83R2952 NAJ-D
 
  By: Zedler H.B. No. 337
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the regulation of owners, operators, employees, and
  independent contractors of sexually oriented businesses to reduce
  risks to public and occupational health and to prevent human
  trafficking; providing penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle D, Title 13, Occupations Code, is
  amended by adding Chapter 2158 to read as follows:
  CHAPTER 2158. SEXUALLY ORIENTED BUSINESSES
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 2158.001.  DEFINITIONS. In this chapter:
               (1)  "Department" means the Department of State Health
  Services.
               (2)  "Executive commissioner" means the executive
  commissioner of the Health and Human Services Commission.
               (3)  "License holder" means a person who holds a
  license issued under this chapter.
               (4)  "Sexually oriented business" has the meaning
  assigned by Section 243.002, Local Government Code.
         Sec. 2158.002.  ADMINISTRATION BY DEPARTMENT OF STATE HEALTH
  SERVICES. The department shall administer this chapter.
         Sec. 2158.003.  MUNICIPAL AND COUNTY REGULATION. This
  chapter is in addition to any municipal or county regulation.  To
  the extent of a conflict between this chapter and a municipal or
  county regulation, this chapter controls.
         Sec. 2158.004.  EXEMPTIONS. (a) This chapter does not apply
  to:
               (1)  a business operated by or employing a licensed
  psychologist, licensed physical therapist, licensed massage
  therapist, licensed vocational nurse, registered nurse, licensed
  athletic trainer, licensed cosmetologist, or licensed barber
  engaged in performing the normal and customary functions authorized
  under the license;
               (2)  a business operated by or employing a licensed
  physician or licensed chiropractor engaged in practicing the
  healing arts;
               (3)  a retail establishment whose principal business is
  the offering of wearing apparel for sale to customers and that does
  not exhibit merchandise on live models;
               (4)  an activity conducted or sponsored:
                     (A)  by a proprietary school licensed by this
  state or a state-supported junior college or institution of higher
  education; or
                     (B)  by a private institution of higher education
  that maintains or operates educational programs in which credits
  are transferable to a state-supported junior college or institution
  of higher education;
               (5)  a person licensed as an occupational therapist
  under Chapter 454;
               (6)  a person who is providing a repair, maintenance,
  air conditioning, or delivery service on the premises of a sexually
  oriented business; or
               (7)  a nonsexual nudist camp.
         (b)  An activity conducted or sponsored by an entity
  identified in Subsection (a)(4):
               (1)  must be in a structure that does not have a sign or
  other advertising visible from the exterior of the structure
  indicating that a nude person is available for viewing;
               (2)  must require that, to participate in the activity
  or conduct of a class, a student must enroll in the class at least
  three days in advance of the class; and
               (3)  may not have more than one nude model on the
  premises at any time.
  [Sections 2158.005-2158.050 reserved for expansion]
  SUBCHAPTER B. POWERS AND DUTIES
         Sec. 2158.051.  FEES. The department shall set fees in an
  amount sufficient to cover the cost of administering this chapter.
         Sec. 2158.052.  RULES. (a)  The executive commissioner
  shall adopt rules necessary to administer and enforce this chapter.
         (b)  Rules adopted under this section must:
               (1)  seek to identify and prevent human trafficking
  through sexually oriented businesses; and
               (2)  establish public and occupational health
  standards for sexually oriented businesses that may relate to:
                     (A)  the supervision of public health and
  occupational health risks at all times during the operation of a
  sexually oriented business;
                     (B)  the proper safeguards for sanitation, public
  health, and occupational health in the operation of a sexually
  oriented business or in the conduct of an employee on the premises
  of a sexually oriented business; and
                     (C)  the inspection of a sexually oriented
  business for public health risks, occupational health risks, and
  other violations of this chapter.
         Sec. 2158.053.  RULES RESTRICTING ADVERTISING OR
  COMPETITIVE BIDDING. (a) The executive commissioner may not adopt
  rules restricting advertising or competitive bidding by a license
  holder except to prohibit false, misleading, or deceptive
  practices.
         (b)  In the executive commissioner's rules to prohibit
  false, misleading, or deceptive practices, the executive
  commissioner may not include a rule that:
               (1)  restricts the use of any medium for advertising;
               (2)  restricts the use of a license holder's personal
  appearance or voice in an advertisement;
               (3)  relates to the size or duration of an
  advertisement by the license holder; or
               (4)  restricts the license holder's advertisement under
  a trade name.
