Presenter: Alfonso Campos
Commission Agenda Item No. 16
License Requirements of Marine Dealers,
Distributors, and Manufacturers (SB 489)
I. Executive Summary: During the 79th Regular Legislative Session, Senate Bill 489 was passed which affects rules relating to Marine Licenses, and revocation and suspension procedures for Marine Licenses. Due to the Commission Chairman's Charges regarding TPWD requirements for documented vessels along with SB 489, there are five topics that affect TPW marine laws and processes:
- Procedures to register documented vessels
This change is a refining process and more clearly defines the requirements to register with TPWD a new, used, or previously documented vessel. The rule also allows use of a vessel for 15 consecutive days after purchase prior to filing an application for registration.
- Registration of vessel tenders
Vessel tenders will be allowed to use the registration of the mother ship when used for transport between the ship and shore, instead of having to obtain separate registration and title.
- Marine Brokers are incorporated into the TPWD marine license requirements
Persons in the business of brokering sales of vessels will be included under the same rules and regulations of Chapter 31 Parks and Wildlife Code and this subchapter regarding marine dealers.
- Issuance of 'validation' registration cards to 'show, demonstrate, or test' boats by holders of marine licenses
This change provides the Department with a method with which to address the perceived unfairness of out-of-state marine dealers coming into Texas without registering their demonstrator boats in the manner required by the Department for in-state dealers. The regulation allows all participating boats to acquire a registration validation for a specific period of time in order to comply.
- Suspension and Revocation of marine licenses by the Department
This change provides the Department with a mechanism to address marine licensees who abuse and otherwise violate statutes. It would allow the Department to revoke or suspend a marine license.
These issues were published in the July 22, 2005, issue of the Texas Register (30 Tex. Reg. 4191). A summary of the comments will be provided at the meeting.
II. 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, manufacturers with changes to the proposals published in the July 2005 issue of the Texas Register."
Attachment – 1
- Exhibit A – Proposed Rules
Commission Agenda Item No. 16
Marine Dealer / S.B. 489 Implementation
The Texas Parks and Wildlife Department (TPWD) proposes new §§53.91, concerning Display of Registration Validation Sticker, and an amendment to §53.110, concerning Marine Dealer, Distributors, and Manufacturers. Under Parks and Wildlife Code, Chapter 31, the owner of each vessel requiring numbering by this state shall file an application for a number with the department, an authorized agent of the department, or a county tax assessor-collector.
Proposed new §53.91 prescribes the process and documentation necessary to register a new, used, or previously documented vessel. The proposed new section is necessary to establish procedures for vessel documentation and registration that are consistent with those used in other states. Given the commercial and recreational interrelationships between Texas and other states with respect to boats, boating, and boat sales, the department believes it is important to implement standardized practices to insure that the interactions between regulatory agencies, commercial entities, and the public are similar to what occurs or is normal in other states.
In addition to stipulating the required documentation for registration, the proposed new section would also establish a maximum period of 15 days during which the purchaser of a vessel would be allowed to operate the vessel under the dealer’s number without having filed an application for a certificate of number. The new section is necessary to provide for lawful use of an unregistered vessel between the time a vessel is purchased and the issuance of a certificate of number.
The proposed new section also makes an exception to the applicability of the rule to a vessel used as a tender for direct transportation between a mother ship and the shore and provides for the marking for such vessels. The amendment is necessary to provide for a scenario 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 amendment to §53.110, concerning Marine Dealers, Distributors, and Manufacturers, clarifies the application requirements for persons seeking to acquire a dealer’s license and establishes procedures for the denial of license issuance, denial of license renewal, license suspension, and license revocation of marine dealer, distributor, and manufacturer licenses by the department. The amendment is necessary as a result of the passage of Senate Bill 489 by the 79th Texas Legislature, Regular Session. Under the terms of S.B. 489, persons holding a dealer’s, distributor’s, or manufacturer’s license issued by the department must enter into a license agreement with the department; and the department is authorized to establish license suspension and revocation procedures.
The proposed amendment also introduces definitions for ‘contest,’ ‘demonstrate,’ ‘event,’ ‘recreational purposes,’ ‘show,’ and ‘test’ in order to create unambiguous terms for purposes of applicability, enforcement, and compliance. Under Parks and Wildlife Code, §31.041, a licensee may use a dealer’s, distributor’s, or manufacturer’s number to show, demonstrate, or test on the water of this state instead of securing a certificate of number for each vessel; however, the vessel cannot be used for recreational purposes or for participation in a contest or event. The meaning of ‘recreational use’ is problematic. Before buying a vessel for a given purpose or purposes, a prospective purchaser understandably would want to evaluate the vessel’s performance at given applications. For a fishing vessel, this would mean using the vessel to go fishing; for a skiing vessel, it would mean towing a skier. Such instances of use are clearly connected to the process of shopping for and evaluating a vessel and are not purely recreational. The amendment is necessary to provide clear differentiation between allowed and prohibited uses of vessels by licensees and prospective customers.
