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108th Congress                                             Rept. 108-24
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================



 
               SPORTS AGENT RESPONSIBILITY AND TRUST ACT

                                _______
                                

                 March 5, 2003.--Ordered to be printed

                                _______
                                

 Mr. Tauzin, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 361]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 361) to designate certain conduct by sports 
agents relating to the signing of contracts with student 
athletes as unfair and deceptive acts or practices to be 
regulated by the Federal Trade Commission, having considered 
the same, report favorably thereon with amendment and recommend 
that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for Legislation..............................     2
Hearings.........................................................     2
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     3
Statement of General Performance Goals and Objectives............     3
New Budget Authority, Entitlement Authority, and Tax Expenditures     3
Committee Cost Estimate..........................................     3
Congressional Budget Office Estimate.............................     3
Federal Mandates Statement.......................................     5
Advisory Committee Statement.....................................     5
Constitutional Authority Statement...............................     5
Applicability to Legislative Branch..............................     5
Section-by-Section Analysis of the Legislation...................     5
Changes in Existing Law Made by the Bill, as Reported............     7

                          PURPOSE AND SUMMARY

    The purpose of H.R. 361 is to designate certain conduct by 
sports agents related to the signing of contracts to represent 
student athletes as unfair and deceptive acts or practices to 
be regulated by the Federal Trade Commission (FTC). 
Additionally, H.R. 361 provides the states with the authority 
to bring civil action against violators in a district court and 
provides universities with a right of action against the 
athlete agent for damages resulting from a violation of the 
Act.

                  BACKGROUND AND NEED FOR LEGISLATION

    The multimillion-dollar value of professional athlete 
salaries, signing bonuses, and endorsement contracts has 
resulted in a proliferation of unscrupulous practices by some 
sports agents. Unscrupulous agents, or their representatives, 
are willing to break the rules in order to sign promising 
student athletes to an agency contract. Agents are willing to 
do this because the fees that accompany the representation of a 
professional athlete are considerable, and the consequences 
that the agent will suffer in comparison to the athlete or 
school are limited or non-existent.
    Motivated largely by financial gain, unscrupulous agents 
have gone to extreme measures to represent promising student 
athletes with even a remote chance of becoming a professional 
athlete. These agents, or their cohorts--often known as 
``runners''--will use tactics including secret payments to the 
athlete, undisclosed payments to the family or friends of the 
athlete who may be in a position to influence the athlete, 
unrealistic promises, and even pressuring the athlete. In some 
cases, these agents have made the secret payments to student 
athletes or their families, and then black-mailed them into 
signing a contract with the threat that they would disclose the 
infraction of collegiate rules and threaten the student 
athlete's eligibility. These egregious acts go unpunished due 
to the lack of a Federal law, disparate and sometime 
ineffective state laws, and the absence of any laws in many 
states.
    The effect of a student athlete entering into an agency 
contract is generally a forfeiture of collegiate eligibility. 
The college or university may also be subject to various 
sanctions for violation of competition rules if contests were 
played with ineligible athletes. If this occurs, the economic 
impact to the school and the athlete can be substantial. Not 
only can a student athlete lose a scholarship, the university 
can be sanctioned with monetary penalties, loss of 
scholarships, forfeiture of contests, and loss of television 
revenue.
    Currently there is no Federal law that directly addresses 
the actions of these agents. However, a majority of the states 
have a law to regulate athlete agents and/or their conduct, but 
to varying degree and specificity. Most recently the National 
Conference of Commissioners on Uniform State Laws passed the 
Uniform Athlete's Agent Act (UAAA) in 2000 to provide uniform 
state laws addressing the conduct and practices of athlete 
agents, including registration of agents. It has since been 
adopted by sixteen states and introduced in the legislatures of 
twelve others. Of the states that have not enacted the UAAA, 18 
have existing athlete agent laws while sixteen have no law that 
directly addresses athlete agent conduct. H.R. 361 will provide 
remedies to protect student athletes and the educational 
institutions, particularly in those states with no existing law 
addressing athlete agent conduct.

                                HEARINGS

    The Committee on Energy and Commerce has not held hearings 
on the legislation.

                        COMMITTEE CONSIDERATION

    On Wednesday, January 29, 2003, the Full Committee on 
Energy and Commerce met in open markup session and ordered H.R. 
361 favorably reported to the House, without amendment, by a 
voice vote, a quorum being present.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 361 reported. A motion by Mr. Tauzin to order H.R. 361 
reported to the House, without amendment, was agreed to by a 
voice vote.

                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has not held oversight 
or legislative hearings on this legislation.

         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    The goal of H.R. 361 is to define the prohibited conduct 
employed by individuals to entice or solicit student athletes 
to enter into an agency contract, whether it is a written or 
oral agreement, as well as require written disclosure to the 
student athlete prior to signing a contract and to the 
educational institution after a contract has been entered.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
361, the Sports Agent Responsibility and Trust Act, would 
result in no new or increased budget authority, entitlement 
authority, or tax expenditures or revenues.

                        COMMITTEE COST ESTIMATE

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, January 31, 2003.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 361, the Sports 
Agent Responsibility and Trust Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Ken Johnson 
(for federal costs), Victoria Heid Hall (for the state and 
local impact), and Paige Piper/Bach (for the private-sector 
impact).
            Sincerely,
                                          William J. Gainer
                          (For Barry B. Anderson, Acting Director).
    Enclosure.

