Texas Civil Justice League | COVID Pandemic Liability Protection Legislation Senator Kelly Hancock (R-North Richland Hills) View or Download Texas Civil Justice League | COVID Pandemic Liability Legislation Brief Analysis of TLC Draft Senator Kelly Hancock (R-North Richland Hills) View or Download NTXAD Legislative Update – June 2021 87th Regular Texas Legislative Session OVERVIEW The 2021 Texas Legislature was a drastically different session as compared to the previous session in 2019. When the 87th Texas Legislature gaveled in on January 12th, the state and the world was grappling with the impacts of a global pandemic. Social distancing measures meant access to the Capitol was drastically reduced, and all visitors during session were required to take a COVID-19 test or show proof of vaccination prior to entry and wear masks throughout the building. These precautions would carry into May, creating a significant boundary between legislative offices and the public there to engage on legislative issues. Every legislative session is unique – and the 2021 session was no different with the slow start and lowered expectations due to the COVID-19 pandemic. But that drastically shifted mid-February, on the heels of an unprecedented winter storm that left millions of Texans without power for days. After winter storm Uri shut down the Capitol for a week, legislators turned their focus from the ongoing pandemic to the catastrophic aftermath of the storm. Bill filing saw a drastic increase for energy reform-focused legislation and committee hearings were scheduled immediately to consider the vulnerabilities of the state’s electric grid and determine the best solutions to prevent another incident. As legislators became more accustomed to the new protocols in place, the pace picked up in April and May. Issues such as statewide expansion of broadband access, ERCOT reform, Covid-19 liability protections for businesses, and permanently adopting alcohol-to-go from restaurants were considered and promoted by legislators who passed a comprehensive budget in addition to these other initiatives. *Despite the late push, this legislature’s work is not complete. They will likely be back in Austin for additional special sessions starting this summer. The redistricting process to set legislative and congressional boundaries must be completed, and the arrival of tens of billions in federal funds from the Covid-19 stimulus will prompt the Governor to call legislators back to work. Bill Statistics: The 2021 legislative session produced the lowest bill passage rate in the last 20 years. It is 6.7% lower than the average over that same time. Approximately 75% of House bills and 70% of Senate bills were unable to pass their chamber of origin. Less than half of the House bills that cleared their chamber of origin were passed by the Senate, which is significantly less than the nearly 75% of Senate bills that were passed by the opposite chamber. The following statistics as of June 2nd at 1p.m. Total House & Senate Bills: 6,927 Sent to the Governor: 1,070 Signed by the Governor: 182 Filed without Governor’s Signature: 14 Vetoed by the Governor: 1 SB 813Relating to the insurance premium tax credit for the certified rehabilitation of certified historic structures. Please note, if a bill is sent to the governor within 10 days of final adjournment, the governor has until 20 days after final adjournment to sign the bill, veto it, or allow it to become law without a signature. Session ended on 5/31/21. Texas Senate: Coming into this session, the make-up of the Senate had shifted slightly compared to last session where the number of Republicans was reduced from 19 to 18. This prompted a fundamental change to its rules, lowering the threshold for consideration of a bill to 18 votes. This rule change allows Republicans to continue deciding which bills are brought up for consideration without Democratic input. Senate committee assignments shifted only slightly from last session. The number of Senate committees decreased from 16 to 15 and were all chaired by Republicans except for one, Criminal Justice chaired by Senator John Whitmire (D-Houston). Texas House: In the House, Speaker Dade Phelan (R-Beaumont) oversaw a chamber that was nearly identical to the 2019 House in terms of the partisan makeup after the Democrats failed to flip contested seats in the 2020 election (83R/67D). The new Speaker awarded a slate of new chairmanships, including Representatives Greg Bonnen, MD (R-Friendswood) with Appropriations, Chris Paddie (R-Marshall) with State Affairs, Will Metcalf (R-Conroe) with Administration, Dustin Burrows (R-Lubbock) with Calendars and Tom Oliverson, MD (R-Cypress) with Insurance. This class of leaders is younger and more diverse than in sessions past, more closely representing the make-up of the body. Including the Speaker Pro Tempore