By Brad Shipp, TBFAA with content from Dan Mays, McWilliams Governmental Affairs Consultants

Background

This year The Department of Public Safety, which regulates the private security profession is up for review by the Sunset Commission.

Sunset works by setting a date on which an agency is abolished unless the Legislature passes a bill to continue it. Sunset staff evaluates the agency and issues recommendations for positive change. The Commission considers the recommendations, hears public testimony, and decides on a package of changes to bring to the full Legislature. The Legislature typically passes about 80 percent of the Sunset Commission’s recommendations.

On May 23, 2018, the Commission heard testimony on staff recommendations about the Department of Public Safety. TBFAA Vice President Paul Rusch and Executive Director Brad Shipp testified for TBFAA at the hearing.

On August 29, 2018, The Sunset Commission voted to adopt the staff recommendations with several changes.

The language passed by the Sunset Commission this week is only recommendations for the Legislature to consider when drafting the DPS sunset bill. During the coming weeks and especially during the 2019 legislative session, TBFAA will be working to monitor and influence this process.

The Sunset Commission Recommendations

3.1 – Reconstitute the Private Security Board as an advisory committee.

The Sunset Commission voted that the Private Security Board would expire on September 1, 2019, and the Public Safety Commission (appointed by the Governor) would appoint advisory committee members who represent the regulated private security industries and consumers. The Sunset staff had recommended that the commission could delegate this responsibility to the director, but the Sunset Commission voted to require the Public Safety Commission to appoint the Private Security Advisory Committee. Current Private Security Board members would be eligible for appointment to the new advisory committee. Under this recommendation, statute would provide for at least quarterly meetings to ensure ongoing opportunities for public and stakeholder participation.  The Commission voted to require the Public Safety Commission to designate one of its members to serve as a liaison to the private security advisory committee.

The commission stated that recommendation 3.1 would clarify in statute that all regulatory authority for the private security program, including rulemaking and enforcement authority, exists solely with the Public Safety Commission.

TBFAA strongly opposes the Commission recommendation to reconstitute the Private Security Board (PSB) as a mere advisory committee. We will continue to work to maintain the status of the Private Security Board.

3.2 – Deregulate 10 registrations for individuals and entities that do not directly provide private security services.

Sunset Commission Staff recommended eliminating regulation of individuals such as owners, partners, shareholders, corporate officers, managers, and supervisors, and branch offices who do not provide direct services to the public. Additionally, under this recommendation, governmental subdivisions and private businesses with internal security departments would no longer register with the department, although security guards working for these entities would continue to be regulated.

Sunset Commission Staff recommended to remove the requirement for businesses to operate under the direction of a manager or supervisors that must have additional experience requirements.

The Sunset Commission voted that Everyone who provides services regulated under the Private Security Act (Occupations Code, Chapter 1702) or who owns 51 percent or more of a company that provides such services must obtain an individual license and work under a company license. These two types of licenses will replace all of the existing categories (managers, supervisors, branch offices, etc.).

• To obtain a company license, an applicant must (1) satisfy insurance requirements, (2) pass the jurisprudence examination, (3) pass a criminal background check, and (4) demonstrate adequate experience.
• Governmental subdivisions and private businesses with internal security departments shall provide a one-time registration with DPS that lists a point of contact. Governmental subdivisions and private businesses shall inform DPS any time the point of contact changes.
• DPS shall adopt rules to implement these provisions.

In the discussion leading up to the Sunset Commission vote, Sen. Watson said to obtain a license, a person would have to pass a criminal background check and it would be called a registration.  He said they are combining the requirements of the manager license and the company license in a way that is consistent with the existing licensure process.

TBFAA supports retaining requirements for managers and is glad that the commission supports this position.

3.3 – Discontinue regulation of private security salespersons and consultants.

This recommendation would discontinue regulation of security and alarm systems salespersons and private security consultants on September 1, 2019. The Commission feels these individuals do not directly provide security services or threaten public safety, and that alternative means exist for the state to address reported fraudulent or criminal activity.

TBFAA feels that private security salespersons should be required to undergo background checks and will work to preserve this requirement.

3.4 – Remove requirements for regulated individuals to be affiliated with companies.

The Sunset Commission staff recommended to eliminate the requirement for individuals who engage in private security services to be affiliated with licensed companies.

The Sunset Commission rejected this recommendation.

TBFAA supported that regulated individuals to be affiliated with companies and is glad that the commission supports this position.

3.5 – Require individuals who provide private security services to obtain a license, rather than a registration or endorsement.

Sunset Commission staff recommended requiring individuals who engage in regulated activities to obtain a separate license, rather than a registration or an endorsement, for each activity.

