Dealer and Manufacturer Licensing & Related Matters
H.B. No. 944 (Geren); S.B. No. 489 (Estes). S.B. No.489 passed and takes effect on September 1, 2005. The measure continues work from last session concerning the comprehensive licensing of boating industry participants. The product is the result of considerable discussion and input by us with the Texas Parks & Wildlife Department (the TPWD). The two primary concerns addressed in the bill are:
- Brokers: The bill empowers TPWD to license brokers as dealers. It will require that new TPWD rules be adopted to accomplish this. Our input in developing those rules will be needed. Preliminary draft rules have already been circulated. Note, the bill will require moving the established or permanent place of business language in the dealer definition to TPWD rules.
- License Agreement: The bill also contains an enforcement enhancement for TPWD whereby dealers and manufacturers in the licensing process will be required to enter into a license agreement with TPWD. If a dealer or manufacturer violates any provision of the agreement, TPWD can suspend or revoke a license or undertake other remedies pursuant to the agreement. Our input in the drafting of the form TPWD agreement is ongoing at this time.The rules discussed above will require publication and final adoption by the TPWD. It is anticipated that the rules will become effective in the last quarter of 2005.
- Manufacturers: In connection with the passage of S.B. No. 489, TPWD confirmed a commitment to enforcing manufacturer licensing requirements. TPWD has commenced development of a master manufacturer list for purposes of sending violation notices to manufacturers currently not licensed. Note, the new license agreements also will be required in the manufacturer licensing process.
Show, Demonstrate, or Test. After much discussion, the concerns regarding aggressive TPWD ticketing of dealers and manufacturers for improper use of AA demonstration numbers will not be addressed by statute. Note, last session we tightened the language to make clear that show, demonstrate, or test, expressly does not include boat usage:
- for recreational purposes; or
- for participation in a contest or event.
TPWD has agreed to re-educate game wardens on the issue for better uniformity in enforcement. This could be further developed and addressed in the new license agreements. BTAT is working with Texas Parks & Wildlife Department in drafting rules to properly administer this section.
If the problem persists, the issue could be the subject of a statutory resolution next session.
Taxation (H.B. No.2)
As mentioned above, H.B. No. 2 containing the education finance and property tax reduction proposals did not pass in the regular session and will be the primary focus of the upcoming special session. As we know, to address these issues, significant new revenues will required. The new revenues will be offset to some extent by reductions in local ISD property taxes.
Areas of concern to us are the proposed general business tax schemes, the proposed sales tax rate increases (remaining in parity with the general rate and preserving the statewide fixed rate), and amusement event surcharges (boat show admissions). As the regular session ended, the House and Senate could not reach agreement on a business and sales tax plan.
Education Reform (H.B. No. 2)
Did not pass.
Labor Day School Start. The proposed bill mandated that public schools commence classes on the first Tuesday after Labor Day (no earlier and no later) and for the school year to end not later than June 7 (local ISDs would have discretion here, but must end by the deadline.) This legislation did not pass.
Boater Education/Vessel Operator Licenses (H.B. No. 2622; H.B. No. 3051; H.B. No. 3197). Did not pass. These were TPWD bills with H.B. No. 3051 being the primary bill. The effort sought to consolidate boater education requirements. Included were provisions to require some type of boater education for operators of vessels for hire and removal of the 18 year old cut-off for mandatory boater education. The legislation also tied certain safety equipment requirements to federal standards. We worked closely with TPWD on the language in these bills to ensure no unintended consequence.
BWI (H.B. No. 76; H.B. No. 200; H.B. No.3117; H.B. No. 3241; S.B. No. 27). Did not pass. These bills tightened up the BWI statute, primarily to more closely conform to DWI requirements. One theme was to expand coverage for drivers license suspension for BWI to boat drivers by requiring automatic suspension for test failure or conviction (not just refusal to take). An exemption for small engine (50-HP engines or less) operators was proposed to be eliminated.
Boat Towing (H.B. No. 1118). Did not pass. This bill prohibited riders in a boat while being towed on a roadway. We amended the bill to exempt the launching and retrieving of boats from waterways.
Abandoned Watercraft (H.B. No. 882; S.B. No. 453). Passed (in H.B. No. 883). Effective May 27, 2005. This bill facilitates the transfer of abandoned watercraft to TPWD for use as part of an artificial reef (rather than being auctioned).
Artificial Reefs (H.B. No. 883; S.B. No. 455). H.B. No. 883 passed. Effective May 27, 2005. Expands TPWD authority with respect to constructing artificial reefs (donation of reef materials).
Heirship (H.B. No. 943; S.B. No. 538). H.B. No. 943 passed. Effective June 17, 2005. Facilitates the transfer of title by TPWD in estate situations.
Antique Boats (H.B. No. 942; S.B. No. 537). H.B. No. 942 passed. Effective September 1, 2005. Makes 35 years the age for an antique boat which impacts where the validation decal can be affixed.
Operation with Expired Registration (H.B. No. 2136). Did not pass. Under specified circumstances, reduced the fine and provided for dismissal of charge for operating with an expired certificate of number.
Noise Regulation (H.B. No. 217; H.B. No.1628; H.B. No. 2545; S.B. No. 1296)
Did not pass. This batch of bills had momentum and heavy regulatory requirements by counties for noise usually for urban and suburban environments (auto racetracks, etc.) to control development and usually including boats unintentionally. We’ll see them again.
Finance Code (H.B. No. 955)
Passed. Effective September 1, 2005. A major modernization of the Texas Finance Code it reworks much of the antiquated Texas usury laws. All boating provisions remain in tact (doc fees, etc.).
Shrimper Reduction (H.B. No. 886; H.B. No. 1291; S.B No. 379; S.B. No. 380; S.B. No.454)
Only one bill in this packaged passed – S.B. No. 454. Effective September 1, 2005.The package relates to the Texas 2007 program, supported by environmentalists, conservationists, and sportsmen, to reduce commercial shrimping in bay areas. S.B. No. 454 establishes a moratorium on the issuance of certain commercial shrimp boat licenses and requires additional TPWD rules on the subject.
During two special sessions of the legislature, several issues were considered that could have affected boat dealers including:
- Payroll Tax
- Expansion of the franchise tax
- Increase in both the general sales tax and boat sales tax rate
- Amusement ticket surcharge for events such as boat shows
REPORT COMPILED BY SANFORD & KUHL (512) 472-9090