BILL ANALYSIS



C.S.H.B. 2745
By: Romo
04-17-95
Committee Report (Substituted)


BACKGROUND

Automated Teller Machines (ATMs) came to the state of Texas 15
years ago.  Today, with over 90,000 ATMs in the country, Texas
consumers alone will perform nearly 300 million transactions.  With
the widespread availability and use of automated teller machines in
today's convenience-oriented society, the vulnerability of the ATM
user has increased and reports of ATM robberies and assaults are on
the rise.  As fixed locations open for business 24 hours a day,
ATMs have become easy target sites for criminals.

PURPOSE

This purpose of this legislation is to provide guidelines for the
implementation of uniform safety standards concerning the placement
and operation of automated teller machines in Texas.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill grants additional
rulemaking authority to the Finance Commission and the Credit Union
Commission in SECTION 1, Sec. 7 of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1.   Amends Chapter IX, Article 342-901, Texas Banking
Code, by adding Article 3d.:  Unmanned Teller Machines: User
Safety.

     Section 1.  Article 3d.  Definitions.  
(1) Defines "access area" as a paved walkway or sidewalk that is
within 50 feet of an unmanned teller machine.  
(2) Defines "access device" as having the definition in Section 7,
Article 3c of this chapter in the Banking Code.
(3) Defines "candlefoot power" as the light intensity of candles on
a horizontal plane at 36 inches above ground level and 5 feet in
front of the area to be measured.  
(4) Defines "control" as having the present, actual authority to
determine how, when, and by whom an access area or defined parking
area is to be used, maintained, lighted, and landscaped.  (5)
Defines "customer" as a natural person to whom an access device is
issued for personal, family, or household use.  
(6) Defines "defined parking area" as the portion of a parking area
open for unmanned teller machine customer parking that is
contiguous to an access area, is regularly, principally, and
lawfully used during the hours of darkness for parking by customers
of the machine, and is owned or leased by the owner or operator of
the unmanned teller machine or owned or controlled by a person
leasing the machine site to the owner or operator of the machine. 
Term does not include a parking area that is physically closed, or
on which conspicuous signs indicate that the area is closed, or the
levels of a multiple-level parking area other than the single
parking level considered by the operator of the unmanned teller
machine to be the most directly accessible to customers.  
(7) Defines "financial institution" as a state or national bank or
a state or federal savings and loan association, credit union, or
savings bank.
(8) Defines "hours of darkness" as the period beginning 30 minutes
after sunset and ending 30 minutes before sunrise.  
(9) Defines "operator" as the person primarily responsible for the
operation of an unmanned teller machine.  Does not include a person
whose primary function is to provide for the exchange, transfer, or
dissemination of electronic fund transfer data.  
(10) Defines "owner" as a person having the right to determine the
financial institutions permitted to use or participate in the use
of an unmanned teller machine. Term does not include a person whose
primary function is to provide for the exchange, transfer or
dissemination of electronic fund transfer data. 
(11) Defines "person" as a natural person, corporation, firm,
partnership, association, common law trust, or other entity.  
(12) Defines "public road" as a public right of way. Term includes
a structure, sidewalk, facility, or appurtenance incidental to a
public road.  
(13) Defines "unmanned teller machine" as having the meaning
assigned by Section 2, Article 3a of this chapter; term does not
include a customer convenience terminal as defined by Section 2,
Article 3c of this chapter.

     Section 2.  LEGISLATIVE INTENT:  CONSTRUCTION.  States in (a)
the intent of legislature to establish a standard of good faith for
the evaluation of the safety of each unmanned teller machine in the
state adding that substantial compliance is prima facie evidence of
an adequate effort to provide for public safety; (b) article does
not create a duty, responsibility, obligation for a person whose
primary function is to provide for the exchange, transfer, or
dissemination of electronic fund transfer data and who is not the
owner or operator of an unmanned teller machine.  Person described
by this subsection is not liable to a customer or user of an
unmanned teller machine for any claim or cause of action arising
out of or in connection with any use or attempted use of an
unmanned teller machine.

     Section 3.  SAFETY PROCEDURES.  States (a) operator or owner
of unmanned teller machine shall provide lighting during the hours
of darkness for the machine and its access area and defined parking
area. Owner or operator shall also provide lighting during hours of
darkness for the exterior of the enclosure if the unmanned teller
machine is located in the enclosure; (b) the owner or operator
shall provide a minimum of:  
     (1) 10 candlefoot power at the face of the unmanned teller
machine and extending in an unobstructed direction outward five
feet; 
     (2) two candlefoot power within 50 feet from all unobstructed
directions from the face of the machine unless machine is located
within 10 feet of the corner of building and is accessible from
adjacent side, in which event owner or operator shall provide
minimum of two candlefoot power along first 40 unobstructed feet of
adjacent side of the building; and 
     (3) two candlefoot power in that portion of the defined
parking area within 60 feet of the unmanned teller machine; (c) if
an access area or defined parking area of machine is not controlled
by operator of the machine, and if person who leased site controls
the access area or defined parking area, that person shall comply
with this section.

