88R24432 DIO-F
 
  By: Geren H.B. No. 4078
 
  Substitute the following for H.B. No. 4078:
 
  By:  Canales C.S.H.B. No. 4078
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to motor vehicle franchised dealers and the reimbursement
  of motor vehicle franchised dealers by manufacturers and
  distributors for warranty, recall, and preparation and delivery
  work.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 2301.003, Occupations Code, is amended
  by adding Subsection (c) to read as follows:
         (c)  A manufacturer or distributor may not compel a dealer to
  comply, take an adverse action, or initiate an action or proceeding
  in response to a dealer not participating in a manufacturer or
  distributor program or initiating an action or proceeding,
  including an action or proceeding to which the manufacturer or
  distributor is a party, to enforce a right or remedy available to
  the dealer under law or by agreement.
         SECTION 2.  Subchapter I, Chapter 2301, Occupations Code, is
  amended to read as follows:
  SUBCHAPTER I.  WARRANTIES AND RECALLS:  REIMBURSEMENT OF DEALER
         Sec. 2301.4001.  DEFINITIONS. In this subchapter:
               (1)  "Goodwill repair" means a repair made by a seller
  for no charge that the seller is not obligated to make.
               (2)  "Part" includes:
                     (A)  any component, electric vehicle battery,
  engine, equipment, fixture, good, part assembly, software, or
  transmission for a motor vehicle; and
                     (B)  a replacement for a part listed in Paragraph
  (A).
               (3)  "Routine maintenance" includes replacement of a
  belt, bolt, brake pad, bulb, fastener, filter, fluid, internal
  combustion engine vehicle battery, nut, or rotor, unless the belt,
  bolt, brake pad, bulb, fastener, filter, fluid, internal combustion
  engine vehicle battery, nut, or rotor is provided by the
  manufacturer or distributor in the course of a repair with an
  assigned part number.
         Sec. 2301.401.  WARRANTY, RECALL, PREPARATION, AND DELIVERY
  REQUIREMENTS.  (a)  On request, a manufacturer or distributor shall
  provide to the department a copy of the current requirements the
  manufacturer or distributor imposes on its dealers with respect to
  the dealer's:
               (1)  duties under the manufacturer's or distributor's
  warranty and under a manufacturer's or distributor's recall; and
               (2)  vehicle preparation and delivery obligations.
         (b)  Warranty, recall, or preparation and delivery
  requirements placed on a dealer by a manufacturer or distributor
  are not enforceable unless the requirements are reasonable.
         Sec. 2301.402.  RATE OF COMPENSATION.  (a)  A manufacturer or
  distributor shall fairly and adequately compensate its dealers for
  warranty, recall, and preparation and delivery work.
         (b)  A manufacturer or distributor may not pay or reimburse a
  dealer an amount of money for warranty or recall work that is less
  than the amount the dealer charges a retail customer for similar
  nonwarranty work.
         (c)  In computing the amount of money a dealer charges a
  retail customer under Subsection (b) for labor, the manufacturer or
  distributor shall use the formula, of the following formulas, that
  produces the fewest number of repair orders [the greater of]:
               (1)  the average labor rate charged during the
  preceding six months by the dealer on 100 sequential nonwarranty
  repair orders paid by retail customers, exclusive of:
                     (A)  routine maintenance;
                     (B)  tire, wheel, or wheel alignment;
                     (C)  discounts to state agencies, insurers, or
  warranty or service contract providers;
                     (D)  state inspections;
                     (E)  goodwill repairs;
                     (F)  accessory installation;
                     (G)  a manufacturer's or distributor's promotion
  or service campaign; or
                     (H)  repairs to a vehicle owned by the dealer, an
  affiliate of the dealer, or an employee of either the dealer or
  affiliate; or
               (2)  the average labor rate charged for 90 consecutive
  days during the preceding six months by the dealer for nonwarranty
  repairs paid by retail customers, exclusive of:
                     (A)  routine maintenance;
                     (B)  tire, wheel, or wheel alignment;
                     (C)  discounts to state agencies, insurers, or
  warranty or service contract providers;
                     (D)  state inspections;
                     (E)  goodwill repairs;
                     (F)  accessory installation;
                     (G)  a manufacturer's or distributor's promotion
  or service campaign; or
                     (H)  repairs to a vehicle owned by the dealer, an
  affiliate of the dealer, or an employee of either the dealer or
  affiliate.
