BILL ANALYSIS S.B. 871 By: Madla Economic Development 4-6-95 Committee Report (Amended) BACKGROUND The consumer credit commissioner has authority to assess civil money penalties under the Texas Pawnshop Act (Article 5069-51.01, et seq., V.T.C.S.) but has no authority to do so under Subtitle II, Title 79, V.T.C.S. The consumer credit commissioner licenses and regulates various lenders and creditors under the purview of Subtitle II. Currently, the only administrative remedy available to the commissioner is suspension and revocation of licenses. Often a civil money penalty is more appropriate, and some lenders have requested the opportunity to pay a civil money penalty in lieu of suspension, but that alternative is not available under current law. PURPOSE As proposed, S.B. 871 authorizes the consumer credit commissioner to assess civil money penalties under Subtitle II, Title 79, V.T.C.S. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 7, Article 5069-2.03, V.T.C.S., to require an appeal to an order of the consumer credit commissioner (commissioner), requiring a person to refrain or desist from violation, to be made in accordance with Chapter 2001, Government Code. SECTION 2. Amends Article 5069-1.01, et seq., V.T.C.S., by adding Article 2.03A, as follows: Art. 2.03A. ADMINISTRATIVE PENALTY; RESTITUTION ORDER. (a) Authorizes the commissioner to assess an administrative penalty against a person who knowingly and wilfully violates this subtitle, Chapter 9 or 15 of this title, or a rule adopted under this subtitle or Chapter 9 or 15 of this title, and to make a violator make restitution to a person injured by the violation. (b) Prohibits the amount of an administrative penalty from exceeding $1,000 for each day and each act of violation, and the aggregate amount during one year may not exceed $5,000 for each business location at which an element of a violation occurred, with a limit of $50,000 for violations at 11 or more locations. (c) Sets forth the considerations of the commissioner required to determine the amount of an administrative penalty. (d) Authorizes the commissioner, if the commissioner determines that a violation occurred, to issue a report stating the facts on which the determination is based and a recommendation on imposition and the amount of a penalty. (e) Requires the commissioner to give written notice of the report, by certified mail, to the violator within 14 days after the report is issued. Requires the notice to include a brief summary of the alleged violation and a statement of the amount of the recommended penalty, and to inform the person that the person has a right to a hearing on the occurrence of the violation, the amount of the penalty, or both. (f) Authorizes the person, within 20 days after the person receives notice, to either accept the determination and recommended penalty in writing or make a written request for a hearing. (g) Requires the commissioner, if the person accepts the determination and recommended penalty, to approve the determination by order and impose the recommended penalty. (h) Requires the commissioner, if the person requests a hearing or fails to respond timely to the notice, to set a hearing and give notice, by certified mail, of the hearing to the person. Requires the hearing to be held by an administrative law judge of the State Office of Administrative Hearings. Requires the judge to make findings of fact and conclusions of law and promptly issue a proposal for a decision about the occurrence of the violation and the proposed penalty. Authorizes the commissioner, based on the findings of fact, conclusions of law, and proposal for a decision, to find by order that a violation has occurred and impose a penalty, or to find that no violation has occurred. (i) Requires the notice of the commissioner's order to include a statement of the right of the person to judicial review of the order. (j) Provides that judicial review of the order is instituted by filing a petition under Chapter 2001G, Government Code, and is under the substantial evidence rule. (k) Authorizes the court, if it sustains the occurrence of the violation, to uphold or reduce the amount of the penalty, and order the person to pay the penalty. Requires the court, if it does not sustain the occurrence of the violation, to order that no penalty is owed. (l) Requires the court to proceed under this subsection when the judgment of the court becomes final and to order the amount of the penalty plus accrued interest to be remitted to the person, if the person paid the penalty and if the penalty was reduced or not upheld by the court. Requires the rate of interest, which is set at the rate authorized by Article 1.05, to be paid for the period the court held the penalty. (m) Authorizes the court to authorize the commissioner to recover from a person who pays an administrative penalty or restitution amount, or both, reasonable expenses incurred in obtaining the ordered amount. (n) Requires a penalty collected under this section to be deposited in the general revenue fund. (o) Subjects all proceedings under this article to Chapter 2001, Government Code. (p) Provides that an administrative penalty or restitution order under this article is in addition to any other enforcement authority provided by law. SECTION 3. Amends Article 5069-8.03, V.T.C.S., to make a person guilty of a misdemeanor who, without first securing a license, engages in business under the scope of Chapter 3, 4, 5, or 15 of this Title. SECTION 4. Makes application of this Act prospective. SECTION 5. Effective date: September 1, 1995. SECTION 6. Emergency clause.