The Sunset Commission adopted this recommendation. This means that separate licenses are required for each activity.  Access Control Installer, Burglar Alarm Installer, Closed Circuit Television Installer.

Texas Degrees of Regulation

• Registration: typically considered the lowest level of regulation. The regulating agency essentially maintains a roster and may set minimum requirements for individuals to be added to the list.
• Endorsement: a permit entitling a registered individual to perform a regulated service.
• Licensure: the most stringent form of regulation. Specific education and experience standards are typically required to be licensed, and the practice, as well as the title of an occupation, is subject to regulation.

TBFAA feels that treating each license or registration held by an individual separately is wrong. Simplifying the structure to create an endorsement system is the way to go.

3.6 – Discontinue regulation of guard dog companies and trainers.

The Sunset Commission Staff recommended to deregulate guard dog companies and trainers. Regulation of these entities would cease on September 1, 2019.

The Sunset Commission adopted this recommendation.

TBFAA has no dog in this fight – pun intended

3.7 – Discontinue state regulation of telematics companies.

The Sunset Commission Staff recommended to deregulate telematics service providers under the Private Security Act by removing payment of an annual fee. The minimal regulatory functions related to these activities would cease on September 1, 2019.

Telematics is a service provided to owners, operators, and occupants of consumer vehicles or commercial fleet vehicles through the remote access of in-vehicle data that may rely on global positioning system satellite data to fix the exact location of the vehicle, including: location-specific emergency and roadside vehicle breakdown assistance; automatic collision notification; real-time traffic and navigation information; remote vehicle diagnostics;  and stolen vehicle recovery.

The Sunset Commission adopted this recommendation.

TBFAA supports this recommendation.

4.1 – Require DPS to track and annually report regulatory information on its website.

Sunset Commission Staff recommended to require DPS in statute to maintain and regularly report licensing, investigative, and disciplinary information for each of its regulatory programs, providing policymakers, commission members, staff, stakeholders, and the public a more complete picture of DPS’ regulatory efforts.

As a management action, DPS would be required to report the following minimum measurements and statistics for each fiscal year and type of license or registration:

• Applications received
• Applications denied by the reason for the denial (criminal history, experience, etc.)
• Number of licensees
• Average number of days to issue a license
• Total number of complaints
• Number of complaints by source (public, DPS, other agencies, etc.)
• Number of complaints by type (operating without a license, advertising violation, etc.)
• Number of cases referred to and number of cases resolved at informal settlement hearings
• Number of resolved complaints by each type of action taken (nonjurisdictional, dismissed, warning, suspension, etc.)
• Breakdown of resolved complaints by the nature of the allegation (operating without a license, advertising violation, etc.)
• Number of cases referred to the State Office of Administrative Hearings (default and non-default)
• Number of cases appealed to district court
• Average number of days to resolve a complaint, from received to investigation completed and from received to case closure

Under this recommendation, DPS would begin posting available information for fiscal year 2019, and would be expected to have fully implemented this recommendation no later than September 1, 2020.

The Sunset Commission adopted this recommendation.

TBFAA supports this recommendation.

4.2 – Direct DPS to work with TDLR to develop regulatory processes and rules.

Sunset Commission Staff recommended to direct DPS to work with TDLR to review existing practices and rules for opportunities to streamline and simplify DPS’ regulatory functions, taking into consideration any recommendations adopted by the Sunset Advisory Commission. TDLR would assist DPS to develop more efficient, clear processes and rules to better manage DPS’ regulatory programs through cooperative interagency discussions and should seek stakeholder input from regulated industries. DPS staff would propose regulatory improvements to the Public Safety Commission and director, as appropriate, for implementation or adoption no later than September 1, 2020. This recommendation would allow DPS and TDLR to determine the most appropriate means of collaborating and would authorize DPS and TDLR to enter into a memorandum of understanding if necessary.

The Sunset Commission adopted this recommendation.

TBFAA supports this recommendation.

4.3 – Remove conflicting, nonstandard statutory definitions regarding convictions.

Sunset Commission Staff recommended to remove the separate, inconsistent statutory definitions of conviction from the private security, metal recycling entity, and vehicle inspection programs. Under this recommendation, DPS would rely on the standard definition of conviction provided in Chapter 53, Texas Occupations Code, to better align DPS’ criminal history evaluations with common regulatory practices and the Legislature’s intent to reduce barriers to licensure.

The Sunset Commission adopted this recommendation.