Joe Moody (D-El Paso), a leadership position equivalent to a chair, 21 chairs are Republicans and 14 are Democrats. Of those committees: 5 chairs and 14 vice chairs are women; 14 chairs and 21 vice chairs are Black, Hispanic, or Asian-American; 11 chairs and 7 vice chairs represent rural areas of the state; and 24 chairs and 27 vice chairs represent urban areas of the state. SESSION ISSUES 2022-23 Budget: Coming into the session, Comptroller Glenn Hegar projected a nearly $1 billion deficit for the current state budget and an estimated $112.5 billion available to allocate for general-purpose spending in the next two-year state budget, a number that was down slightly from the current budget. However, a revised revenue estimate from Hegar in May erased the deficit, estimating a $725 million surplus for the current budget cycle and projected funds available for the 2022-2023 budget increased by $3 billion to a total of $116 billion in general revenue. The budget does not tap into the state’s Economic Stabilization Fund (rainy day fund) and does not appropriate approximately $16 billion in federal funds for coronavirus relief. Governor Abbott has committed to the Legislature that the allocation of those federal funds will be part of the call for a special session later this year. Senate Bill 1, the state budget, is one of only two bills required to pass in the 87th Session (the other is the supplemental budget bill for 2021). Legislators ultimately approved a $248.5 billion All Funds budget, approximately 5.2% lower than the 2020-2021 biennial budget. 87th Session Detailed Bills InformationDownload NTXAD Legislative Update – March 2021 The 87th regular legislative session is set to begin on January 12, 2021 and then we will be off to the races for what will likely be an interesting and unpredictable 140 days. The COVID-19 pandemic has drastically changed how the legislature has operated during the 2020 interim, with the closing of the Capitol building, cancellation of committee hearings, and virtual meetings taking the place of traditional in person visits. Conversations over how the Legislature should operate in 2021 are taking place, with leaders in the House and Senate suggesting that masks and testing could be required, as well as limiting the number of people allowed inside the Capitol and spacing out the meetings of certain committees. The Texas House recently announced that those attending the opening day of the 2021 legislative session will be required to wear masks and asked to take COVID tests ahead of the event. Access to the House floor will be restricted to lawmakers, essential staff, ceremony participants, temporary officers and approved guests. There will be hand sanitation stations outside the chamber and on members’ desks and that ultraviolet light disinfecting units will be used on the floor and in the gallery. It has been unclear how the Senate plans on proceeding during session, but Lt. Gov. Dan Patrick has told senators that people wishing to testify on legislation before a committee may need to register days beforehand and take a COVID test ahead of the hearing. The bottom line is we still do not know if the 2021 Legislative Session will be held in-person and in the Capitol as is customary. There are many factors playing into how the session will be conducted and how NTXAD will be able to advocate effectively, including increased reliance on remote and digital communication including phone calls/text messages and social media. We hope the situation improves over the next few months, but we are prepared to adapt to the situation should the Capitol remain closed to the public. New Speaker of the Texas House: The first order of business in the Texas House of Representatives is to Elect a Speaker. The members of the House vote on who will lead their chamber and whomever can get to 76 votes (a simple majority in the House) will oversee the chamber’s business. This includes committee assignments, appointing committee chairs, and developing an agenda for legislative action. Rep. Dade Phelan (R-Beaumont) announced his candidacy for Speaker of the House on November 1st, and then announced that he had secured enough votes  to win the race on Wednesday, November 3rd. Since then, all remaining competitors to Phelan dropped their bids, and in all likelihood Rep. Phelan will be elected speaker when the Legislature convenes on January 12, 2021. Rule change in the Texas Senate: Unlike the Texas House, the Texas Senate does not elect the leader of their chamber; Lt. Governor Dan Patrick (R-Houston) leads the Senate and is elected via statewide ballot. The Lt. Gov. has the additional powers of controlling the Senate agenda, and recognition of Senators for legislative debate and action. Currently, Senate rules state that 19 of the chamber’s 31 members — three-fifths — must agree to call up a bill