HBA-NLM, C.S.H.B. 3092 76(R)HBA-NLM, C.S.H.B. 3092 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3092 By: Siebert Transportation 4/12/1999 Committee Report (Substituted) 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. C.S.H.B. 3092 provides that a person is eligible for appointment to the Texas Motor Vehicle Board (board) if the person is otherwise eligible under 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 rulemaking authority is expressly delegated to the Texas Motor Vehicle Board in SECTION 16 (Section 8.01, Article 4413(36), V.T.C.S.) and that the rulemaking previously delegated to the Texas Motor Vehicle Board, now the Texas Motor Vehicle Commission, is modified in SECTION 9 (Section 4.02, Article 4413(36), V.T.C.S.) of this bill. 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," and "manufacturer." Redefines "rule" to substitute the Texas Motor Vehicle Board (board) for the Texas Motor Vehicle Commission. SECTION 2. Amends Section 1.03(28), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., as renumbered by Chapter 639, Acts of the 75th Legislature, Regular Session, 1997, to redefine "party" by making a conforming change. SECTION 3. Amends Section 1.03(28), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to redefine "towable recreational vehicle." SECTION 4. Amends Section 2.02, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., by amending Subsection (c) and adding Subsection (d), as follows: (c) Sets forth the composition of the board members. (d) Provides that a person is not eligible to serve on the board under Subsection (c) of this section if the person's qualifying ownership interest under Subsection (c) is in a dealer in which a manufacturrer or distributor has an ownership interest. SECTION 5. Amends Subsections (a), (b), and (c), Section 2.08, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to delete the exception providing that a member appointed under 2.02 of this Act is not counted in the calculation of a quorum for the purposes of the determination of an issue with respect to which the member is prohibited from voting. Makes conforming changes. SECTION 6. 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 conforming changes. SECTION 7. Amends Section 3.02, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to make conforming changes. SECTION 8. 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 9. Amends Section 4.02, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to require the board, if it adopts a rule regulating off-site display or sale of towable recreational vehicles, to authorize in the rule, the display and sale at a private event in a trade area that would not otherwise qualify as a private event, rather than in areas (counties, cities, or towns), under the application of general participation requirements for organized dealer shows and exhibitions. Redesignates existing Subdivisions (1)-(3) to Subsections (c)-(e). Redesignates existing Subsection (d) to Subsection (f). Makes conforming and nonsubstantive changes. SECTION 10. Amends Section 4.03(b), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to require the applicant to separately list each dealer in which the applicant, or an entity owned or controlled by the applicant, has any ownership interest, regardless of whether the dealer is included in the list of franchised dealers. Makes a conforming change. SECTION 11. 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 by the prospective transferee identifying a manufacturer or distributor that has an ownership interest in the transferee. Makes a nonsubstantive change. SECTION 12. 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 conforming and nonsubstantive changes. SECTION 13. Amends Section 6.01, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., as follows: Sec. 6.01. New title: ADMINISTRATIVE PENALTY. Authorizes the board to levy an administrative penalty as provided by this section in the event that the board determines that a person is in violation or has violated Subchapter A, Chapter 728, Transportation Code, or any rule or order of the board as provided by this section. Deletes "civil" from existing title. Makes conforming changes. SECTION 14. Amends Section 6.07(a), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to redefine "owner" for the purposes of this section. Makes conforming and nonsubstantive changes. SECTION 15. Amends Section 7.01(f), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to provide that appeal does not affect the enforcement of a final board order unless its enforcement is enjoinable or the board, in the interest of justice, suspends the enforcement of it until the appeal is finally determined. SECTION 16. Amends the Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., by adding Subchapter H, as follows: SUBCHAPTER H. MISCELLANEOUS PROVISIONS Sec. 8.01. WARRANTY REIMBURSEMENT. (a) Requires a manufacturer or distributor to maintain on file with the board a copy of the current requirements imposed by the manufacturer or distributor on its dealers with regard to a dealer's duties under the warranty and vehicle delivery and preparation obligations. (b) Provides that a requirement imposed on a dealer under Subsection (a) is unenforceable if it is unreasonable as determined by board rule or not filed in compliance with Subsection (a). (c) Requires a manufacturer or distributor to fairly compensate its dealer for all warranty work expenses incurred by the dealer in performing warranty work and pay or reimburse a dealer for warranty work in a specified manner, no later than the 30th day after the claim is approved. (d) Provides that a reimbursement claim that is not disapproved, on or before the 30th