 Mr. Atkinson advised Sierra Pacific Power Company issued approximately $500 million dollars of first mortgage debt which constituted 18 separate transactions. Although there are exceptions generally they are done on a competitive basis which means they advance through a competitive bid process and the transaction must close within five business days. Within the five days they are secured with a mortgage bond as the law currently stands the indenture must be filed supporting the first mortgage lien in 15 counties in the state and also 6 counties in California. All of the filings in the 15 counties in Nevada and California must be made on the same day and Mr. Atkinson advised if for any reason they failed to get them filed on the same day, they would have to start completely over. Fortunately, Mr. Atkinson stated there has never been a failed filing and the process generally involves chartered aircraft and traveling several hundreds of miles on the public highway to ensure the filings on one day. Mr. Atkinson requested the ability to make the filing in a single location with the Secretary of State's office. Mr. Carpenter asked if this just covers personal property. Mr. Atkinson replied this is for real property and personal property. Mr. Carpenter asked how they would file with the Secretary of State on real property. Mr. DePaoli, attorney for Sierra Pacific Power Company, responded he could answer this question in his overview of A.B. 642. Mr. Gordon DePaoli had distributed proposed amendments to A.B. 642, attached as (Exhibit C). Mr. DePaoli advised there had been provisions both in the uniform commercial code, Chapter 104, article 9, and in Chapter 704, to allow public utilities to a certain extent to file certain kinds of security instruments centrally with the Secretary of State. However, there has never been any proposal to allow for central filing for security interest in real property anywhere except each county where the property was located and Mr. DePaoli advised of special provisions in the uniform commercial code dealing with transmitting utilities which were limited to some but not all of the utilities. Mr. DePaoli informed this bill proposes essentially to eliminate those special provisions and to incorporate those provisions into this new act. Mr. DePaoli reviewed the amendments to A.B. 642, attached as (Exhibit C). Mr. Carpenter asked if it would change the fees charged by the county recorder. Mr. DePaoli advised the bill does not specifically change any county recorder's fee and did not believe there were significant fees associated with filing of a security instrument in real property except for the basic charge of the document itself and the initial charge for the number of pages. Mr. Stan Warren, Sierra Pacific Power Company, conferred with NACO and county recorders who confirmed of no significant fees and not perceived to be a problem. Mr. Carpenter asked about foreclosure proceedings. Mr. DePaoli advised under Chapter 106 probably operating with a judicial foreclosure, there may be a gap that needs to be looked at. Mr. DePaoli said that the notice of default and election to sell would have to be recorded in each county where the property was located. Mr. Carpenter asked if this was happening in other states. Mr. DePaoli informed the only model was in Texas. Since 1974 they have had this statute. Mr. Carpenter remarked if he was the lender he would be concerned about foreclosure. Ms. Ohrenschall requested clarification on filing an instrument with Secretary of State and the notice with the county recorder, then the instrument can be reviewed with the Secretary of State and do nothing further with the county recorder when the instrument is renewed. Mr. DePaoli informed this bill continues an existing provision in the law for public utilities with respect to personal property that involve both real estate and personal property. Transmitting utilities have security instruments that involve only personal property and Mr. DePaoli explained the law provides that those security instruments remain effective until they are released and they are not required to file the continuation statements every five years. Mr. DePaoli informed this bill also provides once a public utility files a notice in a county where it owns property, it has filed a security instrument effecting property in that county with the Secretary of State. Assuming it owns other property in the same county and 10 years later, Mr. DePaoli stated it grants a security instrument in that property, it would simply file the security instrument with the Secretary of State and notice recorded 10 years earlier with respect to public utility acts is granted security instruments in property in this county pursuant to a filing with the Secretary of State. Mr. DePaoli advised