MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session June 5, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 4:30 p.m., on Monday, June 5, 1995, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Randolph J. Townsend, Chairman Senator Ann O'Connell, Vice Chairman Senator Sue Lowden Senator Kathy M. Augustine Senator Raymond C. Shaffer Senator John B. (Jack) Regan Senator Joseph M. Neal, Jr. STAFF MEMBERS PRESENT: Beverly Willis, Committee Secretary Scott Young, Senior Research Analyst OTHERS PRESENT: John Gibbons, Investigator, Real Estate Division, Department of Business and Industry Marsha Berkbigler, Lobbyist, Nevada State Medical Association Bob Gagnier, Lobbyist, Executive Director, State of Nevada Employees Association Dennis Healey, Attorney, State of Nevada Peace Officers Association John Mendoza, Chairman, Public Service Commission of Nevada (PSC) Judy Sheldrew, Commissioner, Public Service Commission of Nevada (PSC) Scott Craigie, Lobbyist, Nevada Bell, Sprint Central Telephone John Gibbons, Investigator, Real Estate Division, Department of Business and Industry, presented two bill draft requests; Bill Draft Request (BDR) 54-2080 and BDR 54-2122 for the committee's consideration. BILL DRAFT REQUEST 54-2080: Regulates appraisers of real estate. BILL DRAFT REQUEST 54-2122: Makes changes concerning sellers of real estate. Mr. Gibbins noted BDR 54-2080 will allow an examination fee for appraisers set by regulation instead of statute. BDR 54-2122 will allow the position of the administrator to be appointed by the director of the Department of Business and Industry, either in the Las Vegas or the Carson City office and prohibits anyone convicted of a felony or possession of a controlled substance from applying for a real estate license until 3 years after completion of sentencing. Senator Townsend noted these pieces of proposed legislation could be expedited by being affiliated with pending Assembly legislation. The hearing on Senate Bill (S.B.) 538 was opened. SENATE BILL 538: Provides for cooperative purchasing and basic benefits in health insurance. Marsha Berkbigler, Lobbyist, Nevada State Medical Association, testified on this legislation. Ms. Berkbigler stated agreement is still needed on some language and, hopefully, this will be forthcoming very shortly. The hearing was closed on S.B. 538 and opened on Assembly Bill (A.B.) 57. ASSEMBLY BILL 57: Broadens application of provisions governing eligibility for workers' compensation for diseases of heart or lungs. Bob Gagnier, Executive Director, State of Nevada Employees Association, testified on this legislation. Mr. Gagnier noted the State Industrial Insurance System feels this legislation is necessary. Dennis Healey, Attorney, State of Nevada Peace Officers Association, spoke in favor of this legislation. SENATOR O'CONNELL MOVED TO DO PASS A.B. 57. SENATOR REGAN SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS AUGUSTINE, LOWDEN AND NEAL WERE ABSENT FOR THE VOTE.) * * * * * The hearing closed on A.B. 57 and opened on A.B. 62. ASSEMBLY BILL 62: Revises requirements for establishing quorum of occupational safety and health review board. SENATOR O'CONNELL MOVED TO DO PASS A.B. 62. SENATOR REGAN SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS AUGUSTINE, LOWDEN AND NEAL WERE ABSENT FOR THE VOTE.) * * * * * The hearing closed on A.B. 62 and opened on A.B. 448. ASSEMBLY BILL 448: Requires that federal individual income tax be deducted and withheld from unemployment compensation benefits upon request of recipient of benefits. SENATOR REGAN MOVED TO DO PASS A.B. 448. SENATOR SHAFFER SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS AUGUSTINE, LOWDEN AND NEAL WERE ABSENT FOR THE VOTE.) * * * * * The hearing closed on A.B. 448 and opened on A.B. 603. ASSEMBLY BILL 603: Authorizes public service commission of Nevada to collect assessment from public utilities which provide telecommunication services. First to testify was John Mendoza, Chairman, Public Service Commission of Nevada (PSC). Senator Townsend noted the committee wants to understand the role this legislation takes regarding what the PSC has done in the docket on telecommunications. Senator O'Connell asked if this legislation might present a similar problem where larger hotels/businesses, as in southern Nevada, are subsidizing the utility rate. Senator O'Connell went on, "We are trying to get away from that and now we are talking about subsidizing the rurals." Mr. Mendoza explained, "The universal service fund is a fund whereby there is an assessment on the public utilities to be able to provide monies so telephone services are available for those who cannot afford it." Mr. Mendoza went on to note the PSC needs the authority to hire an independent administrator. At this time, Scott Craigie, Lobbyist, Nevada Bell, Sprint Central Telephone, offered some comments. Mr. Craigie noted this is not a wide-ranging subsidy, but is to make certain there is general availability of phone service in major rural areas. Senator O'Connell inquired if these charges will show on a telephone bill or will this be a hidden tax. Mr. Craigie, explained this decision will be determined by the PSC. Senator Townsend inquired if information will be available for the committee to study during the interim, in order to be kept abreast of any progress. Mr. Mendoza replied it was his belief there is a commitment for this already in effect. Senator Townsend reiterated his request for information. SENATOR SHAFFER MOVED TO DO PASS ASSEMBLY BILL 603. SENATOR REGAN SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS AUGUSTINE, NEAL AND LOWDEN WERE ABSENT FOR THE VOTE.) * * * * * Senator Townsend then asked Mr. Mendoza for information regarding previously introduced legislation. Senator Townsend noted this legislation, "Requires legislative auditor to conduct audits of the Public Service Commission of Nevada (PSC) and the Office of Advocate for Consumers of Public Utilities. Senator Townsend noted this legislation is quite old and portions may no longer be relevant. Senator Townsend went on to note, "[Mr. Mendoza and Senator Townsend] have