Commission Agenda Item No. 3
Exhibit A

MARINE DEALER, DISTRIBUTORS, AND MANUFACTURERS LICENSE RULES
PROPOSAL PREAMBLE

1. Introduction.

        The Texas Parks and Wildlife Department proposes the repeal of §53.110 and new §53.110-53.115, concerning Marine Dealers, Distributors, and Manufacturers.

        The current rule consists of a single section, which the department has determined is unwieldy and difficult to navigate. By repealing the current rule and replacing it with several new sections delimited according to similarity of subject matter, the department intends to create a more user-friendly and approachable regulatory structure.

        Proposed new §53.110, concerning Definitions, retains the provisions of current subsection (a) and adds three new definitions. Proposed new §53.110 (1) would define “applicant” as “a person or entity who has applied for a new or renewal license. This includes each member of a partnership or association, each officer of a corporation, the owner of a majority of a corporation’s corporate stock, and any agent or employee acting on behalf of any of the aforementioned persons or entities.” The definition is necessary because the term “applicant” is used in several places in the proposed new rules and a definition is necessary to provide an unambiguous meaning. Similarly, the proposed new rule would provide for definitions of “final conviction” and “licensee.” Because proposed new §53.113, concerning Refusal to Issue or Renew Licenses; Review of Agency Decision to Refuse or Renew License, would address the denial or refusal of license issuance on the basis of an applicant’s criminal history of final convictions for certain offenses, it is necessary to define “final conviction.”  Therefore, proposed new §53.110(3) would define that term as “a final judgment of guilt, the entering of a plea of guilty or nolo contendere, or the granting of deferred adjudication or pretrial diversion in accordance with Occupations Code, §53.021(d),” which identifies the possible judicial outcomes that the department would consider to constitute a final conviction for purposes of denying license issuance. Similarly, proposed new §53.110(4) would define “licensee” as “a person or entity who has received a license under this subchapter. This includes each member of a partnership or association, each officer of a corporation, the owner of a majority of a corporation’s corporate stock, and any agent or employee acting on behalf of any of the aforementioned persons or entities,” which is necessary to identify the specific conditions under which the department would consider a person to be a licensee for purposes of enforcement or administration of the rules.

        Proposed new §53.111, concerning Applicability, would consist of the contents of current §53.110(b), which identifies the activities constituting the business of buying, selling, selling on consignment, displaying for sale, or exchanging a vessel. Under Parks and Wildlife Code, §31.041, a person may not engage in business in this state as a dealer, distributor, or manufacturer unless the person holds a license for that purpose issued by the department. Therefore, it is necessary to delineate the activities that the department considers to constitute “engaging in business” for purposes of the applicability of the rules.

        Proposed new §53.112, concerning Application and Issuance, would consist of the contents of current §53.113(c)-(e), which prescribe the documentation required by the department prior to any issuance or renewal of a dealer, distributor, or manufacturer’s license.

        Proposed §53.112(a) provides that for a dealer license, an applicant would be required to submit the fee for the license, accompanied by photographs of a permanent sign bearing the name of the business at the location of business, the front of the business (proving public access), and space sufficient for office, service area (not applicable to floating inventory or listings), and display of vessels, motorboats, or outboard motors (not applicable to floating inventory or listings). Additionally, an applicant would be required to furnish a copy of the Tax Permit issued by the Comptroller under Chapter 151, Tax Code, submit all assumed name(s) on file with the Secretary of State or county clerk; a copy of personal identification documentation of the owner, president, or managing partner of the business, and a list of dealer agreements. Parks and Wildlife Code, §31.041(a) prohibits any person from engaging in business in this state as a dealer, distributor, or manufacturer unless the person holds a license issued by the department for that purpose and has entered into a license agreement with the department. That section also requires a dealer to have a separate license for each place of business. Additionally, Parks and Wildlife Code, §31.041(e) requires an application for a dealer license to be accompanied by photographs of the business sufficient to show any sign the business is required to display and the extent of the space the business is required to maintain.  The application must also be accompanied by a copy of the tax permit of the dealer, distributor, or manufacturer issued by the comptroller under Chapter 151, Tax Code, if the dealer, distributor, or manufacturer has a tax permit. Therefore, the current as well as the proposed new section require verification of what the department has determined are the minimum reasonable expectations necessary to determine that the applicant has complied with the statute. With respect to the documentation of floating inventory (vessels or outboard motors not kept at a single 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 current rules require the applicant to furnish the physical address of the office, the physical address, phone number, and management /ownership information for at least five marinas where vessels are expected to be moored, or an explanatory note if the applicant expects to keep inventory at fewer than five marinas, which is necessary to ensure that the department’s rules encompass the variety of business models that affected by the requirements of Parks and Wildlife Code, Chapter 31. The proposed new rule would retain these requirements; however, instead of furnishing the required information for at least five marinas, the proposed new rule would require the information to be provided for all marinas where an applicant maintains inventory. The change is necessary to account for all inventory subject to the rules.

