By: Hinojosa S.B. No. 1013

A BILL TO BE ENTITLED

AN ACT

relating to the continuation and functions of the Texas Racing Commission, the abolishment of the Equine Research Account Advisory Committee, and the authority of Texas AgriLife Research; providing an administrative penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 1.03, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by amending Subdivisions (37) and (52) and adding Subdivision (80) to read as follows:

(37) "Handicapper" means a person who predicts the winner of a horse or greyhound race.

(52) "Performance" means the consecutive running of a specified number of greyhound races as determined by the commission [not more than 13 greyhound races].

(80) "Handicapper tournament" means a contest conducted by an association and offered to handicappers on a series of live or simulcast greyhound or horse races that have been approved by the commission at the request of the association and that may be offered for pari-mutuel wagering at the racetrack. The association may charge a tournament fee to each participating handicapper.

SECTION 2. Section 2.071, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

Sec. 2.071. CONFLICT OF INTEREST. (a) A person may not be a member of the commission and may not be a commission employee employed in a "bona fide executive, administrative, or professional capacity," as that phrase is used for purposes of establishing an exemption to the overtime provisions of the federal Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.), if:

(1) the person is an [An] officer, employee, or paid consultant of a Texas trade association in the field of horse or greyhound racing or breeding; or

(2) the person's [may not be a member of the commission or an employee of the commission who is exempt from the state's position classification plan or is compensated at or above the amount prescribed by the General Appropriations Act for step 1, salary group 17, of the position classification salary schedule.

[(b) A person who is the] spouse is [of] an officer, manager, or paid consultant of a Texas trade association in the field of horse or greyhound racing or breeding [may not be a member of the commission and may not be an employee of the commission who is exempt from the state's position classification plan or is compensated at or above the amount prescribed by the General Appropriations Act for step 1, salary group 17, of the position classification salary schedule].

(b) A person may not be a member of the commission or act as the general counsel to the commission if the person is required to register as a lobbyist under Chapter 305, Government Code, because of the person's activities for compensation on behalf of a profession related to the operation of the commission.

(c) In [For the purposes of] this section, "Texas trade association" means [a Texas trade association is] a cooperative and voluntarily joined statewide [nonprofit] association of business or professional competitors in this state designed to assist its members and its industry or profession in dealing with mutual business or professional problems and in promoting their common interest.

SECTION 3. Article 2, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by adding Section 2.25 to read as follows:

Sec. 2.25. USE OF TECHNOLOGY. The commission shall implement a policy requiring the commission to use appropriate technological solutions to improve the commission's ability to perform its functions. The policy must ensure that the public is able to interact with the commission on the Internet.

SECTION 4. Article 2, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by adding Section 2.26 to read as follows:

Sec. 2.26. NEGOTIATED RULEMAKING AND ALTERNATIVE DISPUTE RESOLUTION PROCEDURES. (a) The commission shall develop and implement a policy to encourage the use of:

(1) negotiated rulemaking procedures under Chapter 2008, Government Code, for the adoption of commission rules; and

(2) appropriate alternative dispute resolution procedures under Chapter 2009, Government Code, to assist in the resolution of internal and external disputes under the commission's jurisdiction.

(b) The commission's procedures relating to alternative dispute resolution shall conform, to the extent possible, to any model guidelines issued by the State Office of Administrative Hearings for the use of alternative dispute resolution by state agencies.

(c) The commission shall designate a trained person to:

(1) coordinate the implementation of the policy adopted under Subsection (a) of this section;

(2) serve as a resource for any training needed to implement the procedures for negotiated rulemaking or alternative dispute resolution; and

(3) collect data concerning the effectiveness of those procedures, as implemented by the commission.

