HBA-ATS H.B. 965 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 965 By: Swinford Business & Industry 2/22/1999 Introduced BACKGROUND AND PURPOSE A common practice in the agricultural equipment industry is for manufacturers to create their own franchise of dealerships, to own an interest in the dealerships, and to enter into agreements with the dealerships. In such dealer agreements, the manufacturers specify the type of equipment the dealer is obligated to sell and define the territory where such equipment is to be sold. Chapter 19 of the Business & Commerce Code was created to protect agricultural equipment dealers in this state from agreements which restricted how they operated their dealerships and to whom they could sell their dealerships. Under the code, the term "dealer" does not include a person whose principal business is the sale of off-road construction equipment. Corporate mergers and other industry changes have allowed off-road construction equipment manufacturers to circumvent the law by either manufacturing agricultural equipment themselves or by merging with companies that manufacture agricultural equipment. H.B. 965 redefines the term "dealer" by providing that a dealer is not a single line dealer primarily engaged in the retail sale and service of off-road construction and earth-moving equipment. This bill also redefines "equipment" by including off-road construction equipment within the statutory definition. It defines a "single line dealer" to mean a person who has purchased 75 percent or more of a dealer's total new product inventory from a single supplier and has total annual average sales in excess of $100 million for the preceding three years with that single supplier for the territory for which the dealer is responsible in this state. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends the heading to Chapter 19, Business & Commerce Code, as follows: New heading: CHAPTER 19. FARM, INDUSTRIAL, OFF-ROAD CONSTRUCTION, AND OUTDOOR POWER EQUIPMENT DEALER AGREEMENTS. Adds "off-road construction" to existing heading. SECTION 2. Amends Section 19.01, Business & Commerce Code, by amending Subdivisions (5) and (8) and adding Subdivision (12), as follows: (5) Provides that the definition of "dealer" does not include a single line dealer primarily engaged in the retail sale and service of off-road construction and earth moving equipment, rather than a person whose principal business is the sale of offroad construction equipment. (6) Includes "off-road construction equipment" in the definition of "equipment." (12) Defines "single line dealer" as an individual , partnership, or corporation who has purchased 75 percent or more of the dealer's total new product inventory from a single supplier under all agreements with that supplier, and has a total annual average sales in excess of $100 million for the preceding three years with that single supplier for the territory for which the dealer is responsible in this state. SECTION 3. Amends Section 19.43(a), Business & Commerce Code, to make a conforming change. SECTION 4. Effective date: September 1, 1999. Makes application of this Act prospective. SECTION 5. Emergency clause.