        For a distributor or manufacture license, proposed new §53.112(b) would require a properly completed application form, accompanied by the appropriate fee, verification of all assumed names on file with the Secretary of State or county clerk, a complete list of manufacturers represented by a distributorship, and a complete list of distributors, dealers, and representatives for a manufacturer, which is necessary for the department to determine that the applicant, if issued a license, is compliant with the applicable tax and registration requirements applicable to boats and motors in Texas.

        Finally, proposed new §53.112(c) would require applicants for a dealer, distributor, or manufacturers license to sign a license agreement stating that the applicant agrees to comply with all applicable state laws, including Occupations Code, Chapter 2352, concerning Franchise Agreements, when required. The proposed new provision is required by Parks and Wildlife Code, §31.041(a) and is necessary to ensure that licensees provide affirmative evidence of intent to comply with the laws of the state.

        Proposed new §53.113, regarding Refusal to Issue or Renew License; Review of Agency Decision to Refuse or Renew License would set forth new provisions regarding the circumstances under which the department could refuse to issue or renew a dealer, distributor, or manufacturer license, and would implement a process to review agency decisions to refuse license issuance or renewal.

        The department is engaged in an overall effort to create uniform criteria for the denial of special permits and licenses to persons who have been proven to exhibit disregard for statutes and regulations governing license and permit privileges and Parks and Wildlife laws in general. Therefore, the proposed new section would eliminate the current criteria used by the department to revoke or suspend a license and instead institute new criteria for denial of license issuance or renewal, and implement a review process for license denials.

        Under proposed new §53.113, the department could choose to refuse license issuance or renewal to any person who applies for a dealer, distributor, or manufacturer license if the applicant has been finally convicted of or been assessed an administrative penalty for any violation of Parks and Wildlife Code, Chapter 31, Subchapter A, B, B-1, C, D, or E or that is a Class A or B misdemeanor, state jail felony, or felony; Chapters 51, 53, or 55 of the department’s regulations, or any federal or state law relating to the sale, distribution, financing, registration, or taxing of a vessel, motorboat, or outboard motor. The proposed new section also would provide for license denial if an applicant is liable to the state under Parks and Wildlife Code §12.301 or if department has evidence that the applicant is acting on behalf of or as a surrogate for another person or entity who has a final conviction or has been assessed an administrative penalty for any violation listed in this subsection.

        The department believes that a person who has demonstrated egregious, repeated, or reckless disregard for Parks and Wildlife laws other than those punishable as Class C misdemeanors (i.e., minor crimes such as bag and possession limit violations), and specifically, laws relating to water safety, boat registration, titling, and taxation, and commerce should not be accorded the privilege of holding a commercial license issued by the department. Similarly, a person who is indebted to the state for the civil restitution value of fish and wildlife resources that were unlawfully taken or possessed should not be accorded license privileges.

        The proposed new section also would allow the department to refuse to issue a license to any person the department has reason to believe is acting on behalf of or as a surrogate for another person who is prohibited by the provisions of this subchapter from engaging in licensed activities. In some cases, persons who have been prohibited from obtaining certain types of permits and licenses have attempted to continue their activities by using proxies to obtain a permit or license. The department’s intent is to ensure that persons the department intends to prevent from engaging in certain activities are in fact prevented from doing so.

        The department does not intend for a conviction or administrative penalty to be an automatic bar to obtaining a dealer, distributor, or manufacturer license. Therefore, the proposed rule would provide for the department to consider a number of factors and make such determinations on a case-by-case basis. The factors that may be considered by the department in determining whether to deny a license based on a conviction or deferred adjudication would include the seriousness of the offence, the number of offenses, the existence or absences of a pattern of offenses, the length of time between the offense and the license application, and any other pertinent factors.

        Finally, the proposed amendment would create a mechanism for persons who have been denied license issuance to have the opportunity to have such decisions reviewed by department managers, which is intended to help ensure that decisions affecting license privileges are correct.

        Proposed new §53.114, concerning Suspension or Revocation, would set forth the conditions and process for the department to revoke or suspend a license. Parks and Wildlife Code, Chapter 12, Subchapter F, prescribes the process for the department to revoke or suspend a license or permit. Under that statute, the executive director may suspend or revoke a permit or license, if it is found after notice and hearing, that the licensee violated or has been finally convicted of a violation of the Parks and Wildlife Code or regulation of the commission related to the license being revoked, for making false or misleading statements on an application, or for indebtedness to the state for taxes, fees, payment of penalties relating to the license being revoked or suspended, or is liable to the state under Parks and Wildlife Code, §12.301.  Those criteria are recapitulated in the current rule (§53.110(i)(1)-(4)) and would be retained in the proposed new rule. The proposed new rule also would retain current §53.110(i)(5), (6), (8), and (9),  which allow for license renewal or revocation if the applicant or licensee was previously the holder of a similar license 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; if the applicant or licensee was previously a partner, stockholder, director, or officer controlling or managing a partnership, corporation, or store location whose license was revoked for cause and never reissued, or was suspended for cause and the terms of the suspension have not been fulfilled; if 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 if 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. The proposed new rule also would explicitly state that revocation or suspension of a license will be conducted pursuant to the requirements of Parks and Wildlife Code, Chapter 12, Subchapter J.