talked about the necessity of doing an analysis, particularly now, of the [PSC] structure, which includes your staff, which includes the Office of Consumer Advocate (OCA), going into the competitive world." In answer to inquiries posed by Senator Townsend, Mr. Mendoza presented Exhibit C and noted, "An amount of $175,000 has been included in our budget for a study of the PSC organization and its structure." Mr. Mendoza went on to elaborate stating in the last legislature, they (PSC) had introduced such a bill. Mr. Mendoza continued noting this was a separate bill - it was not in the budget. It passed the Senate and went to the Assembly the last 2 or 3 days of the session and died there. He went on to note in information supplied to other committees there were project goals which stated: Evaluate the functions of the commission, its policies and regulatory operation staff and determine the resources necessary to carry out these functions. Further, review the commission's relationship with other key elements of state government and regulated enterprises. Mr. Mendoza continued: We included those provisions; because, when we started, this particular work performance request was discussed and we took that into mind when we decided we would include a portion of that in the management study. We think it's the best way to go. It's been 15 years since we have had a management study of the commission. Mr. Mendoza proceeded to note he feels a study is needed, asserting: As I have pointed out we have had some changes. We have gone through various internal studies of our own. I think, it is time that we take a hard look at ourselves and see where this commission is going to be in the future. It's in our budget, it's there, ............it is adequately covered in our budget. In answer to Senator Townsend's question, if the finance (committee) and ways & means (committee) have both allowed you to put that in your budget, Mr. Mendoza replied, "Yes they have." At this time Judy Sheldrew, Commissioner, Public Service Commission of Nevada (PSC), came forward with comments on a management study. She agreed with Mr. Mendoza that it is time for the commission to review its structure. Senator Townsend noted a question the committee might have: Would be the credibility of a study, if you were to sub it out yourselves as opposed to another group subbing it out; whether it be the budget director for the Governor, or the legislative auditor subbing it out,........ Would you consider an independent group doing the actual hiring, ........ I haven't spoken to the Governor about this at all. Mr. Mendoza spoke, stating: We rely on NARC, National Association of Regulatory Commissioners, who have a list of consultants. They have to meet certain ethical standards so we don't get into a situation of people who aren't qualified. So we submit and look at their list to send out for RFP [Request for Proposal], then the process is we take whatever number comes in; we did go the Department of Administration to try to get that funded in the past. When that didn't go then we went to bill form. As a result we narrowed it down to three. That's what the process would be, we would do the narrowing, but the independent consultants would be submitting their RFP to us, based on those people that are from the list provided to us from NARC and others. In answer to a question posed by Senator Townsend as to who makes the final determination, Mr. Mendoza replied, "The commission." At this time Ms. Sheldrew, noted the commission would want to obtain an independent consultant to do any management study. Ms. Sheldrew noted two sources, NARC and the National Regulatory Research Institute (NRRI). She went on to expound on the functions of NRRI and stated: They (NRRI) would, if there were some concern about independence of contractors directly hired by us, manage a contract for us. That is another option if you had some concerns about the independence of the group we were to select directly. Senator Townsend noted, "For your benefit you ought to have the independence." Senator Regan and Mr. Mendoza continued a discussion, with Senator Regan asking, "It's not how you are organized, it's what you are doing?" Mr. Mendoza's reply was "Right." Senator Townsend continued: This is perhaps the largest amount of dollars that have been allocated to look at any agency of government ......... we want to make sure it has as much validity as possible. I don't know if you have time to ask the Governor or his staff their insight on this independent issue. I think this committee would like to know the feeling on how they want to structure that before we leave here. I don't think we are going to spend a lot of time on how they do that, that's not our role, but we want to make sure that when we come back here it has the kind of validity that $175,000 ought to buy you. Second, it's absolutely crucial in your writing the RFP, that they are aware that you have an open docket on retail wheeling. Number 2, that we have a rather large study on [retail] wheeling that is as detailed and as aggressive an agenda as any legislature in the country. So they are not just looking at you in a vacuum they must realize we are going into a whole other arena and maybe we are one of the few jurisdictions capable of doing that because of our growth and our location, we want to make sure we don't get a management audit or performance audit that occurred without consideration of the rather large part of your responsibility. We don't need to be sitting here 2 years from now saying, `Oh, that's what the audit says and it didn't include that.' I know this is a fluid situation and part may be invalid by the time we get back, because of changes. Senator Townsend continued, "If we need legislation on that issue, or a funding mechanism, somebody will have to let us know, but I would like to know what the Governor feels about the independence." Mr. Mendoza replied, "Alright." There being no further business, the meeting was adjourned at 5:25 p.m. RESPECTFULLY SUBMITTED: Beverly Willis, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor June 5, 1995 Page