S.B. 157 New Motorboat Distributor Act: transcript

Thank you, Mr. Chair. I appreciate that. And, uh, I'll, I'll try and make this as, uh, as brief and quick as possible knowing that you Maybe agenda I better interrupt you.

you. Uh, new motorboat Distri DISTRI Distributor Act. Now you got me doing it is intended to accomplish several items, and I, if I may, uh, I'm joined by Todd Solberg, who's the president of the Utah Boat Dealers Association. Um, to put a set of principles and procedures in place. It creates a level playing field between the boat manufacturers, the distributors, and the boat dealers. The distributees, like the automotive industry that has rules and regulations for the distribution, sales, and service of new automobiles. This act will accomplish the same types of things as it pertains to sales, warranty, repair, relevant market area succession termination, and have a regular regulatory agency. The Department of Commerce oversee the act. The boat marine industry in Utah means approximately $1.2 billion in revenue and provides roughly 3,700 jobs all contributing to the economy current there. Currently, there is no comprehensive legislation for the boat industry in Utah, which would give the dealers any recourse to dispute or defend potential actions manufacturers may levy, such as termination, non-renewal, unfair sales parts, service and warranty processes, and the ability to pass the business on boat dealers in Utah invest millions in buildings, inventory, special tools and personnel. And the agreements that they sign with a manufacturer, generally only for one year, and are mostly contracts of adhesion ru leaving them very much at risk for business continuation. The question as to why this hadn't been done prior to this is that the Utah Boat Dealer Association is relatively new, and though the need existed in the past, there was not an organization to bring such legislation forward. Four years ago, there was a bill that was passed in legislature. The National Marine Manufacturers Association was able to insert their language, which afforded little or no protections to the dealers. With this bill, we are repealing that part of the code, putting this comprehensive act in its place. There may be questions about why we as a state are getting in between two contracting businesses. And the simple answer is because dealers have no bargaining position with her manufacturer. Uh, Mr. Chair, I'll for forego that, uh, my personal, uh, experience, uh, in the automobile industry, when I had a manufacturer, uh, uh, happened to us 'cause of discrimination against our religion back in 1980. The manufacturers are just too big to fight. If there becomes a question of fairness in the marketplace, there are fines and penalties for the manufacturers if they're not compliant. But what about the dealers? Should they not have these same fines and penalties? The answer is very simple. The potential actions against the manufacturers by the state are for their failure to uphold the terms and conditions of this act. Once it is passed, the dealers are beholden to the manufacturers not the other way. Which actions could the dealer per perpetrate against the manufacturer anyway, this proposed legislation simply gives the dealer a way to appeal to a regulatory agency. If they feel that there's an issue that is not fair, coercive, or abusive, like the new, like the Utah New Motor Vehicle Franchise Act, we would anticipate very few complaints or actions that come before the Department of Commerce wants the manufacturer dealers understand the new required standards. If, if I may add, I was shocked, Mr. Chair, to find out that Utah is the number two, uh, highest boat industry in the country. Um, I, I had no idea. So if I could, Mr. Chair, just like to turn some time over to, uh, Todd Solberg just for a few comments, if that's okay?

My name is Todd Solberg with the Utah Boat Dealers Association. And I, and I'm currently serving as the president. And I appreciate the committee hearing this bill and, and taking it into consideration. We, as, as a group of dealers, we do represent a, a significant and growing market here in Utah. It is significant for the country, and, and so we appreciate the opportunity to gain some, some protections and, and to level set, uh, with our relationship with the manufacturers. Thank you. And if, if I could, Mr. Chair, uh, you know, we've been, we've been meeting, we, we had a, a, a robust meeting. Gosh, was it yesterday? My goodness. All my days are run together. Uh, I know we're gonna have one of the lobbyists for the association, for the, uh, national Marine Manufacturer Association is, uh, is Frank Pinelli will talk to you, uh, mentioned where we're at. We're just trying to move forward. I'd like to keep this kind of moving. This first sub was, is, um, I think a, a compromise and we'll continue with talks with, with, um, the, the Marine Manufacturers Association. And he'll be speaking either now or during the public comment.

Does, Mr. Chair.

Thank you Mr. Chairman. Uh, I move that we delete entitled Embody Senate Bill 1 57 New Motorboat Distributor Act and replace it with first sub Senate bill 1 57.

