Presenters: Alfonso Campos
Frances Stiles

Commission Agenda Item No. 18
Action
License Requirements of Marine Dealers,
Distributors, and Manufacturers (SB 489)
November 2005

I. Executive Summary: This item provides the Commission the opportunity to review and approve four issues concerning the implementation of Senate Bill 489 and procedural improvements, which include:

  1. improvements to administrative procedures to register vessels documented through the United States Coast Guard (USCG),
  2. registration and display of numbers for vessel tenders,
  3. incorporating marine brokers into the marine licensing requirements, and
  4. Establishing procedures for the revocation or suspension of marine licenses.

II. Discussion: During the 79th Regular Legislative Session, Senate Bill 489 passed which affects rules relating to revocation and suspension procedures for Marine Licenses for dealers, distributors and manufacturers. Due to the Chairman’s charges about TPWD requirements for registering documented vessels along with implementation of SB 489, four topics affect TPWD marine laws and processes. TPWD staff has worked closely with the Boating Trades of Texas Association and the Gulf Coast Yacht Broker’s Association to develop rules, which work efficiently, and effectively for both the Department and the boating industry.

  1. Procedures to register vessels documented through the USCG:
    This change is a refining and improvement process, which details the requirements to register with TPWD a new or used documented vessel and the requirements for registration renewal. These procedural changes allow greater opportunity for customers to obtain registration compliance when the USCG documentation process is pending.
  2. Registration of vessel tenders:
    Vessel tenders will be allowed to use the registration and numbering of the mother ship when used for transport purposes between the ship and shore.
  3. Marine brokers are incorporated into the TPWD marine license requirements:
    Persons in the business of brokering sales of vessels will be under the same rules and regulations as marine dealers.
  4. Procedures to revoke or suspend marine licenses:
    Prior to SB 489, the Department had the authority to issue marine licenses but did not have the specific authority to suspend or revoke these privileges when the license holders continued to violate State law. The recommended rule establishes the provisions when a license may be denied, suspended or revoked. This change provides the Department with a mechanism to address marine licensees who abuse and otherwise violate statutes using their marine license to conduct the business transactions at the expense of their customers and the State.

III. Recommendation: The staff recommends the Texas Parks and Wildlife Commission adopt the following motion:

"The Texas Parks and Wildlife Commission adopts new 53.91 concerning documented vessel registration and vessel tender registration and amendments to 53.110 concerning regulation of marine dealers, distributors, and manufacturers as published in the September 30, 2005 issue of the Texas Register (30 TexReg 6235).”

Attachments - 1

  1. Exhibit A - Proposed Rules

Commission Agenda Item No. 18
Exhibit A

Marine Dealers / S.B. 489 Implementation
Proposal Preamble

1. Introduction.

The Texas Parks and Wildlife Department (TPWD) proposes new §53.91, concerning Documented Vessels, and an amendment to §53.110, concerning Marine Dealer, Distributors, and Manufacturers.

Proposed new §53.91 prescribes the process and documentation necessary to register a new or used vessel, and the process and documentation necessary to renew a registration. The proposed new section is necessary to establish procedures for improved customer service by allowing the submission of expired documentation for purposes of initial registration of a vessel. The amendment would have the effect of creating a two-year time period for a vessel owner to acquire current documentation before having to renew a registration.

The proposed new section also makes an exception to the applicability of the rule to vessels used as tenders for direct transportation between a mother ship and the shore and provides for the marking for such vessels. This portion of the proposed new section is necessary to provide for scenarios in which a vessel is used only as a ferry between a registered vessel and shore and separate vessel registration is not necessary for the purposes of the subchapter because of such use.

The proposed amendment to §53.110, concerning Marine Dealers, Distributors, and Manufacturers, consists of several actions. The proposed amendment clarifies the types of activities regulated by the subchapter and the application requirements for persons seeking to acquire a dealer’s, manufacturer’s, or distributor’s license. Under Parks and Wildlife Code, Chapter 31, a person engaged in the business of buying, selling, selling on consignment, displaying for sale, or exchanging at least five vessels, motorboats, or outboard motors during a calendar year is a dealer and therefore required to have a license from the department. The proposed amendment is necessary to make clear the range of business activities regulated by the department under the subchapter. The current rule requires an applicant for a license to provide photographs of signage, service areas, and display areas. The proposed amendment is necessary for the sake of clarity between industry practices.

The proposed amendment also clarifies license display requirements. The current rule requires that a license be displayed at all times. The proposed amendment makes clear that the license must be displayed at all times at the location for which the license was issued. The proposed amendment is necessary for the sake of clarity.

The amendment also adds a provision to the application requirements for a marine dealer’s license to address licensure of persons who display or list vessels or outboard motors not kept at a single location, such as commission-sale brokers who at any given time may be attempting to sell vessels located on the water in different parts of the state. The proposed amendment would require persons engaged in such types of businesses to furnish to the department the physical address of the office, the physical address, phone number, and management /ownership information for at least five marinas where vessels are expected to be moored. The proposed amendment also requires an applicant to provide an explanatory note if the applicant expects to keep inventory at fewer than five marinas. The amendment is necessary to ensure that the department’s rules encompass the variety of business models that affected by the requirements of Parks and Wildlife Code, Chapter 31.

The proposed amendment also adds clarifying language to the list of documentation required to be maintained by licensees. Under current subsection (g), copies of any and all documents, forms, and agreements applicable to a particular sale are required to be retained for department inspection. The proposed amendment inserts additional language to clarify that acts such as consignment, transfer of ownership titling, titling and registration, and documentation activities are all considered to be a part of sales activities. The amendment is necessary to clarify exactly what activities require a person to obtain a dealer’s license.

The proposed amendment also stipulates that an applicant must sign a license agreement with the department indicating that the person agrees to abide by all applicable statutes and regulations as a condition of license issuance. The amendment is necessary to ensure that the full range of possible activities contemplated by the legislative intent of Parks and Wildlife Code, Chapter 31, is explicitly acknowledged in the rule, and to comply with the mandates of Senate Bill 489, enacted by the 79th Texas Legislature, Regular Session, which requires licensees to enter into a license agreement with the department.

The proposed amendment also establishes criteria and procedures for revocation and suspension of licenses. The amendment implements additional provisions of S.B. 489 that authorize the commission to adopt rules governing revocation and suspension of licenses. The amendment is necessary to protect the public, and the boating public in particular, by creating a mechanism for the department to prevent persons who have not met the appropriate standards from operating a business regulated by the department. The rule provides for notice and hearing when the department determines that a license should be revoked, suspended, or denied. The provisions are necessary to provide a fair opportunity to be heard to those who may lose their license, and are necessary to meet due process requirements.

The proposed amendment also prohibits the use of non-registered vessels under license to a manufacturer, dealer, or distributor from being used to advertise or promote any entity or product other than the manufacturer of the vessel or the business for which the license was issued. The proposed amendment is necessary because Parks and Wildlife Code, Chapter 31, restricts the use of vessels operated under a dealer’s, distributor’s, or manufacturer’s license. By statute, such non-registered vessels may be operated only for purposes of testing, showing, or demonstration.


2. Fiscal Note.

Ms. Frances Stiles, Assistant Director of Revenue, has determined that for each of the first five years that the rules as proposed are in effect, there will be minimal implications to state government as a result of enforcing or administering the rules. The department would incur costs related to administrative hearings necessitated in the event of suspension or revocation procedures. The costs are believed to be minimal, but cannot be quantified, as there is no way to predict, for purposes of estimation, the nature, scope, or range of future administrative hearings, if any, and no empirical data upon which to base to an estimate. There will be no fiscal implications for units of local government as a result of administering the rules as proposed.


3. Public Benefit/Cost Note.

Ms. Stiles 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 improved ability of the department to provide efficient customer service, protect consumers, and provide greater safety for the boating public.

(B) Industry and regulatory trends show no adverse economic effect on small businesses, microbusinesses, or persons required to comply with the rule as proposed as these requirements echo standards established within the industry.

(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 rules 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 by Government Code, Chapter 2007, as a result of the proposed rules.


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 amendment and new section are proposed under the authority of Senate Bill 489, 79th Texas Legislature, Regular Session, which amended Parks and Wildlife Code, Chapter 31, to authorize the commission to prescribe license requirements and establish license revocation and suspension procedures, and Parks and Wildlife Code, §31.0412, which authorizes the commission to adopt rules regarding dealer’s, distributor’s, and manufacturer’s licenses, including application forms, application and renewal procedures, and reporting and recordkeeping requirements.

The proposed new section affects Parks and Wildlife Code, Chapter 31.

§53.91. Documented Vessels.

(a) New vessels that have applied for documentation may acquire a certificate of number and validation decal at any TPWD boat registration office. At the time of application, applicants must present:

(1) a properly completed registration application on a form supplied by the department;

(2) a copy of:

(A) the current documentation from the U. S. Coast Guard National Vessel Documentation Center (USCGNVDC) or their website in the applicant’s name; or

(B) the application for initial documentation with the USCGNVDC in the applicant’s name;

(3) payment of any tax required under Tax Code, Chapter 160, or verification of payment; and

(4) payment of the appropriate registration fee as required by Parks and Wildlife Code, §31.026, and §53.16 of this title (relating to Vessel, Motor, and Marine Licensing Fees).

(b) Used or previously documented vessels may acquire a certificate of number and validation decal at any TPWD boat registration office. At the time of application, applicants must present:

(1) a properly completed registration application on a form supplied by the department;

(2) a copy of:

(A) the current documentation from the U. S. Coast Guard National Vessel Documentation Center (USCGNVDC) or their website in the previous owner’s name, or the applicant’s name; or

(B) the lapsed documentation from the USCGNVDC or their website in the previous owner’s name and the application for current documentation with the USCGNVDC in the applicant’s name;

(3) payment of any tax required under Tax Code, Chapter 160, or verification of payment; and

(4) payment of the appropriate registration fee as required by Parks and Wildlife Code, §31.026, and §53.16 of this title (relating to Vessel, Motor, and Marine Licensing Fees).

(c) Renewal of certificate of number and validation decal for a documented vessel may be acquired at any TPWD boat registration office. At the time of application, applicants must present:

(1) a properly completed registration application or renewal notice on a form supplied by the department, or a hand written request;

(2) a copy of the current documentation from the U.S. Coast Guard National Vessel Documentation Center (USCGNVDC) or their website in the current owner’s name;

(3) for vessels greater than 65 feet in length for the first registration renewal, verification of payment under Tax Code 151 or verification from the TPWD boat system; and

(4) payment of the appropriate registration fee as required by §53.16 of this title (relating to Vessel, Motor, and Marine Licensing Fees).

(d) A vessel used as a tender for direct transportation between a mother ship and the shore is not required to display a validation decal, provided:

(1) the vessel is equipped with propulsion machinery of less than 10 horsepower;

(2) is owned by the owner of a vessel for which a valid certificate of number has been issued and displays the registration number of that vessel followed by the suffix "1" (i.e. TX-1234-AB-1) in the manner specified by Parks and Wildlife Code, §31.031; and

(3) is used for no purpose other than direct transportation between a mother ship and the shore.

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


The amendment is proposed under the authority of Senate Bill 489, 79th Texas Legislature, Regular Session, which amended Parks and Wildlife Code, Chapter 31, to authorize the commission to prescribe license requirements and establish license revocation and suspension procedures, and Parks and Wildlife Code, §31.0412, which authorizes the commission to adopt rules regarding dealer’s, distributor’s, and manufacturer’s licenses, including application forms, application and renewal procedures, and reporting and recordkeeping requirements.

The proposed amendment affects Parks and Wildlife Code, Chapter 31.


§53.110. Marine Dealer, Distributors, and Manufacturers.

(a) 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.

(b) Any person or entity, including a person or entity purporting to be a broker or brokerage house, who acts as an intermediary or assists in the sale, sale on consignment, display for sale, purchase, trade, or transfer of a vessel, motorboat, or outboard motor in exchange for a fee, commission, or other consideration is considered to be engaged in the business of buying, selling, selling on consignment, displaying for sale, or exchanging a vessel for the purposes of this subchapter. Any person or entity, including a person or entity purporting to be a broker or brokerage house, engaged in any activity described above is subject to the provisions of this subchapter.

(c)[(b)] A person shall apply for a license as a dealer by submitting a properly completed, department-approved application form, accompanied by the following:

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

(2) photographs clearly showing:

(A) the permanent sign at the location designated in the application as the applicant’s permanent place of business, clearly indicating the name of the business;

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

(C) space sufficient for office, service area (not applicable to floating inventory or listings), and display of vessels, motorboats, or outboard motors (not applicable to floating inventory or listings)[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;

(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; and

(6) a list of dealer agreements; and

(7) if the applicant is to maintain floating inventory or listings at a location other than that designated as the applicant’s permanent place of business, a record of at least five marinas where floating inventory or listings are expected to be displayed. If the applicant contemplates using less than five marinas, then the application shall include an explanatory statement. The record must identify, at a minimum, the name, physical address, and telephone for each marina.

(d)[(c)] A person shall apply for a license as a distributor or manufacturer by submitting a properly completed, department-approved application form accompanied by the following:

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

(2) 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;

(3) a complete list of manufacturers represented by a distributorship; and (4) a complete list of distributors, dealers, and manufacturers.

(e)[(d)] 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 license agreement [affidavit] stating that the applicant agrees to comply with all applicable state laws, [full compliance with state law] including Occupation Code, Chapter 2352, concerning Franchise Agreements, when required.

(f)[(e)] A license holder shall notify the department in writing within 10 days if there is any change of:

(1) ownership;

(2) business name;

(3) physical location;

(4) dealer agreement;

(5) distributors, dealers, or representatives; or

(6) address or phone information.

(g)[(f)] The licenses issued under this subchapter to dealers must be publicly displayed at all times in the place of business for which the license is issued.

(h)[(g)] 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, consignment, listing, transfer of ownership, titling, titling and registration, or documentation through the U.S. Coast Guard,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.

(i) The department may suspend or revoke a license under this subchapter if:

(1) the licensee has been finally convicted or received deferred adjudication for a violation of Parks and Wildlife Code, Chapter 31, or a rule adopted under that chapter;

(2) the licensee has violated Parks and Wildlife Code, Chapter 31, or a rule adopted under that chapter;

(3) the licensee made a false or misleading statement in connection with the original or renewal application for the license, either in the formal application itself or in any other written instrument relating to the application submitted to the commission or its officers or employees;

(4) the licensee is indebted to the state for taxes, fees, or payment of penalties imposed by Parks and Wildlife Code, Chapter 31, or a rule adopted under that chapter;

(5) the applicant or licensee was previously the holder of a license issued under this subchapter that was revoked for cause and never reissued by the department, or that was suspended for cause and the terms of the suspension have not been fulfilled;

(6) the applicant or licensee was previously a partner, stockholder, director, or officer controlling or managing a partnership, corporation, or store location whose license issued under this subsection was revoked for cause and never reissued, or was suspended for cause and the terms of the suspension have not been fulfilled;

(7) the business does not intend to be open to all members of the public nor during normal business hours;

(8) the licensee or an employee of the licensee has obtained, or attempted to obtain, any money, commission, fee, barter, exchange or other compensation by fraud, deception or misrepresentation; or

(9) the licensee or an employee of the licensee is finally convicted or receives deferred adjudication for a violation of any federal or state law relating to the sale, distribution, financing, registration, taxing, or insuring of a vessel.

(j) Provisions governing the revocation or suspension of a license are as follows.

(1) Before suspending or revoking a license under this subchapter, the staff of the executive director of the department (executive director) shall provide notice by certified mail to the licensee’s last known address of the department’s intent to revoke or suspend the license. Within 30 days of the date of the letter, the licensee may request an administrative hearing. The hearing request must be in writing and addressed to: Manager of Boat Titling, Registration, and Marine Licensing, Texas Parks and Wildlife Department, 4200 Smith School Rd., Austin, TX 78744. For a hearing request to be valid, the department must receive the hearing request within 30 days of the date of the letter notifying the licensee of the department’s intent to revoke or suspend the license. If no hearing request is received within this time frame, the executive director shall make a final decision whether to revoke or suspend the license.

(2) Timely hearing requests shall be referred by the department to the State Office of Administrative Hearings (SOAH) for adjudication.

(3) The department shall provide notice of the hearing date to the licensee by certified mail at the licensee’s last known address at least ten days prior to the hearing date.

(4) The licensee shall be responsible for all hearing costs to SOAH, including but not limited to transcript and court reporting costs incurred by the department. Prior to the beginning of the hearing, at the request of department, the SOAH judge shall require the licensee to post a bond in an amount set by the SOAH judge, payable to the department and conditioned on prompt payment of hearing costs. Failure to post the requested bond prior to the start of the hearing shall result in default by the licensee.

(5) The failure of the licensee to appear at the hearing shall entitle the department’s staff to request issuance of a default proposal for decision or order by the judge.

(6) At the conclusion of the hearing, SOAH shall prepare a proposal for decision in accordance with SOAH rules. The proposal for decision shall be submitted to the department’s deputy executive director for administration, who will make the final decision on whether to revoke or suspend the license.

(k) It is an offense for any person to provide or use a vessel licensed under the provisions of this subchapter for advertising or promoting any entity or product other than the manufacturer of the vessel or a business licensed under this subchapter.

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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