Presenters: Frances Stiles
Dennis Johnston

Commission Agenda Item No. 12
Action
Implementation of H.B. 2926 – Marine Dealers Bill
August 2003

I. Discussion: During the 78th Regular Legislative Session, House Bill 2926 was passed which affects rules and fees relating to Marine Dealers, decal placement and registration exceptions, public information reports, and allows the agency to issue certificates of title secured through a bonding process. Within HB2926, there are four topics that affect TPWD marine laws and processes:

These issues were published in the July, 25, 2003 issue of the Texas Register. A summary of the comments will be provided at the meeting.

II. Recommendation: Staff recommends that the Texas Parks and Wildlife Commission adopt the following motion:

“The Texas Parks and Wildlife Department adopts an amendment to 53.10 concerning boating industry fees set by the Commission and new 53.200-53.206 concerning regulation of marine dealers, distributors, manufacturers with changes to the proposals published in the July 25, 2003 issue of the Texas Register (28TexReg 5809)”.

Attachments – 1
1. Exhibit A – Proposed Rules


Commission Agenda Item No. 12
Exhibit A

Regulation of Marine Manufacturers, Dealers and Distributors
Proposal Preamble

1. Introduction.

The Texas Parks and Wildlife Department proposes new §§53.200 – 53.206, concerning the regulation of marine manufacturers, distributors, and dealers. New §53.200, concerning Definitions, establishes a specific meaning for the word ‘consignment’ for use in the context of the subchapter. The new section is necessary to create an unambiguous meaning for the term so that the regulated community and the department are mutually clear on what is meant when the term is used. New §53.201, concerning Application, Renewal, Transfer, and Replacement, sets forth the required information and documentation that an applicant must submit in order to be licensed by the department as a dealer, distributor, or manufacturer. The new section is necessary to establish the identity of an applicant and the fact that an applicant for a license under the subchapter meets the statutory criteria for licensure. New §53.202, concerning Notification—Change of Dealer, Manufacturer, Distributor Status, establishes a notification requirement for dealers, manufacturers, and distributors in the event that a change in address, ownership, business name, location, franchise agreement, contact information, or phone number has occurred. The amendment is necessary to maintain current information on all licensees. New §53.203, concerning Display of License, requires licenses to be publicly displayed at all times. The new section is necessary to ensure that businesses required to be licensed are indeed licensed and to provide consumers with evidence that a business is licensed to engage in an activity regulated by the department. New §53.204, concerning Reporting and Recordkeeping Requirements, sets forth the types of records that must be maintained as a condition of licensure. The new section is necessary to allow the department to verify that the licensee is in compliance with the provisions of the subchapter and applicable statutory requirements. New §53.205, concerning Display of Registration Validation Sticker, articulates the method and manner in which validation stickers must be displayed on vessels. The new section is necessary to provide a mechanism to clearly identify vessels that are in compliance with applicable regulations and statutes. New §53.206, concerning Bonded Title – Acceptable Situations, sets forth the circumstances under which the department will issue a bonded title in the event that complete documentation cannot be provided or obtained by an applicant for title, registration or transfer. The new section is necessary to acknowledge that in some cases complete historical documentation is not available and to create a mechanism for dealing with such eventualities.

The new sections are necessary, in general, because of the enactment of House Bill 2926 by the 78th Legislature, which requires the commission to adopt rules to implement the Act by not later than January 1, 2004.

2. Fiscal Note.

Ms. Julie Horsley, program specialist, has determined that for each of the first five years the rule as proposed is in effect, there will be fiscal implications to state government as a result of enforcing or administering the rule. A proposed rulemaking that implements the fees for record searches and licenses for marine dealers, manufacturers, and distributors, also contains this fiscal information and is published elsewhere in this issue. For each of the first five years the rules as proposed are in effect, the department is estimated to realize between $239,541 and $453,380 in additional revenues. These estimates were derived as follows:

Marine Dealer, Distributor, and Manufacturer license. The department estimates an additional $185,000 in revenue for the first year, then $388,500 in each year thereafter. The estimate was derived by multiplying the expected number of license sales in each year by the amount of the fee increase. There are currently about 900 dealer licenses issued annually, at the current fee of $130. The estimate assumes that because licensing will now be mandatory there will be an increase in the number of licensees in the first 2 years, with numbers leveling off after 2005.The estimate also factors in the March effective date for FY 2004 figures.