         Sec. 2158.054.  RECORDS DISCLOSURE; CONFIDENTIALITY. (a)
  The department shall disclose to a criminal justice agency
  information contained in the department's files and records
  regarding whether a named individual is licensed under this
  chapter.
         (b)  Except as otherwise provided by this section, all
  records maintained under this chapter regarding an applicant or
  license holder are confidential and are not subject to mandatory
  disclosure under Chapter 552, Government Code, except that an
  applicant or license holder may be furnished a copy of disclosable
  records regarding that applicant or license holder on request and
  the payment of a reasonable fee.
  [Sections 2158.055-2158.100 reserved for expansion]
  SUBCHAPTER C. LICENSE REQUIREMENTS
         Sec. 2158.101.  LICENSE REQUIRED. (a)  A person may not own,
  operate, or work at, or otherwise engage in a business transaction
  as an owner, operator, employee, or independent contractor at, a
  sexually oriented business unless the person holds a license under
  this chapter.
         (b)  A person may not employ or hire a person to work at, or
  contract with an independent contractor to work at, a sexually
  oriented business unless the person employed or the independent
  contractor entering into the contract holds a license under this
  chapter.
         (c)  A sexually oriented business shall maintain a copy of
  the license of any owner, operator, employee, or independent
  contractor associated with the business for at least 30 days after
  the last day the owner, operator, employee, or independent
  contractor is associated with the business.
         Sec. 2158.102.  ISSUANCE OF LICENSE. (a)  The department
  shall issue a sexually oriented business license to an applicant
  that meets the requirements of this chapter.
         (b)  The department shall establish separate categories of
  licenses issued under this chapter for:
               (1)  an owner or operator of a sexually oriented
  business; and
               (2)  an employee of or independent contractor for a
  sexually oriented business.
         (c)  A license issued under this chapter is not transferable.
         Sec. 2158.103.  FORM OF LICENSE. A license issued to an
  individual under this subchapter:
               (1)  may not contain any personally identifiable
  information about the individual; and
               (2)  must be capable of being verified as belonging to
  the license holder on inspection by the department.
         Sec. 2158.104.  LICENSE APPLICATION. (a)  A license
  applicant must apply to the department on a form and in the manner
  the department prescribes.
         (b)  The application must be accompanied by a nonrefundable
  application fee and any other appropriate fees.
         Sec. 2158.105.  ELIGIBILITY FOR LICENSE; INELIGIBILITY DUE
  TO CERTAIN OFFENSES. (a)  To be eligible for a license under this
  chapter, an applicant must:
               (1)  be at least 18 years of age;
               (2)  have completed a department-approved training
  course relating to human trafficking awareness and reporting
  procedures; and
               (3)  meet any other requirements approved by the
  department.
         (b)  A person is ineligible to be issued a license under this
  chapter if the person has been convicted of:
               (1)  an offense under Section 20A.02, Penal Code
  (trafficking of persons);
               (2)  an offense under Section 43.25, Penal Code (sexual
  performance by a child);
               (3)  prostitution;
               (4)  promotion of prostitution;
               (5)  aggravated promotion of prostitution;
               (6)  compelling prostitution;
               (7)  obscenity;
               (8)  sale, distribution, or display of harmful material
  to a minor;
               (9)  possession of child pornography;
               (10)  public lewdness;
               (11)  indecent exposure;
               (12)  indecency with a child;
               (13)  sexual assault or aggravated sexual assault;
               (14)  incest, including an offense under Section 25.02,
  Penal Code (prohibited sexual conduct); or
               (15)  harboring a runaway child.
         Sec. 2158.106.  LICENSE EXPIRATION AND RENEWAL. (a) A
  license expires on the second anniversary of the date the license
  was issued.
         (b)  A person who is otherwise eligible to renew a license
  may renew an unexpired license by paying the required renewal fee to
  the department before the expiration date of the license. A person
  whose license has expired may not engage in activities that require
  a license until the license is renewed.
         (c)  A person whose license has been expired for 90 days or
  less may renew the license by paying to the department a renewal fee
  that is equal to 1-1/2 times the normally required renewal fee.
         (d)  A person whose license has been expired for more than 90
  days but less than one year may renew the license by paying to the
  department a renewal fee that is equal to two times the normally
  required renewal fee.
         (e)  A person whose license has been expired for one year or
  more may not renew the license. The person may obtain a new license
  by complying with the requirements and procedures for obtaining an
  original license.
         Sec. 2158.107.  NOTICE OF RENEWAL.  Not later than the 30th
  day before the date a person's license is scheduled to expire, the
  department shall send written notice of the impending expiration to
  the person at the person's last known address according to the
  records of the department.
