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.