MINUTES OF THE meeting
of the
ASSEMBLY Committee on Judiciary
Seventy-Second Session
April 25, 2003
The Committee on Judiciarywas called to order at 8:06 a.m., on Friday, April 25, 2003. Chairman Bernie Anderson presided in Room 3138 of the Legislative Building, Carson City, Nevada, and, via simultaneous videoconference, in Room 4401 of the Grant Sawyer State Office Building, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
Note: These minutes are compiled in the modified verbatim style. Bracketed material indicates language used to clarify and further describe testimony. Actions of the Committee are presented in the traditional legislative style.
COMMITTEE MEMBERS PRESENT:
Mr. Bernie Anderson, Chairman
Mr. John Oceguera, Vice Chairman
Mrs. Sharron Angle
Mr. David Brown
Ms. Barbara Buckley
Mr. John C. Carpenter
Mr. Jerry D. Claborn
Mr. Marcus Conklin
Mr. Jason Geddes
Mr. Don Gustavson
Mr. Garn Mabey
Mr. Harry Mortenson
Ms. Genie Ohrenschall
Mr. Rod Sherer
COMMITTEE MEMBERS ABSENT:
Mr. William Horne (excused)
GUEST LEGISLATORS PRESENT:
Senator Valerie Wiener, Senatorial District No. 3, Clark County
STAFF MEMBERS PRESENT:
Allison Combs, Committee Policy Analyst
Risa B. Lang, Committee Counsel
Carrie Lee, Committee Secretary
OTHERS PRESENT:
Kimberly McDonald, City of North Las Vegas
Judy Cruden, Citizen
Chris Larotonda, Lieutenant, Narcotics Division, North Las Vegas Police Department
Stan Olsen, Lieutenant, Las Vegas Metropolitan Police Department, and representing the Nevada Sheriffs and Chiefs Association
Nancy Brown, representing the Nevada Bankers Association
Sean Gamble, representing the Clark County Health District
Sean McGowan, City Attorney, City of North Las Vegas
Tami DeVries, Real Estate Division, Nevada Department of Business and Industry
Matt DiOrio, Real Estate Division, Nevada Department of Business and Industry
John Morrow, Division of Parole and Probation, Nevada Department of Public Safety
Pat Hines, Citizen
Tara Shepperson, Ph.D., Executive Director, Nevada CyberCrime Task Force
Paul Enos, representing the Retail Association of Nevada
Lynn Chapman, Vice President, Nevada Eagle Forum
James Jackson, representing the Consumer Data Industry Association
Good morning. The Assembly Committee on Judiciary will please come to order.
[The Chair reminded the Committee members and those present in the audience of the Standing Rules and appropriate meeting etiquette. He acknowledged Judges Bunch and Ward, who listened via the Internet. Roll called.] A quorum is present.
Let’s begin with S.B. 204.
Senate Bill 204 (1st Reprint): Revises certain provisions governing disclosure of certain information to purchasers, lessees and tenants of real property. (BDR 3-562)
Kimberly McDonald, City of North Las Vegas:
[Introduced herself.] Good morning, Mr. Chairman and members of the Committee. We have provided S.B. 204 packets (Exhibit C), which include the bill, written testimony and various supplemental information. Please note included in the packet is written testimony from North Las Vegas City Councilwoman Stephanie Smith; she was unable to be here due to work obligations. To my left is Miss Judy Cruden, the constituent who brought this issue to us. To my right is Lt. Chris Larotonda of the North Las Vegas Police Department, Narcotics Division. Lt. Larotonda will be testifying about methamphetamine (meth) chemicals, their effects, meth labs, and the police department’s process and role with this issue. We also have our city attorney who will address any technical legal issues that we might have.
We are pleased to present S.B. 204, which revises the provisions governing disclosure of certain information to purchasers and lessees of real property. In summary, S.B. 204 removes the exemption of financial institutions and landlords from disclosing whether a real property was formerly a meth lab, if they have actual knowledge. This bill provides they must disclose this information to a purchaser or a lessee, just the same as realtors and sellers.
The first reprint of this bill reflects the amendments that were recommended by the Senate Committee on Judiciary. We included the rental property and the landlords language, as well as the provision that a home could be deemed safe and habitable by either a certified or licensed governmental entity. This would remove the property stigma upon remediation and decontamination.
Section 1, subsection 1, with the exception of subsection 5, proposes to clarify what is considered material and immaterial to the sale, lease, or rental transaction of real property—facts such as if the real property is or has been the site of a homicide, suicide, death, or felonious crime; occupied by a person exposed to or suffering from AIDS; or facts that are considered not material to the transaction. We have added language to further specify that a crime, such as the manufacture of methamphetamine on the real property, is not material to such a transaction.
Section 1, subsection 2, lines 9 through 14, continues with existing sex offender language that is not material to the transaction; however, we did add language to include the lease or rental of real property, as well as the lessee, tenant, or landlord.
Subsections 3 and 4, lines 15 through 27, add language [to stipulate] that a lessor, landlord, agent, or seller is not liable to disclose to the buyer that they have this information if they don’t have the actual knowledge that this was a previous methamphetamine lab. That also protects the realtor or the seller of the property.
Subsection 5, lines 28 through 36, reasserts through added knowledge that if the property has been the site of a crime involving the manufacture of methamphetamine, it is not material to the transaction only if the substances and materials related to the methamphetamine had been removed or remediated on the property by a certified or licensed entity or deemed safe by a governmental entity.
Section 2, subsection 2, lines 16 through 30, are proposed to delete language indicating the specific entities or instances that are not exempt from disclosing this knowledge, such as the government, governmental agencies, court orders or foreclosures, and the various financial institutions. This deletion would remove their exemption.
Vice Chairman Oceguera:
I would like to disclose for the record that I work for the City of North Las Vegas. I don’t think this bill will affect me; however, I might be able to offer some testimony on the bill, as in my job I often come across these types of situations.
Judy Cruden, Citizen:
[Introduced herself.] I first became aware of the health hazards of homes that were former meth labs in March of 2002. In years past, the process of making methamphetamine gave off a strong odor, therefore making rural areas the typical setting for labs. Today the process has been refined so as not to give off the odors that it once did, and these labs are popping up in all neighborhoods, not just drug-infested neighborhoods and outlying areas.
I purchased a rental property located in North Las Vegas. When I first looked at the house—a bank repossession—I knew we would have to paint and get new carpet. I chalked it up to filthy living and what I thought were cigarette burns in the carpet. The night we closed [escrow], I took my husband and three young children to the house to show them our newest rental property. My daughter, who was 18-months old at the time, had fallen inside the house and crawled on the floor just for a few moments before I scooped her up.
What I didn’t know at the time, and was not told, was this house had been a meth lab. The only reason I found out was because a neighbor came over the next day and told my painter that the house had been a meth lab. I began making phone calls and found the house had been a lab and that an environmental technology team, through the North Las Vegas Police Department, Narcotics Division, had collected obvious waste products, but no cleanup was done. The problem is the removal of chemicals is not the same as the cleanup of hazardous materials that are left behind; no one regulates the cleanup of these residential meth labs.