it would not have to do another filing as to that new security instrument 10 years down the road. The notice is effected to put someone on notice checking the records 10 years hence in that county that they better look in the Secretary of State's office to see what other security instruments might affect real property owned by the utility in that county. Ms. Ohrenschall inquired if this would create an exception to res notice provisions by filing of interests in real estate in the county recorder's office. Mr. DePaoli stated an exception is created as to where those are to be filed and rules of res notice will continue to apply. In Section 5, Ms. Ohrenschall noted it provides notice by security instrument covering real or personal property, such an instrument may be filed anew. Ms. Ohrenschall did not understand when it would be filed anew. Mr. DePaoli advised that provision is intended to deal with existing security instruments perfected under existing law prior to the effective date of this act. Mr. DePaoli informed ll. 3-8 allows Sierra Pacific Company to take that security instrument and file it anew or again, to record notices in each county and then can file in the Secretary of State's office as to that security instrument in the future. Ms. Ohrenschall commented she understood what he was saying but did not think the word, "anew," was appropriate. Chairman Anderson requested clarification to his concern in Section 16, p. 12, with the loss of financial statement and asked its effect on the public service commission to discover what the utility companies's ability is and justify their rates. Mr. DePaoli commented not at all and the question relating to financing statement which is not to be confused with financial statements that companies maintain is a special document under the uniform commercial code that simply is intended to give notice of a security interest in a particular item of personal property. Mr. DePaoli stated none of this will effect the public service commission's ability to inquire into the financial condition of utilities or the public service commission's ability to approve or disapprove certain acquisitions of debt of public utilities. Chairman Anderson questioned if the public service commission does not utilize in addition to those documents that are filed at the time of rate increase to discover the financial picture of the utility in question. Chairman Anderson asked if this was perceived to be part of it. Mr. DePaoli stated he understood the question very well and in his judgment this would not effect at all the public service commission's ability to get that kind of information. The fact that Texas has this type of provision Chairman Anderson inquired if they adopted the uniform commercial code with any exceptions. Mr. DePaoli did not know the answer to this question. Chairman Anderson expressed concern if this will deviate dramatically from the uniform codes that it may be without the examination of the commission. Mr. DePaoli pointed out insofar as the uniform commercial code security instruments deals with security interests in personal property and in some cases fixtures which may become a part of the real property. Mr. DePaoli advised there already is in the uniform commercial code special exceptions for public utilities and public utility's security instruments in those kinds of property. Mr. DePaoli advised this bill does not really change that and the main thing this bill changes, it allows a public utility to grant a security instrument in real property that may be located in several counties by filing with the Secretary of State and also a notice with the county recorder. Chairman Anderson asked if it does not create a larger window of opportunity for the public utilities than that already enjoyed. Mr. DePaoli advised as far as personal property is concerned, he believed that was correct. Chairman Anderson recalled in 1991 when this mammoth uniform commercial code was presented and remembered the wonderful time attorneys had in discerning what it had truly said. Ms. Steel commented it has been a long time since law school to review the UCC code. Ms. Steel stated the financing statement puts people on notice that one has granted a loan against personal property to someone else. If a financing statement is not filed, then it can also be done with another person and the person would have no way of knowing it has already been encumbered. Ms. Steel wondered why it is needed where it might harm another individual, not just a power company. Mr. DePaoli advised the technical amendment was intended to make it clear to the extent that the security instrument is filed and recorded in accordance with this act. Mr. DePaoli stated it need not be filed under the uniform commercial code, but in Ms. Steel's