SECTION 5. Subsections (b) and (e), Section 3.07, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), are amended to read as follows:

(b) The commission shall make rules specifying the authority and the duties of each official, including the power of stewards or judges to impose penalties for unethical practices or violations of racing rules. A penalty imposed by the stewards or judges may include a fine of not more than $5,000, a suspension for not more than one year, or both a fine and suspension. Before imposing a penalty under this subsection, the stewards and judges shall conduct a hearing that is consistent with constitutional due process. A hearing conducted by a steward or judge under this subsection is not subject to Chapter 2001, Government Code. A decision of a steward or judge is subject to review by the executive director, who may modify the penalty. A penalty modified by the executive director under this section may include a fine not to exceed $10,000, a suspension not to exceed two years, or both a fine and a suspension. A decision of a steward or judge that is not reviewed or modified by the executive director is a final decision. Any decision of a steward or judge may be appealed under Section 3.08(a) of this Act regardless of whether the decision is modified by the executive director [If, in the opinion of the stewards or judges, the allowable penalties are not sufficient, the stewards or judges may refer the case to the commission for further action].

(e) To pay the charges associated with the medication or drug testing, an association may use the money held by the association to pay outstanding tickets and pari-mutuel vouchers. If additional amounts are needed to pay the charges, the association shall pay those additional amounts. [If the amount held exceeds the amount needed to pay the charges, the association shall pay the excess to the commission in accordance with Section 11.08 of this Act.]

SECTION 6. Section 3.09, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by amending Subsection (b) and adding Subsections (c) and (d) to read as follows:

(b) The commission shall deposit the money it collects under this Act in the State Treasury to the credit of a special fund to be known as the Texas Racing Commission fund. The Texas Racing Commission fund may be appropriated only for the administration and enforcement of this Act. Any unappropriated money remaining in that special fund at the close of each fiscal biennium shall be transferred to the General Revenue Fund and may be appropriated for any legal purpose.

(c) On the first business day of each state fiscal year, the legislature shall appropriate from the General Revenue Fund into the Texas Racing Commission fund one-quarter of the money appropriated to the commission for the state fiscal biennium for the administration and enforcement of this Act. Not later than the last day of the state fiscal year in which the general revenue funds are appropriated, the commission shall reimburse the General Revenue Fund from the Texas Racing Commission fund or from other funds available to the commission for the amount deposited in the Texas Racing Commission fund, including 2.75 percent interest per year on the amount, with all payments first attributable to the accrued interest.

(d) The legislature may also appropriate additional money from the General Revenue Fund for the administration and enforcement of this Act. Any amount of general revenue appropriated for the administration and enforcement of this Act in excess of the cumulative amount deposited in the Texas Racing Commission fund shall be reimbursed from the Texas Racing Commission fund not later than one year after the date on which the general revenue funds are appropriated, with 2.75 [12] percent interest per year [until August 31, 1993, and 6-3/4 percent interest thereafter] with all payments first attributable to interest. In times of fiscal emergency, the legislature may make a specific appropriation from general revenue that is not subject to the reimbursement requirements in this section.

SECTION 7. Subsections (a) and (c), Section 5.03, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), are amended to read as follows:

(a) An applicant for any license or license renewal under this Act must, except as allowed under Section 7.10 of this Act, submit to the commission a complete set of fingerprints of the individual natural person applying for the license or license renewal or, if the applicant is not an individual natural person, a complete set of fingerprints of each officer or director and of each person owning an interest of at least five percent in the applicant. The Department of Public Safety may request any person owning any interest in an applicant for a racetrack license to submit a complete set of fingerprints.

(c) A peace officer of this or any other state, or any district office of the commission, shall take the fingerprints of an applicant for a license or license renewal on forms approved and furnished by the Department of Public Safety and shall immediately deliver them to the commission.

SECTION 8. Article 5, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by adding Section 5.011 to read as follows:

Sec. 5.011. INACTIVE FEES. (a) The commission may charge an annual fee for licensing and regulating a racetrack designated by the commission as inactive.

(b) The amount of the annual license fee for a racetrack designated by the commission as inactive must be at least 50 percent greater than the amount of the annual license fee for a racetrack holding a similar class of license designated by the commission as active. The commission shall set the amount of the annual inactive license fees on a sliding scale that increases the amount based on the consecutive number of years the license has been designated by the commission as inactive.

(c) If the commission charges an annual license fee for a racetrack designated by the commission as inactive, the commission may use all or a portion of the money collected under this section to reduce the fees attributable to live racing that are paid by racetracks designated by the commission as active.

SECTION 9. The heading to Section 6.04, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

Sec. 6.04. ISSUANCE OF LICENSE[; BOND].

