HBA-NLM, H.B. 3092 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3092 By: Siebert Transportation 3/26/1999 Introduced BACKGROUND AND PURPOSE The Texas Motor Vehicle Commission Code provides for the licensing of manufacturers of motor vehicles and their franchised dealers and independent dealers, and includes regulations for relations between and among licensees. The purpose of this bill is to clarify definitions and other provisions contained in the code. H.B. 3092 provides that a person is eligible for appointment to the Texas Motor Vehicle Board (board) if the person is otherwise eligible by this Act and is a natural person who is either a dealer or is the bona fide owner of at least 20 percent of a dealer entity. This bill also requires a manufacturer or distributor to file with the board a copy of the current requirements the manufacturer or distributor places on its dealer with respect to the dealer's duties under the manufacturer or distributor's warranty, and vehicle delivery and preparation obligations. In addition, this bill defines "incentive programs" and requires a manufacturer or distributor to file with the board a copy of the rules and procedures of the program, and the duties of a dealer under the program. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 1.03, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to redefine "broker," "franchise," "lease facilitator," "lessor," "manufacturer," "rule," and "towable recreational vehicle." SECTION 2. Amends Section 2.02, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., by adding Subsection (d), to provide that a person is eligible for appointment to the Texas Motor Vehicle Board (board) if the person is otherwise eligible by this Act and is a natural person who is either a dealer or is the bona fide owner of at least 20 percent of a dealer entity. Provides that a person is ineligible to serve on the board if the person's status as a dealer is derived from a dealer or dealership in which a manufacturer or distributor owns an interest. SECTION 3. Amends Subsections (a), (b), and (c), Section 2.08, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to provide an exception under Section 2.02(b), rather than Section 2.02. Provides that the board, rather than the Texas Motor Vehicle Commission (commission), is subject to Chapters 551 (Open Meetings) and 2001 (Administrative Procedure), Government Code. Requires the board, rather than the commission, to develop and implement policies provided by this section. SECTION 4. Amends Section 2.08A(c), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to require the director, rather than the executive director, to notify the vice-chairman of the commission if the director has knowledge that a potential ground for removal exists. Makes a conforming change. SECTION 5. Amends Section 3.02, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to make conforming changes. SECTION 6. Amends Section 3.08(g), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to require the board's written final decision or order to be signed on behalf of the board by the chairman or vice chairman, rather than the director. SECTION 7. Amends Section 4.02, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to redesignate existing Subdivisions (1)-(3) to Subsections (c)-(e). Redesignates existing Subsection (d) to Subsection (f). Makes conforming and nonsubstantive changes. SECTION 8. Amends Section 4.03(b), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to require the applicant to separately set forth a list of dealers in which the applicant, or an entity owned or controlled by the applicant, owns an interest, whether or not the dealer is also included in the applicant's list of franchised dealers. SECTION 9. Amends Section 5.01B(a), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to include among the required contents of a notice under this section, a statement identifying the manufacturer that owns or controls the entity, if the prospective transferee is an entity owned or controlled by a manufacturer or distributor. Makes a nonsubstantive change. SECTION 10. Amends Section 5.02(b), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to provide that it is unlawful for any manufacturer, distributor, or representative to attempt to force a dealer to relocate a line-make or parts or products related to that line-make unless certain conditions are met. Deletes the provision relating to the failure to compensate dealers for the work and services they are required to perform in connection with the dealer's obligations. Deletes the provision which states that it is unlawful for any manufacturer, distributor, or representative to operate as a dealer except on a temporary basis and only under certain conditions. Redesignates existing Subdivisions (26)-(28) to Subdivisions (25)-(27) and makes nonsubstantive changes. SECTION 11. Amends the Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., by adding Sections 5.02A, 5.02B, and 5.02C, as follows: Sec. 5.02A. WARRANTY REIMBURSEMENT. (a) Requires a manufacturer or distributor to file with the board a copy of the current requirements the manufacturer or distributor places on its dealers with respect to the dealer's duties under the manufacturer or distributor's warranty, and