for debate. Lt. Gov. Patrick recently announced that he wants to lower the threshold of support that legislation needs to make it on to the Senate floor to match the size of the new Republican majority. Patrick is recommending lowering that threshold to 18 senators, after his party lost its supermajority with the defeat of Sen. Pete Flores, R-Pleasanton. Lowering the threshold would require an amendment to the Senate Rules and must be approved by a majority vote of the full Senate. Lt. Gov. Patrick already oversaw a decrease in the threshold during his first session as Lt. Governor in 2015. The Senate began that session by dropping the threshold from two-thirds, or 21 members, to three-fifths, or 19 members, at a time when there were 20 Republican senators. Budget Deficit/Implications: The driving force behind each legislative session is the state budget. It is the only piece of legislation that must pass during the session, and it covers a two-year funding period. At the beginning of each regular legislative session the Texas Constitution requires the Comptroller of Public Accounts (Glenn Hegar) to submit a statement showing the state’s financial condition and estimating the revenue it can expect to receive during the next two-year budget period. This Biennial Revenue Estimate (BRE) forms the basis of the state budget for the coming biennium. Legislators must ensure that total appropriations do not exceed the available cash and anticipated revenue as projected by the Comptroller. Although we do not yet know how much money will be available for lawmakers to craft the 2022-2023 budget, it will likely be a significant shortfall. Comptroller Hegar has already revised the 2020-21 Revenue Estimate and the amount of revenue available for the state’s current two-year budget, projecting it to end with a deficit of $4.6 billion, a downward revision from the previously projected surplus of $2.9 billion. This $11.5 billion swing creates a deficit that does not include expected additional appropriations for Medicaid and other programs that were underfunded in the current budget. State Agencies have already been asked to reduce budgets by 5% for the current biennium, and they could be directed to seek additional cuts. As these agencies prepare their appropriation requests for the next budget cycle, these 5% have been directed to be included in their initial baseline requests. Redistricting: The Texas Constitution (Tex. Const. Art. III, § 28) directs that redistricting of state legislative and congressional districts be undertaken in the session after the delivery of census data. While we may not have the census numbers in time to take up redistricting in the regular session, it will be on the minds of legislators as they debate and determine other issues. A special session in late Summer of 2021 is the most likely time for a special session to take up redistricting. Communications: We will provide updates throughout the session. Please call me with any questions. Brent Franchised Dealers’ Impact to the Texas Economy 1,355 dealerships in nearly 300 communities throughout Texas.120,000+ Texans are employed by franchised auto dealers (12,300 Veterans are employed by franchised dealers) at an annual payroll of more than $6+ billion and make a $600+ million annual capital investment in their businesses and communities.Franchised dealers in Texas are retailing and distributing over 1.6 million new motor vehicles to Texans each year. Overall, this represents $84 billion in sales and 18% of all retail sales in the State.Franchised dealers collect over $5.9 billion annually for the state in motor vehicle sales taxes and fees. Dealerships support local charities, with over $50 million in charitable contributions. Franchise System Talking Points Texas franchise laws have promoted competition for decades by ensuring that locally owned dealerships, rooted in their communities, must compete to sell new cars and trucks. It provides for the efficient distribution of vehicles and service across the state, and provides a local presence where Texas consumers can have service, warranty, and recall work performed even in cases when a motor vehicle manufacturer ceases to do business. Increased competition among franchise dealers leads to lower prices on new vehicles, improved customer service, and accountability to consumers. Tesla/ Direct Sales Prohibition Talking Points Texas franchise laws exist to promote competition, allowing various franchised dealers for the same lines to compete for business in vehicle pricing and service.Texas law DOES NOT prohibit Tesla (and other OEMs) from participating in the franchise system. Instead of operating by the same rules as all other manufacturers, Tesla wants a carve out from Texas law by operating under its own set of laws.Other manufacturers produce electric vehicles. Other manufacturers