SECTION 10. Article 6, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by adding Section 6.0601 to read as follows:

Sec. 6.0601. LICENSE REVIEW AND RENEWAL; FEES. (a) The commission shall designate each racetrack license as either active or inactive. The commission shall designate a racetrack license as an active license if the license holder:

(1) holds live racing events at the racetrack; or

(2) makes significant efforts to engage in the construction of a racetrack or other good faith efforts preparatory to conducting live racing.

(b) The commission by rule shall establish a renewal and review process for racetrack licenses issued under this article.

(c) The commission shall review each racetrack license designated by the commission as active not less than once every 10 years, except as otherwise provided by this section.

(d) The commission shall annually review a racetrack license designated by the commission as inactive.

(e) The commission by rule may adopt a system under which active racetrack licenses are renewed on various dates in a year or in various years. For the year in which the license renewal date is changed, license fees shall be prorated on a monthly basis so that each license holder pays only that portion of the license fee allocable to the number of months during which the license is valid. On renewal, the total license renewal fee is payable.

(f) The commission may require a license holder who is renewing a racetrack license or who is subject to commission review of the racetrack license to provide any information that would be required to be provided in connection with an original license application under this Act.

(g) In reviewing a racetrack license or in determining whether to renew a racetrack license, the commission shall consider:

(1) the license holder's financial stability and ability to conduct live racing events;

(2) the license holder's ability to construct and maintain a racetrack facility and to conduct live racing; and

(3) other necessary factors considered in the issuance of the original license.

(h) The commission may refuse to renew an inactive racetrack license if, after notice and a hearing, the commission determines under Subsection (g) of this section that allowing the license holder to hold the racetrack license is not in the best interests of the racing industry or the public.

(i) The commission shall renew an active racetrack license after the commission completes the review of that license. The commission may revoke an active racetrack license under Section 6.0602 of this Act if, after notice and a hearing, the commission finds that the license holder has violated this Act or a commission rule.

(j) The commission shall set and collect renewal and review fees in amounts reasonable and necessary to cover the costs of administering and enforcing this Act.

(k) The commission shall consult with members of the racing industry and other key stakeholders in developing the racetrack license renewal and review process under this section.

(l) The commission may change the designation of a racetrack license as appropriate.

SECTION 11. Article 6, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by adding Section 6.0602 to read as follows:

Sec. 6.0602. DISCIPLINARY ACTION. (a) The commission by rule shall establish procedures for disciplinary action against a racetrack license holder.

(b) If, after notice and hearing, the commission finds that a racetrack license holder or a person employed by the racetrack has violated this Act or a commission rule or if the commission finds during a review or renewal that the racetrack is ineligible for a license under this article, the commission may:

(1) revoke, suspend, or refuse to renew the racetrack license;

(2) impose an administrative penalty as provided under Section 15.03 of this Act; or

(3) take any other action as provided by commission rule.

SECTION 12. Article 6, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by adding Section 6.0605 to read as follows:

Sec. 6.0605. OWNERSHIP TRANSFER. (a) The commission by rule shall develop a process for expeditiously processing requests to transfer ownership of a racetrack license to a racetrack owner who:

(1) holds an active racetrack license under this Act at the time a request is submitted; and

(2) is in compliance with the commission's rules and regulations.

(b) A transfer under this section requires a background check under Section 6.031 of this Act. If the commission has required and approved a completed personal, financial, and business background check of the applicant within 12 months of the application date, the commission may approve the transfer after requiring an update of the previously completed background check.

SECTION 13. Section 6.18, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

Sec. 6.18. ANNUAL FEE FOR RACETRACK [TERM OF] LICENSE[; RESTRICTIONS ON RACETRACKS]. (a) [A racetrack license issued under this article is perpetual. The commission may suspend or revoke a license as provided by this Act.

[(b)] The commission may prescribe a reasonable annual fee to be paid by each active racetrack license holder [licensee].

(b) The commission may prescribe an annual fee for each inactive racetrack license holder in an amount greater than the annual fee paid by an active racetrack license holder.

(c) The [fee must be in an amount sufficient to provide that the] total amount of fees imposed under this section, together with the license fees prescribed under Section 5.01(b) of this Act, the inactive fees described under Section 5.011 of this Act, and the renewal and review fees prescribed under Section 6.0601(j) of this Act, must be [is] sufficient to pay the costs of administering and enforcing this Act.