     Section 4.  SAFETY EVALUATIONS.  An owner or operator of
unmanned teller machine shall evaluate safety of each machine owned
or operated by the person and shall include in the evaluation a
consideration of: 
     (1) extent to which the lighting for machine complies with the
standards required by Section 3 of this article; and
     (2) presence of landscaping, vegetation, or other obstructions
in the area of the machine and the access area and defined parking
area for the machine; and (3) incidence of crimes of violence in
the immediate neighborhood of the machine as reflected in the
records of local law enforcement and of which owner or operator has
actual knowledge.

     Section 5. NOTICE.  The issuer of access devices shall furnish
customers with notice of basic safety precautions. The issuer shall
deliver personally or mail information to each customer whose
mailing address is in this state according to records. Issuer is
required to furnish information to only one customer per account.
Issuer may furnish information with other disclosures as described
by the Federal Electronic Fund Transfer Act.  

     Section 6.  LIMITATION. This article does not apply to an
unmanned teller machine located in: (1) inside a building, unless
(a) the building is a freestanding installation existing solely to
provide an enclosure for the unmanned teller machine or (b) except
to the extent a transaction can be conducted from outside the
building; or (2) in any area not controlled by the owner or
operator of the unmanned teller machine.

     Section 7. ENFORCEMENT:  RULES.  (a) grants the Finance
Commission and the Credit Union Commission enforcement power of
this article rulemaking authority to implement this article. 
(b) rules must establish security requirements to be implemented by
banks for the operation of unmanned teller machines. Institutions
may be required to install and maintain security devices in
addition to those required by this article to be operated in
conjunction with the machines for the protection of customers using
the machines, including: (1) video surveillance equipment that is
maintained in working order and operated continuously during the
hours of operation of a machine; and (2) adequate lighting around
the premised that contains a machine. 
(c) Failure by a bank to comply with rules adopted under this
section constitutes grounds for the imposition of a civil penalty
under Section 7, Article 3a, of this code.

SECTION 2. (a) an issuer of access devices to unmanned teller
machines shall provide notice to customers as required by the Texas
Banking Code and as added by this Act no later than January 1,
1996.  (b) an owner or operator of an unmanned teller machine or
any person described in Sec. 3(c) of this Act shall comply with
safety requirements imposed by Article 3d, Chapter IX, The Texas
Banking Code as added by this Act, no later than September 1, 1996. 

SECTION 3. Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

In SECTION 1, Sec. 1, the definition of "Financial institution" is
clarified in the substitute to include credit unions in addition to
state or national banks, federal savings and loans and savings
banks.

In Sec. 2, legislative Intent is clarified in the substitute by
adding a sentence which states that substantial compliance with
this Act is prima facie evidence that an adequate effort has been
made to provide for public safety.

Sec. 3 is clarified to include not only the operator of an ATM but
also the owner of an ATM as having to comply with this Act.

The original bill granted rulemaking authority and enforcement
power to the State Banking Board.  There are several bills proposed
to abolish the State Banking Board before the 74th Legislature,
therefore an inconsistency was created by this bill.   To rectify
this, C.S.H.B. 2745 adds subsections (a), (b), and (c) to Sec. 7 of
the bill entitled "Enforcement:  Rules," which grants rulemaking
authority and enforcement power to the Finance Commission and the
Credit Union Commission.  
(a) states that the Finance Commission and the Credit Union
Commission shall enforce this article and adopt rules to implement
article.  
(b) states that rules must establish security requirements to be
implemented by financial institutions for the operation of unmanned
teller machines and that institutions may be required to install
and maintain security devices in addition to those required by this
article, including (1) video surveillance equipment; and (2)
adequate lighting around premises that contains machine.
(c) states that failure to comply with rules adopted under this Act
constitutes grounds for imposition of civil penalty under Section
7, Article 3a of this code.

Lastly, in SECTION 2 of the substitute, language has been removed
regarding the State Banking Board who had previously been granted
rulemaking authority in this Act, and, (b), the compliance clause,
has been clarified.










SUMMARY OF COMMITTEE ACTION

The committee considered HB 2745 in a public hearing on March 27,
1995.

The following people testified in favor of the bill:
Gayle Vickers representing the Texas Bankers Association;
Eric Sandberg representing the Texas Savings and Community Bankers
Association;
Jeff Huffman representing the Texas Credit Union League; and
Chris Williston representing the Independent Bankers Association of
Texas.

The following person testified neutrally on the bill:
Catherine A. Ghiglieri representing the Texas Department of
Banking.

The bill was left pending.

The committee considered HB 2745 in a public hearing on April 10,
1995.

The committee considered a complete committee substitute for the
bill which was adopted without objection.

The bill was reported favorably as substituted, with the
recommendation that it do pass and be printed, by a record vote of: 
7 Ayes, 0 Nays, 0 PNV, 2 Absent.