MBN S.B. 665 75(R)BILL ANALYSIS ENERGY RESOURCES S.B. 665 By: Haywood (Horn) 5-14-97 Committee Report (Amended) BACKGROUND Currently, the Federal Trade Commission (FTC) has the authority to test fuel for octane content and bring enforcement actions against those retailers selling sub-octane fuel. However, because of budgetary concerns, the FTC rarely tests fuel and instead limits enforcement to the investigation of complaints. S.B. 665 would allow the Texas Department of Agriculture to test motor fuel for octane content when it tests fuel dispensers for accurate calibration. PURPOSE As proposed, S.B. 665 outlines provisions and provides criminal, administrative and civil penalties regarding the sale and delivery of certain motor fuel. RULEMAKING AUTHORITY Rulemaking authority is granted to the commissioner of agriculture under SECTIONS 2, 4, 5, and 10 (Sections 2, 4(c), 5(b), and 9(a), Article 8614, V.T.C.S.), of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 1, Article 8614, V.T.C.S., to define "automotive fuel rating." Makes conforming changes. SECTION 2. Amends Section 2, Article 8614, V.T.C.S., to authorize the commissioner of agriculture (commissioner), rather than the comptroller of public accounts (comptroller), or an authorized representative of the commissioner, rather than the comptroller, any law enforcement officer at the direction of a prosecuting attorney, or the attorney general, to test any motor fuel sold in this state in order to determine compliance with the standards and for the enforcement of rules adopted under Sections 3, 3A, 3B, 4, and 5 of this Act. Provides that nothing under this section shall prohibit the commissioner from adopting rules relating to the frequency of testing motor fuels. Requires the commissioner to consider the nature of the violation, history of past violations, and funds available as provided by Section 9(e) of this Act in adopting such rules. SECTION 3. Amends Article 8614, V.T.C.S., by adding Sections 3A and 3B, as follows: Sec. 3A. SALE OF MOTOR FUEL WITH AUTOMOTIVE FUEL RATING LOWER THAN RATING POSTED ON PUMP LABEL. Prohibits a motor fuel dealer in this state from selling or offering for sale motor fuel from a motor fuel pump if the motor fuel contains an automotive fuel rating that is lower than the automotive fuel rating for that motor fuel posted on the motor fuel pump. Sec. 3B. DELIVERY OF MOTOR FUEL WITH AUTOMOTIVE FUEL RATING LOWER THAN RATING CERTIFIED BY TRANSFER. Prohibits a distributor or supplier of motor fuel, as those persons are defined by Section 153.001, Tax Code, from delivering or transferring motor fuel to a motor fuel dealer in this state if the fuel contains an automotive fuel rating that is lower than the certification made to the fuel dealer. SECTION 4. Amends Sections 4(c)-(e), Article 8614, V.T.C.S., to make conforming changes. SECTION 5. Amends Section 5, Article 8614, V.T.C.S., to require each motor dealer in this state to keep for one year, rather than four years, a copy of certain documents. Makes conforming changes. SECTION 6. Amends Article 8614, V.T.C.S., by adding Section 5A, as follows: Sec. 5A. DOCUMENTS RELATING TO POSTINGS OR CERTIFICATION OF AUTOMOTIVE FUEL RATINGS. Requires each motor fuel dealer in this state to keep a copy of certain records for at least one year. Requires each distributor or supplier to keep, for at least one year at the principal place of business, a copy of each delivery ticket or letter of certification required to be delivered by the distributor or supplier to a motor fuel dealer in this state under 16 C.F.R. Part 306. Provides that a document required to be kept under this section is subject to inspection by the commissioner or an authorized representative of the commissioner. SECTION 7. Amends Section 6, Article 8614, V.T.C.S., to authorize any motor fuel user who has purchased fuel and who has suffered damages or has a complaint about the product obtained from a motor fuel dealer or a distributer, supplier, wholesaler, or jobber of motor fuel in violation of Section 3, 3A, 3B, 4, 5, or 5A to maintain a civil action against the individual in violation. Requires the trier of fact to award not more than three times the amount of actual damages if the trier of fact finds that a violation of Section 3, 4, or 5 of this Act was committed wilfully or knowingly by the defendant. Makes conforming changes. SECTION 8. Amends Section 7, Article 8614, V.T.C.S., to set forth penalties for a violation of a provision of Section 3, 3A, 3B, 4, 5, or 5A of this Act. SECTION 9. Amends Sections 8(a), (b), and (e), Article 8614, V.T.C.S., to set forth instances in which a person commits an offense. Authorizes the commissioner, rather than the comptroller, or the authorized representative of the commissioner, rather than the comptroller's representative, to request the appropriate prosecuting attorney to prosecute a violation of a provision of this Act, rather than authorizing any law enforcement officer, or the attorney general to file a complaint under this section. Makes conforming changes. SECTION 10. Amends Sections 9(a)-(c), (e), and (f), Article 8614, V.T.C.S., to authorize the comptroller, by rule, to impose fees for the performance of services provided as determined necessary by the commissioner in the administration of this Act. Outlines provisions regarding the fees collected under this section. Deletes text authorizing the fees collected under this section to be used only for the administration and enforcement of this Act by the comptroller and requiring the fees to be deposited in the Comptroller's Operating Fund 062. Gives rulemaking authority to commissioner to regulate ethanol and methanol while removing such authority from