SECTION 14. Section 7.01, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

Sec. 7.01. LICENSE REQUIRED. (a) Except as provided by this section, a [A] person may not participate in racing with pari-mutuel wagering other than as a spectator or as a person placing a wager without first obtaining a license from the commission. A person may not engage in any occupation for which commission rules require a license under this Act without first obtaining a license from the commission.

(b) The commission by rule shall categorize the occupations of racetrack employees and determine the occupations that afford the employee an opportunity to influence racing with pari-mutuel wagering. The rules must require the following employees to be licensed under this Act:

(1) an employee who works in an occupation determined by the commission to afford the employee an opportunity to influence racing with pari-mutuel wagering; or

(2) an employee who will likely have significant access to the backside of a racetrack or to restricted areas of the frontside of a racetrack.

(c) A racetrack licensed under this Act is responsible for ensuring that its employees comply with this Act and commission rules. The commission may impose disciplinary action against a licensed racetrack for violations of this Act and commission rules by its employees as provided by Section 6.0602 of this Act.

SECTION 15. Section 7.07, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by amending Subsection (a) and adding Subsection (a-1) to read as follows:

(a) A license issued under this article is valid for a period set by the commission not to exceed 36 months following the date of its issuance. It is renewable on application, satisfactory results of a criminal history information record check, and payment of the fee in accordance with the rules of the commission.

(a-1) The commission shall obtain criminal history record information on each applicant renewing a license under this article. The commission shall ensure that criminal history record information is obtained on each license holder at least once every 36 months.

SECTION 16. Section 11.01, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended by amending Subsection (a) and adding Subsection (a-1) to read as follows:

(a) The commission shall adopt rules to regulate wagering on greyhound races and horse races under the system known as pari-mutuel wagering. Wagering may be conducted only by an association within its enclosure. A person may not accept, in person, by telephone, or over the Internet, a wager for a horse race or greyhound race conducted inside or outside this state from a person in this state unless the wager is authorized under this Act.

(a-1) The commission may commission as many investigators as the commission determines necessary to enforce this Act and the rules of the commission. Each investigator shall take the constitutional oath of office and file it with the commission. Each commissioned investigator has the powers of a peace officer.

SECTION 17. Subsections (a) and (c), Section 11.04, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), are amended to read as follows:

(a) Only a person inside the enclosure where both live and simulcast race meetings are authorized may wager on the result of a live or simulcast race presented by the association in accordance with commission rules. Except as provided by this section, a person may not place, in person, by telephone, or over the Internet, a wager for a horse race or greyhound race conducted inside or outside this state. The commission shall adopt rules to prohibit wagering by employees of the commission and to regulate wagering by persons licensed under this Act.

(c) The commission shall adopt rules prohibiting an association from accepting a wager made on credit and shall adopt rules providing for the use of automatic banking machines within the enclosure. The commission shall limit the use of an automatic banking machine to[:

[(1)] allow a person to have access to only the person's checking account at a bank or other financial institution[; and

[(2) deliver no more than $200].

SECTION 18. Section 11.05, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

Sec. 11.05. UNLAWFUL WAGERING. A person shall not wager on the result of a greyhound race or horse race in this state except as permitted by this Act. A person who is not an association under this Act may not accept from a Texas resident while the resident is in this state a wager on the result of a greyhound race or horse race conducted inside or outside this state.

SECTION 19. Subsection (a), Section 18.01, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), is amended to read as follows:

(a) The Texas Racing Commission is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, and except as provided by Subsections (b) and (c) of this section, the commission is abolished and this Act expires September 1, 2015 [2009].

SECTION 20. Subdivision (2), Section 88.521, Education Code, is amended to read as follows:

(2) "Director" means the executive director of Texas AgriLife Research, formerly known as the Texas Agricultural Experiment Station.

SECTION 21. Subsections (b), (f), and (g), Section 88.522, Education Code, are amended to read as follows:

(b) The director shall administer the account through established procedures of Texas AgriLife Research, formerly known as the Texas Agricultural Experiment Station.

(f) Not more than 10 percent of the account may be spent each year on the cost incurred in the operation or administration of the [advisory committee or] account.