Yeah, thank you, chairman. It, it helps to uniform what is happening between various manufacturers and the dealers so that there's more of an even playing field, um, for all of those throughout the state. And, and it helps improve because it adds clarification where, where clarification doesn't currently exist. And so it goes beyond that, the simple dealer agreement and, and it calls out specific actions that have occurred in the past and, and are likely to occur in the future. And it, and it puts 'em in a statute so that we can have an even playing field as we, as, as we go about that. Um, as, as Senator Wilson commented earlier, the contracts of, we have contracts of adhesion in place and with those contracts, there's never been a single that I'm aware of, uh, a, a single change or amendment it's taken or leave it each year as we receive those contracts. And so this lets through statute add additional items that are, that are needed for clarification, um, so that we can have a good and productive, uh, relationship.

Do. Okay. We Do.

Thank you. Um, you may have described this, I'm sorry, but is the $5,000 per day violation, is that consistent across, uh, like what car dealers or subject to, is that, where did that number come from?

Uh, uh, I'm phoning a friend here in the front row saw that and he said that that the, that the automobile is higher than this one. Okay.

Thank you Mr. Chairman, uh, members of the committee. My name is Frank Elli with Foxley Elli, Kelly and Styler. And we, we represent the National Marine Manufacturing Association and the good news for the sponsors of the bills. They have Senator Wilson. And the good news for us is the sponsor Bill Senator Wilson. He understands franchise laws and the automobile industry understands the balance that you have to have to protect the interests of the dealers, but at the same time, you don't want to interfere with the market and the manufacturers. So we, we have had good discussions with Senator Wilson and we look forward to others 'cause we do have some concerns with the legislation and we expect to have a good, good discussions as this moves forward through the process. So we do appreciate that. And franchise laws for boating is new. I mean, this is, I think they've maybe one or two other states, whereas the automobile industry, they've been around for decades. This is new to the boating industry. And so we're trying to make our way to the National Association how we, uh, accomplish the, the, the goals that everyone wants to have. Um, the thing that we would ask for, and I think this committee would need, and what the whole Senate and the House would need, is as we make our way through, we are asking the supporters of this legislation to give Senator Wilson and us and lawmakers specific examples of where there have been concerns with that dealer manufacturer relationship. We wanna make sure that in order to avoid government overreach and disruption of the marketplace, we're just not developing laws that, uh, are, that are not based upon real problems when we need to learn those problems as you need to learn em as Senator Wilson's learn, so we can adapt the appropriate legislation to respond to that. So we look forward to hearing those and modifying legislation as this bill makes its way through the process. And we're grateful for the time that Senator Wilson has spent with us, along with the supporters of the bill as we craft something that works and protects both sides of this equation.

You, Mr. Chair. I make a motion that Senate bill first substitute Senate Bill 1 57 passed at the floor with a favorable recommendation.

I appreciate it, Mr. Chair. Let me just say something that you, you would have a lot more boat dealers here, uh, except there was great concern among them as the manufacturers kept demanding who it was that's bringing this bill forward and they felt they were unable to be here to testify, concerned about exact the reason why we need this bill. Thank you, Mr. Chair.

Okay. Um, I, I assume as we, as we go to take this vote, and, uh, I'm assuming the outcome, but you don't ever know, but I I'm assuming that you're, you're con going to continue to work on the bill, most likely have some additional subs or,

Oh, absolutely. Yeah. I mean, we've still got how many votes in the Senate and the House everywhere and, and, and I appreciate, uh, Frank's obviously somebody we've worked with before in our franchisees and, uh, uh, looking forward to working with him, uh, as, as we move forward.

Okay. Thank you.

Uh, yeah. What, what Basically we, there's several changes that generally they reducing penalties, narrowing geo geographic protections and adding specific criteria for termination. I'll, I'll go into more details in my presentation. That's basically what the new sub does.