A few days later I noticed what looked like a burn mark on my daughter’s finger. I immediately took her to the doctor and he confirmed that it looked like a chemical burn. That little exposure with the carpet gave her a chemical burn on her finger. What angered me the most about this situation was if I had purchased this home as my personal residence, I would have moved in the very same day and exposed my children to the home’s toxic and hazardous materials. My neighbor went out of his way to warn us. There is no law in place to prevent a seller from not disclosing the house was a previous meth lab, and my children would have been exposed to potentially life-threatening health hazards. After much research, I now know more than I ever wanted to know about this silent killer.
The cost to rehabilitate a former meth lab is staggering. For this 1400-square-foot home, it was estimated the decontamination costs would be approximately $15,000 to $20,000. These costs needed to be incurred before we could allow anyone to move into the house. The damage was extensive and would require the complete removal of the contaminated carpet and pad, scraping of the glue, sealing the concrete, and putting new carpet down.
The other items that required decontamination was the heating and air conditioning system. The plumbing in the master bathroom would have to be replaced, along with the grout and the cabinets. The stove and the microwave in the kitchen would have to be replaced, along with the light fixtures and any porous surfaces in the house. The walls and ceiling in the house, assuming no explosion had taken place, would have to be sealed and repainted. If an explosion had occurred, the cost would be even more horrendous as decontamination may not be an option.
I contacted the seller’s agent and the bank to attempt to get them to take back the house, but to no avail. I contacted an attorney to ask on my behalf and they still refused. Only after I went to the local media, KBBC, Channel 3 in Las Vegas, and my story was aired did the bank contact my attorney and agree to reimburse me for all the costs. Although this story ended well, most don’t.
I stand before you today asking for help to do what is right. Health hazards should be disclosed in the same fashion as lead-based paint to any potential homebuyers by all sellers, including sellers of repossessed properties, if they knew, or should have known, about the lab.
I would like to thank the North Las Vegas City Council for taking my call and listening to my concerns about this loophole in the law which allows this potential health hazard to go unnoticed. I would like to thank you, members of the Assembly Committee on Judiciary, for considering passage of S.B. 204 and listening to my plea for help for the public on this issue. Anyone of us at this moment could be renting or living in a home or apartment that was a meth lab and not know it.
Chairman Anderson:
First of all, I would like to compliment you for your “stick-to-it-iveness” and making sure this came to the legislative process. Oftentimes we get telephone calls from constituents who want us to fix the law; we put bill drafts in and when it comes forward there isn’t anybody there to give the information or first‑hand knowledge. We appreciate your going out of your way to do this for us. You have several pieces of rental property in Las Vegas?
Judy Cruden:
I do.
Chairman Anderson:
If someone had rented a place from you and, unbeknown to you, was carrying this on and then left, would you then be held liable for the cleanup afterwards?
Judy Cruden:
Yes, I would. There would be liability to me to clean up the meth lab, and there would be future liability if I did not clean up the meth lab. If I rented to any future tenants and they were exposed to this hazard, I could be liable for damage to them as well. As a landlord, part of my obligation is to try to make sure that I observe my rental properties and make sure that I know what is going on as much as possible.
Assemblyman Mortenson:
I think I heard you say that this was a repossession? Was it the bank that owned this house?
Judy Cruden:
Yes, the house was a bank repossession.
Assemblyman Mortenson:
And the bank was aware of the problem with the house?
Judy Cruden:
I never had to go so far as having to go to court because the bank graciously agreed to take back the house after the story was aired. In my personal opinion, somebody knew. But it was not disclosed to me and legally I can’t say, “Yes, they knew.”
Assemblyman Mortenson:
I was going to say that if they knew and if they sold it to you, what a seedy bank you have. Is there one particular chemical that is that noxious and does those bad things? You said you had studied and knew a lot about it. What is that chemical?
Judy Cruden:
I am going to defer that to Lt. Larotonda, but I don’t believe there is just one chemical; there is a vast array of chemicals.
Chris Larotonda, Lieutenant, Narcotics Division, North Las Vegas Police Department:
[Introduced himself.] I am pleased to address you today to discuss the problem methamphetamine trafficking poses to the citizens of our state and our country.
Methamphetamine is one of the most significant law enforcement social issues facing the nation today. Methamphetamine is one of the only widely abused controlled substances an addict can make on his own without chemical experience. A cocaine or heroin addict cannot make his own cocaine or heroin, but a methamphetamine addict has only to turn on his computer to find a recipe for the chemicals and the process to make this drug.
Unlike drugs produced in some clandestine laboratories, methamphetamine is a very simple drug to produce. The user, or “cook,” can go to a retail store and purchase the vast majority of chemicals needed for the manufacturing process. Such items as battery acid, red phosphorus, muriatic acid, and iodine crystals can be utilized to substitute for necessary chemicals. Clandestine laboratory operations can use a wide variety of common items such as Mason jars, coffee filters, hot plates, pressure cookers, pillow cases, and plastic tubing to substitute for sophisticated laboratory equipment.
The Drug Enforcement Agency (DEA) is reporting that 98 percent of clandestine laboratories seized in the United States are methamphetamine laboratories. In North Las Vegas alone, my Narcotics Division has responded to 65 clandestine laboratories since 1997. As a narcotics enforcement team, we do our best to make a meth lab site safe and to neutralize the chemical danger involved in the clandestine laboratory. This includes calling for professional cleanup crews for hazardous waste; however, we cannot guarantee that all hazardous waste is removed.
The problem does not stop there. It continues due to the dangerous chemical reactions that occur during the manufacturing process. The toxic chemical vapors can penetrate into walls, carpets, plaster, furniture, and the wood of the houses or buildings in which they are located.
It is for this reason, as law enforcement professionals, it is important that legislation be passed to protect the citizens of Nevada against the health enemy they cannot see. S.B. 204 is one way to help us achieve this.
In closing, I would like to read a relevant comment made by the Drug Enforcement Agency in a drug intelligence report to a multi-jurisdictional counter-drug task force. The quote is, “Perhaps the greatest risk of long-term exposure is assumed by unsuspecting inhabitants of buildings formerly used by clandestine drug laboratory operators where residual contamination may exist inside and outside the structure.”
I thank the Committee and urge the passage of S.B. 204.
Assemblyman Mortenson:
I can see if you have hydrochloric and sulfuric acid, those can burn you on the rug. Normally you would replace those rugs and neutralize the acid, but is there something else left that permeates the walls, or something that causes health effects?
Lt. Chris Larotonda:
It is not really so much the chemicals in and of themselves, because for the most part you can buy most of these chemicals at K-Mart. The problem is when you start mixing them together. One of the chemicals that would be somewhat dangerous in and of itself would be the red phosphorus; it is a fairly hazardous chemical. It is the interaction between the chemicals that is the hazard.
Assemblyman Mabey:
How would you know you had “actual knowledge” of this? Would a neighbor tell a person?
Lt. Chris Larotonda:
We placard the residences when we leave. We take our evidence and any objects that we see in the residence we believe to be contaminated. We also send a letter to the owner of the residence. This is something we do on a routine basis. We also notify the [Clark County] Health District that the house was used as a meth lab.
Assemblyman Mabey:
Let’s say I bought the house and then a couple of weeks later the neighbor came by and said, “Oh, by the way, that was a meth lab,” and the previous owner had absolutely no knowledge of that. Then that owner would not be responsible?
Lt. Chris Larotonda:
As I understand the bill, the person who sells the house would have to have knowledge.