Access to ownership /other records: The department estimates an additional $10,654 in FY 2004 and $15,980 in each year thereafter as a result of fees for these records. The estimate was derived by multiplying the number of current transactions for each report by the amount of the proposed fee, adjusting FY 2004 to reflect the January effective date.

Bonded Certificate of Title. The department estimates an additional $1,667 in FY 2004 and $2,500 in each year thereafter as a result of fees paid by persons seeking bonded title. The estimate was derived by multiplying the proposed fee increase by the estimated number of bonded titling transactions, adjusting FY 2004 to reflect the January implementation date.

Registration of US Coast Guard Vessels. The department estimates an additional $42,220 to 46,400 in each of the first five years as a result of the new requirements provided in statute to register US Coast Guard vessels. This estimate was derived by multiplying the estimated number of such vessels by the appropriate registration fee. The estimate assumes that approximately half of the vessels will be registered in the first year, and assumes a slight increase in the numbers registered in 2005.

The department does not have sufficient information upon which to base an estimate of anticipated revenues resulting from license and location transfer fees, and does not anticipate significant additional revenues from fees associated with information updates/corrections, as the number of such transactions is currently not significant.

The department anticipates administrative costs associated with the review and processing of bonded title applications of approximately $2,500 per year. This estimate was derived based on review of staff time expected to be spent reviewing correspondence and documentation specifically associated with bonded title situations.

No other costs to state or local governments are anticipated as a result of enforcing or administering rules.

3. Public Benefit – Cost Note.

Ms. Horsley also has determined that for each of the first five years the rules as proposed are in effect:

(A) The public benefit anticipated as a result of enforcing or administering the rules as proposed will be the capture of revenue that is currently uncollected and the consumer benefits attained by minimizing the impact of theft and fraud involving boats and motors.

(B) The probable economic cost to persons required to comply with the rules will be the amount of fee paid by each person. Depending on the transactions affecting each individual, the amount paid will range from $2 to $500 dollars, as follows: current owner of record report ($2); certified history report of ownership ($10), accident and water fatality report, less than 5 pages ($5); accident and water safety report, more than 5 pages ($10); fee for bonded certificate of title ($35); marine dealer, distributor or manufacturer license ($500); marine dealer, distributor or manufacturer license transfer ($500); marine dealer, distributor or manufacturer location transfer($10);marine dealer, distributor or manufacturer information update/license correction ($3); and boat registration (Vessel Class I - $50; Vessel Class II $70; Vessel Class III $90).

The marine dealer, distributor and manufacturer fee will not impose additional costs to small businesses and microbusinesses beyond that mandated by House Bill 2926. However, the marine dealer, distributor and manufacturer fee and the remaining fees will impose a direct cost on small businesses and microbusinesses, namely in the amount of the increased fees. In addition, because the licensing requirements will now be mandatory, small businesses and microbusinesses that previously did not obtain a license will incur the full cost of the new fees, which range from $2 to $500. No significant cost is anticipated as a result of fees pertaining to reporting and recordkeeping, as businesses must already maintain this documentation to conduct transactions under existing state regulations and to comply with federal tax laws.

There is no difference in the cost of compliance between a large and small business as a result of the proposed amendment. Affected businesses must already possess the documentation required under the proposed rule; therefore, there would not be an additional cost to small business as compared to large for complying with these provisions.

(C) The department has not drafted a local employment impact statement under the Administrative Procedures Act, §2001.022, as the agency has determined that the rule as proposed will not impact local economies.

(D) The department has determined that there will not be a taking of private real property, as defined in Government Code, Chapter 2007, as a result of the proposed rule.

4. Request for Public Comment.

Comments on the proposed rules may be submitted to Frances Stiles, Texas Parks and Wildlife Department, 4200 Smith School Road, Austin, Texas, 78744; (512) 389-4860 (e-mail: frances.stiles@tpwd.state.tx.us).

5. Statutory Authority.

The new sections are proposed under Parks and Wildlife Code, §31.032, which authorizes the department to prescribe the manner in which identification numbers and validation decals are placed on a vessel and authorizes the commission to adopt rules for the placement of validation decals for antique boats; §31.0412, which authorizes the commission to adopt rules regarding dealer’s, distributor’s, and manufacturer’s licenses, including transfer procedures, application forms, application and renewal procedures, and reporting and recordkeeping requirements; and §31.0465, which authorizes the commission to define by rule what constitutes an acceptable situation in which certificates of title may be issued after the filing of a bond, and §31.039 which authorizes the commission to charge a fee for access to ownership and other records.