        Proposed new §53.115, concerning Recordkeeping, Display of License, and Notification Requirements, would consist of the contents of current §53.110(f)-(h), which require a licensee to notify the department in writing within 10 days if there is any change of ownership, business name, physical location, dealer agreement, distributors, dealers, or representatives, or address or phone information; require licenses to be publicly displayed at all times in the place of business for which the license is issued; require licensees to keep a complete record (to include date of purchase, date of sale, hull identification number and/or motor identification number, name and address of person selling to the dealer, name and address of person purchasing from the dealer, name and address of selling dealer or individual if vessel and/or outboard motor is offered for sale by consignment, a copy of the vessel/outboard motor title/registration receipt, copies of any and all documents, forms, and agreements applicable to a particular sale, consignment, listing, 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 copies of written consignment agreements or power of attorney for vessels, motorboats, or outboard motors. The proposed new section is necessary to allow the department to verify, from inspection of required records, that a licensee is compliant with the applicable provisions of the subchapter and Parks and Wildlife Code.

2. Fiscal Note.

        Cody Jones, Boating Law Administrator, has determined that for each of the first five years that the rules as proposed are in effect, there will be no fiscal implications to state or local governments as a result of enforcing or administering the rules, as the proposed new rules will not significantly alter the processes currently in place for enforcing and administering the current rules.

3. Public Benefit/Cost Note.

        Mr. Jones also has determined that for each of the first five years the rules as proposed are in effect:

        (A) The public benefit anticipated as a result of enforcing or administering the rules as proposed will be consistent regulations governing the department’s administrative processes with regard to license and permit issuance.

        (B) There will be no adverse economic effect on persons required to comply with the rules as proposed.

        (C) Under the provisions of Government Code, Chapter 2006, a state agency must prepare an economic impact statement and a regulatory flexibility analysis for a rule that may have an adverse economic effect on small businesses and micro-businesses. As required by Government Code, §2006.002(g), the Office of the Attorney General has prepared guidelines to assist state agencies in determining a proposed rule’s potential adverse economic impact on small businesses. Those guidelines state that an agency need only consider a proposed rule’s “direct adverse economic impacts” to small businesses and micro-businesses to determine if any further analysis is required. For that purpose, the department considers “direct economic impact” to mean a requirement that would directly impose recordkeeping or reporting requirements; impose taxes or fees; result in lost sales or profits; adversely affect market competition; or require the purchase or modification of equipment or services.

        The department has determined that there will be no adverse economic effects on small businesses or microbusinesses because the proposed rules do not create any requirements in addition to those currently in effect for small businesses or micro-businesses.  Therefore, the department has not prepared the economic impact statement or regulatory flexibility analysis described in Government Code, Chapter 2006.

        (D) The department has not drafted a local employment impact statement under the Administrative Procedures Act, §2001.022, as the agency has determined that the rules as proposed will not impact local economies.

        (E) 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 rules.

4. Request for Public Comment.

        Comments on the proposed rules may be submitted to Assistant Commander Cody Jones,  Texas Parks and Wildlife Department 4200 Smith School Road, Austin, Texas, 78744; (512) 389-4624 (e-mail: cody.jones@tpwd.texas.gov) or via the department website at http://tpwd.texas.gov/business/feedback/public_comment/.

5. Statutory Authority.

        The repeal is proposed under the authority of Parks and Wildlife Code, §31.0412, which authorizes the commission to promulgate rules regarding marine dealer, distributor, and manufacturing licenses, including rules prescribing application and license agreement forms; application and renewal procedures; reporting and recordkeeping requirements for license holders; license requirements; and license revocation and suspension procedures.

        The proposed repeal affects Parks and Wildlife Code, Chapter 31.

        §53.110. Marine Dealers, Distributors, and Manufacturers.

        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

        The new sections are proposed under the authority of Parks and Wildlife Code, §31.0412, which authorizes the commission to promulgate rules regarding marine dealer, distributor, and manufacturing licenses, including rules prescribing application and license agreement forms; application and renewal procedures; reporting and recordkeeping requirements for license holders; license requirements; and license revocation and suspension procedures.

        The new sections affect Parks and Wildlife Code, Chapter 31.

        §53.110. Definitions.  The following words and terms, when used in this subchapter shall have the following meanings, unless the context clearly indicates otherwise.