Judy Cruden:
My understanding of this is if a neighbor had come over and told the tenant or the new home purchaser the house had been a meth lab—I believe the bill is structured as “knew or should have known.” At that point, you would do some chemical testing to find out because you are obligated to do further investigation. Once you find out, the landlord would be obligated to clean up the meth lab.
Chairman Anderson:
Does this increase the responsibility of the police to make sure the seller is aware of the crime scene?
Lt. Chris Larotonda:
As I read this bill, there doesn’t seem to be any notification in the bill itself. However, we do that as a normal course.
Chairman Anderson:
Currently, if there has been a homicide at the site, you are obligated to report it, but it is not a condition that has to be passed on to the buyer. The fact that there was tape up could mean a lot of different things when you are doing a crime scene investigation. How is the seller to know? I think that is the real key here to make sure this is an applicable, workable law.
Kimberly McDonald:
When we spoke to the Nevada Real Estate Division, they agreed to modify the disclosure form; a sample of that is also in your packets. That provision could be included as well, when they are disclosing any other condition of the property. I believe the onus is on the purchaser to find out the information.
First, it is the responsibility of the property owner to disclose it, but then once this information is out—say by the good graces of a neighbor—they need to tell the potential purchaser or lessor. Then, they need to actually go out and find the proof that the property owner had this actual knowledge. That is why we are bringing this forth; if it can be proven that the financial institution had that information, further steps can be taken for recovery.
Assemblyman Claborn:
I was dealing in U.S. Department of Housing and Urban Development (HUD) foreclosures four or five years ago and I found a lot of homes were growing marijuana and pot, but I never found a meth lab. Those HUD houses were owned by government loans. What do you do about those? Who is the landlord then?
Kimberly McDonald:
On page 3, line 16, it shows it also exempts the governmental agency; they have to disclose this information, the same as a realtor or financial institution.
Assemblyman Mortenson:
Lt. Larotonda, a government agency—is that you? In other words, should the police not be required to pass that information on to the owner officially so it definitely is transmitted to a new buyer? Is it in this bill the police will do that?
Lt. Chris Larotonda:
I don’t believe this bill requires law enforcement to do that. We do it on a routine basis, however. That is our standard operating procedure (SOP) for a meth lab.
Assemblyman Mortenson:
Perhaps it might be a good thing to amend this into the bill to make sure it happens.
Assemblyman Gustavson:
If we were to process this bill, and we are talking about real property here, why did they leave out manufactured homes? Some manufactured homes are considered real property if they sit on a permanent foundation. In my district I have many and I know there have been meth labs in those homes also. Is it possible to include these?
Kimberly McDonald:
That is an excellent idea you are bringing up. It was posed in the previous committee, but we wanted to take a first step. This is a very pervasive issue and we felt if we could attack the real property issue first, and then the rental property, we could address other issues later on. That is why we did not include manufactured homes at this time.
Assemblyman Gustavson:
I understand you want to take it one step at a time, but I would hate to see you exclude a large portion of the population. I do know for a fact that there are a lot of meth labs out there.
Assemblywoman Buckley:
We might have Ms. Lang check on that because I believe once a manufactured home is permanently affixed, it is then considered real property for purposes of taxation, and may also be real property for purposes of this bill.
Risa Lang, Committee Counsel:
I think that is correct.
Assemblyman Gustavson:
I would like to respond to Ms. Buckley’s comment; I do believe that those homes would be covered. I am fairly sure they would be. We’ll have Ms. Lang check. But I was concerned about those that would not be covered, the ones that would not be considered real property.
Chairman Anderson:
Because it would be sitting on its tires and would not be sitting on the ground? It wouldn’t be sitting on jacks or permanently attached in some way?
Assemblyman Gustavson:
There is a specific definition for a manufactured home. There are more manufactured homes out there that have not been converted to real property. The ones that are sitting on property are basically permanent, but are not considered real property. That is where my concern is.
Assemblyman Carpenter:
I am in favor of this bill, but I don’t believe that the police agencies or law enforcement in rural Nevada—at least where I live in Elko—put this placard up like you do. I think you could probably go to them and they might tell you that it was a meth lab. It seems to me it would make the bill much more enforceable if the police agencies had to do what you are doing in North Las Vegas. Then if we do that, we are going to have to attach a fiscal note to it. I think it would make much more sense if all law enforcement was doing it the way you are and maybe you know if it is done like this everywhere.
Kimberly McDonald:
Also, the local governments would have to incur the liability if they don’t do such a thing; that would set not only an unfunded mandate but another precedent. We would like to have the type of collaboration with law enforcement to make sure these notifications are in place, but that is an area where we really need to consider the ramifications of the impact.
Chairman Anderson:
I think if we are going to be doing this in a meaningful way, we have to make sure the law enforcement people have indeed done something substantial so the person who is potentially purchasing this piece of property knows that the property fell into this particular category. It would not be unusual for the property to have changed hands before the adjudication of the case had taken place. Thus, while it was a crime scene and the damage had been done, the person may not have been put to trial and the determination of guilt or innocence had not been established yet, and the property would have changed because it was a rental and the seller wanted to get rid of it before the adjudication took place.
Kimberly McDonald:
Could we have Lt. Larotonda and Lt. Olsen from LVMP respond to some of these issues?
Chairman Anderson:
Sure. Clearly this took place in North Las Vegas. When Ms. Cruden went to the property, she didn’t know it was a meth lab; there was nothing left at the site that would have indicated anything to her. Ms. Cruden, did you know that chemicals had been removed from the site?
Judy Cruden:
No, I did not.
Chairman Anderson:
She didn’t know anything even though the tape had been up and you had cleaned up the site.
Lt. Chris Larotonda:
You are absolutely correct. We send a letter to the homeowner and we send one to the Health Department. However, the placards had obviously been removed. We leave the orange placards you see in your packet. We affix those to the doors so no one can accidentally walk into the residence without knowing first.
The cost is quite minimal. The placards I believe we had printed up for about $2 apiece, and of course the added cost of a couple of letters.
Chairman Anderson:
Any other questions for this panel?
Stan Olsen, Lieutenant, Las Vegas Metropolitan Police Department (LVMP) and representing the Nevada Sheriffs and Chiefs Association:
[Introduced himself.] We support the bill. I can’t speak for the rural areas, but would have to check to see how they do the notice on the house. I know the Las Vegas Metropolitan Police Department has hundreds of labs per year and we also make the placards and send letters as North Las Vegas does.
If there were to be a fiscal note on this, to notify the owner officially, I can’t imagine it being much. I just did a quick calculation based on 300 labs, and it would cost about $150 in letters, other than the research to find out who owns it through the computer system. If there were a fiscal note, I think it would be extremely minimal, regardless of what agency it was. The other thing, which might put it into Ways and Means and again would be a very minor fiscal note, would be the responsibility of the Nevada Division of Investigation (NDI), which also does a lot of narcotics operations but usually with the local agency. We support the bill and I think it would be a good one.
Chairman Anderson:
Any questions for Ms. McDonald, Ms. Cruden, or Lt. Olsen? Any concluding remark you want to make, Ms. McDonald?
Kimberly McDonald:
We have a tape we wanted to feature. It covers the whole methamphetamine lab issue and is from the February 24, 2003 “Inside Edition” (Exhibit D). We would be willing to air that, and I also have concluding remarks.
Chairman Anderson:
Does the Committee want to see the tape? [The members indicated in the affirmative. Videotape played.]
Kimberly McDonald:
Thank you for hearing our presentation today.