         (d)  The average labor rate under Subsection (c) is
  determined by dividing the total charges for labor submitted by the
  total number of hours charged for the repairs.
         (e)  In computing the amount of money a dealer charges a
  retail customer under Subsection (b) for parts, the manufacturer or
  distributor shall use the formula, of the following formulas, that
  produces the fewest number of repair orders:
               (1)  the average parts markup charged during the
  preceding six months by the dealer on 100 sequential nonwarranty
  repair orders paid by retail customers, exclusive of:
                     (A)  routine maintenance;
                     (B)  tire, wheel, or wheel alignment;
                     (C)  discounts to state agencies, insurers, or
  warranty or service contract providers;
                     (D)  state inspections;
                     (E)  goodwill repairs;
                     (F)  accessory installation;
                     (G)  a manufacturer's or distributor's promotion
  or service campaign; or
                     (H)  repairs to a vehicle owned by the dealer, an
  affiliate of the dealer, or an employee of either the dealer or
  affiliate; or
               (2)  the average parts markup charged for 90
  consecutive days during the preceding six months by the dealer for
  nonwarranty repairs paid by retail customers, exclusive of:
                     (A)  routine maintenance;
                     (B)  tire, wheel, or wheel alignment;
                     (C)  discounts to state agencies, insurers, or
  warranty or service contract providers;
                     (D)  state inspections;
                     (E)  goodwill repairs;
                     (F)  accessory installation;
                     (G)  a manufacturer's or distributor's promotion
  or service campaign; or
                     (H)  repairs to a vehicle owned by the dealer, an
  affiliate of the dealer, or an employee of either the dealer or
  affiliate.
         (f)  The average parts markup for Subsection (e) is
  determined by dividing the total charges for parts submitted by the
  total cost of the parts for which charges are submitted.
         (g)  If a manufacturer or distributor supplies a part to a
  dealer at no cost or at a reduced cost for use in a warranty or
  recall repair, the manufacturer or distributor shall compensate the
  dealer for the dealer's cost for the part, if any, plus an amount
  equal to the dealer's prevailing retail parts markup, multiplied by
  the fair wholesale value of the part.
         (h)  For purposes of Subsection (g), the fair wholesale value
  of a part is the greater of:
               (1)  the amount the dealer paid for the part or a
  substantially identical part if presently owned by the dealer;
               (2)  the cost of the part as shown in a current or
  previously established price schedule of the manufacturer or
  distributor; or
               (3)  the cost of a substantially identical part shown
  in a current or previously established price schedule of the
  manufacturer or distributor.
         (i)  A manufacturer or distributor shall compensate a dealer
  in accordance with this subchapter if the dealer assists in or
  performs an over-the-air or remote installation, change, repair,
  update, or amendment to any part, system, accessory, or function.
         Sec. 2301.403.  ADJUSTMENT OF RATE FOR WARRANTY WORK [LABOR
  RATE].  (a)  A dealer may request an adjustment in the dealer's
  warranty work [labor] rate.  The request must be sent to the
  manufacturer or distributor by certified mail, return receipt
  requested, and must state the requested labor or parts rate and
  include information reasonably necessary to enable the
  manufacturer or distributor to adequately evaluate the request as
  provided by this subchapter.
         (b)  Not later than the 60th day after the date of receipt of
  a request under this section, the manufacturer or distributor shall
  provide written notice to the requesting dealer of the approval,
  reduction, claimed material inaccuracy, or disapproval of the
  request.  If the manufacturer or distributor fails to respond
  before the 60th day after the date the request is received, the
  submitted rate shall take effect on the 60th day after the date the
  manufacturer or distributor receives the request. If the request
  is disapproved, reduced, or claimed to be materially inaccurate,
  the manufacturer or distributor shall state the reasons for the
  disapproval, reduction, or claimed material inaccuracy. The stated
  reasons for disapproval, reduction, or claimed material inaccuracy
  of the requested labor rate or parts markup must contain:
               (1)  an explanation of the reasons the request is
  disapproved, reduced, or claimed to be materially inaccurate;
               (2)  evidence that substantiates each stated reason;
               (3)  if a material inaccuracy is alleged, a copy of the
  calculations used by the manufacturer or distributor demonstrating
  a material inaccuracy; and
               (4)  a proposed adjusted labor or parts rate, as
  applicable.