                 (1) Applicant — A person or entity who has applied for a new or renewal license. This includes each member of a partnership or association, each officer of a corporation, the owner of a majority of a corporation’s corporate stock, and any agent or employee acting on behalf of any of the aforementioned persons or entities.

                 (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) Final conviction — A final judgment of guilt, the entering of a plea of guilty or nolo contendere, or the granting of deferred adjudication or pretrial diversion in accordance with Occupations Code, §53.021(d).

                 (4) Licensee — A person or entity who has received a license under this subchapter. This includes each member of a partnership or association, each officer of a corporation, the owner of a majority of a corporation’s corporate stock, and any agent or employee acting on behalf of any of the aforementioned persons or entities.

        §53.111. Applicability. Any person or entity, including a person or entity purporting to be a broker or brokerage house, 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 is considered to be engaged in the business of buying, selling, selling on consignment, displaying for sale, or exchanging a vessel for the purposes of this subchapter. Any person or entity, including a person or entity purporting to be a broker or brokerage house, engaged in any activity described above is subject to the provisions of this subchapter.

        §53.112. Application and Issuance.

                 (a) An applicant shall for a dealer license shall submit a properly completed, department-approved application form, accompanied by the following:

                         (1) the fee prescribed by law;

                         (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 (not applicable to floating inventory  or listings), and display of vessels, motorboats, or outboard motors (not applicable to floating inventory or listings);

                         (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 complete list of dealer agreements; and

                         (7) if the applicant is to maintain floating inventory or listings at a location other than that designated as the applicant’s permanent place of business, a record of all marinas where floating inventory or listings are expected to be displayed. If the applicant contemplates using less than five marinas, then the application shall include an explanatory statement. The record must identify, at a minimum, the name, physical address, and telephone for each marina.

                 (b) An applicant for a distributor or manufacturer license shall submit 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 representatives for a manufacturer.

                  (c) The department will not issue a license under this subchapter if the applicant has not signed and submitted a department-provided license agreement stating that the applicant agrees to comply with all applicable state laws, including Occupations Code, Chapter 2352, concerning Franchise Agreements, when required.

        §53.113. Refusal to Issue or Renew License; Review of Agency Decision to Refuse or Renew License.

                         (a) The department may refuse to issue or renew a license under this subchapter if:

                                  (1) an applicant is liable to the state under Parks and Wildlife Code §12.301;

                                 (2) an applicant has a final conviction or has been assessed an administrative penalty for a violation of:

                                          (A) Parks and Wildlife Code, Chapter 31, Subchapter A, B, B-1, C, D, or E;

                                          (B) a provision of the Parks and Wildlife Code not described by subparagraph (A) of this paragraph that is punishable as a Parks and Wildlife Code:

                                                  (I)  Class A or B misdemeanor;

                                                  (II)  state jail felony; or

                                                  (III) felony;

                                          (C) Chapters 51, 53, or 55 of this title; or

                                          (D) any federal or state law relating to the sale, distribution, financing, registration, or taxing of a vessel, motorboat, or outboard motor; or

                                          (E) the department has evidence that the applicant is acting on behalf of or as a surrogate for another person or entity who has a final conviction or has been assessed an administrative penalty for any violation listed in this subsection.

                         (b) In determining whether to issue or renew a license under this section, the department may consider:

                                  (1) the number of final convictions or administrative penalties;

                                  (2) the seriousness of the conduct on which the final conviction or administrative penalty is based;

                                  (3) the existence, number, and seriousness of offenses or violations other than offenses or violations that resulted in a final conviction or administrative penalty described by paragraph (1) of this subsection;

                                  (4) the length of time between the most recent final conviction or administrative penalty and the license application;

                                  (5) whether the final conviction, administrative penalty, or other offense or violation was the result of negligence or intentional conduct;

                                  (6) whether the final conviction or administrative penalty resulted from conduct committed or omitted by the applicant, an agent of the applicant, or both; and

                                  (7) other mitigating factors.

                         (c) The department shall provide to the applicant a written statement of the reasons for a decision to deny the issuance or renewal of a license.

                         (d) An applicant may request a review of a decision of the department with respect to license issuance or denial. The request for review must be made within 30 days of being notified by the department that the application for a license or license renewal has been denied. The review 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. If no review request is received within 30 days of the date of the letter notifying the licensee of the department’s intent to refuse issuance or renewal of the license, the decision to deny the issuance or renewal of a license is final.

                                  (1) Within 10 working days of receiving a request for review under this section, the department shall establish a date and time for the review.

                                  (2) The department shall conduct the review within 30 days of receipt of the request required by subsection (d) of this section, unless another date is established in writing by mutual agreement between the department and the requestor.

                                  (3) The request for review shall be presented to a review panel. The review panel shall consist of three department managers with knowledge in boating regulations, appointed or approved by the executive director or his or her designee.

                                  (4) The decision of the review panel is final.