The new rules affect Parks and Wildlife Code, Chapter 31.

§53.200. Definitions. The following words and terms, when used in this subchapter shall have the following meanings, unless the context clearly indicates otherwise. Consignment – The sale or offer for sale by a person other than the owner under terms of a verbal or written authorization from the owner.

§53.201. Application, Renewal, Transfer, and Replacement.

(a) A person shall apply for a license as a dealer, distributor, or manufacturer by submitting a properly completed, department-approved form furnishing all requested information, accompanied by the following:

(1) the fee prescribed by law for each license requested;

(2) photographs clearly showing:

(A) the permanent sign clearly indicating the name of the business;

(B) the front of the business with public access; and

(C) space sufficient for office, and additionally for dealers - service area and display of products;

(3) a copy of the Tax Permit issued by the Comptroller under Chapter 151, Tax Code;

(4) verification of all assumed name(s), if applicable, in the form of assumed name certificate(s) on file with the Secretary of State or county clerk; and

(5) a photocopy of the current driver’s license or Department of Public Safety identification of the owner, president or managing partner of the business.

(b) The department may issue a license under this subchapter if:

(1) the applicant submits a complete application form and required attachments; and

(2) the applicant signs a department-provided affidavit stating full compliance with state law including Occupation Code, Chapter 2352, concerning Franchise Agreements, when required.

§53.202. Notification - Change of Dealer, Manufacturer, Distributor Status. A license holder shall notify the department in writing within 10 days if there is any change in status including:

(1) change in ownership;

(2) change of business name;

(3) change of physical location;

(4) change of franchise line agreement (marine dealer);

(5) change in location contact; or

(6) change in address or phone information.

§53.203. Display of License. Licenses issued under this subchapter must be publicly displayed at all times in the place of business.

§53.204. Reporting and Recordkeeping Requirements. A license holder must keep a complete record available for inspection in the place of business relating to all vessels, motorboats, and outboard motors purchased, sold, or displayed for sale for a minimum of 24 months. Content of records must include the:

(1) date of purchase;

(2) date of sale;

(3) hull identification number and/or motor identification number;

(4) name and address of person selling to the dealer;

(5) name and address of person purchasing from the dealer;

(6) name and address of selling dealer or individual if vessel and/or outboard motor is offered for sale by consignment;

(7) a copy of the vessel/outboard motor title/registration receipt;

(8) copies of any and all documents, forms, and agreements applicable to a particular sale, including, but not limited to title applications, work-up sheets, Manufacturer’s Certificates of Origin, titles or photocopies of the front and back of titles, factory invoices, sales contracts, retail installment agreements, buyer’s orders, bills of sale, waivers, or other agreements between the seller and purchaser; and

(9) copies of written consignment agreements or power of attorney for vessels, motorboats, or outboard motors.

§53.205. Display of Registration Validation Sticker.

(a) Documented vessels are required to display the registration validation sticker on both sides of the bow and maintain current documentation through the United States Coast Guard or display the state-assigned TX numbering series with the decal. Commercial vessels used in coastal shipping and vessels exceeding 115 feet in length are exempt from registration requirements.

(b) Vessels registered as antique boats are permitted to display the registration validation sticker on the left portion of the windshield. In the absence of a windshield, the registration validation sticker must be attached to the certificate of number and made available for inspection when the boat is operated on public water.

§53.206. Bonded Title – Acceptable Situations.

(a) A bonded title situation exists when complete documentation cannot be provided or obtained by an applicant requesting title, registration or ownership transfer of a vessel or outboard motor. The applicant may appeal the department’s refusal to issue a certificate of title by applying for consideration of a bonded title. The department will accept applications for bonded title as provided in Parks and Wildlife Code, §31.0465.