Nancy Brown, representing the Nevada Bankers Association:
[Introduced herself.] Our client, the Nevada Bankers Association, supports this bill.
Sean Gamble, representing the Clark County Health District:
[Introduced herself.] We are in support of this legislation for the obvious reasons you have seen today—the harmful effects it can have on families who move into these homes. There will be no extra burden put on the Environmental Health Division because these records are already accessible by the public. If anyone comes in, the Health District will allow them access to the records of any home where there had been a meth lab they are aware of.
It does state in Section 1, subsection 5(b), it must be “deemed safe for habitation by a governmental entity.” That is where we come in as the Health District. There are no current federal guidelines with the EPA (Environmental Protection Agency) on what is deemed “cleanup” of a meth lab. There are guidelines for chemical cleanup, and Clark County Health District has agreed to be the first in the nation to come up with guidelines for Clark County.
Chairman Anderson:
Other than the renter taking on the responsibility of going to the health department to make sure their property is clean, is this going to be a new step and are they going to be advised to go to the health department to make sure that property is clean? If I were to approach the department, how long do you think it would take to retrieve information on that particular piece of property?
Sean Gamble:
I am not sure of the answer to that; it probably would depend on how long it had been determined to be a meth lab. Once it is recorded, it would be very easy to get the records.
Chairman Anderson:
Any estimate on what the turnaround time is between when the police notify the health department?
Lt. Stan Olsen:
I don’t have the exact knowledge, but I know in our operation the reports have to be put together in our records division and sent over to the District Attorney’s office within 10 days. I forget what it is in the D.A.’s office, but I would say within two weeks they are notified.
Chairman Anderson:
Would that prove to be about the same, Lt. Larotonda?
Lt. Chris Larotonda:
As far as our agency is concerned, as soon as the actual reports on the incident are done, the letters are generated and sent out; you are looking at two days.
Chairman Anderson:
Two weeks would be a reasonable amount of time.
Sean McGowan, City Attorney, City of North Las Vegas:
[Introduced himself.] I want to give some reassurance to the Committee as to one point—the “actual knowledge issue”—and I may be disagreeing with our star witness, Miss Cruden. I think this first effort, by using the higher standard of knowledge, “actual knowledge,” it is intended to assure sellers we are not looking for those situations where someone should be deemed ”to have known.” There may be a disagreement from time to time on whether they really did know, but that can be resolved on an individual basis.
This is intended to address the most egregious situations where it can be shown clearly that the seller knew. With the health district and police coordination you are talking about, there might be something later where a broader standard would be appropriate; it is encouraging to see the health district and police coordination proceeding. I just didn’t want anyone to be misled thinking we are looking for those situations that cover the entire universe.
Chairman Anderson:
Mr. McGowan, with all due respect, I think we are trying to make sure the law is going to be used, if it is going to have any impact, and Ms. Cruden’s time is not wasted in pursuing this over the last two years. We are trying to do the right thing, both by her and for people in the future who might get caught up in a similar set of circumstances. If we are going to set a standard, we should set it so it is doable and achievable rather than just put a piece of paper in a book. I am not a big fan of doing that kind of law.
Tami DeVries, Real Estate Division, Nevada Department of Business and Industry:
[Introduced herself.] I am here to support S.B. 204. We did work with Ms. McDonald and the Senate Committee on Judiciary on the amendment. We just wanted to make sure you knew we were in support, and we are here to answer any questions about how our agency will be involved in the implementation of this bill.
Matt DiOrio, Real Estate Division, Nevada Department of Business and Industry:
[Introduced himself.] Tami DeVries stated our position.
Chairman Anderson:
Are there any additional people who wish to testify on S.B. 204? I am going to bring S.B. 204 back to the Committee. I don’t see any real problems with the bill. I think there are a couple of questions that we would like to see answered.
Assemblyman Gustavson:
I think I have the information I need, and I think that if we were to include manufactured homes it would be a different section of the NRS (Nevada Revised Statutes). I would like to see this done, but maybe next session if we can’t do it now; I don’t want to hold the bill up.
Chairman Anderson:
Ms. Lang, could you clarify for us on mobile homes as rentals?
Risa Lang:
The way the bill is right now, I guess it is applying to real property, so it would only be the rental of a mobile home that qualifies as real property. If we were to add a mobile home that is considered personal property, it would just go someplace else [in NRS] because this section is dealing specifically with real property. Perhaps we could come up with some language when you are renting personal property that is used for habitation.
Chairman Anderson:
I think we can safely move with this bill at this time. There are a couple of things we may want to fix in the future, and one of them would be the requirements of making sure police reports were filed in a timely fashion with these different agencies; it is clearly an issue that we need to come back to. If we are going to be the first in the nation to take a baby step, let’s take a solid step.
Assemblyman Carpenter:
That is why I think we ought to add mobile homes to it. I know in my area, it is where a number of these operations are carried out. If mobile homes are left out, we are leaving a big void in this bill.
Chairman Anderson:
Ms. Lang says we can do it.
Assemblyman Claborn:
I have to agree with Mr. Carpenter; it is really expensive to convert these mobiles to real property. You have to go in and put in different footings and foundations; it is quite expensive. I think mobiles ought to be in the bill.
Assemblyman Sherer:
Since Pahrump is one of those capitals of the world that have manufactured homes, I am in agreement also.
Chairman Anderson:
The Chair will entertain an Amend and Do Pass motion on S.B. 204.
Assemblyman Conklin moved to Amend and Do Pass S.B. 204 to include mobile homes.
Assemblywoman Angle seconded the motion.
The motion carried. (Mr. Horne was not present for the vote.)
Assemblyman Mortenson:
Do you want to put in a mandatory notification to the owner of the property and the health department?
Chairman Anderson:
We are not going to do that at this time; we are going to wait and see how the health department is able to coordinate this activity over time, and we will see what the real turnaround time is going to be. [The Chair assigned the bill to Mrs. Angle for reading on the Floor.]
Let’s turn our attention to S.B. 232.
Senate Bill 232: Makes various changes pertaining to duties and authority of State Board of Parole Commissioners. (BDR 16-551)
John Morrow, Division of Parole and Probation, Nevada Department of Public Safety:
[Introduced himself.] Chairman Salling extends her regrets for not being here. S.B. 232 is before the Committee with proposals by the Board to change our operation to some degree—we hope for the better. There are four things we intend to do with this bill.
First, I’ll address the executive secretary position. For many years the executive secretary of the Parole Board has also served as the executive secretary of the Pardons Board. The Pardons Board operates as an arm of the Governor’s office, providing clemency and so on for inmates in our prison system; they will meet about twice a year. However, the executive secretary of the Parole Board serves at the pleasure, and by the appointment of, the whole Parole Board and wears this additional hat for the Pardons Board. The two jobs together have become big enough that one individual cannot handle it. However, statutorily, as things now stand, it must be done by the executive secretary of both boards. We are not asking for more personnel at this point.
What we are asking is that the Chairman of the Parole Board be allowed to designate some other employee to handle the functions of supporting the Pardons Board, and we will have some other employee fill that function. It doesn’t really change what happens, it is who does the functioning for the Pardons Board. That is the first portion of the bill.