        §53.114. Suspension or Revocation. The department may suspend or revoke a license under this subchapter as provided by Parks and Wildlife Code, Chapter 12, Subchapter F, if:

                 (1) a licensee has been finally convicted or been assessed an administrative penalty for a violation or condition listed in §53.113(a) of this title (relating to Refusal to Issue or Renew License; Review of Agency Decision to Refuse or Renew License):

                 (2) the 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;

                 (3) the 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;

                 (4) the business does not intend to be open to all members of the public nor during normal business hours;

                 (5) 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.

        §53.115. Recordkeeping, Display of License, and Notification Requirements.

                 (a) A licensee shall notify the department in writing within 10 days if there is any change of:

                         (1) ownership;

                         (2) business name;

                         (3) physical location;

                         (4) dealer agreement;

                         (5) distributors, dealers, or representatives; or

                         (6) address or phone information.

                 (b) 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.

                 (c) A licensee 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 to the dealer;

                         (5) name and address of person purchasing from the dealer;

                         (6) name and address of selling dealer or 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, listing, 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.

        This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be a valid exercise of the agency’s authority.

            Issued in Austin, Texas, on

Commission Agenda Item No. 3
Exhibit B

FLOATING CABIN RULES
PROPOSAL PREAMBLE

1. Introduction.

        The Texas Parks and Wildlife Department proposes an amendment to §55.202, concerning Period of Validity; Renewal and Transfer of Permits and new §55.208, concerning Refusal to Renew Permit; Review of Agency Decision to Refuse Permit Renewal.

        The proposed amendment to §55.202 would eliminate language in subsection (c) providing for notification and review of permit expiration. The proposed amendment is necessary because proposed new §55.208 creates a comprehensive process for refusal of renewal of a floating cabin permit; thus, the provisions in §55.202 are not necessary.

        Under current rules the only criteria for denying renewal of a floating cabin permit is if the permittee has allowed a floating cabin permit to expire. Proposed new §55.208 would institute additional criteria for denial of permit renewal, and implement a review process for permit denials. The amendment is part of an overall effort to create uniform criteria for the denial of special permits and licenses to persons who have been proven to exhibit disregard for statutes and regulations governing special permit and license privileges and Parks and Wildlife laws in general.

        Proposed new §55.208 would allow the department to deny permit renewal to any person who has been finally convicted or assessed an administrative penalty for a violation of Parks and Wildlife Code that is Class A or B misdemeanor,  state jail felony, or felony, or a violation of Water Code, §26.121 (which applies to water pollution, such as wastewater discharges). Additionally, the proposed new section would allow for permit renewal denial if the applicant is liable to the state under Parks and Wildlife Code, §12.301 (civil restitution value of fish and wildlife resources unlawfully taken or possessed).

        The department believes that a person who has demonstrated egregious, repeated, or reckless disregard for Parks and Wildlife laws other than those punishable as Class C misdemeanors (i.e., minor crimes such as bag and possession limit violations), and specifically, laws relating to water pollution, should not be accorded the privilege of holding a floating cabin permit. Similarly, a person who is indebted to the state for the civil restitution value of fish and wildlife resources that were unlawfully taken or possessed should not be accorded permit privileges.

        The department does not intend for a conviction or administrative penalty to be an automatic bar to renewal of a floating cabin permit. Therefore, the proposed new rule would provide for the department to consider a number of factors and make such determinations on a case-by-case basis. The factors that may be considered by the department in determining whether to deny a permit based on a conviction or deferred adjudication would include the seriousness of the offence, the number of offenses, the existence or absences of a pattern of offenses, the length of time between the offense and the permit application, and any other pertinent factors.

        Finally, the proposed amendment would create a mechanism for persons who have been denied permit renewal to have the opportunity to have such decisions reviewed by department managers, which is intended to help ensure that decisions affecting license privileges are correct.

2. Fiscal Note.

        Cody Jones, Boating Law Administrator, has determined that for each of the first five years that the rules as proposed are in effect, there will be no fiscal implications to state or local governments as a result of enforcing or administering the rules.

3. Public Benefit/Cost Note.

        Mr. Jones also has determined that for each of the first five years the rules as proposed are in effect:

        (A) The public benefit anticipated as a result of enforcing or administering the rules as proposed will be consistent regulations governing the department’s administrative processes with regard to license and permit issuance.

        (B) There will be no adverse economic effect on persons required to comply with the rules as proposed.

        (C) Under the provisions of Government Code, Chapter 2006, a state agency must prepare an economic impact statement and a regulatory flexibility analysis for a rule that may have an adverse economic effect on small businesses and micro-businesses. As required by Government Code, §2006.002(g), the Office of the Attorney General has prepared guidelines to assist state agencies in determining a proposed rule’s potential adverse economic impact on small businesses. Those guidelines state that an agency need only consider a proposed rule’s “direct adverse economic impacts” to small businesses and micro-businesses to determine if any further analysis is required. For that purpose, the department considers “direct economic impact” to mean a requirement that would directly impose recordkeeping or reporting requirements; impose taxes or fees; result in lost sales or profits; adversely affect market competition; or require the purchase or modification of equipment or services.

