BILL ANALYSIS C.S.H.B. 667 By: Kuempel 4-21-95 Committee Report (Substituted) BACKGROUND The art of auctioneering has a long and distinguished history. Today the world of auctioneering is evolving, utilizing high-tech equipment, skills, and connecting people worldwide. The need for better regulation and oversight of the industry is necessary to protect the public and the reputation of the industry. Many of these goals of maintaining the integrity of the industry can be accomplished through continuing education and by strengthening the requirements for licensing. PURPOSE CSHB 667 adds to the definition of an "auction business" and creates an Auctioneer Advisory Board and provides for the duties of the Board and remedies under this act. It also establishes the Public Protection and Recovery Fund. RULEMAKING AUTHORITY It is the committee's opinion that this bill grants additional rulemaking authority in SECTION 3, SECTION 4, SECTION 5, SECTION 6, SECTION 7, and SECTION 11, to the Commissioner and to the Department of Licensing and Regulation. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 1(10), Chapter 320, Acts of the 64th Legislature, Regular Session 1975, as amended (Art. 8700, V.T.C.S.). Adds clarifying language to "auction company" definition, and changes "company" to "business". SECTION 2. Amends Section 2, Chapter 320, Acts of the 64th Legislature, Regular Session 1975, as amended (Art. 8700, V.T.C.S.). Deletes the present exemption from regulation of (i) an individual conducting an auction for the sale of his own property, and (ii) the exemption for non-profit auctions at a state, county, or municipal fair. SECTION 3. Amends Section 3, Chapter 320, Acts of the 64th Legislature, Regular Session 1975, as amended (Art. 8700, V.T.C.S.). Exempts businesses engaging in wholesale motor vehicle auctions. Amends present requirements for an auctioneers license by requiring a (i) high school education or GED equivalent, (ii) 80 hours of classroom instruction, and (iii) no felony conviction involving moral turpitude during the preceding five years. This section also requires that an auction business be owned, managed, or operated by a licensed auctioneer and that a copy of the license be displayed during any auction on the premises of the auction business. Limits an associate auctioneer's license to include persons less than 18 years of age at the time the license is issued or renewed. In addition Changes the fee structure to: $100 for auctioneer's license and renewal $50 for associate's license and renewal $100 for the trust fund for each license issued or renewed Also provides that if the total of the fund is $500,000 or more on September 1, of any year, fee for license renewal shall not be required. If less than $500,000, the renewal fee will be a shared proportion to bring the fund back to $500,000, and provides that the fee will never be above $100 in any renewal year. SECTION 4. Amends Section 3B, Chapter 320, Acts of the 64th Legislature, Regular Session 1975, as amended (Art. 8700, V.T.C.S.). Provides for mandatory continuing education for license renewals of 7 1/2 hours per year. SECTION 5. Amends Chapter 320, Acts of the 64th Legislature, Regular Session 1975, as amended (Art. 8700, V.T.C.S.). by adding a new Section 3C. changes the present advisory board to 6 members -- four auctioneers and two members of the general public, and staggers the terms of the members. SECTION 6. Amends Chapter 320, Acts of the 64th Legislature, Regular Session 1975, as amended (Art. 8700, V.T.C.S.). by adding a new Section 4A. Establishes the new Public Protection And Recovery Fund, as a trust fund, to replace the present education fund. Proceeds from the new Fund can be used for both (i) public protection programs to assure compliance with the law by auctioneers and auction businesses and (ii) for the payment of claims after a final judgment is given by a court. A new provision requires an informal dispute resolution process for the settlement of claims. $250,000 is set aside for claims and the rest can be used for public protection programs. The present limits on recovery (i.e., $10,000 and $20,000) are maintained. This section also authorizes sanctions against licensees if claims payments from the Fund are not promptly repaid. By setting up the trust fund, the monies do not go to the state's general