The second portion of the bill deals with changing the timing requirements for hearing by the Board for parole violators. As things now stand, we have 60 days after a person is returned to the system after finding probable cause by the Department of Parole and Probation that a person has violated his parole. We found that some folks are slipping through the net, particularly those who are accused of having committed new crimes while they are on parole. What has happened in some instances is these people are sent back to the institution, thereby triggering the 60-day rule while they are pending trial on their new charges. Many times the Board needs to know what the disposition of those charges are prior to making a final decision as to whether to revoke or reinstate a person’s parole.
What we are asking for is, if a person is in the process of adjudicating another offense, that the time for the hearing of their case not be triggered until after the adjudication of their new criminal charge. We would like to have the statutory authorization to do it either way with the person who is a parole violator because of a new offense. In other words, there are situations where we could hear them under the old rule, and there are situations where we would like to wait and hear them under the new proposed rule. As I said earlier, there are some folks that slipped through the net because by some manipulation of timing of court dates and so on, they will spend more than 60 days prior to having their new case adjudicated, thereby triggering a dismissal of the alleged parole violation. Are there any questions?
Chairman Anderson:
So currently this guy is picked up and you have to make a determination within 60 days. This would only happen if he were charged with a subsequent crime that would conceivably cause the revocation of his parole and additional time for whatever he was adjudicated for. Is that right?
John Morrow:
Yes, Mr. Chairman.
Chairman Anderson:
The second trial would determine the question of the new offense, 60 days after, to determine whether to revoke his parole.
John Morrow:
That is correct.
Chairman Anderson:
This guy could conceivably sit around here for two years?
John Morrow:
We would certainly hope not, Mr. Chairman. We would see the person within 60 days after the adjudication of the new offense. The court system controls how long it takes for that to happen.
The third part of the bill involves a change to the system called “mandatory parole.” Currently NRS 213.1215 requires that a person be considered for mandatory parole prior to the time they expire their parole if they have not been paroled under regular conditions. When the Legislature established that procedure back during one of our earlier fiscal crises, it was intended to force people out of prison early to clear bed space for non-violent offenders. One of the penalties required that if a person were put on mandatory parole, any violation they had would result in the loss of all their statutory “good time.” Statutory good time is time off for good behavior.
Under the mandatory law, any violation resulted in people being brought back, their statutory good time taken away, and that added to the end of their sentence so they expired their sentence in prison. We have found that one of the problems with the mandatory law reading that way is people will come up for mandatory parole and simply decline to be paroled. They will refuse to submit a parole plan, and they are not put out of prison because they don’t want to take the chance of losing, as a matter of law, all their statutory good time, if they are brought back on a revocation for any reason.
What we are proposing is to handle the mandatory parole revocation very similar to the way we handle any revocation, except for people that are convicted of a new felony. The normal procedure is when a person is arrested on a parole violation, all of the statutory good time they have accumulated during their institutional placement belongs to the Parole Board. The Board may, at its discretion, restore all or part of that time if we feel it is an appropriate thing to do. We are requesting to be able to do that with the people who are on mandatory parole, hoping to make mandatory parole a more attractive alternative for people to come out of our institutions.
The fourth part of the bill deals with the deletion on handling people who are convicted of crimes in other states and institutionalized there. In the past, the authority was to give them a dishonorable discharge from parole. However, in the last legislative session, we had been given the discretion to hear these people on violations in abstentia. We no longer need to have the dishonorable discharge provision in the law and we have requested it be struck.
Chairman Anderson:
If this person has committed another crime in another jurisdiction and we have knowledge of it, why would we not want to make sure that our records indicated he was a recidivist, thus giving him a dishonorable discharge?
John Morrow:
That is what we are not doing now; we actually have a hearing in absentia in the Parole Board office with the appropriate number of commissioners present and if it is earned and deserved, we revoke the parole. We have that power now.
Chairman Anderson:
If we revoke the parole, some state could then conceivably ship them back to us?
John Morrow:
That is correct.
Chairman Anderson:
Would we want that?
John Morrow:
We don’t do that as a matter of course. We look at the sentence structure they have in the other jurisdiction, and, generally speaking, because it has been a subsequent offense with priors and so on, these people are given fairly stiff sentences in the other jurisdictions, and their sentence simply expires once we revoke their parole prior to coming back. If it is someone who is a paroled first-degree murderer who has been paroled to another jurisdiction and violates parole there, we may very well revoke their parole and bring them back just to keep the public safe.
Chairman Anderson:
Other than in a murder case, does this expand our economic exposure for the potential return of prisoners to Nevada because some state may be trying to avoid their prison population increased numbers?
John Morrow:
I don’t get that sense out of it. The Board is very sensitive to the problems that we have in our prison system, and we do our very best to not allow that to happen.
Chairman Anderson:
This is really unnecessary and conflicting language with our existing statutes, as has been pointed out by my researcher. Is there anybody else wishing to be heard on S.B. 232? Let me close the hearing on S.B. 232.
Assemblyman Carpenter moved to Do Pass S.B. 232.
Assemblyman Claborn seconded the motion.
Assemblywoman Buckley:
Do we still have the Consent Calendar? Maybe we should use it so the freshmen can see it. I don’t think we have done it this session, have we?
Assemblyman Anderson:
I don’t think I have moved anything to the Consent Calendar.
Assemblywoman Buckley:
It might just be a good educational tool. We did it a lot in previous sessions; maybe we haven’t enough clean bills this session.
Chairman Anderson:
I am not sure we can move this; we don’t have enough bills to do this. Let’s move S.B. 232. Ms. Hines, did you wish to speak on S.B. 232? I was just in the process of taking the vote. Ms. Hines, allow me to get your statement on the record. I don’t know if you are in favor of or in opposition to the piece of legislation; you only indicated that you desired to speak.
Pat Hines, Citizen:
[Introduced herself.] I have some concerns about this bill. It is a good bill; I am for it and I am against it. One of the things that I am opposed to is the section where they allow 60 days to handle a parole violation decision. This has been a problem in the past for many of the parole violations because if another crime is committed and it is a new felony, that is not so bad. But, for these people who may have their probation reinstated within 10, 15, or 60 days, they have lost their housing, their job, probably their car has been impounded. Then if they are put back out in the community, they have to start all over again and it just seems like this is a barrier that could be rectified.
In the first part of the bill, where it gives the Chairman of the Board of Parole Commissioners to appoint the secretary of the Board of Pardons Commissioners, this is really great because it takes that burden off the Governor. But, is this going to be the same secretary as for the Board of Parole Commissioners? I believe that is mentioned in page 2, line 3, and I think that needs to be clarified because many of us who are involved with the Parole Board do not feel that it should be the same secretary for both of these boards. That has been happening in the past and it doesn’t seem to work.
I had a question maybe you could answer for me on page 2, line 9, and this is in the existing law, where it says, “Where the inquiring officer has determined that there is probable cause,” I think it needs to be clarified who can be this inquiring officer. Quite often this person has been the probation officer, and I believe the law says that it has to be an outside party.
You might want to think about the 60 days to give a decision because it is a terrible barrier for people who are going to get their probation revoked for a minor technicality. If you look on page 2, lines 11 and 12, where it says what the Board may do in case of a pending hearing; we have no statistics. That is what is wrong with criminal justice, as you well know. When it says they can release the parolee back on parole, or order to be placed in residential confinement, or suspend his parole and return him to confinement, if we had some statistics, my question could be answered as to how often residential confinement is used where this person could continue working until the decision is made. It seems like 99 percent of the time before the hearing, the parole is suspended and the person is returned to confinement. It is something to consider because unless you actually work with this and try to help the offenders, it is not thoroughly understood. I appreciate your consideration.