        The department has determined that there will be no adverse economic effects on small businesses or microbusinesses because the proposed rules will not directly affect small businesses or micro-businesses.  Therefore, the department has not prepared the economic impact statement or regulatory flexibility analysis described in Government Code, Chapter 2006.

        (D) The department has not drafted a local employment impact statement under the Administrative Procedures Act, §2001.022, as the agency has determined that the rules as proposed will not impact local economies.

        (E) 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 rules.

4. Request for Public Comment.

        Comments on the proposed rules may be submitted to Assistant Commander Cody Jones,  Texas Parks and Wildlife Department 4200 Smith School Road, Austin, Texas, 78744; (512) 389-4624 (e-mail: cody.jones@tpwd.texas.gov) or via the department website at http://tpwd.texas.gov/business/feedback/public_comment/.

5. Statutory Authority.

        The amendment and new section are proposed under the authority of Parks and Wildlife Code, §32.005, which authorizes the commission to promulgate rules necessary to implement the provisions of Parks and Wildlife Code, Chapter 32.

        The proposed amendment affects Parks and Wildlife Code, Chapter 32.

6. Text.

        §55.202. Period of Validity; Renewal and Transfer of Permits.

                 (a) – (b) (No change.)

                 (c) Permits that are not renewed within 90 days after expiration will become ineligible for renewal and the affected floating cabin will be subject to removal at the permittee’s expense according to the provisions of Parks and Wildlife Code, §32.154. The department shall notify each permittee by certified mail upon determining that a permit has expired and become ineligible for renewal.

                         [(1) A permittee whose permit has expired and become ineligible for renewal may request a review of the ineligibility status to show why the permit should be renewed. A person seeking a review under this subsection must contact the department within 10 working days after the date that the department issues the notification required by this section.]

                         [(2) The request for review shall be presented to a review panel. The review panel shall consist of the following:]

                                  [(A) the Deputy Executive Director for Operations (or his or her designee);]

                                   [(B) the Director of Law Enforcement (or his or her designee); and]

                                  [(C) the Director of the Coastal Fisheries Division (or his or her designee).]

                          [(3) The decision of the review panel is final.]

                 (d) – (e) (No change.)

        §55.208. Refusal to Renew Permit; Review of Agency Decision to Refuse Permit Renewal.

                 (a) In addition to refusal of permit renewal under the provisions of §55.202(c) of this title (relating to Period of Validity; Renewal and Transfer of Permits), the department may refuse to renew a permit under this subchapter if:

                         (1) an applicant is liable to the state under Parks and Wildlife Code §12.301;

                         (2) an applicant has been finally convicted or assessed an administrative penalty for a violation of:

                                  (A) a provision of the Parks and Wildlife Code that is punishable as a Parks and Wildlife Code:

                                          (i)  Class A or B misdemeanor;

                                          (ii)  state jail felony; or

                                          (iii) felony; or

                                          (iv) a violation of Water Code, §26.121.

                 (b) In determining whether to renew a permit under this section, the department may consider:

                         (1) the number of final convictions or administrative penalties;

                         (2) the seriousness of the conduct on which the final conviction or administrative penalty is based;

                         (3) the existence, number, and seriousness of offenses or violations other than offenses or violations that resulted in a final conviction or administrative penalty described by subsection (a)(2) of this section;

                         (4) the length of time between the most recent final conviction or administrative penalty and the application for permit renewal;

                         (5) whether the final conviction, administrative penalty, or other offense or violation was the result of negligence or intentional conduct;

                         (6) whether the final conviction or administrative penalty resulted from conduct committed or omitted by the applicant; and

                         (7) other mitigating factors.

                 (c) The department shall provide to the applicant a written statement of the reasons for a decision to deny the renewal of a permit.

                 (d) An applicant for a permit renewal may request a review of a decision of the department to refuse permit renewal.

                         (1) An applicant seeking review of a decision of the department with respect to permit renewal must request the review within 10 working days of being notified by the department that the application for permit renewal has been denied. The review request must be in writing and addressed to: Marine Enforcement, Texas Parks and Wildlife Department, 4200 Smith School Rd., Austin, TX 78744

                         (2) Within 10 working days of receiving a request for review under this subsection, the department shall establish a date and time for the review.

                         (3) The department shall conduct the review within 30 days of receipt of the request required by paragraph (2) of this subsection, unless another date is established in writing by mutual agreement between the department and the requestor.

                         (4) The request for review shall be presented to a review panel. The review panel shall consist of three department managers with expertise in marine regulations, appointed or approved by the executive director, or designee.

