Governor Abbott's Executive Order

Texas Independence Day has a new meaning this March 2nd.  Governor Abbott issued an Executive Order today and held a press conference in Lubbock to make the announcement.  Governor Abbott stated, “With the medical advancements of vaccines and antibody therapeutic drugs, Texas now has the tools to protect Texans from the virus.”   

Executive Order (GA-34)

Main Points from Governor Abbott’s Press Conference:

1. First and foremost the bottom line is this: mandates to wear masks, as well as capacity limitations on businesses will be terminated next Wednesday, March 10^th.
2. Texas is seeing the lowest hospitalizations in four months; far more Texans recovering from COVID-19 than contracting it.
3. Also highlighted positive vaccine progress, including:
   1. 5.7M vaccine shots have been given to Texans
   2. 216K shots given today alone
   3. 1M shots given per week
   4. 7M total shots given to Texans by this time next week
4. For all counties without high hospitalizations “there are no COVID-19-related operating limits for any business or other establishment,” and “individuals are strongly encouraged to wear face coverings over the nose and mouth wherever it is not feasible to maintain 6 feet of social distancing from another person not in the same household, but no person may be required by any jurisdiction to wear or to mandate the wearing of a face covering.”
5. “High hospitalizations” is defined as any Trauma Service Area with seven straight days of COVID-hospitalized patients in excess of 15% of that TSA’s hospital capacity.
6. In any county located within a Trauma Service Area (TSA) with high hospitalizations, there are no state-imposed COVID-19-related operating limits for any businesses/establishments nor any face-covering requirements, but, a county judge may institute COVID mitigation strategies to prevent the spread of the virus, so long as:
   1. Mitigation strategies may do not include enforcement of criminal or civil penalties,
   2. And do not limit business capacity to less than 50%
7. A current list of areas with high hospitalizations will be maintained at www.dshs.texas.gov/ga3031
8. Importantly, Gov. Abbott did not restrict private businesses from enforcing their own safety protocols as they see fit, including imposing face mask requirements.
9. Often discussed state entities such as public schools, jails/prisons, and assisted living facilities are directed to follow guidance from their state agency of oversight (e.g. TEA for schools).

Cheri Brimberry Huddleston

Legislative Consultant

Governor Abbott's State of the State Address

Governor Abbott’s State of the State Address

Under normal circumstances, the House and the Senate will meet in a joint session to hear the Governor’s State of the State Address.  This year Governor Abbott delivered his address at the Visionary Fiber Technologies in Lockhart, Texas.  This was the first time since the 1980s that the a Governor did not deliver the speech from the Texas Capitol. 

 During Governor Abbott’s State of the State address, he declared five emergency items. 

 The emergency items are:

• Expanding broadband access;
• Passing laws that prevent cities from defunding the police;
• Fixing the "flawed bail system;" 
• Election integrity so Texans can have "trust and confidence in the outcome of elections;" and
• Coronavirus-related civil liberty protections for "individuals, businesses and health care providers that operated safely during the pandemic."

 By declaring these items as an emergency will allow the Legislature to take action on them within the first 60 days of the legislative session.  Abbott also noted other areas he believes should be priorities this legislative session, including continued investment in education and mental health support.

The full transcript of the governor’s address can be viewed here.

Texas House Speaker Dade Phelan Releases Committee Assignments

 Last Thursday, Speaker Dade Phelan released his committee assignments.  The announcement came much earlier than anyone inside the Capitol arena expected. 

 Here is a breakdown of demographics.

• The House has 82 Republicans and 67 Democrats; House District 68 is vacant;
• 21 Republicans and 13 Democrats were selected as chairs, showing an approach toward bipartisanship in the House;
• 5 committee chairs and 14 vice-chairs are women, while 14 chairs and 21 vice-chairs are Black, Hispanic or Asian American; and
• 11 committee chairs are from rural areas and 24 committee chairs are from urban areas.

 View the full list of assignments by committee and by member.