Chairman Anderson:
Let me take the last question first. Statistical information on the judicial system is something that the Legislature has been pursuing for some time. I think Parole and Probation and the prison system itself is very aware of our concerns about that process.
As to the question of the secretary, I believe it will end up being the same secretary. This change of the Executive Director’s position is so they can have a person who more efficiently does secretarial-type duties, as compared to an executive secretary of the Board.
Relative to the 60-day question, we had inquired if it would happen and how it would happen if there were another criminal event that had taken place. The Parole Board is asking for the opportunity to wait until after the determination of an actual criminal felony event, rather than before. It may end up that the person was found innocent at that event and there would be no reason for the revocation of parole merely because of the charge. Otherwise, he would be left at the point where he would have a revocation and be adjudicated guilty before the trial had taken place. That is my understanding.
Pat Hines:
I am at the opposite end of that. If you have the statistics that have come out of Parole and Probation, you will see that when there is an alleged parole violation, approximately 47 percent of the parole violations are on minor technical charges. If they have to wait 60 days for this, or if they are accused of a felony, they have lost everything they had. We need to start keeping track of how many of these people are actually sent back to prison. How many people could have kept their jobs and all their possessions had they been put on house arrest until the final decision?
Chairman Anderson:
That is currently the law, the 60 days.
Pat Hines:
The 60 days is currently the law? I didn’t think that was the case, but maybe I am wrong. Is there any way that a body like this can get or require statistics? It is very hard for me to make a decision without the proper statistics—knowing whether these people really have done a technical violation or committed a new crime. I think they have been keeping statistics in three ways: those who are on probation and abscond; those who are back for minor technicalities; and those who commit a new crime. It seems like new crime runs about 29 to 31 percent. I have no confirmation of this percentage at this time. If there is anything you can do to make this a little more fair for both, that would be fine.
The other question I had on the double secretary—it lists preparing the agendas and that type of thing. It does not mention anything about taking minutes or keeping tapes; that has been a real problem with the Parole Board. I don’t know about the Pardons Board, but I know in the past when people have tried to get minutes and tapes, this has been a problem. Perhaps those duties, if they are going to be listed in a law, should be expanded.
Chairman Anderson:
I would call your attention to line 9 on page 1, “The Secretary shall perform such duties as are required by the Board.” Keeping minutes and tapes would probably fall under that. We don’t document every single specific function that a secretary does.
Pat Hines:
What I am saying is if you are going to specify “some” [duties] maybe you should also specify some of the ones the constituent thinks are important, as well as to the benefit of the Board.
Chairman Anderson:
Thank you, Ms. Hines. Questions for Ms. Hines? We have a motion in front of us. The Chair diverted to allow Ms. Hines to get her testimony in the record.
Assemblywoman Buckley:
I am going to support the motion—I really respect Ms. Hines, her advocacy, and all of her efforts, and if there is any way you as Chair can help get those records, I think that would be great as well.
Chairman Anderson:
Mr. Morrow, Ms. Hines brings up several very important elements in terms of the methodology of the Parole Board and the Parole Commission, of which you are a member. Since you happen to be here today, the question of statistical information—which was in part given to us on the very first day here of this session—would you take it upon yourself to make sure that Ms. Hines has the statistical information provided to her? I will ask my researcher to do the same.
John Morrow:
We have an analyst in our office that prepares an extensive report every quarter for the Legislative Counsel Bureau; this should be available as a public record for Ms. Hines to refer to. If she does not have any satisfaction there, she could certainly contact me at the Parole Board office and I would refer her to our analyst.
Chairman Anderson:
Ms. Combs, would you make sure statistics from the last two quarters of 2002, and the first quarter of 2003, be given to Ms. Hines? [The Chair restated the motion.]
Assemblyman Carpenter moved to Do Pass S.B. 232.
Assemblyman Claborn seconded the motion.
The motion carried. (Mr. Horne was not present for the vote.)
Chairman Anderson:
Let’s take a look at Senate Bill 297.
Senate Bill 297: Makes various changes relating to personal identifying information. (BDR 15-28)
Senator Valerie Wiener, District No. 3, Clark County:
It is always a pleasure to be before you, and it is also intriguing to hear the other house hear bills that we processed in our committee because you offer new insights we might not have shared in our committee. I appreciate that opportunity as well. [Introduced herself.]
I am here to ask your support for Senate Bill 297, which addresses identity theft. Identity theft is a relatively new crime but it is one of the fastest-growing crimes in our country. With it comes great fears for people who are now questioning whether or not they should use discretion in utilizing credit and debit cards in their transactions and experiences in commerce. Technology and its abuse by unscrupulous people have put millions of Americans at risk when they use these convenient instruments in their daily transactions.
To help you understand the primary components of S.B. 297, you will find some key definitions that are necessary to the enforcement of the legislation: in Section 3 we define “payment card”; in Section 4 we define “reencoder”; and in Section 5 we define “scanning device.” Section 6 prohibits a person from using a scanning device or reencoder “without the permission of the authorized user of the payment card and with the intent to defraud the authorized user, the issuer of the payment card or any other person.” A person who violates these provisions is guilty of a Category B felony and would serve from 1 to 20 years in prison and could be fined up to $100,000. In addition, the court shall order the violator to pay restitution, including attorney’s fees and the cost required to repair each victim’s credit history or rating, and satisfy the debt, lien, or other obligation incurred by each victim.
Section 7 prohibits the possession of a “scanning device or reencoder with the intent to use for an unlawful purpose.” Any violation of this is a Category C felony. Section 8 protects the people who do not have the intent to defraud or commit any unlawful act, but possess or use the scanning device or reencoder in the ordinary course of business or employment.
Section 9 deals with prosecution. “The State is not required to establish and it is no defense that: (1) An accessory has not been convicted, apprehended or identified; or (2) Some of the acts constituting the elements of the crime did not occur in this state or that where such acts did occur” might not have been considered a crime in that state.
Section 11 defines “document”; Section 12 extensively defines “personal identifying information”; Section 13 defines “public body”; Section 14 defines “public employee”; Section 15 defines “public officer.” Section 16 helps repair a statutory oversight by allowing for the prosecution for the identity theft of a person living or dead. As we were preparing this bill draft we determined that current law does not address the theft of a deceased’s name or identity, so that is part of this bill.
Section 17 addresses situations where a public officer or public employee knowingly obtains another person’s personal identifying information from any source or resource used by that public body to collect or otherwise handle personal identifying information, and uses that information to harm that person or for any unlawful purpose. These purposes include such activities as obtaining credit, goods, or services in that person’s name.
[Senator Wiener continued.] Any public officer or public employee who violates this will be guilty of a Category B felony, with a 5- to 20-year sentence and up to a $100,000 fine. You can compare the minimum here, of 5 years for a public officer employee, with the sanctions in Section 6 for persons using scanning devices or reencoders. Section 6 violators in this bill would be guilty of a Category B felony as well, but their minimum time is 1 year, not 5 years as would be imposed here. I asked for a stiffer minimum for public officers and employees because they hold the public trust and we do not ordinarily have the opportunity to say “no” to many of them when they request this personal identifying information.