TBFAA supports the creation of consistent criterion for background review for private security applicants. But, we agree with DPS that “Ensuring that the public is not put at risk by security personnel with disqualifying criminal records is central”

4.4 – Remove unnecessary, subjective qualifications for applicants.

Sunset Commission Staff recommended to remove the requirement that individuals employed in positions that require carrying firearms have “good moral character.” This recommendation would not affect any requirements related to disqualifying criminal convictions or standards for physical or mental fitness to carry a firearm, and because DPS does not currently evaluate applicants’ character, this recommendation would not affect current licensees or future applicants.

The Sunset Commission adopted this recommendation.

TBFAA supports removing subjective qualification for private security applicants. But, we agree with DPS that “Ensuring that the public is not put at risk by security personnel with disqualifying criminal records is central”

4.5 – Authorize DPS to conduct fingerprint-based criminal background checks for all applicants and licensees.

Sunset Commission Staff recommended to authorize, but not require, DPS to conduct fingerprint-based state and federal criminal background checks for all applicants and licensees for DPS’ regulatory programs, not just the Capitol access pass, license to carry a handgun, and private security programs. Most regulated individuals have already undergone a fingerprint-based state and federal background check, and this recommendation would not require those individuals to undergo additional checks. Some programs may not necessitate such a thorough vetting, so DPS should establish in rule which applicants and licensees would be subject to fingerprint-based background checks. Applicants and current licensees who have not yet undergone a state and federal background check would pay the approximately $37 cost to submit fingerprints through DPS’ vendor. The department should consider this cost to applicants and licensees when determining if fingerprint-based background checks are necessary.

The Sunset Commission adopted this recommendation.

TBFAA supports reviewing these requirements.

4.6 – Authorize DPS to establish flexible license renewal requirements.

Sunset Commission Staff recommended to a remove from statute requirements to renew private security licenses annually and vehicle inspection certificates on specific dates, reducing staff time needed to renew licenses without compromising oversight of licensees. This recommendation would instead clearly authorize DPS to stagger license renewals throughout the year and on a biennial basis for all of its regulatory programs, providing a single, clear approach to license renewal requirements.

The Sunset Commission adopted this recommendation.

TBFAA supports reviewing these requirements.

4.7 – Direct DPS to adopt a process for applying mitigating and aggravating factors in criminal history evaluations.

Sunset Commission Staff recommended that, DPS adopt in rule procedures for applying mitigating and aggravating factors in evaluating criminal history for applicants and licensees. This process should cover the responsibilities of DPS staff and the applicant or licensee, outline procedures, and require DPS to retain documentation for any suspensions, denials, or revocations taken as a result of an individual’s criminal history. While the process should be consistent, the mitigating and aggravating factors applied in evaluations should be tailored for the specific occupation.

The Sunset Commission adopted this recommendation.

TBFAA supports the creation of consistent criterion for background review for private security applicants. But, we agree with DPS that “Ensuring that the public is not put at risk by security personnel with disqualifying criminal records is central”

4.8 – Direct DPS to cease permanently disqualifying individuals for certain convictions and review rules for compliance with Chapter 53, Texas Occupations Code.

Sunset Commission Staff recommended that DPS modify its rules to eliminate permanently disqualifying convictions and review rules applying blanket penalties for convictions related and unrelated to the occupation to ensure DPS practices are not unfairly restricting entry into a regulated industry.

The Sunset Commission adopted this recommendation with the following modification: Modify the recommendation to direct DPS to cease permanently disqualifying individuals for certain convictions (other than those convictions specified by Chapter 53), but in reviewing and modifying its rules, allow DPS to apply mitigating and aggravating factors to crimes relevant to the profession according to the level of threat to public safety

TBFAA supports the creation of consistent criterion for background review for private security applicants. But, we agree with DPS that “Ensuring that the public is not put at risk by security personnel with disqualifying criminal records is central”

4.9 – Establish clear authority to receive, investigate, and resolve complaints.

Sunset Commission Staff recommended to clarify DPS’ authority to act on complaints against licensees by consolidating investigative authority under DPS’ general statutes and requiring DPS to establish the entire complaint process in rule, including complaint intake, investigation, adjudication, resulting sanctions, and disclosure of final actions to the public. This recommendation would also require DPS to maintain documentation for each stage of complaint resolution. These changes would promote consistency between regulatory programs and improve transparency to licensees and the public.

The Sunset Commission adopted this recommendation.

TBFAA supports the recommendation.

4.10 Clarify the Public Safety Commission’s responsibility to take final enforcement actions for regulatory programs.

Sunset Commission Staff recommended that statute clearly make the Public Safety Commission responsible for taking all final enforcement actions for the regulatory programs under DPS’ jurisdiction. However, statute would also authorize the commission to delegate this responsibility to the director. This recommendation would also require notice be given to individuals subject to final enforcement action of their rights to appeal final actions to the State Office of Administrative Hearings or district or municipal courts, as applicable.