example, in order to fit under this act if the utility wants to rely on this act, in order to do that, there would be a security instrument not termed a financing statement on file with the Secretary of State where someone would be put on notice that there is a lien against that personal property. Ms. Steel commented the UCC-2 is filed to find out if property has been encumbered; but, she also must check another place. Ms. Steel concluded people will have to start checking two places to determine if personal property has been encumbered. Depending on the kind of personal property, Mr. DePaoli advised they may have to do that anyway, especially if it is a public utility. Mr. DePaoli informed public utilities can already do filings with the Secretary of State if they so choose or with a particular county. Ms. Steel asked if the person would know to check in two places if he does not deal with security of the utilities. Mr. DePaoli replied if they know they are dealing with a public utility then they need to and should be aware of it. During the period of Chairman Anderson's absence, Ms. Buckley was presiding Chairman at 7:30 p.m. Mr. Frank A. McRae, Manager, Governmental and Regulatory Affairs, Nevada Power Company, testified in support of A.B. 642 and distributed a letter from Senior Staff Counsel James D. Salo of June 5, 1995, attached as (Exhibit D). Mr. McRae advised the letter explained their concerns and briefly summarized. Mr. Schneider inquired how this bill would affect the Southwest Gas in Las Vegas. Mr. McRae could not speak for Southwest Gas, but it would be addressed by the definition of a public utility. Mr. Carpenter asked Mr. DePaoli about the Washington merger and asked how they would be handled. Mr. DePaoli deferred to Mr. Atkinson; and they are only concerned with the 15 counties in Nevada. Mr. Atkinson advised he was not an expert on the Washington law and it was his understanding one of the differences in their statute it is not a requirement as it is for us to file all of the supplementals on the same date. They usually have about a 30-day window and they can file through the mail. Mr. Carpenter inquired why that was not asked for rather than a re-hash of the whole system. Mr. Warren advised when the request came through it was his understanding that there was going to be similar request made in the five states involved. Mr. Atkinson stated he believed it as correct and the process in Washington would be initiated in the next legislative session. Mr. Carpenter expressed concern the utilities are a large part of the tax base and now there is good system in place. Mr. Carpenter was reluctant to have the small counties hung out to dry. Mr. Carpenter commented on the filing of one financing statement with the Secretary of State and one original with the county, then later file 50 more with the Secretary of State, what position does it put the counties in. Mr. Warren advised Mr. DePaoli did have a meeting with Lyon County Recorder Nancy Carr to satisfy her concerns. Also, Mr. Warren advised Mr. Gill, Southwest Gas lobbyist, represented to him support of the bill. Mr. Warren advised Nevada Bell did not want to become part of the bill, but were interested in the bill. Mr. Warren did contact the railroads and attempted to contact all interested parties. In reference to Washington experience Mr. Goldwater commented when Washington and public utilities are discussed, it throws up a red flag for him. Mr. Goldwater asked if this was reactive legislation. Mr. Atkinson informed previously they discussed how the process worked in Washington State and was not associated with the merger. Chairman Anderson noted the Sierra Pacific Power Company is in the process of a merger with the state of Washington and not Washington, D.C. Mr. Atkinson advised this would have been a piece of legislation they would have proposed and supported regardless of the merger pending with Washington Water Power. Chairman Anderson announced A.B. 642 will be scheduled for a later work session and closed the hearing. ASSEMBLY BILL NO. 648 - Increases penalties for certain wilful or malicious acts. Assemblyman Bernie Anderson, District 31, sponsor, testified A.B. 648 was introduced at the request of constituents to clarify there should be a penalty for people who wilfully and maliciously destroy the personal property of individuals. Mrs. Helen Leveille, President, Nevada Public Land Access Coalition, Inc., testified in support of A.B. 648, attached as (Exhibit E). Mr. Sandoval inquired if this provides additional penalties to the littering laws. Mrs. Leveille replied it enhances the statutes already on the books. Mr. Anderson advised in the forfeiture provisions there is a dramatic departure in terms of the loss and the fact that a youth would be tried as an adult if