HBA-DMD H.B. 1485 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1485 By: Brimer Public Safety 4/5/1999 Introduced BACKGROUND AND PURPOSE Recent occurrences of auto theft by persons posing as repossession agents have sparked concern about the repossession industry, which is essentially unregulated. H.B. 1485 requires a person who is applying for a repossession company license to file a copy of the sales tax permit issued to the applicant by the comptroller with the Texas Board of Private Investigators and Private Security Agencies (board). This bill requires the board to adopt rules in order to ensure that a vehicle used for repossession is a tow truck or other vehicle that is suitable in terms of size, towing capacity, equipment, and safety. This bill establishes requirements for the vehicle used for repossession and for the storage of repossessed vehicles. This bill also requires a person applying for registration as a repossession agent to submit to a drug test. It prohibits a creditor from hiring a person to engage in repossession unless that person is licensed as a repossession company. H.B. 1485 establishes a civil penalty for creditors who violate this Act. This bill authorizes the attorney general or an appropriate prosecuting attorney to sue to collect a civil penalty. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking is expressly delegated to the Texas Board of Private Investigators and Private Security Agencies (board) SECTIONS 1.06 and 1.12 (Sections 14C and 39A, Article 4413(29bb), V.TC.S. (Private Investigators and Private Security Agencies Act)) and that rulemaking authority previously delegated to the board is modified in SECTION 1.08 (Section 17, Article 4413(29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act)) of this bill. SECTION BY SECTION ANALYSIS ARTICLE 1. REGULATION OF REPOSSESSION COMPANIES SECTION 1.01. Amends Section 1, Article 4413 (29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), to authorize this Act to be cited as the Private Investigators, Private Security Agencies, and Repossession Companies Act. SECTION 1.02. Amends Section 2, Article 4413 (29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), to define "manufactured home," "mobile home," "motor vehicle," "repossession," "repossession agent," "repossession company," and "vessel." Makes conforming changes. SECTION 1.03. Amends Section 3(a), Article 4413 (29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), to delete Subdivision (7), which provides that this Act does not apply to a person who engages exclusively in the business of repossessing property that is secured by a mortgage or other security interest. Sets forth that this Act does not apply to a person who is an employee of a federally insured lender. Redesignates Subdivisions (8)-(32) to Subdivisions (7)(31), respectively. SECTION 1.04. Amends Section 5(a), Article 4413 (29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), to provide that the Texas Board of Private Investigators and Private Security Agencies (board) is composed of five, rather than two, members who are required to be appointed by the governor. Makes a conforming change. SECTION 1.05. Amends Section 13(a) and (c), Article 4413 (29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), to make conforming changes. SECTION 1.06. Amends the Article 4413 (29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), by adding Section 14C, as follows: Sec. 14C. REPOSSESSION COMPANY. (a) Requires a person who is applying for a repossession company license to file with the board a copy of the sales tax permit issued to the applicant by the comptroller under Chapter 151 (Limited Sales, Excise, and Use Tax), Tax Code, along with evidence of compliance with the registration and insurance requirements of Chapter 643 (Motor Carrier Registration), Transportation Code, regarding tow trucks or other vehicles to be used by the applicant to repossess a motor vehicle, mobile or manufactured home, or vessel. (b) Requires the board to adopt rules, with the advise of the Texas Department of Transportation and the Texas Department of Public Safety, to ensure that a vehicle used for repossession by a Class D, Class E, Class F, or Class G license holder is a tow truck or other vehicle that is suitable in terms of size, towing capacity, equipment, and safety. (c) Sets forth that a vehicle is not suitable under Subsection (b) of this section unless it has four rear wheels. (d) Sets forth that a vehicle used for a repossession by a Class D, Class E, Class F, or Class G license holder must be identified during the repossession by the license number of the repossession company. Requires the license number to be displayed on both sides of the vehicle and appear in lettering that is not less than two and a half inches tall and is a color that contrasts with the vehicle's background. (e) Requires each area in which a repossession company stores repossessed motor vehicles, mobile or manufactured homes, or vessels to be