day is considered approved. (e) Requires the manufacturer or distributor, if a claim is disapproved to provide the dealer written reasons for the disapproval. (f) Prohibits a manufacturer or distributor from attempting to recover money paid to the dealer to satisfy an approved claim except under specified circumstances. (g) Prohibits a manufacturer or distributor from auditing a claim filed under this section after a certain time period unless there are reasonable grounds to believe the claim was fraudulent or from requiring as a condition for the reimbursement of a claim that a dealer file a statement of the actual time of the labor involved unless the actual time of the labor is the basis for reimbursement. Sec. 8.02. MANUFACTURER OR DISTRIBUTOR INCENTIVE PROGRAMS. Defines "incentive program." (b) Provides that a manufacturer or distributor must file with the board a copy of an incentive program's rules and procedures and the duties of the dealer. Sets forth conditions for the copy to be filed. (c) Prohibits a manufacturer or distributor from recouping and award to the dealer unless certain conditions are met. (d) Prohibits manufacturers or distributors from auditing a dealer's records after a certain period unless the manufacturer or distributor has reasonable grounds to suspect the dealer of fraud. Provides that clerical errors do not constitute fraud. Sec. 8.03. MANUFACTURER OWNERSHIP OF DEALERSHIP. (a) Defines "agent." (b) Prohibits a manufacturer, distributor, representative, or an agent from owning an interest in a dealer or dealership, operating or controlling a dealer or dealership, or acting as a dealer, except as provided by this section. (c) Authorizes a manufacturer, distributor, representative, or an agent to own an interest in a franchised dealer or control a dealership for not more than one year from the date the person acquires the dealership under certain conditions described by this subsection. (d) Authorizes a manufacturer, distributor, representative, or an agent to temporarily own an interest in a dealership under certain conditions described by this section. SECTION 17. Provides that Section 2.02, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., as amended by this act, does not affect the entitlement of a member of the board who is serving on the board immediately before the effective date of this Act to continue to serve on the board for the remainder of the member's term or to serve in a holdover capacity until a successor is appointed and take office. SECTION 18. Makes application of Section 3.08(g), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., as amended by this act, prospective. SECTION 19. Makes application of Section 6.07(a), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., as amended by this act, prospective. SECTION 20. Makes application of Section 8.03, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., as added by this act, prospective. SECTION 21. Emergency clause. Effective date: upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original in SECTION 1 (Section 1.03, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.) by redefining "lessor," and by reinstating the word "franchisee" in the definition of "franchise." The substitute also modifies the original to conform to Legislative Council form and make other nonsubstantive changes. The substitute modifies the original by amending Section 1.03(28), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., in SECTION 2 of the substitute, rather than SECTION 1 of the original. Makes a conforming change. The substitute modifies the original in new SECTION 3 of the substitute by redesignating Section 1.03(28), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., to proposed Section 1.03(36). Redefines "towable recreational vehicle." Makes a conforming change. The substitute modifies the original in SECTION 4 (Section 2.02, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.), to change existing Subsection (c) to provide that the board must include two persons who are licensed dealers or who have at least 20 precent ownership interest in a dealer, at least one of whom is franchised dealer or has at least 20 percent ownership interest in a franchised dealer. The substitute modifies the original in SECTION 4 (Section 2.02, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.) by deleting proposed Subsection (d) which provided that a person is eligible for appointment to the board if the person is otherwise eligible under 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. SECTION 5 of this substitute is redesignated from SECTION 3 of the original. Redesignated SECTION 5 (Sections 2.08(a), (b), and (c), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.) modifies the original by amending existing Subsection (a) to delete the exception that a board member appointed under Section 2.02 of this Act is not counted in the calculation of a quorum for determining an issue with respect to which the member is prohibited from voting. Makes conforming changes. SECTION 6 (Section 2.08A(c), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.) of this substitute is redesignated from SECTION 4 of the original. SECTION 7 (Section 3.02, Texas Motor Vehicle Vehicle Commission Code, Article 4413(36), V.T.C.S.) of this substitute is redesignated from SECTION 5 of the original. Makes a conforming change. SECTION 8 (Section 3.08(g), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.) of this substitute is redesignated from SECTION 6 of the original. SECTION 9 (Section 4.02, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.) of this substitute is redesignated from SECTION 7 of the original. Makes nonsubstantive changes. SECTION 10 (Section 4.03(b), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.) of this substitute is redesignated from SECTION 8 of the original. Specifies that an applicant must list those dealers in which the applicant has a direct or indirect ownership interest. Makes nonsubstantive changes. SECTION 11 (Section 5.01B(a), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.) of this substitute is redesignated from SECTION 9 of the original. Makes nonsubstantive changes to proposed Section 5.01B(a)(5)Deletes entire text of proposed SECTION 11 (proposed Sections 5.02A (Warranty REimbursement), 5.02B (Manufacturer or Distributor Incentive Programs;: Prcedures), and 5.02C (Manufacturer Ownership of Delaership), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.) of the original. SECTION 12 (Section 5.02(b), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.) of this substitute is redesignated from SECTION 10 of the original. SECTION 13 (Section 6.01, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.) of this substitute is redesignated from SECTION 12 of the original. The substitute modifies the original by renaming the section and by providing for administrative penalties rather than civil penalties, and by renaming the section accordingly. SECTION 14 (Section 6.07(a), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.) of this substitute is redesignated from SECTION 13 of the original. The substitute modifies the original by redefining "owner." Makes nonsubstantive changes. SECTION 15 (Section 7.01(f), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S.) of this substitute is redesignated from SECTION 14 of the original. Makes nonsubstantive changes. Adds new SECTION 16 to amend the Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., by adding Subchapter H, as follows: SUBCHAPTER H. MISCELLANEOUS PROVISIONS Sec. 8.01. WARRANTY REIMBURSEMENT. (a) Requires a manufacturer or distributor to maintain on file with the board a copy of the current requirements imposed by the manufacturer or distributor on its dealers with regard to a dealer's duties under the warranty and vehicle delivery and preparation obligations. (b) Provides that a requirement imposed on a dealer under Subsection (a) is unenforceable if it is unreasonable as determined by board rules or not filed in compliance with Subsection (a). (c) Requires a manufacturer or distributor to fairly compensate its dealers for all warranty work expenses incurred by the dealer in performing warranty work and pay or reimburse a dealer for warranty work in a specified manner, no later than the 30th day after the claim is approved. (d) Provides that a reimbursement claim that is not disapproved on or before the 30th day is considered approved. (e) Requires the manufacturer or distributor, if a claim is disapproved to provide the dealer written reasons for the disapproval. (f) Prohibits a manufacturer or distributor from attempting to recover money paid to the dealer to satisfy an approved claim except under specified circumstances. (g) Prohibits a manufacturer or distributor from auditing a claim filed under this section after a certain time period unless there are reasonable grounds to believe the claim was fraudulent or from requiring as a condition for the reimbursement of a claim that a dealer file a statement of the actual time of the labor involved unless the actual time of the labor as the basis for reimbursement. Sec. 8.02. MANUFACTURER OR DISTRIBUTOR INCENTIVE PROGRAMS. (a) Defines "incentive program." (b) Prohibits a manufacturer or distributor from recouping an award to the dealer unless certain conditions are met. (c) Prohibits a manufacturer or distributor from recouping and award to the dealer unless certain conditions are met. (d) Prohibits manufacturers or distributors from auditing a dealer's records after a certain period unless the manufacturer or distributor has reasonable grounds to suspect the dealer of fraud. Provides that clerical errors do not constitute fraud. Sec. 8.03. MANUFACTURER OWNERSHIP OF DEALERSHIP. (a) Defines "agent." (b) Prohibits a manufacturer, distributor, representative, or an agent from owning an interest in a dealer or dealership, operating or controlling a dealer or dealership, or acting as a dealer, except as provided by this section. (c) Authorizes a manufacturer, distributor, representative, or an agent to own an interest in a franchised dealer or control a dealership for not more than one year from the date the person acquires the dealership under certain conditions described by this subsection. (d) Authorizes a manufacturer, distributor, representative, or an agent to temporarily own an interest in a dealership under certain conditions described by this section. Adds new SECTION 17 to provide that Section 2.02, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., as amended by this act, does not affect the entitlement of a member of the board who is serving on the board immediately before the effective date of this Act to continue to serve on the board for the remainder of the member's term or to serve in a holdover capacity until a successor is appointed and take office. Adds new SECTION 18 to make application of Section 3.08(g), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., as amended by this act, prospective. Adds new SECTION 19 to make application of Section 6.07(a), Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., as amended by this act, prospective. Adds new SECTION 20 to make application of Section 8.03, Texas Motor Vehicle Commission Code, Article 4413(36), V.T.C.S., as added by this act, prospective. Adds new SECTION 21 (emergency clause) of this substitute is redesignated from SECTION 15 of the original.