BILL ANALYSIS
C.S.H.B. 2599
By: Kubiak (Cain)
State Affairs
5-15-95
Senate Committee Report (Substituted)
BACKGROUND
Over 125,000 automobiles were stolen in Texas in 1993 with a value
of $600 million. Some of these vehicles are then sold with
switched identification plates or dismantled by "chop shops" and
sold to both legitimate and illegitimate repair facilities.
Current law does not required salvage dealers and salvage vehicle
rebuilders to be licensed.
PURPOSE
As proposed, C.S.H.B. 2599 establishes provisions for the licensing
and regulation of salvage vehicle dealers and agents.
RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is granted
to the Texas Transportation Commission under SECTION 1 (Sections
1.02(a), 2.01(g), 4.01(b), Article 6687-1A, V.T.C.S.) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Title 116, Chapter 1, by adding Article 6687-1A,
as follows:
ARTICLE 6687-1A. SALVAGE VEHICLE DEALERS
PART 1. GENERAL PROVISIONS
Sec. 1.01. DEFINITIONS. Defines "actual cash value,"
"automobile recycler," "casual sale," "commission,"
"department," "late model salvage vehicle," "major component
part," "motor vehicle," "nonrepairable vehicle,"
"nonrepairable vehicle certificate of title," "out-of-state
buyer," "person," "salvage part," "salvage vehicle" or "late
model salvage vehicle," "salvage vehicle agent," "salvage
vehicle certificate of title," "salvage vehicle dealer,"
"salvage pool operator," and "salvage vehicle record."
Sec. 1.02. POWERS AND DUTIES OF COMMISSION. (a) Requires the
Texas Transportation Commission (commission) to adopt rules to
administer this article, and authorizes the commission to take
other action as necessary to enforce this article.
(b) Requires the commission to set application fees, license
fees, renewal fees, and other fees, in amounts reasonable
and necessary to implement this article.
Sec. 1.03. DETERMINATION OF ESTIMATED COST OF REPAIR. (a)
Requires the estimated cost of repair parts to be determined
using a manual of repair costs or other instrument that is
generally recognized in the insurance industry to determines
those costs or an estimate of the actual cost of the repair
parts.
(b) Requires the estimated labor costs to be computed using
the hourly rate and time allocations commonly assessed for
repairs in the community where the repairs are performed.
PART 2. LICENSE REQUIREMENTS
Sec. 2.01. LICENSE REQUIRED; EXEMPTION. (a) Prohibits a
person from acting as an automobile recycler or salvage
vehicle dealer (dealer) unless the person has a salvage
vehicle dealer license (dealer license) under this article.
(b) Prohibits a person from acting as a salvage vehicle
agent (agent) unless the person holds a salvage vehicle
agent license (agent license) under this article.
(c) Provides that this article does not apply to an
insurance company authorized to engage in the business of
insurance in this state.
(d) Provides that this article does not apply to, and does
not preclude or prohibit any sales to, purchases by, or
other transactions by or with, a person described by Article
6687-2b(g), V.T.C.S., with exceptions.
(e) Requires a person described by Article 6687-2b(g),
V.T.C.S., to submit to the department the certificate of
title or equivalent document that the person receives in
conjunction with the purchase of a vehicle within a certain
time period.
(f) Applies this article to a transaction with a person
described by Article 6687-2b(g), V.T.C.S., in which a
vehicle is sold or delivered to the person for the purpose
of reuse or resale as a vehicle or as vehicle parts if the
vehicle is so used.
(g) Provides that this article does not apply to a person
who purchases a nonrepairable vehicle or salvage vehicle
from a salvage pool operator in a casual sale. Requires the
commission to adopt rules to regulate casual sales and to
enforce this subsection. Requires a salvage pool operator
that sells a vehicle in a casual sale to comply with each
rule adopted by the commission regarding that sale.
(h) Provides that this section does not prohibit the sale to
any person of a vehicle that is classified as a late model
salvage or a nonrepairable vehicle solely because of water
damage caused by flood conditions.
Sec. 2.02. LICENSE APPLICATION. (a) Requires an applicant for
a dealer license to apply on a form prescribed by the Texas
Department of Transportation (department), signed by the
applicant, accompanied by the application fee, and including
specific information.
(b) Prohibits a license from being issued in a fictitious
name that may be confused with that of a governmental entity
or is otherwise deceptive or misleading.
Sec. 2.03. ADDITIONAL REQUIREMENTS FOR CORPORATE OR
PARTNERSHIP LICENSE. Requires a dealer license to include
specific information, if an applicant intends to engage in
business through a corporation or partnership.
Sec. 2.04. CLASSIFICATION OF LICENSE ENDORSEMENTS. (a)
Requires the department to classify dealers according to the
type of activity performed by the dealers. Requires the
dealer to hold a license endorsement under a particular
classification provided by this article in order to engage in
the activities of that classification.
(b) Sets forth endorsements in one or more of which an
applicant is authorized to apply for a dealer license.
Sec. 2.05. INVESTIGATION. (a) Prohibits the department from
granting a license under this article until the department
investigates the applicant's qualifications.
(b) Requires the department to conduct the investigation
within 15 days after the department receives the
application, and to report the results to the applicant.
Sec. 2.06. LICENSE ISSUANCE. Requires the department to
issue a license to an applicant who meets the required
qualifications and pays the required fees.
Sec. 2.07. LICENSE RENEWAL. (a) Makes a license issued under
this article expire on the first anniversary of the date of
issuance, and may be renewed annually on or before the
expiration date on payment of the required renewal fee.
