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F I S C A L I M P A C T R E P O R T

SPONSOR HJC

DATE TYPED 03/16/05 HB CS1059/aHBIC

SHORT TITLE Private Investigator Licensing Requirements

SB

ANALYST McSherry

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

$380.4

$380.4

Recurring Private Investiga-

tors Fund

(Parenthesis ( ) Indicate Revenue Decreases)

House Bill 1059 in its introduced form duplicated Senate Bill 796.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Regulations and Licensing Department (RLD)

SUMMARY

Synopsis of House Judiciary Committee Substitute for HB 1059

House Bill 1059 proposes to amend the Private Investigators and Polygraphers Act. The bill

would change the licensing structure and regulatory authority for private investigators and pri-

vate patrol (security) operators.

Specifically, the bill would:

Eliminate the requirement that persons licensed as private investigators conducting inves-

tigations obtain information regarding “the identity, habits, conduct, business, occupation, hon-

esty, integrity, credibility, knowledge, trustworthiness, efficiency, loyalty, activity, movement,

whereabouts, affiliation, association, transactions, acts, reputation or character of any person.”

The bill would rather require that when conducting investigations with respect to crimes against

a state or the United States; stolen property; damage or injury to persons or property; and secur-

ing evidence.

House Bill CS/1059/aHBIC/HJC -- Page 2

Require that private investigator managers, and private patrol operator managers be as-

signed to and operate from company or branch offices for which they are licensed;

Provide for registration and different qualifications for three levels of “security guards,”

which would be distinguished on the basis of whether the guard would be unarmed, armed with a

weapon other than a firearm, or armed with a firearm.

Exempt “an attorney licensed in New Mexico conducting private investigations while

engaged in the practice of law” from the Act’s private investigator licensing requirements. Cur-

rent law exempts all attorneys without regard to their license status or activities.

Establish a “private investigators, private patrol operators, and polygraph examiners

board” which would be given the responsibility for administering the Act. Currently the Regula-

tion and Licensing Department administers the Act, with input from an advisory board. The

board would consist of five members appointed by the governor.

Require the new board to implement rules which would raise the age of eligibility for a

private investigator license and private patrol operators license from 18 to 21.

Provide for “private investigation company” and “private patrol operator company” li-

censes for entities providing private investigation or private patrol services within New Mexico.

Current statutes provide for licensing individuals or branch offices, but not companies.

Provide for registration of private investigator employees who work under direct control

and supervision of a licensed private investigator.

Establish a procedure for private patrol operator companies to hire and register temporary

security guards for special events

Allow the new board to establish fees for registration and licensure, and set limits for

those fees.

Require private investigation and private patrol operator companies to carry 1 million

dollars in general liability insurance.

Allow the new board to deny licenses to those who have violated any state or federal “la-

bor, tax or employee benefit law or rule”.

Allow the new board to assess civil penalties for violating the act, up to $1000 per viola-

tion.

Allow the new board to enter into licensing reciprocity agreements with other states.

Provide for fingerprinting and background checks for persons licensed or registered un-

der the Act.

Allow private patrol operators to provide services as bodyguards. Current law restricts

those services to private investigators.

House Bill CS/1059/aHBIC/HJC -- Page 3

Extend the sunset provisions for the Act from July 1, 2006 to July 1, 2012.

Enact a temporary “grandfather” provision for security guards, watchmen, loss preven-

tion officers and patrolmen who are currently licensed by the Regulation and Licensing Depart-

ment.

The substitute bill restores original language found in the current Private Investigators and Poly-

graphers Act that requires Private Patrol Operator Companies and Private Investigation Compa-

nies to maintain a Surety Bond in the amount of $10 thousand dollars, and would require a new

commercial general liability certificate of insurance in order to obtain a license to do business in

New Mexico as a private investigation company or private patrol operator company.

The Substitute bill also adds new language which would:

Exempt private patrol operators holding a $2,000 dollars certificate of deposit or surety

bond from the Private Investigators and Polygraphers Act if the private investigator’s license or

private patrol operator’s license remains current and the holder is in good standing with the

board.

Allow board rules adopted by the currently existing advisory board to remain in effect

until the newly proposed board adopts rules.

Allows for RLD to continue to carry out the existing advisory board rules until the newly

proposed board exists and adopts rules.

Significant Issues

The Regulation and Licensing Department is currently responsible for licensing private investi-

gators, private patrol operators and polygraphers with the assistance of an advisory board ap-

pointed by the department. This legislation would create the Private Investigators, private patrol

operators and polygraph examiners board with the authority that was previously the responsibil-

ity of the Superintendent.