vehicle delivery and preparation obligations. (b) Provides that warranty or delivery and prepartation requirements are not enforceable unless they are reasonable and are disclosed and filed in compliance with Subsection (a). Requires the board to insure that the requirements set forth in Subsection (a) are reasonable. (c) Requires a manufacturer to fairly and adequately compensate its dealers for all warranty work, and labor, parts, and other expenses necessarily incurred by the dealer in the performance of warranty work. (d) Provides that in no event may a manufacturer or distributor pay or reimburse a dealer an amount of money for warranty work that is less than that charged by the dealer to the dealer's retail customers for nonwarranty work of like kind. (e) Requires the manufacturer or distributor to pay a dealer's claim for reimbursement for warranty work or dealer preparation and delivery work within 30 days after approval of the claim. Provides a claim not disapproved within 30 days after the manufacturer or distributor receives it is approved. Requires the manufacturer or distributor to provide the dealer written notice of the reasons for the disapproval if the claim is disapproved. (f) Prohibits a manufacturer or distributor, except as provided by this section, from charging a dealer back to recoup money paid to the dealer to satisfy a claim approved and paid as provided by this section. Authorizes a manufacturer or distributor to recoup from a dealer money paid to the dealer to satisfy a claim approved and paid as provided by this section, if the manufacturer can show that: _the claim was false or fraudulent; _repair work was not properly performed or was unnecessary to correct a defective condition; or _the dealer who made the claim failed to provide substantiation of the claim in the manner provided by the manufacturer's or distributor's requirements if those requirements were on file with the board at the time the claim was filed and if those requirements are reasonable as provided by this section. (g) Prohibits a manufacturer or distributor from auditing a claim filed under this section after a specified time, or requiring that a dealer file a statement of actual time spent in performance of labor, as provided. Sec. 5.02B. MANUFACTURER OR DISTRIBUTOR INCENTIVE PROGRAMS: PROCEDURES. Defines "incentive program." Requires a manufacturer or distributor to file with the board a copy of the rules and procedures of the program, and the duties of dealers under the program. Prohibits a manufacturer or distributor from charging a dealer back to recoup money or the cash value of specified items, if the manufacturer or distributor can show that: _the information filed by the dealer in connection with the incentive program contained a material, substantive mistake as provided by this section; or _the dealer committed fraud with respect to a material fact or other material evidentiary matter as provided by this section. Prohibits a manufacturer or distributor from auditing the records of the dealer for the purpose of determining compliance with the rules of the program unless the manufacturer or distributor has reasonable grounds to suspect that the dealer committed fraud. Provides that in this section, clerical error is not fraud. Sec. 5.02C. MANUFACTURER OWNERSHIP OF DEALERSHIP. (a) Defines the term "manufacturer" for the purposes of this section. (b) Provides that for purposes of Subsection (a), a person or entity is controlled by a manufacturer if the manufacturer has the authority directly or indirectly, by law or by agreement of the parties, to direct or influence the management and policies of the person or entity. (c) Prohibits a manufacturer, except as provided by this section, from directly or indirectly: _owning an interest in a dealer or dealership; _operating or controlling a dealer or dealership; or _acting in the capacity of a dealer. (d) Authorizes a manufacturer to own an interest in a franchised dealer, or otherwise control a dealership, for a period not to exceed 12 months from the date the manufacturer acquires the dealership under certain provisions of this subsection. (e) Authorizes a manufacturer to temporarily own an interest in a dealership if the manufacturer's participation in the dealership is in a bona fide relationship with a certain franchised dealer, for the specified purposes of this subsection. SECTION 12. Amends Section 6.01, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to authorize the board to levy a civil penalty as provided by this section in the event that the board determines that a person is in violation or has violated any rule or order of the board as provided by this section. Makes conforming changes. SECTION 13. Amends Section 6.07(a), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to define "owner" for the purposes of this section. Deletes existing definition of "owner." Makes a conforming change. SECTION 14. Amends Section 7.01(f), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to authorize the board, in the interest of justice, to suspend the enforcement of its order pending final determination of an appeal of that order as provided by this section, notwithstanding the terms of this section. SECTION 15. Emergency clause. Effective date: upon passage.