produce in smaller volumes. Other manufacturers produce higher cost and more luxurious vehicles. And yet they are all treated the same under state law. Tesla could, today, establish any franchised dealer of their choosing and operate their business under their current model. North Texas Automobile Dealers mission As the voice of North Texas’ franchised dealers in public policy and regulatory matters, North Texas Automobile Dealers advocates on behalf of its members for fair and ethical business practices to better serve consumers in Texas. North Texas Automobile Dealers promotes the best interests not only of franchised dealers but also consumers, by promoting motor vehicle and driver safety, supporting the speedy resolution of consumer complaints as well as a safe, reliable highway system. North Texas Automobile Dealers members are committed to creating jobs, providing quality service, and giving back to their communities through time and resources. By supporting laws that benefit the automobile industry and consumers, North Texas Automobile Dealers helps promote a business climate that fosters growth, opportunity and financial stability. 86th Session Recap North Texas Automobile Dealers supported legislation (HB 3420) requiring personal automobile insurance policies to cover certain courtesy loaner vehicles. This would prevent a situation from arising in which both a repair shop’s insurer and a driver’s personal insurer provide only excess coverage for a borrowed courtesy vehicle and a driver could be held personally liable for any damage to the vehicle. North Texas Automobile Dealers supported legislation (SB 1415) that protects and strengthens the franchise system while guaranteeing the laws of the state of Texas reflect the modern realities of the various ownership structures that exist in today’s diverse market. North Texas Automobile Dealers supported legislation (SB 711) that maintained the vehicle safety inspection but also require those performing the inspection to alert consumers if their automobiles were subject to recall. North Texas Automobile Dealers opposed efforts by Tesla and Cummins Diesel (HB 2607/SB 1267) to seek a carve out from the state’s franchise laws. Neither bill passed. HB 3420 by Representative Stan Lambert; Sponsor: Senator Jose Menendez Relating to liability coverage for certain vehicles provided by certain automobile repair facilities. PASSED https://capitol.texas.gov/tlodocs/86R/billtext/html/HB03420F.htm Legislation sought to require that an individual’s primary insurance coverage for physical damage carries forward to a temporary substitute vehicle provided by an auto repair facility while the insured’s vehicle is in for repair. Coverage carries forward while the insured’s vehicle is at the repair facility for service, repair, maintenance, damage, or to obtain an estimate and provides coverage for a substitute vehicle with a gross vehicle weight rating of 14,000 pounds or less. SB 1415 by Senator Kelly Hancock; Sponsor: Representative Charlie Geren Relating to the ownership, control, or operation of a franchised or nonfranchised dealer or dealership by certain motor vehicle manufacturers and distributors. PASSED https://capitol.texas.gov/tlodocs/86R/billtext/html/SB01415F.htm SB 1415 updates the franchise laws by allowing a manufacturer or distributor to own an interest in a dealership, as long as the dealership sells a different type of motor vehicle than the type manufactured or distributed by the manufacturer or distributor. Consistent with current law and Texas tradition, a vehicle manufacturer or distributor could not own an interest in a franchised dealer or dealership for the same type of motor vehicle that it manufactures or distributes. SB 711 by Senator Chuy Hinojosa; Sponsor: Representative Jeff Leach Caption: Relating to allowing safety recall information to be included in a vehicle inspection report. PASSED https://capitol.texas.gov/tlodocs/86R/billtext/html/SB00711F.htm Legislation would authorize the DPS to adopt rules providing for the inclusion of outstanding safety recall information on the vehicle safety inspection report. Authorizes TCEQ to adopt rules providing for the inclusion of safety recall information on a vehicle inspection report for a vehicle inspected in a county that is included in a vehicle emissions inspection and maintenance program. HB 2602 by Representative Senfronia Thompson/ SB 1267 by Senator Kirk Watson Relating to the operation of a motor vehicle dealership by certain manufacturers. FAILED https://capitol.texas.gov/tlodocs/86R/billtext/html/HB02602I.htm Legislation would allow manufacturers of heavy- duty truck engines, transmissions, or rear axles to own and operate dealerships. This legislation was pursued by Cummins diesel to grandfather their existing operations, which are currently in violation of the franchise laws.