The newly proposed board (although already in existence as an advisory board) has not been

through the Sunrise process as provided for in the Sunrise Act. This bill proposes substantial

changes to the current licensing process and statutes for multiple professions and may benefit

from being proposed in public hearings through the sunrise process.

The Act, as amended, would require additional training for individuals who seek to be licensed

as Private Investigators or Private Patrol Operators.

The House Judiciary Committee Substitute increases the amount of the Surety Bond required by

Private Patrol Operator Companies and Private Investigator Companies. The current statute pro-

vides all Private Patrol Operator Companies and Private Investigator Companies to maintain a

$2,000 Consumer Protection Bond. The House Substitute restores the bond language and in-

creases the amount of the Consumer Protection Bond to $10,000.

According to RLD, the Private Investigators and Polygraphers Board has contacted Surety Bond

Companies in New Mexico and determined that the cost between purchasing a $2,000 Surety

House Bill CS/1059/aHBIC/HJC -- Page 4

Bond and purchasing a $10,000 Surety Bond is minimal.

The bill would be effective July 1, 2005. The included provisions to not seem to “grandfather”

currently licensed private investigators or private investigator managers, but would provide for a

“grandfather” for security guards, watchmen, loss prevention officers, and patrolmen.

The Bill provides for the ability of the Board to conduct national background checks on prospec-

tive licensees before issuing a license to investigate, patrol or carry various types of weapons.

RLD reports that it has been over 10 years since any major amendments have been made to the

Private Investigators and Polygraphers Act and that there have been many technological changes

in the way in which private patrol operators and private investigators perform their duties during

this time.

This bill would appear to require both a company license and an individual license in order for a

private investigator or private patrol operator to conduct business as a sole proprietor.

The new board is required to adopt rules providing for licenses and registration, including mini-

mum education qualifications and training standards. Rules will not be adopted by the new board

for some time after the board is created (July 2005); which would be the same time that that, the

“department” would only be permitted to issue licenses to those who qualify under the new

boards rules. The bill does not contain any temporary provisions allowing issuance of new li-

censes by RLD rules in the time between rule promulgation by the board and board creation.

The Act, as amended, would create a three-tiered licensure program for security guards, associat-

ing level of training and experience with level of licensure.

A Level One security guard would be an unarmed, entry level guard trained to perform

basic guard duties

A Level Two security guard would be armed with a knight stick or other defense mecha-

nism, but not registered by the Board to carry a firearm; and

A Level Three security guard would be able to carry a firearm, would be the most ad-

vanced level for a security guard

RLD asserts that, under the current legislation, the company that hires the security guards also

owns the “guard cards,” so that each time a security guard changed employers they also have to

apply for and receive a new security guard registration. The Department predicts that the pro-

posed legislation would create increased security guard mobility and more guard flexibility

within the profession.

The proposed amendments require each private investigation company or private patrol operator

company provide the Board with a copy of the certificate of general liability insurance.

PERFORMANCE IMPLICATIONS

The Regulation and Licensing Department, and new board, would have to implement the provi-

sions of this bill.

House Bill CS/1059/aHBIC/HJC -- Page 5

FISCAL IMPLICATIONS

Members of the new board would be entitled to per diem and mileage

RLD reports that the license fee for a security guard would increase from $15 to $50 and that

these increased fees would increase board revenues by $380.4 thousand.

ADMINISTRATIVE IMPLICATIONS

The bill would increase the level of complexity involved in the licensing of security guards, pri-

vate investigators and related professions causing increased administrative duties for the board

and administrators.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

The original version of House Bill 1059 duplicates Senate Bill 796.

TECHNICAL ISSUES

AGO suggests that the bill clarify whether rule adoption is a condition precedent to implement-

ing the new licensing requirements, and whether current private investigator licensees will be

“grand fathered.”

OTHER SUBSTANTIVE ISSUES

According to RLD, during the last two years, the board has become aware of instances that in-

volved the death or injury of a security guard or a citizen because of an improperly trained or un-

registered security guard. The Department believes that the proposed legislation would create an

effective protocol for licensing and registering individuals as security guards and/ or private in-

vestigators.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

The Regulation and Licensing Department would continue to issue all licenses pursuant to the

Private Investigators and Polygraphers Act.

RLD asserts that should the Bill not be enacted, the Board would not have the authority to con-

duct background checks beyond the information contained in books and records housed in the

State of New Mexico. Security guards would not have established levels of licensure.

EM/rs:lg