Thank you Mr. President Pro temp tempt. And what what this bill does is it's gonna, again earlier, it's gonna reduce the penalties gonna, uh, from we had $5,000. It's down to a thousand dollars per day for, uh, administrative fine for violations. Um, it also gives the executive director, uh, it's a, should we change it from a shall to a may. We also reduce the radius of existing dealership where a distributor shall provide notice from a hundred miles down to 50 miles. We remove the definition of relevant market area and instead it's a notice area again from a hundred down to 50 miles that a, um, they have to notify a dealer. Uh, it adds specific examples of what constitutes good cause for a distributor to terminate an agreement, including fraud evidence or customer harm. Failure to meet financial standards or failure to meet communicated performance standards. These factors are also added to the, the list of evidence the executive director shall consider in an aju aate. Boy, that's a tough word. In a proceeding voluntary termination notice sub to increases the notice period of a, of a dealership to voluntary terminate from 30, uh, to 60 days. It also changed the amount of, um, parts that had to be bought back by the manufacturer. And to be basically just either current or immediately proceeding model yeared, um, to be pur purchased back by the distributor. And also allows, um, for wear and tear on those, on those, uh, parts. Uh, the warranty reimbursement. It modifies the reimbursement for warranty and recall work to be in accordance with the written schedule of compensation. And it adds an exclusion of vessels that are in the same link line make as a personal watercraft distributed under the same agreement. Uh, it also removes the requirement for distributors to notify the clerk of each effective municipality when seeking to establish or relocate a dealership. And it also removes the standalone section. And, um, Mr. President Pro temp the boat dealers just in the last four years has formed an association and they're now addressing some of the concerns they've had in Utah and some of the trends in other states, uh, with terminating dealers without cause and replacing them with others. This, uh, they're requiring dealers to do warranty work that is not fully reimbursed or having to do third parties to facilitate repairs and payment, which is a disservice to the dealer and the customer. Most of the contracts currently between the dealer and the boat manufacturers is, is a year. And sometimes there's just a lot of uncertainty in the future of these boat dealers as they're looking to, uh, increase their, um, facilities, their increase employees or spend the money on training for their employees. Um, this is just a very similar, uh, agreement that the automobile industry has had for many years, the RVs, the motor homes industry. And then just a few years ago we added power sports and all terrain vehicles to the same, uh, franchise distributor Act. So what this does is just brings the boat dealers into the same kind of, uh, helps them improve their, uh, their certainty in the future. I think it also brings about fairness, uh, for the boat dealers. And with that, I'd be happy to answer any questions.

Thank you Mr. President Pro temp I I move that second substitute Senate bill 1 57. Be read a third time And the question is, shall second substitute Senate bill 1 57?

Be read for a third time. Roll call vote. Senator Vickers Spery Aye. Lein Aye. Bramer Aye. Bus? Aye. Comore. Ms. Camilla Bill Moore. Aye. Grover Harper Aye. Hankins Aye. Ipson Aye. Johnson. Aye. Quan McKay Mikel Milner Aye. Musman Musselman Owens pitcher Plum Rebi Sandal Stevenson Stratton Vickers Aye. Weiler Aye. Wilson Aye. Winterton McKay No one Winterton Senator Winterton Aye. President Adams Second substitute Senate bill 1 57. Having received 21 yay votes one nay vote seven being absent will be read for a third time.

Yes. Thank you Mr. President Pro Tem, I'd like to if I could, encircle third substitute Senate bill two 10 nicotine amendments. The motion is to Unci third substitute Senate Bill two 10 nicotine amendments.

Thank you again, Mr. President Pro tem. This bill, we did, um, add a sub in on Friday. Hopefully if anybody needed to do some reading, they were able to over the weekend. This bill is addressing some of the problematic pieces of what was Senate bill 61.

Thank you Mr. President Pro Temp. Uh, this is, this bill is similar to what we've done in the past with the automobiles industry, the RV motor home recently, power sports. This will bring certainty and fairness to the future for the boat dealers of the State of Utah. With that, I'd be happy to answer any questions.

Uh, thank you Mr. President Pro Temp. I move that second substitute Senate bill 1 57 pass. This bill has been read three times.

Senator Vickers Spery Aye. Lewin Aye. Brammer Bus call Moore Escamilla Fillmore Grover Harper Harper Hankins Ipson Johnson Wan McKay Mikel Milner Aye. Musman Owens pitcher Aye. Plum Rebe. Aye. Sandal Stevenson. Aye. Stratton? Yes. Yeah. Bickers. Byler Aye. Wilson. Aye. Winterton.

Thank you Mr. President Pro Tem.