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Administrative Rules To Be Considered

Updated July 11, 2017

The following rule amendments are being proposed by the department, for consideration by the Private Security Board. These proposals are provided as a courtesy to the public and the regulated industries.  They are in preliminary, draft form and may be subject to further change. Comments or suggestions may be submitted by email at https://www.dps.texas.gov/rsd/contact/psb.aspx.

I.   Assignments and Terminations of Licenses

Currently, consent of the majority owners is required for the reclassification or assignment of a license, and the majority must maintain ownership in the new entity.  The proposal would eliminate the latter requirement, and would allow assignments with the consent of a majority of the registered owners holding at least 25% consent.  Alternatively, where a majority of such owners is not possible because, for instance, the company is owned by numerous shareholders who hold less than 25% and who are not registered, the license may be assigned by written consent of the qualified manager.

There is currently no rule addressing the termination of licenses.  The proposal is intended to address the situation in which current owners disagree over whether the license should be terminated (typically in a dispute over who should retain control over the license), and to clarify who is ultimately authorized to decide the issue in a manner similar to that of the proposal for assignments.

RULE §35.26    Reclassification, and Assignment, and Termination

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(c) Other assignments will be permitted only where the majority owners of the original licensee maintain majority ownership of the proposed assignee. under one of the following conditions:

    (1)  the ownership in the assignor and assignee will remain the same;

    (2)  the registered owners (those holding at least 25% ownership in the original licensee), and collectively holding a majority ownership interest, consent to the assignment; or

    (3)  if the ownership structure of the company is such that there is an insufficient number of registered owners (with interests of at least 25%) to potentially hold a majority in ownership interest in the licensee, the license may be assigned by written consent of the qualified manager. 

The assignor must provide the department written documentation establishing the intended date of assignment and notarized statements establishing the consent of a majority of the owners of the original licensee, or if applicable, the qualified manager, in the form of notarized statements from the appropriate individual(s). The assignee must ensure any new owners required to register have been approved by the department. The assignee may not perform regulated services prior to the proposed date of assignment or the date of the department's approval of all required registration applications for new owners, whichever is later. The assignor must cease performance of all regulated services on the earlier of either the proposed date of assignment or the date of surrender or termination of any owner registrations.

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(e) A license may only be terminated by consent of the registered owners holding at least 25% in the licensed company collectively reflecting a majority ownership interest, unless the ownership structure of the company is such that there is an insufficient number of such owners to potentially represent such a majority, in which case the license may be terminated by written consent of the qualified manager.  The licensee must provide the department written documentation reflecting the intended date of termination and the consent of the appropriate individual(s) in the form of notarized statements.

(f) The proposed effective date for assignment or termination may not be more than 90 days from the date of the department's receipt of the request.  Requests for assignment or termination are subject to the provisions of Section 35.23 of this chapter, relating to Termination of Incomplete Applications.

(g) An assignment or termination effected by written consent of the qualified manager may be overturned within 10 business days of the department's receipt of the consent documentation by majority vote of the entity's board of directors or the equivalent level decision making body of the entity.  Documentation of the vote must be received by the department within 5 business days of the board's decision.

II.  Letters of Authority, Employment of Non-Commissioned Security Officers and Personal Protection Officers

The following proposals would clarify the authority of entities holding Private Business or Governmental Letters of Authority to employ personal protection officers, and authorize the employment of non-commissioned security officers by holders of private business letters of authority.

RULE §35.101   Private Business Letter of Authority

  (a) The security department of a private business, as defined in the Act, must obtain a letter of authority in order to employ a commissioned security officer or personal protection officer.

 (b)A security department of a private business In order to that employs, in a non commissioned capacity, an individual meeting the conditions of §1702.323(d) of the Act, a security department of a private business must obtain a guard company license obtain a letter of authority and must register the individual with the department.

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RULE §35.102    Governmental Letter of Authority

 (a) A political subdivision that employs a commissioned private security officer or personal protection officer must obtain a governmental letter of authority.

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III.   Continuing Education Requirements

Please see explanatory notes below, following the rule text.