         (c)  A requesting dealer may file a protest with the board if
  the manufacturer or distributor[:
               [(1)]  disapproves or reduces a dealer's request or
  claims the request is materially inaccurate[; or
               [(2)  fails to respond within the time required by this
  section].
         (d)  After a protest is filed, the board may uphold the
  manufacturer's or distributor's decision only if the manufacturer
  or distributor proves by a preponderance of the evidence that the
  disapproval, reduction, or claimed material inaccuracy of the
  request [or failure to respond] was reasonable.
         (e)  If the board does not determine that the disapproval,
  reduction, or claimed material inaccuracy of the request [or
  failure to respond] was reasonable, the board shall order the
  requested rate into effect as of the 60th day after the receipt of
  the request by the manufacturer or distributor.
         (f)  Except by agreement of the parties, a warranty labor
  rate or warranty parts rate established under this subchapter may
  not be adjusted more often than once a year.
         Sec. 2301.404.  TIME FOR PAYMENT. (a)  A manufacturer or
  distributor shall pay a dealer's claim for reimbursement for
  warranty work, recall work, or dealer preparation and delivery work
  not later than the 30th day after the date of approval of the claim.
         (b)  A claim that is not disapproved before the 31st day
  after the date of receipt is considered approved.
         (c)  If a claim is disapproved, the manufacturer or
  distributor shall provide the dealer written notice explaining [of]
  the reasons for the disapproval.
         (d)  A controversy regarding the payment of a claim under
  this subchapter or compliance with the provisions of this
  subchapter shall be resolved in accordance with Subchapter Q.
         Sec. 2301.405.  CHARGE BACK TO DEALER.  (a)  A manufacturer
  or distributor may not charge back to a dealer money paid by the
  manufacturer or distributor to satisfy a claim approved and paid
  under this chapter [subchapter] unless the manufacturer or
  distributor shows that:
               (1)  the claim was false or fraudulent;
               (2)  repair work was not properly performed or was
  unnecessary to correct a defective condition; or
               (3)  the dealer who made the claim failed to
  substantiate the claim as provided by the manufacturer's or
  distributor's requirements that were enforceable under Section
  2301.401 at the time the claim was filed.
         (b)  A manufacturer or distributor may not audit a claim
  filed under this chapter [subchapter] after the first anniversary
  of the date the claim is submitted unless the manufacturer or
  distributor has reasonable grounds to suspect that the claim was
  fraudulent.
         Sec. 2301.406.  PROHIBITED REQUIREMENTS FOR PAYMENT.  (a) A
  manufacturer or distributor may not require, as a prerequisite to
  the payment of a claim for reimbursement, that a dealer file a
  statement of actual time spent in performance of labor, unless
  actual time is the basis for reimbursement.
         (b)  A manufacturer or distributor may not recover or attempt
  to recover any portion of the compensation due to a dealer for
  warranty, recall, or preparation and delivery work by reducing the
  amount due by a separate charge, surcharge, like charge, other
  charge, supplemental charge, or reduction in return reserve
  allowance to the wholesale price paid by the dealer to the
  manufacturer or distributor for any product, including motor
  vehicles and parts.  This subsection does not prohibit a
  manufacturer or distributor from increasing prices for a vehicle or
  part in the normal course of business. 
         (c)  A manufacturer or distributor may not establish or
  implement a special part number for a part used in warranty, recall,
  or preparation and delivery work if the result is lower
  compensation to the dealer than as calculated under Section
  2301.402.
         SECTION 3.  The changes in law made by this Act apply only to
  warranty, recall, or preparation and delivery work under Subchapter
  I, Chapter 2301, Occupations Code, as amended by this Act,
  commenced on or after the effective date of this Act. Warranty,
  recall, or preparation and delivery work commenced before the
  effective date of this Act is governed by the law in effect on the
  date the work was commenced, and the former law is continued in
  effect for that purpose.
         SECTION 4.  This Act takes effect September 1, 2023.