(b) Bonded titles may be used in situations where the applicant is unable to produce complete documentation required by the department in order to title or transfer ownership of a vessel or outboard motor. Acceptable situations regarding the filing and award of a bonded title situation will apply where a complete history of ownership for a vessel or outboard motor cannot be produced by the applicant and the department has determined that the customer is unable to provide the history due to the inability to locate the previous owners. Missing ownership documentation may consist of a certificate of title, bill of sale, invoice, or tax affidavit signed by the owner of record, or authority to handle a deceased person’s estate. The inability to locate previous owners must be evidenced by proof of returned certified mail or by the lack of any known addresses for a previous owner.

(c) The department shall not under any circumstances issue a bonded title if the applicant does not have any proof of payment, ownership transfer or other related documentation to support a claim of ownership.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency’s authority to adopt.

Issued in Austin, Texas, on


REGULATION OF MARINE MANUFACTURERS,
DEALERS AND DISTRIBUTORS – FEES
PROPOSAL PREAMBLE

1. Introduction.

The Texas Parks and Wildlife Department proposes an amendment to §53.10, concerning Vessel and Motor Fees Set by Commission. The amendment makes the fee for the issuance of marine dealer and manufacturer numbers applicable to marine distributors and raises the fee from $130 to $500, effective March 1, 2004. The amendment also creates new fees as follows: marine dealer, distributor or manufacturer ownership transfer of license ($500); marine dealer, distributor or manufacturer location transfer ($10); marine dealer, distributor or manufacturer information update/license correction ($3.00); current owner of record report for vessel or outboard motor ($2.00); certified history report of ownership for vessel or outboard motor ($10); accident/water fatality report up to five pages in length ($5.00); accident/water fatality report over five pages in length ($10); and bonded certificate of title ($35).

The amendment is necessary because of the enactment of House Bill 2926 by the 78th Legislature, which requires the commission to adopt rules to implement the Act by not later than January 1, 2004. The Act establishes a minimum fee of $500 for a dealer, distributor, or manufacturer license, and authorizes the commission to by rule charge a fee for access to ownership records and other records made or kept under the Act.

2. Fiscal Note.

Ms. Julie Horsley, program specialist, has determined that for each of the first five years the rule as proposed is in effect, there will be fiscal implications to state government as a result of enforcing or administering the rule. A proposed rulemaking that implements the provisions of HB 2926 also contains this fiscal information and is published elsewhere in this issue. For each of the first five years the rules as proposed are in effect, the department is estimated to realize between $239,541 and $453,380 in additional revenues. These estimates were derived as follows:

(1) Marine Dealer, Distributor and Manufacturer license. The department estimates an additional $185,000 in revenue for the first year, then $388,500 in each year thereafter. The estimate was derived by multiplying the expected number of licenses sales in each year by the amount of the fee increase. There are currently about 900 dealer licenses issued annually, at the current fee of $130. The estimate assumes that because licensing will now be mandatory there will be an increase in the number of licensees in the first two years, with numbers leveling off after 2005. The estimate also factors in the March 2004 effective date in calculating FY 2004 figures.

(2) Access to ownership /other records. The department estimates an additional $10,654 in FY 2004 and $15,980 in each year thereafter. The estimate was derived by multiplying the number of current transactions for each report by the amount of the proposed fee, adjusting FY 2004 to reflect the January effective date.

(3) Bonded Certificate of Title. The department estimates an additional $1,667 in FY2004 and $2,500 in each year thereafter as a result of fees paid by persons seeking bonded title. The estimate was derived by multiplying the proposed fee increase by the estimated number of bonded titling transactions, and adjusting FY2004 to reflect the January effective date.

(4) Registration of US Coast Guard Vessels. The department estimates an additional $442,220 to $446,400 in each of the first five years as a result of the new statutory provisions requiring US Coast Guard vessel registration. This estimate was derived by multiplying the estimated number of such vessels by the appropriate registration fee. The estimate assumes that approximately half of the vessels will be registered in the first year, and assumes a slight increase in the numbers registered in 2005.

The department does not have sufficient information upon which to base an estimate of anticipated revenues resulting from license and location transfer fees, and does not anticipate significant additional revenues from fees associated with information updates/corrections, as the number of such transactions is currently not significant.

The department anticipates administrative costs associated with the review and processing of bonded title applications of approximately $2,500 per year. This estimate was derived based on review of staff time expected to be spent reviewing correspondence and documentation specifically associated with bonded title situations.

No other costs to state or local governments are anticipated as a result of enforcing or administering rules.

3. Public Benefit – Cost Note.

Ms. Horsley also has determined that for each of the first five years the rule as proposed is in effect:

(A) The public benefit anticipated as a result of enforcing or administering the rule as proposed will be the capture of revenue that is currently uncollected, and the consumer benefits attained by minimizing the impact of theft and fraud involving boats and motors.

(B) The probable economic cost to persons required to comply with the rules will be the amount of fee paid by each person. Depending on the transactions affecting each individual, the amount paid will range from $2 to $500 dollars, as follows: current owner of record report ($2); certified history report of ownership ($10), accident and water fatality report, less than five pages ($5); accident and water safety report, more than five pages ($10); fee for bonded certificate of title ($10); marine dealer, distributor or manufacturer license ($500); marine dealer, distributor or manufacturer license transfer ($500); marine dealer, distributor or manufacturer location transfer($10); marine dealer, distributor or manufacturer information update/license correction ($3); and boat registration (Vessel Class I - $50; Vessel Class II $70; Vessel Class III $90).

The marine dealer, distributor and manufacturer fee will not impose additional costs to small businesses and microbusinesses beyond that mandated by House Bill 2926. However, the marine dealer, distributor and manufacturer fee and the remaining fees will impose a direct cost on small businesses and microbusinesses, namely in the amount of the increased fees. In addition, because the licensing requirements will now be mandatory, small businesses and microbusinesses that previously did not obtain a license will incur the full cost of the new fees, which range from $2 to $500. No significant cost is anticipated as a result of fees pertaining to reporting and recordkeeping, as businesses must already maintain this documentation to conduct transactions under existing state regulations and to comply with federal tax laws.

There is no difference in the cost of compliance between a large and small business as a result of the proposed amendment. Affected businesses must already possess the documentation required under the proposed rule; therefore, there would not be an additional cost to small business as compared to large for complying with these provisions.

(C) The department has not drafted a local employment impact statement under the Administrative Procedures Act, §2001.022, as the agency has determined that the rule as proposed will not impact local economies.

(D) The department has determined that there will not be a taking of private real property, as defined in Government Code, Chapter 2007, as a result of the proposed rule.

4. Request for Public Comment.

Comments on the proposed rules may be submitted to Frances Stiles, Texas Parks and Wildlife Department, 4200 Smith School Road, Austin, Texas 78744; (512) 389-4860 or 1-800-792-1112, e-mail: frances.stiles@tpwd.state.tx.us.

5. Statutory Authority.

The amendment is proposed under Parks and Wildlife Code, §31.039, which authorizes the commission by rule to charge a fee for access to ownership and other records; and §31.0412, which authorizes the commission to adopt rules regarding reporting and recordkeeping requirements, and fees for transferred and replacement licenses.

The amendment affects Parks and Wildlife Code, Chapter 31.

§53.10. Vessel and Motor Fees Set by Commission.

(a) The following vessel and motor fee amounts are effective September 1, 2003, and thereafter:

(1) expedited "quick" title to a vessel—$35;

(2) expedited "quick" title to a motor—$35;

(3) livery vessel—$30;

(4) vessel-Class A—$30;

(5) vessel-Class 1—$50;

(6) vessel-Class 2—$70;

(7) vessel-Class 3—$90;

(8) vessel-transfer of ownership—$10.00;

(9) vessel-duplicate certificate of number—$10.00;

(10) vessel-duplicate decals—$10.00;

(11) marine dealer/manufacturer number (effective until February 29, 2004) —$130; [and]

(12) certificate of title—$25; and [.]

(13) bonded certificate of title—$35 (effective January 1, 2004).

(b) The following fee amounts are effective March 1, 2004 and thereafter:

(1) marine dealer, distributor or manufacturer license - $500;

(2) marine dealer, distributor or manufacturer ownership transfer of license - $500;

(3) marine dealer, distributor or manufacturer location transfer - $10.00; and

(4) marine dealer, distributor or manufacturer information update/license correction - $3.00;

(c) The following fee amounts are effective January 1, 2004 and thereafter:

(1) current owner of record report for vessel or outboard motor - $2.00;

(2) certified history report of ownership for vessel or outboard motor - $10.00;

(3) accident/water fatality report up to five pages in length - $5.00; and

(4) accident/water fatality report over five pages in length - $10.00.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency’s authority to adopt.

Issued in Austin, Texas, on


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