As with other offenders, public officers or employees will be held financially accountable for repairing the credit history of their victims, as well as satisfying debts, liens, and other obligations.
[Senator Wiener continued.] In addition, if a public employee or officer obtains personal identifying information and possesses, sells, or transfers this information to establish a false status, occupation, membership, license, or identity for himself or another person, he is guilty of a Category C felony. If the public employee or officer knowingly aids another public employee or officer in one of these violations, he too is guilty of a Category C felony. Please take note that law enforcement is not prohibited from using personal identifying information if this is related to a lawful discharge of their duties.
Section 18 does not apply to persons who do not have the intent to defraud or commit an unlawful act and are performing ordinary tasks in their business or employment. Here we add “or if those employees have entered into a financial transaction with the authorized user of the payment card who has agreed to the financial transaction.”
Section 19, “The State is not required to establish and it is no defense that: 1. An accessory has not been convicted, apprehended or identified,” or whether parts of this crime have not been committed here, or if committed in another state, are not a crime there.
Section 22 defines “credit card” and “debit card” and addresses concerns about receipts; this is why I brought the bill in the first place. This section prohibits the printing on the customer receipt of a credit or debit card the expiration date and more than the last five digits of the account number. The processing can still occur without this information, but this will certainly prevent many people who get their hands on credit card receipts from stealing the identity from that piece of paper. This applies only to receipts that are electronically printed; it does not apply to receipts that are handwritten or copied. If the cash register or printing device is not in place prior to 2003, the requirement does not apply until 2006.
Mr. Chairman and members of the Committee, identity theft is a horrible crime. I know that often the crimes we deal with in the Judiciary Committees deal with other types of crimes—we don’t do a lot of work in the white-collar crime [area], but it is no less egregious when someone is so fearful of doing business with a credit card that it affects how they live their daily life. We have been taught and trained to have the freedom of using credit cards, making credit card or debit card purchases, and this has created a quaking experience for many. It can haunt a victim’s identity, as well as their credit, for years.
[Senator Wiener continued.] I remember, I think it was four years ago in Judiciary, and you would have heard the same bill, one witness was nine years out from her identity being stolen and still had not recovered her identity. I listen carefully as people have shared with me their experiences, but until you experience it yourself it does not hit home as hard, and it happened to me in October 2001. Fortunately, my credit card company called me that day and notified me of some irregular charges that had appeared on my credit card. I was thrilled they had called me, especially when they told me they did not process the charge for about $4,600 for what they had categorized as “Internet Computer Consulting/Overseas,” and I was curious as to where overseas that had occurred because the charge had been incurred the day they contacted me and they said “Spain.” I said that is probably a lovely place, but I have never been there and certainly I am not there today.
So, I was thrilled when they said because of the irregularity they did not process it. I had grief when they said they didn’t process that charge because it went over your limit, but we did process the charge for the same service to the same company for $16,300. Fortunately, because they had called me quickly and spotted the irregular use, they quickly processed the fraud complaint and it did not appear on my credit card statement. I can tell you even now I have high reluctance to use my credit card and surprisingly that was a card that is never out of my possession; I do not have another user on the card; we presupposed that the number had been lifted with a scanner, probably at a restaurant. I am still reluctant to let go of the card; hopefully someday I will reinstate my confidence in the process of credit card use.
I am just one, and I was fortunate. My credit card history was not damaged, but I certainly went through a difficult time. There are tens of thousands of people who are experiencing this with no opportunity to hope for their expectations to be addressed through legislation. Many of these people are in the state of Nevada and with the type of economy and the type of businesses that we have that use credit cards, especially in an industry where tourism is very important to us and credit cards are major transaction pieces, it is important that we protect not only the people who live here but the people who come here. It is my hope because of this you will support Senate Bill 297 in your deliberations.
Assemblyman Carpenter:
Senator Wiener, I have a question on page 7, Section 22, subsection 3, where it talks about these machines. Could you explain again what that means in regard to whether you have to have a machine by January 1, 2006?
Senator Wiener:
There are many retailers who need a transition period to gear up to having their machines address that requirement of not more than five numbers and no expiration date; we are giving a grace period for them to get up to speed. I might add this also includes ATMs (automated teller machines).
Assemblyman Carpenter:
Does this apply then to only ATMs?
Senator Wiener:
No, we included ATMs. This would be cash registers; anyplace where you would do the scan. It does not apply to the handwritten ones, but it would allow many of the small retailers time to prepare for having their equipment legal by this 2006 date.
Assemblyman Carpenter:
My concern is that the machine that I have is connected right to the cash register and I know those cash registers cost quite a bit. I am wondering if I have to get new ones or can they be upgraded?
Senator Wiener:
I don’t know, but we did have the Retail Association at the table as we drafted the bill, and this was language that they felt comfortable with. I don’t know what the technology would require.
Assemblyman Carpenter:
What about when they have “Art in the Park” where a person can go and buy a picture and they only have the remote slide machines? I wonder how that would affect them.
Senator Wiener:
I don’t know. Lt. Olsen says he can answer part of that. If I may bring Lt. Olsen to the table.
Lt. Stan Olsen:
When we have the ”Art in the Park” type things, we encourage the people—we can’t mandate them—we encourage them to destroy the carbons, whether it is the cardholder or the retailer. The other thing that can be done, and I have seen this, is they scratch out the numbers on the part they keep and the one they have to mail in, they leave as is.
Assemblyman Carpenter:
I agree with that. What I am wondering about is whether they have to upgrade to an electronic machine.
Lt. Stan Olsen:
I don’t think they will have to. There is nothing in the bill that prevents them from continuing to use the mechanical device.
Senator Wiener:
There are also protections when they write out the credit card number; that is addressed in the bill as well.
Lt. Stan Olsen:
There are a number of stores already doing this. I have come across it in Carson City using the department’s credit card for purchasing items at Office Depot. It only showed the last four or five numbers of the card; the rest of the numbers were not even on the [receipt]. I don’t know if it requires a new machine or a reprogramming of an existing machine.
Assemblywoman Angle:
I am so happy that you brought this piece up, Senator Wiener, and I am happy that you mentioned ATM fraud. There are also ATM crimes, as you know, where someone will take a person to an ATM and ask them to withdraw money. There is a little piece that some states are putting into ATMs which allows the person [who is being forced to withdraw from his account] to enter their code backwards. That alerts the bank that there is a crime going on and it silently calls a policeman. I was wondering if you had heard of that? Would you be open to something like that? I don’t know if that could be amended in here, but that was my thought on this bill.
Lt. Stan Olsen:
That would be a different type of crime; that is not a credit card fraud, it is actually a robbery that is going on where they are forcing the person to do that.
Assemblywoman Angle:
That would have to be done differently, that could not be addressed in this bill?
Lt. Stan Olsen:
I don’t believe so.
Chairman Anderson:
Dr. Shepperson, can you help us out a little bit? I know your level of expertise, and Lt. Olsen may not realize that you are the Coordinator for the Attorney General’s Cyber Crime Task Force.
Tara Shepperson, Ph.D., Executive Director, Nevada Cyber Crime Task Force:
[Introduced herself.] I am here in support of Senator Wiener’s bill.
Chairman Anderson:
There were some questions asked relative to magnetic coding and the use of different pieces of equipment. I know that you have worked with the business community in trying to get them to be more aware of identity theft and this new computer crimes issue. Can you help us answer some of those questions?