securely enclosed by a six foot chain link fence or an equivalent means of security, be well-lit, and have the capacity to store not less than 20 full-sized motor vehicles. (f) Sets requirements for a repossession company. (g) Provides that the notice under Subsection (f) of this section must include the address where the repossession began, the address where the repossessed item will be stored, a description of the repossessed item, and the license plate number of the repossessed item, if applicable. (h) Requires the board to adopt rules to ensure compliance with this section and conduct regular inspections to ensure compliance with this section and the rules adopted under this section. SECTION 1.07. Amends Section 16(b) and (d), Article 4413 (29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), to establish a Class D license which is a repossession company license, covering operations defined by Section 2(40) of this Act; a Class E license covering the operations included within Class A and Class D; a Class F license covering the operations included within Class B and Class D; and a Class G license covering the operations included within Class A, Class B, and Class D. Makes conforming changes. SECTION 1.08. Amends Section 17(a) and (d), Article 4413 (29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), to establish maximum fees that the board is required, by rule, to establish provided that the General Appropriations Act does not specify the amount of the fee. Sets forth maximum fees for a Class D license (license and original) at $225, for a Class E license (license and original) at $340, for a Class F license (license and original) at $340, and for a Class G license (license and original) at $455. Makes conforming changes. SECTION 1.09. Amends Section 32(a), Article 4413 (29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), to make a conforming change. SECTION 1.10. Amends Section 37(a), Article 4413 (29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), to make a conforming change. SECTION 1.11. Amends Section 38(b), Article 4413 (29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), to make a conforming change. SECTION 1.12. Amends the Article 4413 (29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), by adding Section 39A, as follows: Sec. 39A. DRUG TESTING OF REPOSSESSION AGENTS. (a) Requires a person applying for registration as a repossession agent to submit to a drug test in the manner prescribed by the board. (b) Requires the board to adopt rules for drug testing, that are required to conform to applicable laws regarding drug testing and meet the minimum standards established by federal law for occupational drug testing, under Subsection (a) of this section. ARTICLE 2. LIMITATIONS ON CREDITORS SECTION 2.01. Amends Title 5, Finance Code, by adding Chapter 396, as follows: CHAPTER 396. CREDITOR'S USE OF CERTAIN REPOSSESSION SERVICES Sec. 396.001. DEFINITION. Defines "repossession" with the meaning assigned by Section 2, Article 4413(29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act). Sec. 396.002. USE OF REPOSSESSION SERVICES. Prohibits a creditor from hiring a person to engage in repossession unless that person is licensed as a repossession company under Article 4413(29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act). Sec. 396.003. LIMITED LIABILITY. Establishes that a creditor is not liable for a breach of the peace committed by a repossession company that the creditor has hired to carry out the repossession for which the repossession company was hired. Sec. 396.004. CIVIL PENALTY. Subjects a creditor who violates this chapter to a civil penalty of not less than $1,000 for each violation. Authorizes the attorney general or an appropriate prosecuting attorney to sue to collect a civil penalty. ARTICLE 3. TRANSITION; EMERGENCY SECTION 3.01. (a) Sets forth that a person is not required to obtain a license to operate a repossession company or to register as a repossession agent as required by Sections 13(a) and 32(a), Article 4413(29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), as amended by this Act, until March 1, 2000. (b) Requires the board to adopt rules under this Act no later than December 31, 1999. (c) Effective date: September 1, 2002, for Section 14C(c), Article 4413(29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), as added by this Act. (d) Requires the governor, no later than November 1, 1999, when making the three additional appointments to the board under Section 5(a), Article 4413(29bb), V.T.C.S. (Private Investigators and Private Security Agencies Act), as amended by this Act, to designate one member for a term expiring January 31, 2001, one member for a term expiring January 31, 2003, and one member for a term expiring January 31, 2005. SECTION 3.02. Provides that a creditor is not required to comply with Chapter 396, Finance Code, as added by this Act, until March 1, 2000. SECTION 3.03. Effective date: September 1, 1999. SECTION 3.04. Emergency clause.