                         (5) The decision of the review panel is final.

        This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be a valid exercise of the agency’s authority.

            Issued in Austin, Texas, on

Commission Agenda Item No. 3
Exhibit C

PARTY BOAT OPERATOR LICENSE RULES
PERMIT DENIAL AND REVIEW PROCESS
PROPOSAL PREAMBLE

1. Introduction.

        The Texas Parks and Wildlife Department proposes an amendment to §55.404, concerning Party Boat Operator License—General Provisions.

        The proposed amendment would eliminate the current criteria used by the department to refuse issuance or renewal of a party boat operator license, institute new criteria for permit issuance denial, and implement a review process for permit denials. The amendment is part of an overall effort to create uniform criteria for the denial of special permits and licenses to persons who have been proven to exhibit disregard for statutes and regulations governing permit privileges and Parks and Wildlife laws in general.

        Under the current rule the department will not issue a party boat operator license to any person who has, within five-years of an application, been convicted of a violation of Penal Code, Chapter 49, involving the operation of a motorboat or a violation of Parks and Wildlife Code, Chapter 31, involving reckless or negligent behavior, or behavior that placed passengers in peril. The current rule also prohibits license issuance to a person who is prohibited from holding an equivalent license in another state.

        The proposed amendment would eliminate the current automatic prohibition and allow licenses to be issued at the department’s discretion; however, the current five -year period of applicability would be eliminated (meaning conviction for a listed offense committed at any time could be a justification for license denial) and the subsection would apply to a wider range of offenses. In addition to the current criteria for license denial, the proposed amendment would provide for the department to refuse permit issuance to any person who applies for a party boat operator license if the applicant has been finally convicted of or been assessed an administrative penalty for any violation of Parks and Wildlife Code that is a Class A or B misdemeanor, state jail felony, or felony; a violation of Water Code, §26.121 (environmental crimes related to water pollution by boats); or any federal or state law relating to the sale, distribution, financing, registration, or taxing of a vessel, motorboat, or outboard motor. The proposed amendment also would provide for permit denial if an applicant is liable to the state under Parks and Wildlife Code §12.301 or if department has evidence that the applicant is acting on behalf of or as a surrogate for another person or entity who has a final conviction or has been assessed an administrative penalty for any violation listed in this subsection.

        The department believes that a person who has demonstrated egregious, repeated, or reckless disregard for Parks and Wildlife laws other than those punishable as Class C misdemeanors (i.e., minor crimes such as bag and possession limit violations), and specifically, laws relating to water safety, water pollution, and boat registration, taxation, and commerce should not be accorded the privilege of holding a commercial license issued by the department. Similarly, a person who is indebted to the state for the civil restitution value of fish and wildlife resources that were unlawfully taken or possessed should not be accorded license privileges.

        The amendment also would allow the department to refuse to issue a permit to any person the department has reason to believe is acting on behalf of or as a surrogate for another person who is prohibited by the provisions of this subchapter from engaging in permitted activities. In some cases, persons who have been prohibited from obtaining certain types of permits and licenses have attempted to continue their activities by using proxies to obtain a permit or license. The department’s intent is to ensure that persons the department intends to prevent from engaging in certain activities are in fact prevented from doing so.

        The department does not intend for a conviction or administrative penalty to be an automatic bar to obtaining a party boat operator license. Therefore, the proposed rule would provide for the department to consider a number of factors and make such determinations on a case-by-case basis. The factors that may be considered by the department in determining whether to deny a permit based on a conviction or deferred adjudication would include the seriousness of the offence, the number of offenses, the existence or absences of a pattern of offenses, the length of time between the offense and the permit application, and any other pertinent factors.

        Finally, the proposed amendment would create a mechanism for persons who have been denied license issuance to have the opportunity to have such decisions reviewed by department managers, which is intended to help ensure that decisions affecting license privileges are correct.

2. Fiscal Note.

        Cody Jones, Boating Law Administrator, has determined that for each of the first five years that the rule as proposed is in effect, there will be no fiscal implications to state or local governments as a result of enforcing or administering the rule.

3. Public Benefit/Cost Note.

        Mr. Jones 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 consistent regulations governing the department’s administrative processes with regard to license and permit issuance.

        (B) There will be no adverse economic effect on persons required to comply with the rule as proposed.

        (C) Under the provisions of Government Code, Chapter 2006, a state agency must prepare an economic impact statement and a regulatory flexibility analysis for a rule that may have an adverse economic effect on small businesses and micro-businesses. As required by Government Code, §2006.002(g), the Office of the Attorney General has prepared guidelines to assist state agencies in determining a proposed rule’s potential adverse economic impact on small businesses. Those guidelines state that an agency need only consider a proposed rule’s “direct adverse economic impacts” to small businesses and micro-businesses to determine if any further analysis is required. For that purpose, the department considers “direct economic impact” to mean a requirement that would directly impose recordkeeping or reporting requirements; impose taxes or fees; result in lost sales or profits; adversely affect market competition; or require the purchase or modification of equipment or services.