found in violation. Mr. Sandoval referenced p. 2, Section 2, subsection 2, presumption that one is associated with the crime if the person's vehicle was at the scene of the crime and requested clarification. Mrs. Leveille commented if one is out in the hills and there is a vehicle there, someone is the driver. Mr. Anderson related the situation often arises where a vehicle is found stuck and stranded and the owner of the vehicle is in the general area. Mr. Anderson stated the presumption shall be the owner who is present is the driver of the vehicle. Mr. Sandoval inquired about those cases where the owner of the vehicle is not present. Mr. Anderson noted it makes the driver of the vehicle responsible for the acts of his vehicle in terms of damage in the event the actual driver refuses responsibility. Mr. Sandoval commented on his second reading someone could be liable if they were not present. Mr. Anderson said no. Mr. Humke referred to Section 5, child of any age accused of a violation of Section 2 of this act must be tried as an adult and asked the intent. Mr. Anderson believed it could be changed to "may" rather than "must." Mrs. Leveille stated there are kids who are 17 or 18 years which this section targets. Mrs. Leveille noted youths are protected now and can go out there and drink and party. Mrs. Leveille stated if they are doing damage and destroying private and public property, they should be penalized for it, as they are old enough to know better. Ms. Lucille Lusk, Nevada Concerned Citizens, testified in opposition to A.B. 648. Ms. Lusk stressed it was important in any law to consider the full range of the implications of that law. In reviewing Section 2, Ms. Lusk noted a considerable range from extremely serious events to potentially ones that could be far less serious, for example, l. 12, destroys or damages public campground, restroom, or other buildings open to the public. Ms. Lusk illustrated if a young child wrote on the inside of an outhouse wall in a park, that youth would be subject to the full range of the penalties. Ms. Lusk referred to p. 2, ll. 1-3, the minimum penalty that must be imposed is $2,500. Ms. Lusk asked the committee to look at the full range of the least offense that this minimum fine would be applied to. Ms. Lusk mentioned the presumption of a registered owner of vehicle observed at a scene of an offense was the driver or occupant of the vehicle could be interpreted to if the driver was observed at or near the scene. Ms. Lusk stated it could easily be interpreted that it means if the vehicle was observed at or near the scene; therefore, if the driver was not around, they could be assumed to be guilty. Ms. Lusk stated it is not uncommon for a youth to drive a car registered to his parents. If this bill must be pursued, Ms. Lusk requested it be re-worded to reflect the true intentions. In reference to ll. 12-16 Ms. Lusk expressed concern over the significant penalty. Ms. Lusk addressed revocation of driver's licenses, ll. 19-21, penalizes the parent or guardian. Ms. Lusk objected to young children thrown into adult court. In addition, Section 6, p. 3., Ms. Lusk pointed out is not consistent with other bills on restriction of plea bargains. On p. 5, ll. 24-25, Ms. Lusk called attention to the severity of penalty for the range of offenses. Mr. Greg Harwell, Nevada Automobile Association, testified Ms. Lusk pointed out all of their concerns. Mr. Harwell stated they do not oppose any efforts to deal with people who do these type of offenses. Mr. Harwell expressed concern with the vehicle forfeiture and driver's license suspension. Mr. Harwell pointed out in Section 3, subparagraph 2, p. 2, where a vehicle is subject to forfeiture only if the operator of the vehicle does not have a driver's license. Mr. Harwell stated any licensed driver is not going to lose their vehicle and it creates two different penalties for the same offense for two different classes of people. Mr. Harwell expressed the same concerns as Ms. Lusk as to trying children as adults. Mr. Harwell noted the severity of the second conviction would be to the parents for one year. Mr. Harwell remarked parents sometimes do not have control over teenagers and it is rather severe to penalize the parents for a year or more. Mrs. Leveille understood completely the previous testimony but explained the need to clean up the problems out there and advised it would be workable. Presiding Chairman Buckley commented the committee recognizes it is a meritorious goal and will look at the concerns addressed as well. Presiding Chairman Buckley closed the hearing on A.B. 648 and turned the meeting back over to Chairman Anderson. ASSEMBLY BILL NO. 540 - Increases monetary limits relating to claims in justice's courts. SUBCOMMITTEE A.B. 540 REPORT: Chairman Anderson