  [Sections 2158.108-2158.150 reserved for expansion]
  SUBCHAPTER D. PRACTICE BY LICENSE HOLDER
         Sec. 2158.151.  CONTINUING EDUCATION. (a) The department
  may recognize, prepare, or administer continuing education
  programs for license holders under this chapter. A license holder
  may not renew the person's license unless the person meets any
  continuing education requirements.
         (b)  The department shall:
               (1)  provide to a license applicant, with the
  application form on which the person is to apply for a license,
  information describing the continuing education requirements; and
               (2)  notify each license holder of any change in the
  continuing education requirements at least one year before the date
  the change takes effect.
         Sec. 2158.152.  DISPLAY OF LICENSE.  (a)  An owner, operator,
  employee, or independent contractor licensed under this chapter
  must conspicuously display the person's license on his or her
  person when conducting business at the sexually oriented business
  at which the person is employed.
         (b)  In a prosecution for a violation under this section, a
  presumption exists that the owner, operator, employee, or
  independent contractor did not have a license issued under this
  chapter if the license is not on display as required by this
  section.
  [Sections 2158.153-2158.200 reserved for expansion]
  SUBCHAPTER E. LICENSE DENIAL AND DISCIPLINARY PROCEDURES
         Sec. 2158.201.  ADMINISTRATIVE SANCTIONS. (a) The
  department shall revoke, suspend, or refuse to issue or renew a
  license or shall reprimand a license holder for a violation of this
  chapter or a rule adopted under this chapter.
         (b)  The department may place on probation a person whose
  license is suspended. If a license suspension is probated, the
  department may require the person:
               (1)  to report regularly to the department on matters
  that are the basis of the probation;
               (2)  to limit business activities to the areas
  prescribed by the department; or
               (3)  to continue or review professional education until
  the person attains a degree of skill satisfactory to the department
  in those areas that are the basis of the probation.
         Sec. 2158.202.  COMPLAINTS. Any person may file a complaint
  with the department alleging a violation of this chapter or a rule
  adopted under this chapter.
         Sec. 2158.203.  PROHIBITED ACTIONS. A license holder may
  not:
               (1)  obtain a license by means of fraud,
  misrepresentation, or concealment of a material fact;
               (2)  sell, barter, or offer to sell or barter a license;
  or
               (3)  engage in unprofessional conduct that endangers or
  is likely to endanger the health, welfare, or safety of the public
  as defined by an executive commissioner rule.
         Sec. 2158.204.  MONITORING OF LICENSE HOLDER; RULES. (a)
  The executive commissioner by rule may develop a system for
  monitoring a license holder's compliance with this chapter.
         (b)  Rules adopted under this section may include procedures
  to:
               (1)  monitor for compliance a license holder who is
  ordered by the department to perform certain acts; and
               (2)  identify and monitor license holders who represent
  a risk to the public.
         Sec. 2158.205.  LICENSE DENIAL, REVOCATION, OR SUSPENSION
  FOR CRIMINAL CONVICTION. (a) The department may deny a license
  application or request for renewal, or may suspend or revoke a
  license, if the applicant or license holder has been convicted of:
               (1)  a felony; or
               (2)  a misdemeanor involving:
                     (A)  prostitution;
                     (B)  promotion of prostitution;
                     (C)  obscenity;
                     (D)  sale, distribution, or display of harmful
  material to a minor;
                     (E)  public lewdness;
                     (F)  indecent exposure; or
                     (G)  harboring a runaway child.
         (b)  The department may take action authorized by this
  section:
               (1)  after the time for appeal of the person's
  conviction has elapsed;
               (2)  after the judgment or conviction has been affirmed
  on appeal; or
               (3)  on issuance of an order granting probation and
  suspending the imposition of the person's sentence, without regard
  to whether a subsequent order:
                     (A)  allows withdrawal of a plea of guilty;
                     (B)  sets aside a verdict of guilty; or
                     (C)  dismisses an information or indictment.
         (c)  A plea or verdict of guilty or a conviction following a
  plea of nolo contendere is a conviction for purposes of this
  section.
         Sec. 2158.206.  SCHEDULE OF SANCTIONS; RULES. The
  department shall use the schedule of sanctions adopted by executive
  commissioner rule for any sanction imposed as the result of a
  hearing conducted by the department.
         Sec. 2158.207.  REINSTATEMENT. (a) A person may apply for
  reinstatement of a revoked license on or after the first
  anniversary of the date of revocation.
         (b)  The department may accept or reject the application.