 Cheri Brimberry Huddleston

Legislative Consultant

Texas Commission of Licensing & Regulation Commission Meeting Update - January 19, 2021

TEXAS COMMISSION OF LICENSING AND REGULATION

COMMISSION MEETING UPDATE – January 19, 2021

By: Brian Edward Walters

The Walters Firm PLLC

1101 Navasota St., Suite 1

Austin, TX 78702

(512) 236-1114

            As many in the industry are aware, the Texas Commission of Licensing and Regulation (“Commission”), the governing body of the Texas Department of Licensing and Regulation (“TDLR”), held its January meeting today. This article provides a review of the topics pertinent to Towing and Storage law under Texas Sunset Advisory Commission (“Sunset Commission”) review and the Commission’s plans for the current legislative session.

            TDLR recently underwent review by the Texas Sunset Advisory Commission. This review produced certain recommendations that affect the Towing and Storage industry and, in particular, the Department’s ability to take actions against licensees, require new disclosures, and order licensees to take actions. A list of certain Sunset Commission recommendations and the topics covered in this article may be found below:

1. 1.Removal of Subjective Licensure Provisions;
2. 2.Disclosure of Financial and Controlling Information; and
3. 3.Ordering Refunds.

Recommendation 7.1 - Removal of Subjective Licensure Provisions.

            The Sunset Commission adopted recommendation 7.1, which provides for the removal of the subjective licensing requirements. This recommendation found that qualifications for licensure should be clear, objective, and not unreasonably restrict entry into practice. The recommended changes would remove the outdated provision allowing TDLR to determine license eligibility based on an applicant’s perceived lack of “honesty, trustworthiness, and integrity.” It would allow TDLR to instead rely on an applicant’s criminal history under Chapter 53 of the Texas Occupations Code.

Many licensees will be familiar with these so-called “subjective” requirements from the statutory language requiring licensees to have and practice with “honesty, trustworthiness, and integrity” and that they have “good moral character.” While it is clear that TDLR wishes for its licensees to have these characteristics, the problem with these terms is that they are, by nature, subjective, vague, and subject to differing interpretations.

For years, TDLR has brought administrative cases against licensees and sought license revocations for what a prosecutor interpreted as dishonest conduct. Rather citing a standard of behavior or clear language of a law prohibiting certain conduct, prosecutors were free to interpret licensee behavior as dishonest, thereby sweeping in broad range of offenses that were not codified into law. This created a situation wherein a licensee would have to abide by a “what would TDLR do?” standard that the Sunset Commission found unacceptable. In other words, and to quote the Sunset Commission’s report directly, “this statutory language is inappropriately subjective and vague, and could create inconsistent barriers to licensure for otherwise qualified applicants.”

Brian’s Take: This is a welcome and necessary change. While it sounds odd to advocate for the removal of honesty, trustworthiness, integrity, and good moral character from a licensing statute, the Sunset Commission’s findings were correct and in line with current law. Standards for licensure need to be explicitly spelled out so that any licensee can understand and abide by those standards. Additionally, if certain conduct is to be deemed a bar to licensure (or grounds for revocation or suspension of a license), that conduct needs to be identifiable to every licensee and applicant. This conforms with basic concepts of fair notice and fair play. This proposed change will not eliminate prosecutorial discretion, but it will prevent at least one area of potential overreach by TDLR and its staff.

Recommendation 7.2 – Disclosure of Financial or Controlling Information.

            The Sunset Commission also adopted recommendation 7.2, which would allow TDLR to adopt rules requiring certain license applicants to disclose (i) the name of the business; (ii) as well as each person who has any form of financial investment in the business; (iii) the percentage of the investment in the business; and (iv) other financial interest information. Examples of individuals that this requirement would cover include:

1. i.Officers;
2. ii.Directors;
3. iii.Partners;
4. iv.“Managing employees;”
5. v.Owners; and
6. vi.Other persons with a right to control the owner.

These additional disclosure requirements far exceed the current disclosures necessary for a license application.

Brian’s Take: This proposed change requires no reading between the lines. These changes are targeted at “bad actors,” including other TDLR licensees who have had their licenses revoked, and seeks to keep them from re-entering a licensed industry by (i) obtaining a license through an associated person; or (ii) obtaining a license through a new business entity (such as forming a new limited liability company, corporation, or other entity).

One potential problem is that this language, as written above, contains terms that are not defined by the Texas Business Organizations Code. Specifically, the “managing employees” term, which is likely a mistaken reference to a manager of a limited liability company, is vague. Additionally, “other persons with a right to control the owner” is similarly vague. While I do not object to these additional disclosures per se, exactly who needs to be disclosed in a license application should be very clear in order to avoid an inadvertent failure to disclose charge being brought by the Department.