The Sunset Commission adopted this recommendation with the following modification: Remove the authority for the Public Safety Commission to delegate the responsibility for taking all final enforcement actions for regulatory programs under DPS’ jurisdiction to the director.

TBFAA strongly opposes the Commission recommendation to reconstitute the Private Security Board (PSB) as a mere advisory committee. We will continue to work to maintain the status of the Private Security Board

If the Private Security Board becomes an advisory committee the Public Safety Commission should have full authority and responsibility for enforcement actions.

4.11 – Require DPS to establish a process to informally resolve complaints.

Sunset Commission Staff recommended to authorize DPS to create an informal complaint settlement process in rule for each of its regulatory programs. Statute would require informal settlement conferences be subject to the Administrative Procedure Act, to ensure fairness and consistency, but DPS would be free to adopt the most efficient means of conducting these conferences. Statute that conflicts with the intent of this recommendation for existing informal hearings would be eliminated. Under this recommendation, the director, or the director’s designee, would approve all informal agreements to ensure oversight of staff decisions and operations.

The Sunset Commission adopted this recommendation.

TBFAA supports the recommendation.

4.12 – Provide DPS a full range of sanctions to enforce regulations.

Sunset Commission Staff recommended to consolidate DPS’ authority to take enforcement actions against regulated individuals and provide a single, complete set of sanctions for each of its regulatory programs. Specifically, this recommendation would provide DPS the authority to deny, revoke, suspend, probate, reprimand, or refuse to renew a license, registration, or certificate for conduct that violates statute or rule applicable to each regulatory program. This recommendation would also authorize the department to assess administrative penalties against violators, issue cease and desist letters, and seek injunctions through the attorney general’s office.

This recommendation would also require DPS to establish a penalty matrix for each program to guide the application of sanctions and administrative penalties for specific violations, ensuring consistency and fairness for licensees. The department should account for a variety of factors before applying sanctions, such as the licensee’s compliance history, the seriousness of the violation, and any mitigating factors.

The Sunset Commission adopted this recommendation.

TBFAA supports the recommendation.

4.13 – Remove restrictive fee authority from statute.

Sunset Commission Staff recommended to remove the fee cap for the metal recycling entity registration and eliminate the statutory fee amounts set for the vehicle inspection station and inspector certificates. Instead, DPS would be authorized to set the fees for both of these programs as necessary to recover the costs of administering each regulatory program. Fees for the vehicle inspection and metal recycling entities programs do not currently cover DPS’ costs of regulation. The Legislature would continue to exert control and oversight of DPS’ expenditures through the appropriations process to ensure license fees generate enough revenue in the future.

The Sunset Commission adopted this recommendation.

TBFAA has no dog in this fight

4.14 – Direct DPS to adopt a risk-based inspection process.

Sunset Commission Staff stated  that Statute already authorizes DPS to conduct inspections for each of its regulatory programs, but this recommendation would direct DPS to adopt a risk-based approach to better allocate limited staff and resources. Under this recommendation, DPS should adopt rules outlining the procedures for auditing and inspecting regulated entities and how it will determine when an audit or inspection will be conducted. The intent of this recommendation is not to avoid conducting audits or inspections but to ensure the regulatory impact on licensees is only as onerous as necessary to protect the public.

As to the salvage yard program, DPS does not regulate salvage yards and does not have a formal arrangement to assist the Texas Department of Motor Vehicles in enforcing laws and rules. The department should consider what, if any, role DPS staff should have in conducting inspections and work with the Texas Department of Motor Vehicles to coordinate these efforts and share relevant information to provide the state the most cost-effective means of overseeing these entities.

The Sunset Commission adopted this recommendation with the following modification: Direct DPS to work with TxDMV to identify the most appropriate means of managing investigations and inspections of salvage yards, and to establish a Memorandum of Understanding with TxDMV to coordinate oversight of these entities.

TBFAA supports the Commission staff observation that “Agencies should have a clear process for determining if a licensee needs to be inspected, rather than meeting arbitrary quotas, and identify what risk factors to consider for conducting an inspection, such as recent complaints, past violations or disciplinary actions, or significant changes in business management.  Clear, risk-based inspection policies also keep regulated individuals on notice of the agency’s expectations.”  Inspecting or auditing companies each and every year, apparently due to their proximity to the interstate or local DPS office, is an unnecessary burden on both the company and DPS.