(b) Sets forth provisions for the renewal of an expired
license.
Sec. 2.08. REGISTRATION OF BUSINESS LOCATIONS. (a) Requires
an applicant, intending to operate as a dealer at more than
one location, to list each business location in the
application.
(b) Requires a dealer, before moving or opening an
additional place of business, to register the new location
with the department.
PART 3. DUTIES OF LICENSE HOLDER
Sec. 3.01. CERTIFICATE OF TITLE. (a) Requires a dealer, if
the dealer acquires ownership of a late model salvage vehicle
from an owner, to receive an assigned certificate of title.
Sets forth provisions for a certificate of title which is not
a salvage or nonrepairable certificate or comparable ownership
document issued by another state or jurisdiction (comparable
document).
(b) Requires a dealer, if a late model salvage or
nonrepairable vehicle is to be dismantled, scrapped, or
destroyed, to surrender an assigned, salvage, or
nonrepairable certificate of title, or comparable document
to the department within 30 days of acquiring the vehicle,
and to report to the department that the vehicle was
dismantled, scrapped, or destroyed.
(c) Requires a license holder, if a dealer license holder
acquires ownership of an older model vehicle from an owner,
receives an assigned certificate of title, and the vehicle
is to be dismantled, scrapped, or destroyed, to surrender
the assigned certificate to the department within 30 days of
receiving the title; to present evidence that the vehicle
was dismantled, scrapped, or destroyed; and to keep a record
on the vehicle.
Sec. 3.02. RECORDS. Requires each licensed dealer to
maintain records of each salvage vehicle and any salvage parts
purchased, and sales records as required by this article.
Sec. 3.03. AUTHORIZED SALE. Prohibits a person from selling,
transferring, or releasing a late model salvage or
nonrepairable vehicle to anyone except certain parties.
Sec. 3.04. AGENTS. Authorizes a license holder to authorize
not more than two persons as agents who may acquire, sell, or
deal in late model salvage or nonrepairable vehicles or in
salvage parts. Entitles an agent to an agent license on
application to the department and payment of the required fee.
PART 4. DISCIPLINARY ACTIONS AND PENALTIES
Sec. 4.01. DENIAL, SUSPENSION, OR REVOCATION OF LICENSE. (a)
Authorizes the department to deny, suspend, revoke, or
reinstate a license issued under this article.
(b) Requires the commission to adopt rules establishing the
grounds for the denial, suspension, revocation, or
reinstatement of a license and establishing procedures for
disciplinary action.
(c) Subjects certain proceedings to Chapter 2001, Government
Code.
(d) Prohibits a person whose license is revoked from
applying for a new license before the first anniversary of
the date of the revocation.
Sec. 4.02. CRIMINAL PENALTY. Provides that a person commits
an offense, classified as a Class A misdemeanor, if the person
acts as a dealer or agent without the appropriate licenses
issued under this article. Provides that a person commits an
offense if the person violates a provision of this article,
other than Subsection (a) or (b) of this section, or a rule
adopted under this article.
PART 5. EFFECT ON LOCAL REGULATION
Sec. 5.01. CUMULATIVE EFFECT; EFFECT ON MUNICIPAL LICENSES.
(a) Provides that this article is cumulative of municipal
ordinances relating to the regulation of persons who deal in
salvage vehicles.
(b) Provides that this article does not prohibit the
enforcement of a requirement of a municipal license or
permit that is related to an activity regulated under this
article.
SECTION 2. Amends Section 1, Article 6687-2, V.T.C.S., as follows:
Sec. 1. SALVAGE VEHICLE DEALERS. (a) Defines "salvage
vehicle dealer," rather than "motor vehicle salvage dealer."
Makes conforming changes.
(b) Prohibits a dealer with an endorsement as a used vehicle
parts dealer from receiving a motor vehicle unless the dealer
first obtains a certificate of authority, sales receipt,
transfer document or certificate showing that there are no
liens on the vehicle or that all liens have been released.
Makes conforming and nonsubstantive changes.
(c) Requires a dealer to keep an inventory of used component
parts, rather than component parts, including a photocopy of
the seller's driver's license.
(d) Provides that a dealer is not required to keep records
under Subsection (c) of certain used component parts.
(e)-(f) Make conforming and nonsubstantive changes.
(g)(1) Requires a dealer to perform certain actions related to
inventory, except as provided by Subdivision (3).
(2) Prohibits the removal of a unique inventory number
attached to a component part as required by Subdivision (1)
from being removed while the part remains in the inventory
of the dealer.
(3) Provides that Subdivisions (1) and (2) do not apply to
the purchase by a dealer of a nonoperable engine,
transmission, or rear axle assembly from another dealer or
an automotive-related business.
(h)-(o) Redesignate existing Subsections (g)-(n) and make
conforming and nonsubstantive changes.
SECTION 3. Amends Article 6687-2a, V.T.C.S., to make conforming
changes.
SECTION 4. Amends Subsections (a) and (f), Article 6687-2b,
V.T.C.S., to make conforming and nonsubstantive changes.
SECTION 5. Repealer: Subsection (b), Article 6687-2b, V.T.C.S.
(Hours of operation of motor vehicle salvage yard in populous
counties).
SECTION 6. Provides that a person is not required to hold a dealer
license under Article 6687-1A, V.T.C.S., until March 1, 1996.
SECTION 7. (a) Effective date of this Act: September 1, 1995.
(b) Effective date of Sections 2.01 and 4.02: March 1, 1996.
(c) Requires the commission to adopt rules for dealer
regulation not later than December 1, 1995.
SECTION 8. Emergency clause.