Recommendation 7.5 – Ordering Refunds.

            The Sunset Commission also adopted recommendation 7.5, which would give TDLR the authority to require a licensee to issue a refund to a consumer. The amount of the refund would be limited to the amount paid by a consumer to the licensee, without inclusion of any additional consideration of damages. Any requirement to issue a refund could be in lieu of or in addition to other sanctions ordered against a licensee.  

Brian’s Take: This proposal would allow TDLR to “take more effective action when a consumer harm can be quantified and offer relief to consumers without the need for separate civil court action to recover this amount.” However, this is a massive expansion of TDLR’s power and applies, based on the language as written, to every licensing program – including tow operators, towing companies, and vehicle storage facilities.

For purposes of towing and storage, this would allow TDLR to pursue three remedies (i) administrative penalties; (ii) sanctions (such as revocation or suspension); and (iii) ordering refunds of amounts paid by a consumer. This change would create a dual remedy, one civil and one administrative, wherein a consumer could both file for a tow hearing in justice court (or a lawsuit under §2308.404) as well as complain to TDLR and seek a refund. This presents a very real situation where a towing company or vehicle storage facility would have to defend a case three times: once in a tow hearing, once in a civil lawsuit, and finally again before TDLR or at the State Office of Administrative Hearings.

Importantly, the ability for TDLR to order a refund based on a violation of Texas law (or an administrative rule) is far broader than a probable cause / tow hearing in justice court. Additionally, and unlike a tow hearing, a consumer would not be required to pay a filing fee, present its claims, and prevail in civil court in order to seek his or her refund. A complainant could simply file a complaint with TDLR and let TDLR foot the bill for prosecution. Finally, as many licensees are aware, a proceeding before TDLR can take far more time than a tow hearing and such proceedings are not limited to a tow hearing’s swift filing deadline and swift hearing date. TDLR proceedings can drag on for months or years.

In my view this change is unnecessary and creates additional needless litigation. Here, TDLR is creating an unnecessary remedy because the ability to seek a refund is already provided twice in the Texas Occupations Code. First, a vehicle owner has the right to a tow hearing under Section 2308.452 of the Texas Towing and Booting Act (“TTBA”). Second, a vehicle owner may also file a suit to recover towing fees, damages, and, potentially, treble damages and a $1,000 penalty under Section 2308.404 of the TTBA. Given these two existing remedies, there is no need for TDLR to provide a third solution.

Second, this change creates additional needless litigation. Each tow already has two chances to be brought in civil court in Texas (under 2308.452 – subject to jurisdiction issues - and 2308.404). Additionally, violation of the law or administrative regulations can already be prosecuted by TDLR’s Enforcement Division. These systems are more than adequate to provide for a civil remedy for an aggrieved consumer and allow administrative enforcement of existing laws and rules by TDLR.

By granting TDLR the ability to order a refund, the legislature would also massively incentivize consumer complaints. A consumer could file a complaint, even if groundless or brought for harassment purposes, simply for the opportunity to obtain a free review of the case by TDLR and to see if TDLR could get the consumer paid. Additionally, and unlike a proceeding in civil court, there are extremely limited remedies for a licensee that is the subject of the complaint to recover its costs and expenses. This creates a situation where there is not a fair fight – the licensee would be forced to deal with the complaint, potentially being required to retain a lawyer to do so, all while the complainant’s legal expenses are paid for by Texas taxpayers.

CONCLUSION

            While some Sunset Commission recommendations are helpful and clarify the law, others incentivize consumer complaints and create needless and redundant remedies. Additionally, the new disclosure requirements, if enacted, would bar any person from the towing and storage industry that TDLR considers a bad actor or a person related to a bad actor. The Sunset Commission’s recommendations, and the bills based thereon, need to be thoroughly reviewed. Additionally, industry advocates like Southwest Tow Operators and its members need to be ready to participate and help legislators find the right language for these bills. Without this participation and advocacy, bad language will become bad laws that affect the entire industry.

Staying Ahead

Legislative Update October 29, 2020

Legislative Update
October 29, 2020