Proposed Repeal of Existing Administrative Rules

Chapter 71. Warrantors of Vehicle Protection Products
Proposal Filed: September 18, 2017 – Published in the Texas Register:  September 29, 2017
Deadline for Public Comment: October 30, 2017

The Texas Department of Licensing and Regulation (Department) proposes the repeal of existing rules at 16 Texas Administrative Code (TAC), Chapter 71, §§71.1, 71.10, 71.20, 71.22, 71.70, 71.80, and 71.90, regarding the Vehicle Protection Product Warrantors Program.

JUSTIFICATION AND EXPLANATION OF THE RULES

This proposal repeals the existing rules of the Texas Commission of Licensing and Regulation (Commission), the Department’s governing body, regarding the licensing and regulation of Vehicle Protection Product Warrantors by the Department. The existing rules under 16 TAC Chapter 71 implemented the former Texas Occupations Code, Chapter 2306.

The repeal of the existing rules is necessary to implement Senate Bill (S.B.) 2065, 85th Legislature, Regular Session, 2017.  This bill, in part, repealed Texas Occupations Code, Chapter 2306, Vehicle Protection Product Warrantors, and relocated the regulation of vehicle protection products and warrantors to Texas Business and Commerce Code, Chapter 17, Subchapter E, the Deceptive Trade Practices-Consumer Protection Act. These statutory changes were effective September 1, 2017. 

This proposal repeals the existing rules for the Vehicle Protection Product Warrantors Program under 16 TAC Chapter 71, §§71.1, 71.10, 71.20, 71.22, 71.70, 71.80, and 71.90.  As of September 1, 2017, the Department no longer regulates or licenses vehicle protection products or warrantors.

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Brian E. Francis, Executive Director, has determined that for each year of the first five years the proposed repeal of the rules is in effect, there will be a reduction in costs to the State. While S.B. 2065 repealed the Vehicle Protection Product Warrantors statute, the rules under 16 TAC Chapter 71 implemented the program. There will be a reduction in costs to the State in the amount of $7,460 each year for the first five years due to the Department no longer needing to pay full time employees (FTEs) to collect application and renewal fees, to enforce the statutes and rules, and to provide compliance assistant and information. No FTEs worked on this program on a full-time basis, so there is no loss of FTEs.

In addition, Mr. Francis has determined that for each year of the first five years the proposed repeal of the rules is in effect, there will be a loss of revenue to the State. While S.B. 2065 repealed the Vehicle Protection Product Warrantors statute, the rules under 16 TAC Chapter 71 set out the specific fee amounts that were paid to the Department. Vehicle Protection Product Warrantors paid $250 in application fees and $250 - $1,000 in annual renewal fees depending on the number of warranties sold each year. Elimination of the application and annual renewal fees will result in a loss of revenue to the State in the amount of $36,300 each year for the first five years.

Mr. Francis has determined that enforcing or administering the proposed repeal of the rules under 16 TAC Chapter 71 does not have foreseeable implications relating to costs or revenues of local governments for the first five years the proposed repeal is in effect. Local governments were not involved in the regulation of the Vehicle Protection Product Warrantors Program, and S.B. 2065 did not transfer any responsibilities to local governments. 

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Francis has determined that the proposed rules will not affect the local economy, so the agency is not required to prepare a local employment impact statement under Government Code §2001.022.

PUBLIC BENEFITS

Mr. Francis also has determined that for each year of the first five-year period the proposed repeal of the rules is in effect, the public benefit will be elimination of obsolete rules. The rules under 16 TAC Chapter 71 implemented Texas Occupations Code Chapter 2306, which was repealed by S.B. 2065. In addition, the repeal of the Vehicle Protection Product Warrantors statute and rules eliminate the cost of a regulatory program with a small license population, zero to little enforcement activity, and minimal risk of consumer harm. There will be less of a tax burden on taxpayers.  Companies will no longer be required to submit initial or renewal applications and fees, so there is less of a regulatory burden on the businesses in this industry, potentially enabling a reduction of the prices of vehicle protection products for consumers.  Consumers are still protected through certain consumer protection provisions in the Deceptive Trade Practices-Consumer Protection Act, Business and Commerce Code, Chapter 17, Subchapter E.

PROBABLE ECONOMIC COSTS TO PERSONS REQUIRED TO COMPLY WITH PROPOSAL

Mr. Francis has determined that for each year of the first five-year period the proposed repeal of the rules is in effect, there will be a reduction in costs to persons who are required to comply with the proposed repeal of the rules. Vehicle Protection Product Warrantors will no longer have to pay $250 in application fees or $250 - $1,000 in annual renewal fees, based on the number of warranties sold. The elimination of the application and annual renewal fees will be a reduction in costs in the amount of $36,300 each year for the first five years.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS – FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSINESSES, AND RURAL COMMUNITIES

There will be no adverse effect on small businesses, micro-businesses, or rural communities as a result of the proposed repeal of the rules. 

Since the agency has determined that the proposed repeal of the rules will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, are not required.

ONE-FOR-ONE REQUIREMENT FOR RULES WITH A FISCAL IMPACT

Under Government Code §2001.0045, a state agency may not adopt a proposed rule if the fiscal note states that the rule imposes a cost on regulated persons, including another state agency, a special district, or a local government, unless the state agency: (a) repeals a rule that imposes a total cost on regulated persons that is equal to or greater than the total cost imposed on regulated persons by the proposed rule; or (b) amends a rule to decrease the total cost imposed on regulated persons by an amount that is equal to or greater than the cost imposed on the persons by the proposed rule.  There are exceptions for certain types of rules under §2001.0045(c).

The proposed repeal of the rules does not have a fiscal note that imposes a cost on regulated persons, including another state agency, a special district, or a local government.  Therefore, the agency is not required to take any further action under Government Code §2001.0045.

PUBLIC COMMENTS

Comments on the proposal may be submitted to Pauline Easley, Legal Assistant, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711, or facsimile (512) 475-3032, or electronically: erule.comments@tdlr.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

STATUTORY AUTHORITY 

The repeal of the existing rules is proposed under Texas Occupations Code, Chapter 51, which authorizes the Commission, the Department’s governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department.

The statutory provisions affected by the proposal are those set forth in Texas Occupations Code, Chapter 51 and former Chapter 2306, and Texas Business and Commerce Code, Chapter 17.  No other statutes, articles, or codes are affected by the proposal.

[§71.1. Authority]
[§71.10. Definitions]
[§71.20. Registration and Renewal Requirements--General]
[§71.22. Registration Requirements--Financial Security Requirements]
[§71.70. Responsibilities of Registrant]
[§71.80. Fees]
[§71.90. Administrative Penalties and Sanctions]

REVIEW BY AGENCY COUNSEL

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

Filed with the Office of the Secretary of State, on September 18, 2017.

Brian E. Francis
Executive Director
Texas Department of Licensing and Regulation