C.S.H.B. 1076 78(R)    BILL ANALYSIS


C.S.H.B. 1076
By: McCall
Licensing & Administrative Procedures
Committee Report (Substituted)

BACKGROUND AND PURPOSE 

Under current law rental companies that are owned by a manufacturer are
prohibited from being licensed as a used care dealer by the Texas Motor
Vehicle Board. According to a change in the Texas Motor Vehicle Code
adopted by the Legislature in 1999. 

Prior to 1999, Rental car companies have been licensed in Texas as a
dealer authorized to sell used vehicles. 

In 2001, three licenses came up for renewal, but were rejected by based on
the change to Section 5.02C of Article 4413(36) (Texas Motor Vehicle Code)
adopted by the Legislature in 1999.  The problem arises because one rental
car company became the wholly-owned subsidiary of Ford Motor Company in
2001.  The Motor Vehicle Board interprets the statute after the 1999
amendment to prohibit a rental car company's licensure because of its 100%
ownership by a manufacturer. 

This legislation seeks to allow rental car companies to continue to hold
their licenses under statutory law. 


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. 


ANALYSIS

Amends Article 2301.476, Occupations Code, by adding Subsection (h) to
allow a manufacturer or distributor to own an interest in a car rental
business that holds a general distinguishing number if the entity (1) is
primarily engaged  in the car rental business; and (2) sells or offers for
sale no other vehicle other than a vehicle the entity has (A) owns and has
taken from service in its rental fleet; or (B) has taken in trade towards
the purchase of a vehicle taken from service in its rental fleet. 

This substitute contains an emergency clause.


EFFECTIVE DATE

Upon passage, or if the Act does not receive the necessary vote, the Act
takes effect June 1, 2003. 


COMPARISON OF ORIGINAL TO SUBSTITUTE

Adds new language to Subsection (h) further defining that a distributor or
manufacturer may own an interest in an entity notwithstanding the terms of
this chapter, and subject to the limitations set forth in this subsection. 

The substitute also further defines the business of renting vehicles,
selling those rental vehicles and taking trades on those vehicles for the
purpose of selling vehicles.