revenue fund and are not subject to legislative control. Provides that an aggrieved person does not include a motor vehicle dealer participating in a wholesale motor vehicle auction. SECTION 7. Amends Section 7(a) and (f), Chapter 320, Acts of the 64th Legislature, Regular Session 1975, as amended (Art. 8700, V.T.C.S.). Makes minor language changes to clarify a reasonable time and to allow appeals of decisions pursuant to Chapter 2001, Government Code. SECTION 8. Amends Section 10A, Chapter 320, Acts of the 64th Legislature, Regular Session, 1975, (Art. 8700, V.T.C.S.) Allows a person to act as an auctioneer for a wholesale motor vehicle distributor who is not licensed under this act. SECTION 9. Amends Section 11, Chapter 320, Acts of the 64th Legislature, Regular Session 1975, as amended (Art. 8700, V.T.C.S.). increases the criminal penalties to a Class A misdemeanor for failing to get a license and to a Class B misdemeanor for other violations of the Act or rules of the commissioner. SECTION 10. Repeals Sections 5A, 5B, and 5C, Chapter 320, Acts of the 64th Legislature, Regular Session 1975, as amended (Art. 8700, V.T.C.S.). SECTION 11. Except as otherwise provided, effective date of this act: September 1, 1995. Provides for a transfer of funds to the auctioneer public protection and recovery fund. Change in law applies only to a claim files on or after effective date of this Act. Change regarding the requirements for a license, effective September 1, 1996 and applicable only to licenses renewed on or after that date. Change in offenses applicable only to offenses that occur on or after effective date. Offenses committed before covered by law in effect at time of offense. Provides that initial appointments to the board are staggered, three members to serve two-year terms, and three members to serve four-year terms. SECTION 12. Emergency Clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute provides for a $500,000 cap on the fund, and limits the amount of fees for renewal to maintain the $500,000 level. The original did not provide for this. The substitute also excludes from definition of an "auction business" a wholesale motor vehicle auction number. Language was added in the substitute to provide for effective dates governing transfer of funds, claims against the fund, changes to offenses, requirements regarding licensing, and continuing education. Provides for an effective date of September 1, 1995, unless otherwise provided for. SUMMARY OF COMMITTEE ACTION HB 667 was heard in a Public Hearing on April 5, 1995. The Chair laid out HB 667 and recognized the author Rep. Kuempel to explain the bill. Rep. Dear laid out a complete committee substitute, and moved adoption. There was no objection. The Chair recognized the following persons to testify in favor of the bill: Mr. Mike Jones, Texas Auctioneers Assn.; The Chair recognized the following persons to testify against the bill: Mr. Allan Ray, Texas Wholesale Auto Auction Assn.; The Chair recognized the following person to testify as a resource witness, registering neutral on the bill: Mr. Robert I. (Bob) Peterman, Enforcement Coordinator, Tx. Dept. of Licensing and Regulation.; The Chair recognized Rep. Kuempel to close. HB 667 was left pending in committee. There was no objection. HB 667 was considered in a Public Hearing on April 11, 1995. The Chair called up HB 667 which was pending in committee. There was no objection. Rep. Yarbrough moved that the full committee adopt HB 667 as substituted, and that it be reported favorably to the full House with the recommendation that it do pass and be printed. The motion prevailed by the following vote: AYES: 7, NAYS: 0, ABSENT: 2. HB 667 was reconsidered in committee on April 11, 1995. Rep. Kubiak moved to reconsider the vote by which HB 667 as substituted had been favorably approved. There was no objection. The Chair laid out HB 667. HB 667 was left pending in committee. There was no objection. HB 667 was considered in a Formal Meeting on April 21, 1995. The Chair laid out HB 667 as substituted which was pending in committee. There was no objection. Rep. Kubiak moved that the full committee adopt HB 667 as substituted, and that it be reported favorably to the full House with the recommendation that it do pass and be printed. The motion prevailed by the following vote: AYES: 7, NAYS: 0, ABSENT: 2.