H.R. 361--Sports Agent Responsibility and Trust Act

    H.R. 361 would impose certain restrictions on contracts 
between sports agents and student athletes. For example, the 
bill would prohibit sports agents from soliciting such a 
contract by making false promises or offering gifts. These new 
rules would be enforced by the Federal Trade Commission (FTC) 
through civil penalties and by the states.
    CBO estimates that enacting H.R. 361 would not have a 
significant impact on the federal budget. Based on information 
from the FTC, CBO expects that enforcement of the bill would 
occur mostly at the state level. Therefore, CBO expects that 
any increase in civil penalties resulting from the enactment of 
H.R. 361 would be insignificant. (Such penalties are recorded 
in the budget as revenues). Similarly, we estimate that 
implementing H.R. 361 would increase the FTC's costs by less 
than $500,000 annually, assuming the availability of 
appropriated funds.
    H.R. 361 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would impose no 
costs on state, local, or tribal governments.
    H.R. 361 would impose private-sector mandates as defined by 
UMRA on certain sports agents and student athletes. The bill 
would prohibit a sports agent from providing anything of value 
to a student athlete or anyone associated with the athlete 
before entering into a contract. An agent also would be 
required to provide a student athlete with a specific 
disclosure document before entering into an agency contract and 
could not predate or postdate such a contract. The bill would 
require a student athlete, or the athlete's parents or legal 
guardian if the student is under the age of 18, to sign the 
disclosure document prior to entering into an agency contract. 
In addition, the bill would require the sports agent and 
student athlete to each inform the student's educational 
institution within a specific time frame that the athlete has 
entered into an agency contract. Based on information from 
government sources, CBO estimates that the direct cost of those 
mandates would fall well below the annual threshold established 
by UMRA for private-sector mandates ($117 million in 2003, 
adjusted annually for inflation).
    The CBO staff contacts for this estimate are Ken Johnson 
(for federal costs), Victoria Heid Hall (for the state and 
local impact), and Paige Piper/Bach (for the private-sector 
impact). The estimate was approved by Peter H. Fontaine, Deputy 
Assistant Director for Budget Analysis.

                       FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Pursuant to clause 3(d)(1) of Rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    Section 1 designates the legislation as the ``Sports Agents 
Trust and Responsibility Act.''

Section 2. Definitions

    Section 2 provides definitions for terms incorporated 
throughout H.R. 361.

Section 3. Regulation of unfair and deceptive acts and practices in 
        connection with the contact between an athlete agent and a 
        student athlete

    Section 3 provides for the regulation of conduct between an 
athlete agent and a student athlete. Subsection (a) defines 
prohibited conduct for an athlete agent to engage in order to 
solicit or recruit a student athlete to enter into an agency 
contract. The legislation makes it unlawful for the athlete 
agent to give materially false or misleading information, to 
make materially false promises or representations, or to 
provide anything of value to the student athlete or anyone 
associated with the student athlete before he or she signs an 
agency contract. Additionally, an athlete agent is prohibited 
from entering into an agency contract with the student athlete 
without providing the student the written disclosure proscribed 
by the Act and from either predating or postdating the 
contract.
    Subsection (b) proscribes the terms of the disclosure 
requirements the athlete agent must provide to the student 
athlete, or to the student athlete's parent or guardian, and 
requires the signature of the student athlete, or the student 
athlete's parent or guardian, prior to entering into the agency 
contract.
    Subsection (b)(3) provides the required language of the 
disclosure document.

Section 4. Enforcement

    Section 4 authorizes the FTC to treat a violation of the 
Act as a violation of FTC rules defining an unfair and 
deceptive act or practice under section 18(a)(1)(B) of the FTC 
Act. This section authorizes the FTC to enforce the Act in the 
same manner and with the same powers and duties it has under 
the FTC Act.

Section 5. Actions by states

    Section 5 provides the authority and parameters for a state 
to bring civil action against a violator of the Act. A state 
attorney general may bring civil action against any person in 
practice that violates any regulation of the Commission 
prescribed under section 3 of this Act in Federal district 
court in order to: (1) enjoin that practice; (2) enforce 
compliance with the regulation; (3) obtain damage, restitution, 
or other compensation; or (4) obtain other relief as the court 
may consider appropriate.
    An attorney of the state filing an action under this Act 
must first provide a written notice of the action and a copy of 
the complaint to the FTC, unless it is not feasible in which 
case it must be provided to the FTC at the same time as the 
action is filed.
    Subsection (b) provides the FTC with the authority to 
intervene in any action brought by a state under this Act. If 
the Commission intervenes, it maintains the right to be heard 
and the right to file a petition for appeal.
    Subsection (c) provides that an action brought under 
subsection (a) by an attorney general shall not prevent the 
attorney general from exercising the powers provided by any 
other laws of the state.
    Subsection (d) stipulates that no state may institute an 
action under subsection (a) while an action instituted by or on 
behalf of the Commission is pending.
    Subsection (e) provides that an action brought by an 
attorney general of a state under subsection (a) may be brought 
in a district court of the United States that meets the venue 
requirements.
    Subsection (f) provides the terms under which process may 
be served in an action brought under subsection (a).

Section 6. Protection of the educational institution

    Section 6 provides safeguards and remedies for educational 
institutions.
    Subsection (a) provides for written notification by the 
student athlete, and the athlete agent, to the athletic 
director or appropriate individual responsible for athletic 
programs of the educational institution. The notification that 
an agency contract has been entered into must be within 72 
hours after entering into the contract or before the next 
athletic contest in which the student athlete may participate, 
whichever occurs first.
    Subsection (b) provides an educational institution with 
civil remedy, including a right of action against an athlete 
agent for damages resulting from a violation of this Act.

Section 7. Sense of Congress

    Section 7 expresses the sense of Congress that the States 
should enact the Uniform Athlete Agent Act of 2000 to protect 
student athletes and the integrity of amateur sports from 
unscrupulous sports agents.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    This legislation does not amend any existing Federal 
statute.