         Sec. 2158.208.  REPRIMAND; CONTINUING EDUCATION. (a) In
  addition to other disciplinary action authorized by this
  subchapter, the department may:
               (1)  issue a written reprimand to a license holder who
  violates this chapter; or
               (2)  require that a license holder who violates this
  chapter attend continuing education programs.
         (b)  The department may specify the number of hours of
  continuing education that must be completed by a license holder to
  fulfill the requirement of Subsection (a)(2).
         Sec. 2158.209.  EMERGENCY SUSPENSION. (a) The department
  or a three-member committee of members designated by the department
  shall temporarily suspend the license of a license holder if the
  department or committee determines from the evidence or information
  presented to it that continued practice by the license holder would
  constitute a continuing and imminent threat to the public health or
  welfare.
         (b)  A license may be suspended under this section without
  notice or hearing on the complaint if:
               (1)  action is taken to initiate proceedings for a
  hearing before the State Office of Administrative Hearings
  simultaneously with the temporary suspension; and
               (2)  a hearing is held as soon as practicable under this
  chapter and Chapter 2001, Government Code.
         (c)  The State Office of Administrative Hearings shall hold a
  preliminary hearing not later than the 14th day after the date of
  the temporary suspension to determine if there is probable cause to
  believe that a continuing and imminent threat to the public health
  or welfare still exists. A final hearing on the matter shall be
  held not later than the 61st day after the date of the temporary
  suspension.
  [Sections 2158.210-2158.250 reserved for expansion]
  SUBCHAPTER F. PENALTIES AND OTHER ENFORCEMENT PROCEDURES
         Sec. 2158.251.  DECEPTIVE TRADE PRACTICE. A violation of
  Section 2158.101 is a deceptive trade practice under Subchapter E,
  Chapter 17, Business & Commerce Code.
         Sec. 2158.252.  INJUNCTION. The department may apply to a
  district court in any county for an injunction or another order to
  restrain the violation of this chapter by a person other than a
  license holder under this chapter.
         Sec. 2158.253.  CRIMINAL OFFENSE. (a)  A person commits an
  offense if the person violates Section 2158.101.
         (b)  An offense under this section is a Class A misdemeanor.
         Sec. 2158.254.  CIVIL PENALTY. (a) A person who violates
  Section 2158.101 is liable to the state for a civil penalty in an
  amount not to exceed $1,000 for each violation. Each day a
  violation occurs is a separate violation.
         (b)  The department or the attorney general may institute an
  action in a district court in Travis County or in the county in
  which the person who is alleged to have violated Section 2158.101
  resides.
  [Sections 2158.255-2158.300 reserved for expansion]
  SUBCHAPTER G. ADMINISTRATIVE PENALTY
         Sec. 2158.301.  IMPOSITION OF ADMINISTRATIVE PENALTY. The
  department may impose an administrative penalty on a person
  licensed under this chapter who violates this chapter or a rule or
  order adopted under this chapter.
         Sec. 2158.302.  AMOUNT OF ADMINISTRATIVE PENALTY. (a) The
  amount of the administrative penalty may not be less than $500 or
  more than $5,000 for each violation. Each day a violation continues
  or occurs is a separate violation for the purpose of imposing a
  penalty.
         (b)  The amount shall be based on:
               (1)  the seriousness of the violation, including the
  nature, circumstances, extent, and gravity of the violation;
               (2)  the economic harm caused by the violation;
               (3)  the history of previous violations;
               (4)  the amount necessary to deter a future violation;
               (5)  the risk to public health or occupational health
  posed by the violation;
               (6)  efforts to correct the violation; and
               (7)  any other matter that justice may require.
         Sec. 2158.303.  REPORT AND NOTICE OF VIOLATION AND PENALTY.
  (a) If the department determines that a violation occurred, the
  department may issue a report stating:
               (1)  the facts on which the determination is based; and
               (2)  the department's recommendation on the imposition
  of an administrative penalty, including a recommendation on the
  amount of the penalty.
         (b)  Not later than the 14th day after the date the report is
  issued, the department shall give written notice of the report to
  the person. The notice must:
               (1)  include a brief summary of the alleged violation;
               (2)  state the amount of the recommended administrative
  penalty; and
               (3)  inform the person of the person's right to a
  hearing on the occurrence of the violation, the amount of the
  penalty, or both.
         Sec. 2158.304.  PENALTY TO BE PAID OR HEARING REQUESTED. (a)
  Not later than the 10th day after the date the person receives the
  notice, the person in writing may:
               (1)  accept the determination and recommended
  administrative penalty of the department; or
               (2)  make a request for a hearing on the occurrence of
  the violation, the amount of the penalty, or both.