the Comptroller. Makes conforming changes. SECTION 11. Amends Section 10, Article 8614, V.T.C.S., to make conforming changes. SECTION 12. Amends Article 8614, V.T.C.S., by adding Section 11, as follows: Sec. 11. DELIVERY OF DOCUMENTS TO FEDERAL GOVERNMENT. Outlines provisions regarding the duplication and delivery of certain documents to the federal government. SECTION 13. Amends Section 12.020(c), Agriculture Code, to provide that provisions of this code are subject to this section and to set forth applicable penalty amounts. SECTION 14. Makes application of this Act prospective. SECTION 15. Makes application of this Act prospective. SECTION 16. Effective date: September 1, 1997. Makes application of this Act prospective. SECTION 17. Emergency clause. EXPLANATION OF AMENDMENTS Committee Amendment #1 adds new Sec. 7A. ADMINISTRATIVE PENALTY to SECTION 8 of the bill (page 7, between line 9 and 10). (1) (a) states that the commissioner of agriculture (commissioner) may impose an administrative penalty against a person licensed or regulated under this Act or a rule or order under this Act. (b) states that the penalty shall not exceed $500 and each day a violation continues is considered a separate violation for purposes of imposing a penalty. (c) provides that the amount of the penalty shall be based on the seriousness of the violation, the economic harm, history of violations, amount necessary to deter future violations, efforts to correct violations, and any other matter justice may require. (d) allows the commissioner to designate a department of agriculture employee to act under this section and issue reports, including recommendations on the amount of the penalty. (e) states that within 14 days after a report is issued the designated employee shall give written notice of the report to the person. Provides that the notice be sent certified mail and include a brief summary of the alleged violation, the recommended penalty, and inform the person of right of hearing. (f) states that within 20 days after the person receives notice, the person may, by writing, accept the determination and penalty or request a hearing. (g) provides that the commissioner shall approve the determination and penalty if the person accepts. (h) states that the designated employee shall set a hearing if the person requests one or fails to respond timely to a notice. The hearing shall be held by an administrative law judge to determine findings of fact and conclusions of law. States that based on the findings and conclusions of the law judge, the commission shall by order determine whether or not a violation has occurred. (i) states that the commissioner's order given under Chapter 2001, Government Code, must include a statement of the right of the person to judicial review. (j) provides that within 30 days after the commissioner's order becomes final the person shall pay the penalty, pay the penalty and file for judicial review, or file for judicial review without paying the penalty. (k) provides the a person acting under subsection (j)(3) within the 30 day period may: (1) stay enforcement of the penalty by paying the amount of the penalty to remain in an escrow account with the court or by giving the court a supersedeas bond, or; (2) request the court to stay enforcement of the penalty by filing with a court a sworn affidavit stating inability to pay and giving a copy of the affidavit to the designated employee through certified mail. (l) states that the designated employee may file a contest to the affidavit under subsection (k)(2) within 5 days of receipt. States that the court shall hold a hearing on the facts alleged in the affidavit as soon as practical. (m) allows the designated employee to refer the matter to the attorney general for collection if the person fails to pay the amount of the penalty or the enforcement of the penalty is not stayed. (n) provides that judicial review of a commissioner's order is instituted by filing a petition as provided by Subchapter G, Chapter 2001, Government Code, and is under the substantial evidence rule. (o) states that if the court sustained the violation the court may uphold or reduce the amount of the penalty. If the court does not sustain the violation the court shall order that no penalty is owed. (p) states that when the judgment of the court becomes final, the court shall proceed under this subsection. Provides that the person shall be remitted the appropriate amount of penalty paid and any accrued interest if the court orders the penalty amount reduced or the penalty is not upheld. States that if the person gave a supersedeas bond and the court reduces the amount the court shall release the bond upon the person's paying the penalty. If the court does not uphold the penalty then the bond shall be released. (q) states that a penalty collected under this section shall be remitted to the comptroller for deposit in the general revenue fund. (r) states that all proceedings under this section are subject to Chapter 2001, Government Code, except as provided by subsections (s) and (t). (s) allows the commissioner to change the finding of fact or conclusion of law made by an administrative law judge if the commissioner determines: (1) the judge did not properly apply or interpret applicable law, rule or policies or prior administrative decisions or issue a finding of fact not supported by preponderance of the evidence, or; (2) that a department policy or prior administrative decision on which the judge relied is incorrect or should be changed. (t) states that the commissioner shall state in writing the specific reason and legal basis for a determination under subsection (s). (2) deletes SECTION 13 of the bill in its entirety.