requested Mr. Schneider, Mr. Humke, Mrs. Monaghan and Ms. Buckley report to the committee. Mr. Schneider advised of compromise of $5,000 for small claims court and the filing fees as adjusted to reflect the change of $20. Mr. Neilander summarized the amendments of A.B. 540. Mr. Humke commented the increase from $3,500- $5,000 smalls claims action was to pay heed to the justice court who said they would have more cases with higher dollar amounts which would have been exacerbated if changed to $10,000. Mr. Goldwater asked if all parties developed this compromise including Judge Oesterle. Mr. Schneider advised Judge Oesterle conferred with Ms. Buckley and compromised with the $5,000 threshold. Ms. Ohrenschall asked if it addressed all of Judge Oesterle's concerns in her letter to members of the committee. Ms. Buckley advised to the best of her knowledge Judge Oesterle's concerns were met and Judge Willis also affirmed the compromise. Chairman Anderson stated the need for this legislation to move forward and suggested before the amendments go to the floor to review the amendment and the bill itself. If at that time an unanswered concern was discovered, bring it to the attention of the Co-Chairmen, and they would be happy to put the bill on the Chief Clerk's desk. Ms. Ohrenschall commented if she had been part of the subcommittee she would have known it was going to be on today's work session and would have reviewed Judge Oesterle's letter. Chairman Anderson appreciated that and recognizes Ms. Ohrenschall is extremely thorough. Chairman Anderson informed they will try to notice Ms. Ohrenschall although it is not a requirement, but it is not possible given the timeliness of the session to do so every day. Chairman Anderson declared it was the intention to take a motion on the bill. ASSEMBLYMAN MANENDO MOVED TO AMEND AND DO PASS A.B. 540. ASSEMBLYMAN SCHNEIDER SECONDED THE MOTION. Ms. Ohrenschall requested a recess to retrieve her material and Chairman Anderson stated she is excused to do so. Ms. Ohrenschall restated her request to go find Judge Oesterle's letter to verify if the amendment covered all of her concerns. Ms. Ohrenschall stated she is never assigned to any subcommittee in judiciary; therefore, she does not have the time to participate unlike certain members who get assigned all the time, and it is a courtesy that can be afforded. Chairman Anderson thanked Ms. Ohrenschall for her observations. THE MOTION CARRIED. (ASSEMBLYMAN OHRENSCHALL PROVISIONALLY VOTED IN THE AFFIRMATIVE BECAUSE JUDGE OESTERLE WAS IN AGREEMENT OF THE $5,000 LIMIT AND RESERVES THE RIGHT TO VOTE AGAINST IT ON THE FLOOR OR RAISE AN AMENDMENT ON THE FLOOR.) (ASSEMBLYMAN PERKINS WAS NOT PRESENT.) ASSEMBLY BILL NO. 353 - Increases penalty for commission of assault or battery against emergency medical technician. Mr. Humke asked if the Chair would consider this evening A.B. 353 dealing with assaults upon emergency medical technicians (EMT's). Chairman Anderson remarked the vote on this bill has been tried several times and advised of no objection. Mr. Humke stated they have tried to process this bill several times and the Co-Chairs apprised the chief sponsor the bill needed amendments to move forward. Mr. Humke advised the chief sponsor sent a letter stating that no amendments were possible and requested a vote on the bill. Mr. Humke proposed to grant the chief sponsor's request. ASSEMBLYMAN HUMKE MOVED TO INDEFINITELY POSTPONE A.B. 353. ASSEMBLYMAN MONAGHAN SECONDED THE MOTION. Mrs. Monaghan advised of concerns of the bill and of the inability to achieve a compromise. Ms. Steel stated she could not remember what was wrong with the bill, and emergency medical technicians should have the same protection that other emergency people have. Chairman Anderson pointed out the bill was first heard on April 20. At that time among other problems with the bill, there are other emergency technicians who are in similar circumstances who are not covered by this type of status. Secondly, Chairman Anderson remarked it was part of the job with exposure to people who at times may act in an irrational manner because of the nature of their injuries. Thirdly, Chairman Anderson noted the EMT's are often covered by a statute similar to this and many EMT's are part of fire departments and have protection in this manner. THE MOTION FAILED. ASSEMBLY BILL NO. 520 - Makes various changes to provisions relating to actions for medical malpractice. This bill was not heard in this evening session. There being no further business to come before the committee, Chairman Anderson adjourned the meeting at 8:29 p.m. RESPECTFULLY SUBMITTED: Patty Hicks, Committee Secretary APPROVED BY: Assemblyman Bernie Anderson, Chairman Assemblyman David E. Humke, Chairman Assembly Committee on Judiciary June 5, 1995 Page