        The department has determined that there will be no adverse economic effects on small businesses or microbusinesses because the proposed rule will not directly affect small businesses or micro-businesses.  Therefore, the department has not prepared the economic impact statement or regulatory flexibility analysis described in Government Code, Chapter 2006.

        (D) 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.

        (E) 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 Assistant Commander Cody Jones,  Texas Parks and Wildlife Department 4200 Smith School Road, Austin, Texas, 78744; (512) 389-4624 (e-mail: cody.jones@tpwd.texas.gov) or via the department website at http://tpwd.texas.gov/business/feedback/public_comment/.

5. Statutory Authority.

        The amendment is proposed under the authority of Parks and Wildlife Code, §31.180, which authorizes the commission to promulgate rules necessary to implement Parks and Wildlife Code, Chapter 31, Subchapter G.

        The proposed amendment affects Parks and Wildlife Code, Chapter 31.

6. Text

        §55.404. Party Boat Operator License—General Provisions.

                 (a)-(d) (No change.)

                 (e) Refusal to Issue or Renew License.; Review of Agency Decision to Refuse or Renew License[Denial of license issuance].

                         (1) The department may refuse to issue or renew a license under this subchapter if:

                                  (A) an applicant is liable to the state under Parks and Wildlife Code §12.301;

                                  (B) an applicant has a final conviction or has been assessed an administrative penalty for a violation of:

                                          (i) Parks and Wildlife Code, Chapter 31, involving reckless or negligent behavior, or behavior that placed passengers in peril.

                                          (ii) a provision of the Parks and Wildlife Code that is punishable as a Parks and Wildlife Code:

                                                  (I)  Class A or B misdemeanor;

                                                  (II)  state jail felony; or

                                                  (III) felony;

                                          (iii) a violation of Penal Code, Chapter 49 involving the operation of a motorboat;

                                          (iv) a violation of Water Code, §26.121; or

                                          (v) any federal or state law relating to the sale, distribution, financing, registration, or taxing of a vessel, motorboat, or outboard motor; or

                                  (C) the department has evidence that the applicant is acting on behalf of or as a surrogate for another person or entity who has a final conviction or has been assessed an administrative penalty for any violation listed in this subsection.

                         (2) The department will not issue a party boat operator license to a person who is prohibited from holding an equivalent license in another state.

                         (3) In determining whether to issue or renew a license under this section, the department may consider:

                                  (A) the number of final convictions or administrative penalties;

                                  (B) the seriousness of the conduct on which the final conviction or administrative penalty is based;

                                  (C) the existence, number, and seriousness of offenses or violations other than offenses or violations that resulted in a final conviction or administrative penalty described by paragraph (1) of this subsection;

                                  (D) the length of time between the most recent final conviction or administrative penalty and the license application;

                                  (E) whether the final conviction, administrative penalty, or other offense or violation was the result of negligence or intentional conduct;

                                  (F) whether the final conviction or administrative penalty resulted from conduct committed or omitted by the applicant, an agent of the applicant, or both; and

                                  (G) other mitigating factors.

                         (4) The department shall provide to the applicant a written statement of the reasons for a decision to deny the issuance or renewal of a license.

                         (5) An applicant may request a review of a decision of the department with respect to license issuance or denial. The request for review must be made within 30 days of being notified by the department that the application for a license or license renewal has been denied. The review request must be in writing and addressed to: Marine Enforcement, Texas Parks and Wildlife Department, 4200 Smith School Rd., Austin, TX 78744. If no review request is received within 30 days of the date of the letter notifying the licensee of the department’s intent to refuse issuance or renewal of the license, the decision to deny the issuance or renewal of a license is final.

                                  (A) Within 10 working days of receiving a request for review under this section, the department shall establish a date and time for the review.

                                  (B) The department shall conduct the review within 30 days of receipt of the request required by subparagraph (A) of this section, unless another date is established in writing by mutual agreement between the department and the requestor.

                                  (C) The request for review shall be presented to a review panel. The review panel shall consist of three department managers with knowledge in marine regulations, appointed or approved by the executive director or his or her designee.

                                  (D) The decision of the review panel is final.

                         [(1) The department will not issue a party boat operator license to any person who has, within the five-year period preceding an application for a party boat operator license, been convicted of:]

                                  [(A) a violation of Penal Code, Chapter 49 involving the operation of a motorboat; or]

                                  [(B) a violation of Parks and Wildlife Code, Chapter 31, involving reckless or negligent behavior, or behavior that placed passengers in peril.]

                                  [(2) The department will not issue a party boat operator license to a person who is prohibited from holding an equivalent license in another state.]

        This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be a valid exercise of the agency’s authority.

            Issued in Austin, Texas, on