Dr. Tara Shepperson:
I am not sure I can answer; I did not actually come prepared to answer those technical questions, although they are very good ones. I do know that many businesses currently have mechanisms in place to make sure the full credit card number is not imprinted on the receipt, particularly those that are automatic and electronic. It is not so much a mechanical process as it is an electronic one. I cannot honestly say that I have researched it or can answer in detail the answers to those questions.
Senator Wiener:
I hope the Committee has the letter (Exhibit E) from the Attorney General regarding S.B. 297.
Paul Enos, representing the Retail Association of Nevada:
[Introduced himself.] We did look at the requirements to upgrade cash registers to truncate the numbers and we figured with a two-year provision in there, they would not have to do it until 2006. We would like to applaud any efforts to help decrease identity theft so we can continue with free commerce. We would like to thank Senator Wiener for bringing forward this piece of legislation and we appreciate your consideration of the bill.
Assemblyman Carpenter:
Do you know what it would cost to reprogram one of those machines?
Paul Enos:
I do not have those exact figures, but I will be sure to get those to the Committee as soon as possible.
Lynn Chapman, Vice President, Nevada Eagle Forum:
[Introduced herself.] Janine Hansen is out of state on business and since Janine and I both testified on this bill in the Senate, she would like to know if I could state a couple of comments on her behalf? Then I can do my own testimony, if that is all right.
Chairman Anderson:
How long a statement do you have to read from Ms. Hansen?
Lynn Chapman:
It will only be about a minute. It is just comments.
This is on behalf of Janine Hansen—she is President of the Nevada Eagle Forum. This is excerpted from testimony the Honorable John G. Huse, Jr., Inspector General of the Social Security Administration, gave before the Subcommittee on Social Security of the House Committee on Ways and Means (Exhibit F).
Misuse of the social security number (SSN) catalyzed by the Internet has quickly become a national crisis. The social security number’s universality has become its own worst enemy. Identity theft begins in most cases with the misuse of a social security number. While the ability to punish identity theft is important, the ability to prevent it is even more critical.
First and foremost, the time has come to put the SSN number back into its box. We as a government created the SSN, and we as a government should control it. It is a unique identifier and its use by schools, hospitals, and other institutions is understandable but dangerous; it is a convenience that we can no longer afford. Its use in private industry has become reckless. We need legislation that limits the use of SSN to those purposes and benefit the holder of the social security number. The appropriate agencies in cooperation with governmental authorities and business leaders must reach an understanding as to the need to limit the use of the social security number.
We are involved now in a joint investigation with another federal law enforcement agency in which lists of names and social security numbers were being sold to the highest bidder on an Internet auction site. This highlights the need to stop the indiscriminate use of social security numbers as ID numbers.
[Lynn Chapman continued.] That is the end of the comment she wanted to put onto the record. She is in support of S.B. 297.
The Nevada Eagle Forum is in support of S.B. 297. The Privacy Rights Clearinghouse put out a report in May 2000 (Exhibit G). They interviewed thousands of victims of identity theft and these were some of the highlighted results. Forty-five percent of the victims considered their cases to be solved and it took them nearly two years to do it. Fifty-five percent of those surveyed, whose cases were still open or unsolved, [said their cases] took an average of 44 months and they were still ongoing. Seventy-six percent of respondents had an average of six new fraudulent accounts opened in their name—it can range from 1 to 30 new accounts. The average total fraudulent charges made on a new account were about $18,000, but totals ranged from between $250 up to $200,000.
Victims reported spending between $30 and $2,000 on costs related to their identity theft, not including lawyer’s fees; the average cost was $808. Victims most frequently reported discovering their theft in two different ways: denial of either credit or a loan, due to negative credit reporting, or by a debt collection agency demanding payment. Victims surveyed reported learning about the theft on an average of 14 months after it occurred and in one case it took 10 years to find out about it. In 32 percent of the cases, victims had no idea how their identity thefts occurred. Forty-four percent had an idea of how it could have happened but they did not know who the thief was. But in 17 percent of the case, someone the victim knew, either a relative, business associate, or another acquaintance, stole the identity.
Fewer than two-thirds felt that the credit bureaus had been effective in removing the fraudulent accounts or placing a fraud alert on their accounts. Despite the placement of a fraud alert on a victim’s credit report, almost 46 percent of the respondents had financial fraud occurrences on each credit report. Law enforcement agencies issued a police report less than three-fourths of the time and assigned a detective to the victim’s cases less than one-half of the time. Forty-five percent of the respondents reported that their cases involved a driver’s license. For example, the license had been stolen and used as identification, or the thief had obtained a license with his or her picture on it but contained the victim’s information. Fifty-six percent of the respondents contacted the Department of Motor Vehicles (DMV) and only 35 percent of those found the DMV helpful.
The attorney’s fees for the credit card or identity theft ranged from $800 to $40,000. The respondents reported that the most common problems stemming from identity theft was loss of time. Forty-two percent of consumers reported long-term negative impacts on their credit reports. Thirty-six percent reported having been denied credit or a loan due to the fraud. Twelve percent of the respondents noted a related problem—there was a criminal investigation of them or a warrant issued for their arrest due to the identity theft.
The Reno Gazette-Journal had an article on April 17, 2002, about a lawyer in Mendocino, [California], who lost his fight against the Department of Motor Vehicles after his identity was stolen and his credit rating was damaged. In 1999, Rodney Jones learned a DMV office in southern California issued a duplicate driver’s license to someone claiming to be him. Jones said the DMV took three months to issue him a new license while the imposter was applying for credit and buying stolen goods in his name. To this day, the DMV has refused to tell him who had received the license, citing privacy concerns.
Jones sued the DMV for his expenses and the harm to his credit rating, but he lost his appeal. [California] state law requiring the DMV to determine the accuracy of license applications falls short of creating any legal duty to a defrauded license holder and the outcome was he lost his appeal. He said there is absolutely no indication in the statutes that the [California] Legislature intended them to protect against the risk of injury caused by identity theft. Jones said it means there is no law that will allow citizens to protect themselves and get reforms.
Chairman Anderson:
Questions of Ms. Chapman? Thank you very much for support of the bill. Anybody else wishing to testify in support of S.B. 297?
Lt. Stan Olsen:
We support the legislation.
James Jackson, representing the Consumer Data Industry Association:
[Introduced himself.] We support this bill; we view this as a bill that would take the tools of identity theft, identity fraud, and credit fraud out of the hands of criminals. We think this is a good piece of legislation. Any tool that we can give law enforcement to stop that crime, we certainly support. We urge your passage of this bill.
Chairman Anderson:
Is this the statement (Exhibit G) of Mr. Huse, or is this the statement of Ms. Hansen?
Lynn Chapman:
That was by Mr. Huse and she wanted it on the record.
Chairman Anderson:
Anything else on S.B. 297. I am going to put it over to the work session, which is coming up on Monday. [The Chair distributed a document titled, “In Praise of Parkinson,” by Robert J. Samuelson (Exhibit H).]
We have 63 pieces of legislation referred to us, and I believe that we will be able to get them scheduled on [May] 12 and 13. There is a possibility we will have an opportunity to do some work after the 16th.
We are adjourned [at 10:25 a.m.].
RESPECTFULLY SUBMITTED:
Carrie Lee
Committee Secretary
APPROVED BY:
Assemblyman Bernie Anderson, Chairman
DATE: