BILL ANALYSIS C.S.H.B. 1705 By: Lewis, Ron April 28, 1995 Committee Report (Substituted) BACKGROUND Article 8911 of Vernons' Annotated Texas Statutes requires that boat and boat motor manufacturers maintain written supply agreements with the retail dealers who sell their products in Texas. The statute requires that the contracts address basic supply terms and conditions and meet certain minimum standards, all in an effort to promote fair dealings between the participants. Article 8911 has assisted the boating retail industry in addressing and resolving issues pertaining to market areas, facility and inventory requirements, capital requirements, performance standards, warranty work reimbursement, dealer termination, and dealer succession. To continue its effectiveness, Article 8911 requires modification with respect to various required standards and penalties for noncompliance. PURPOSE The bill amends Article 8911 to modify various required dealer agreement standards and to provide penalties for noncompliance. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 1, Chapter 479, Acts of the 72nd Legislature, Regular Session, 1991 (Article 8911, Vernon's Texas Civil Statutes) by adding Subdivision (10). Defines "good cause". SECTION 2. Amends Section, 2 Chapter 479, Acts of the 72nd Legislature, Regular Session, 1991 (Article 8911, Vernon's Texas Civil Statutes) by adding Subsection (b) providing civil penalties for violations of dealer agreements. SECTION 3. Amends Sections 3(d), (g), and (j)-(p), Chapter 479, Acts of the 72nd Legislature, Regular Session, 1991 (Article 8911, Vernon's Texas Civil Statutes) by adding: (d) Requires good cause to be shown for nonrenewal of a dealer agreement unless written notice of nonrenewal is provided by the manufacturer at least 90 days before the date on which the dealer agreement expires. Deletes non-conforming language regarding good cause, now defined in Section 1. (g) Provides for auditing of warranty work claims. (j) Provides for the repurchase of parts described by Subsection (i)(2). (p) Provides that agreements to waive or not enforce the terms of agreements under this Act are void. Reletters subsections under this Section. SECTION 4. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The major points of difference between H.B. 1705, as introduced, and the committee substitute are as follows: Section 1. The substitute deletes the definition of "termination" and modifies the definition of "good cause". Re-numbers sections accordingly. Section 2. The substitute amends subsection (b) by replacing criminal penalties with civil penalties. Section 3. The substitute (d) deletes agreement termination check lists. Provides for a 90 day written notice of nonrenewal. Deletes subsection (e) in its entirety. Deletes original subsection (g) in its entirety. Adds a new subsection (g) and deletes a proposed provision regarding the payment of refunds. (j) Sets forth requirements for the return of parts in nonrenewal situations. Deletes subsections (o) - (s) containing provision protection against discrimination against dealers and unreasonable requirements concerning tools and equipment, provisions regarding recalls, a "good" faith" and "fair dealing" requirement, and appropriate dealer signs provision. All subsections are renumbered accordingly to accommodate the new changes. SUMMARY OF COMMITTEE ACTION H.B. 1705 was considered by the Committee on Business and Industry in a public hearing on April 11, 1995. Testifying in support of the bill were Howard Rose, representing Boating Trades Association of Metro Houston, Jim R. Colborn, representing Boating Trades of Texas Association, Gene Schkade, representing Lake Nasworthy Marina, Ken Lovell, representing Boating Trade Association of Houston. No one testified against or on the bill. H.B. 1705 was left pending before the committee. H.B. 1705 was reconsidered in a public hearing on April 25, 1995 and was referred to a subcommittee consisting of Representatives Crabb, chair, Eiland, Giddings. H.B. 1705 was considered by the subcommittee in a formal meeting on April 27, 1995. The subcommittee considered a complete committee substitute to the bill. 3 (Three) amendments were offered to the substitute. The 3 (three) amendments were adopted without objection. The substitute, as amended was adopted without objection. The Chair directed the staff to incorporate the amendments into the substitute. H.B. 1705 was reported favorably, as substituted to the full committee with the recommendation that it do pass and be printed, by a record vote of 3 (three) ayes, 0 (zero) nays, 0 (zero) present-not-voting, 0 (zero) absent. H.B. 1705 was considered by the full committee on subcommittee report in a formal meeting on April 28,1995. The full committee considered the complete committee substitute to the bill. One (1) committee amendment was offered to the substitute. The one (1) committee amendment failed by a record vote of 3 (three) ayes, 4 (four) nays, 2 (two) present-not-voting, 0 (zero) absent. The committee substitute was adopted without objection. H.B. 1705 was reported favorably, as substituted with the recommendation that it do pass and be printed, by a record vote of 9 (nine) ayes, 0 (zero) nays, 0 (zero) present-not-voting, 0 (zero) absent.