The amendment also adds a provision to the application requirements for a marine dealer’s license to address licensure of persons whose businesses are not confined to a fixed physical 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, phone number, and management /ownership information for vessels not physically located at the permanent business location of the licensee. The amendment is necessary to ensure that the department’s rules encompass the variety of business models that may be 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 S.B. 489, which requires licensees to enter into a license agreement with the department.
The proposed amendment also establishes criteria and procedures for revocation, suspension, and denial of renewal of licenses. The amendment implements Senate Bill 489, enacted by the 79th Texas Legislature, which authorizes 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 or suspended or license renewal should be 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.
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 is 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 hearing, if any, and no empirical data upon which to base to an estimate. There will be no fiscal implications for units of state 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 rule as proposed is in effect:
(A) The public benefit anticipated as a result of enforcing or administering the rule as proposed will be the improved ability of the department to protect consumers and the safety of the boating public.
(B) There will be/will not be adverse economic effect on small businesses, microbusinesses, or persons required to comply with the rule as proposed.
(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 rule 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 rule.
4. Request for Public Comment.
Comments on the proposed rule may be submitted to Frances Stiles, Texas Parks and Wildlife Department 4200 Smith School Road, Austin, Texas, 78744; (512) 389-4860 (e-mail: email@example.com).
5. Statutory Authority.
The amendments 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 amendments affect Parks and Wildlife Code, Chapter 31.
§53.91. Documented Vessels.
(a) An original or renewal certificate of number and validation decal for a new, used, or previously 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 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
(B) a copy of the application for initial documentation with the (USCGNVDC);
(3) payment of any tax required under Tax Code, or verification of payment; and
(4) payment of the appropriate registration fee as required by §53.16 of this title (relating to Vessel, Motor, and Marine Licensing Fees);
(b) A purchased vessel may be used by the purchaser under the dealer’s number of the seller for a period of no more than 15 consecutive days from the date of purchase prior to filing an application for a certificate of number.
(c) 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.
§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.
(1) Broker—A person not employed by a licensee but 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 more than five times per year. For the purposes of this subchapter, a broker is a dealer.
(2) 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.
(3) Contest –A competition for a prize offering.
(4) Demonstrate – To use a vessel for the purpose of furnishing an example or illustration of practical application to a customer.
(5) Event – A planned or scheduled gathering or activity involving the use of vessels, but does not include promotional participation involving the showing of vessels by a licensee, or representative of a licensee, acting within the scope of the licensee’s legitimate business activities, provided the duration of the participation is less than 72 consecutive hours.
(6) Recreational purposes - Any activity not connected with the sale or exchange of a vessel or outboard motor.
(7) Show – The exhibit or display a vessel by a licensee for a legitimate business purpose.
(8) Test – Any use of a vessel by which a licensee, or representative of a licensee, acting within the scope of the licensee’s legitimate business activities, evaluates the operational worthiness of the vessel.
(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 (if applicable), and display of products (if applicable);
(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 maintains floating inventory, a list of marinas where floating inventory is displayed for sale. The list must account for no less than 90% of the inventory and must identify, at a minimum:
(A) the name and physical address of each marina;
(B) the management personnel at each marina; and
(C) the phone number for each marina.
(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.
(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.
(e) A license holder shall notify the department in writing within 10 days if there is any change of:
(2) business name;
(3) physical location;
(4) dealer agreement;
(5) distributors, dealers, or representatives; or
(6) address or phone information.
(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.
(g) At all times that a vessel is on the water for the purposes of showing, demonstrating, or testing, a department-issued validation card bearing the dealer’s license number must be aboard the vessel and made available for inspection at the request of any department employee acting in the scope of official duties.
(1) The department shall issue one validation card with each license.
(2) Additional validation cards may be purchased by the licensee upon payment of a fee in the amount specified by §53.16(a)(3) of this title (relating to Vessel, Motor, and Marine Licensing Fees) per card.
(3) A licensee shall maintain a current daily log accounting for each use of each validation card issued to the licensee. The log required by this section shall be retained for a period of two years and shall be made available at the request of any department employee acting within the scope of official duties. At a minimum, the log shall indicate, for each use of a validation card:
(A) the date and time of use;
(B) the specific purpose of the use;
(C) the name of the person using the validation card;
(D) a state-issued driver’s license or identification card number; and
(D) the name of the person authorizing the use of the validation card, if authorized by any person other than the licensee.
(4) A validation card is not valid if the dealer’s permit for which it is issued is not valid.
(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, trading or consigning to the dealer
(5) name and address of person purchasing from the dealer
(6) name and address of selling dealer 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, 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, suspend, or deny renewal of 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, suspend, or deny renewal of the license.
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