(g) All money received by [the advisory committee or] the account under this chapter is subject to Subchapter F, Chapter 404, Government Code.

SECTION 22. Section 88.525, Education Code, is amended by adding Subsections (a-1) and (b-1) and amending Subsection (b) to read as follows:

(a-1) In awarding grants under this section, the director shall comply with the conflict of interest provisions of The Texas A&M University System.

(b) The [With the advice of the advisory committee, the] director shall develop annually a request for proposals for equine research grants. Each proposal received may [must] be evaluated by a peer review committee appointed by the director and subject matter experts as necessary to evaluate the proposal. The peer review committee shall consider the applicant's research capacity and the relevance and scientific merit of the proposal and make recommendations to the director.

(b-1) The director may award a grant to an applicant who proposes to commingle grant money awarded under this section with other sources of funding or proposes to conduct research that includes equine research.

SECTION 23. Subsection (a), Section 88.526, Education Code, is amended to read as follows:

(a) The director shall prepare an annual report on equine research funded under this subchapter. The director shall distribute the report to the Texas Racing Commission and [the] members of the Texas horse racing industry [advisory committee]. The director shall make copies of the report available to interested parties.

SECTION 24. Section 88.527, Education Code, is amended to read as follows:

Sec. 88.527. CONFERENCE. Texas AgriLife Research may [The Texas Agricultural Extension Service shall] conduct an annual conference on equine research. Money from the equine research account shall be used to defray the costs of the conference. The conference must be designed to bring to the attention of the Texas horse racing industry the latest research results and technological developments in equine research. The director shall make the report created under Section 88.526 available at the conference.

SECTION 25. The following provisions of the Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes) are repealed:

(1) Section 2.072;

(2) Subsection (b), Section 6.04;

(3) Subsection (k), Section 6.06; and

(4) Subsection (a), Section 7.02.

SECTION 26. The following provisions of the Education Code are repealed:

(1) Subdivision (1), Section 88.521;

(2) Section 88.523;

(3) Section 88.5231;

(4) Section 88.5232;

(5) Section 88.524;

(6) Section 88.5245; and

(7) Subsection (c), Section 88.525.

SECTION 27. (a) Not later than January 1, 2010, the Texas Racing Commission shall determine the expiration date of each license issued under the Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes).

(b) Not later than September 1, 2010, the Texas Racing Commission shall complete a review of each inactive racetrack license as required by Section 6.0601, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), as added by this Act.

(c) The Texas Racing Commission may adjust license renewal and review fees pursuant to the commission's authority to adjust fees under Section 5.01, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), and Section 6.0601, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), as added by this Act, to recover any money lost by the change in law made by this Act to Subsection (e), Section 3.07, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes).

(d) As soon as practicable, the executive director of Texas AgriLife Research shall submit a report to the Texas Racing Commission as required by Section 88.526, Education Code, as amended by this Act.

SECTION 28. (a) In this section:

(1) "Active racetrack license" means a racetrack license designated as active by the commission.

(2) "Commission" means the Texas Racing Commission.

(b) Notwithstanding Section 6.0601, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), as added by this Act, the commission shall conduct an initial review of each active racetrack license not later than September 1, 2011, according to a schedule developed by the commission based on categories defined by the level of activity of the license holder.

(c) The commission shall first review each active racetrack license in the following order:

(1) each active racetrack license held by a person that owns or operates a racetrack but that does not conduct live races;

(2) each active racetrack license held by a person that owns or operates a racetrack and conducts live races; and

(3) each active racetrack license held by a person that does not conduct live racing but is making good faith efforts preparatory to conducting live racing.

SECTION 29. Notwithstanding Subsection (a), Section 18.01, Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes), as amended by this Act, the Sunset Advisory Commission shall conduct a special-purpose review of the Texas Racing Commission as part of the Sunset Advisory Commission's review of agencies for the 82nd Legislature. The Sunset Advisory Commission's report to the 82nd Legislature regarding the review of the Texas Racing Commission must include an evaluation of the Texas Racing Commission's efforts to implement the changes to the Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes) enacted by this Act. The report may include any recommendations the Sunset Advisory Commission considers appropriate based on the review of the Texas Racing Commission.

SECTION 30. This Act takes effect September 1, 2009.