RULE §35.161   Continuing Education Requirements

(a) A An application to renew a license, registration, endorsement, or commission may not be renewed submitted until the required minimum hours of department approved continuing education credits have been earned in accordance with the Act and this chapter. Proof of the required continuing education must be maintained by the employer and contained in the personnel file of the registrant's employing company. All registrants shall indicate they have completed the required minimum hours of department approved continuing education credits on their application for renewal. A renewal application shall also include the name of the school, school number, seminar number, seminar date of attendance, and credits earned number of hours attended, and course(s) of instruction attended.

(b) Participating owners, partners, and shareholders who perform regulated services regulated under the Act on behalf of the licensed company shall comply with the continuing education requirements of this section applicable to the regulated service provided.  Participating owners, partners, and shareholders who do not otherwise perform regulated services regulated under the Act shall complete a total of eight (8) hours of continuing education, seven (7) hours of which must be in subject matter that relates to the type of regulated service provided by the licensee, and one (1) hour of which must cover ethics. For purposes of this section, 'participating' refers to involvement in decisions governing the operation of the regulated business. Nonparticipating owners, owners not required to register under the Act, partners, or shareholders, noncommissioned security officers, and administrative support personnel, and all individuals who are not required to obtain a registration, endorsement, commission or license under the Act are specifically exempted from the continuing education requirements.

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Explanations:

The proposed amendment to subsection (a) of §35.161 is intended to clarify that it is the registrant's responsibility to ensure compliance with the continuing education requirements prior to submission of the renewal application, and to address an inconsistency between the information required to be submitted at renewal and the information required to be provided to the student by the school in Rule 35.162.

The proposed amendments to subsection (b) are intended to address the situation in which registered owners also perform regulated services in their individual capacities. The current rule does not expressly address the continuing education requirements for such individuals, referring only to those who are registered as a specific type of private security registrant (other than owners), or to nonparticipating owners (providing an exemption).  Current rule does not specifically address participating owners. The proposed language clarifies this by addressing owners who are involved in the business ("participating owners"), and distinguishing those participating owners who also independently perform regulated services from those who do not.

For example, the owner of a locksmith company may simply manage the office but not actually leave the office to perform locksmith services on his or her own. Or, on the other hand, the alarm company owner may actually perform installations in addition to managing his employees. The thought is that if the owner is actually performing duties that would otherwise require a separate registration, but they are allowed to perform those services without obtaining a separate endorsement because they are registered as owners, then they should be held to the same continuing education requirements as someone who is registered to perform those services.

By contrast, an owner who doesn't independently perform regulated services but only runs the business is subject to the default continuing education requirement of 8 hours (7 and 1), as a "participating owner." The exemption from continuing education for owners who are not involved in the business (non-participating owners) remains unchanged.

Whether participating or non-participating, only shareholders who own 25% or more are required to register under the Private Security Act.  Those owners holding less than 25% interest in the company are exempt from Chapter 1702, and are therefore not subject to the department's regulatory authority.

IV.  Training School Notification

The following is proposed in response to HB 1508 (85th Leg. Sess.), amending Chapter 53, Occupations Code:

RULE §35.147 Certificates of Completion, and Training Records, and Notifications

(a) A department approved training school shall:

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(5) Notify each student of the potential ineligibility of an individual who has been convicted of a offense, the current guidelines provided in Section 35.4 of this title (relating to Disqualifying Criminal Offenses), and the right to request a criminal history evaluation letter under Occupations Code Section 53.102.  As provided in Occupations Code Section 53.153, failure to comply with this subsection may result in an order to reimburse the individual's application and training fees.  Failure to comply with an order issued under this subsection may result in suspension of the school license until payment is made.  Communication of the following text directly to the prospective applicant, whether by email or other correspondence, or on the application for admission to a course, is sufficient to establish compliance with this section:

Please be advised under the Private Security Act (Occ. Code Chapter 1702) and Administrative Rule 35.4 (37 Tex. Admin. Code 1), a criminal conviction may disqualify you from a registration, commission or license under the Act. You may wish to review Rule 35.4's list of disqualifying offenses and the related periods of ineligibility, available on the department's website at http://www.dps.texas.gov/rsd/psb/index.htm (click on the link to Administrative Code).  You also have a right to request from the department a criminal history evaluation letter under Occupations Code Section 53.102.

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