         (b)  If the person accepts the determination and recommended
  penalty of the department, the department by order shall approve
  the determination and impose the recommended penalty.
         Sec. 2158.305.  HEARING. (a) If the person requests a
  hearing or fails to respond to the notice within the period
  prescribed by Section 2158.304(a), the department shall set a
  hearing and give written notice of the hearing to the person.
         (b)  An administrative law judge of the State Office of
  Administrative Hearings shall hold the hearing.
         (c)  The administrative law judge shall make findings of fact
  and conclusions of law and promptly issue to the department a
  proposal for a decision about the occurrence of the violation and
  the amount of a proposed administrative penalty.
         Sec. 2158.306.  DECISION BY DEPARTMENT. (a) Based on the
  findings of fact, conclusions of law, and proposal for decision,
  the department by order may determine that:
               (1)  a violation occurred and impose an administrative
  penalty; or
               (2)  a violation did not occur.
         (b)  The notice of the department's order given to the person
  must include a statement of the right of the person to judicial
  review of the order.
         Sec. 2158.307.  OPTIONS FOLLOWING DECISION: PAY OR APPEAL.
  (a) Not later than the 30th day after the date the department's
  order becomes final, the person shall:
               (1)  pay the administrative penalty; or
               (2)  file a petition for judicial review contesting the
  occurrence of the violation, the amount of the penalty, or both.
         (b)  A person who files a petition for judicial review within
  the period prescribed by Subsection (a) may:
               (1)  stay enforcement of the penalty by:
                     (A)  paying the penalty to the court for placement
  in an escrow account; or
                     (B)  giving the court a supersedeas bond approved
  by the court that:
                           (i)  is for the amount of the penalty; and
                           (ii)  is effective until all judicial review
  of the department's order is final; or
               (2)  request the court to stay enforcement of the
  penalty by:
                     (A)  filing with the court a sworn affidavit
  stating that the person is financially unable to pay the penalty and
  is financially unable to give the supersedeas bond; and
                     (B)  giving a copy of the affidavit to the
  department by certified mail.
         (c)  If the department receives a copy of an affidavit under
  Subsection (b)(2), the department may file with the court, not
  later than the fifth day after the date the copy is received, a
  contest to the affidavit.
         (d)  The court shall hold a hearing on the facts alleged in
  the affidavit as soon as practicable and shall stay the enforcement
  of the penalty on finding that the alleged facts are true. The
  person who files an affidavit has the burden of proving that the
  person is financially unable to pay the penalty and to give a
  supersedeas bond.
         Sec. 2158.308.  COLLECTION OF PENALTY. (a) If the person
  does not pay the administrative penalty and the enforcement of the
  penalty is not stayed, the penalty may be collected.
         (b)  The attorney general may sue to collect the penalty.
         Sec. 2158.309.  DETERMINATION BY COURT. (a) If the court
  sustains the determination that a violation occurred, the court may
  uphold or reduce the amount of the administrative penalty and order
  the person to pay the full or reduced amount of the penalty.
         (b)  If the court does not sustain the finding that a
  violation occurred, the court shall order that a penalty is not
  owed.
         Sec. 2158.310.  REMITTANCE OF PENALTY AND INTEREST. (a) If
  the person paid the administrative penalty and if the amount of the
  penalty is reduced or the penalty is not upheld by the court, the
  court shall order, when the court's judgment becomes final, that
  the appropriate amount plus accrued interest be remitted to the
  person.
         (b)  The interest accrues at the rate charged on loans to
  depository institutions by the New York Federal Reserve Bank.
         (c)  The interest shall be paid for the period beginning on
  the date the penalty is paid and ending on the date the penalty is
  remitted.
         (d)  If the person gave a supersedeas bond and the penalty is
  not upheld by the court, the court shall order, when the court's
  judgment becomes final, the release of the bond.
         (e)  If the person gave a supersedeas bond and the amount of
  the penalty is reduced, the court shall order the release of the
  bond after the person pays the reduced amount.
         SECTION 2.  Not later than February 1, 2014, the executive
  commissioner of the Health and Human Services Commission shall
  adopt rules and the Department of State Health Services shall set
  fees and prescribe forms necessary to implement Chapter 2158,
  Occupations Code, as added by this Act.
         SECTION 3.  (a)  Except as required by Subsection (b) of this
  section, this Act takes effect September 1, 2013.
         (b)  Section 2158.101 and Subchapters E, F, and G, Chapter
  2158, Occupations Code, as added by this Act, take effect September
  1, 2014.