[49 PA. CODE CH. 19] Vehicle Auction License [32 Pa.B. 5418] The State Board of Vehicle Manufacturers, Dealers and Salespersons (Board) proposes to add §§ 19.19 and 19.20 (relating to standards of licensure for retail or pubic auction; and standards of licensure for wholesale auction) to read as set forth in Annex A. The proposed rulemaking would establish requirements for retail or public vehicle auctions and wholesale vehicle auctions.
Effective Date
The proposed rulemaking will be effective upon publication of final-form rulemaking in the Pennsylvania Bulletin.
Statutory Authority
The rulemaking is proposed under section 4(9) of the Board of Vehicles Act (act) (63 P. S. § 818.4(a)(9)).
Background and Need for the Proposed Rulemaking
The proposed rulemaking would establish requirements for retail or public vehicle auctions and wholesale vehicle auctions and would clarify the statutory restrictions on activities that may be engaged in by persons holding an auction license. The proposed rulemaking is necessary to bring the Board's regulations into conformity with changes made to the act by the act of April 19, 1996 (P. L. 104, No. 27) (Act 27).
Brokering activity became prohibited under Act 27. Section 5(a)(3) of the act (63 P. S. § 818.5(a)(3)) was amended to eliminate licensure for activities that had previously been lawful for persons holding a broker license.
Under the definition of ''broker'' in section 2 of the act (63 P. S. § 818.2), the activities which constituted brokering were very broad and included auctioning vehicles, selling vehicles on consignment (acting as a seller's agent) and acting as a buyer's agent. Prior to Act 27, the Board issued a broker license to a person engaged in these activities.
Under Act 27, the General Assembly substantially amended the act. Act 27 prohibited brokering (section 5(a)(3) of the act) but permitted some of what had previously been defined as brokering activity to be performed by other licensees. This change was accomplished by redefining broker and dealer and creating two new classes of licensees, public or retail vehicle auctions and wholesale vehicle auctions. See section 2 of the act. Activities that had formerly been considered brokering were divided between dealers (consignment sales) and public or retail vehicle auctions and wholesale vehicle auctions (auctioning). Other broker activity remains prohibited by the general prohibition against brokering in section 5(a)(3) of the act (acting as a buyer's agent).
Under Act 27, the term ''broker'' was redefined. In addition, Act 27 redefined the term ''vehicle dealer'' to permit a dealer to engage in consignment sales, which previously was an activity limited to vehicle brokers. See section 2 of the act. Thus, under the act, only a licensed vehicle dealer may act as a seller's agent by engaging in consignment sales.
Act 27 also created a new class of licensure for vehicle auctions. Vehicle auctions were divided into two categories, wholesale auctions and public or retail auctions. Under Act 27, public or retail auction licensees are permitted to engage in auction activities that, under the prior act, could only be performed by brokers. See section 2 of the act.
Act 27 eliminated the class of licensees known as brokers and prohibited brokering activities. Two exceptions to the prohibition were created. First, vehicle dealers' lawful activities were expanded to include consignment sales. Second, new classes of licensees were created to permit auctioning of vehicles.
Additional Statutory Changes Requiring Regulatory Amendments
It is apparent in section 5(e)(1)(i) of act that the General Assembly never intended the same facility requirements to apply to auctions as to dealers. Act 27 did not specify facility requirements for vehicle auctions. However, public safety considerations demand that the Board provide minimum requirements for auction facilities.
In addition, the General Assembly, in Act 27, deviated from the prior act by eliminating licensure for persons acting as a buyer's agent. Under the prior act, a vehicle broker was permitted to act as a buyer's agent. See section 2 of the act. However, under section 5(a)(3) of act, acting as a broker, which would include acting as a buyer's agent, is prohibited. Section 2 of the act creates exceptions to this general rule for certain licensed persons. Some confusion may exist regarding whether a person licensed under one of the enumerated categories in the current definition of broker may perform any type of brokering, such as acting as a buyer's agent. The proposed rulemaking clarifies the Board's interpretation that only those brokering activities authorized by Act 27 are permitted. Act 27 provides that the holder of a public or retail vehicle auction license or wholesale vehicle auction license is not permitted to engage in all the types of activities formerly permitted of a broker, including acting as a buyer's agent; rather, the holder of a public or retail vehicle auction license or wholesale vehicle license may only auction vehicles.
Description of Proposed Rulemaking
The proposed rulemaking conforms the Board's regulations to Act 27. Act 27 created new classes of licensure for auctions. The proposed rulemaking to the Board's regulations set forth facility requirements designed to protect the public, consistent with facility requirements for vehicle dealers. See § 19.18 (relating to established place of business for dealers).
Under § 19.19, retail or public vehicle auctions shall maintain a business identity separate from other businesses owned or operated by the auction, may not conduct auction activities other than from the established place of business and may only broker, other than conducting auctions, if the auction also holds a dealer license. In addition, a retail or public auction shall meet the following requirements at its established place of business: (1) have a permanent enclosed building for use as an auction facility within this Commonwealth; (2) include a private office within the permanent enclosed building, separate from display and auction areas and suitable for storing books and records; (3) have a single business line telephone listed in the auction's licensed name; (4) be in compliance with applicable building codes, zoning ordinances and other land-use restrictions; (5) comply with fire-safety and occupancy requirements relevant to the area in which the auction is located; (6) post a sign indicating the days and hours that the public may attend; (7) exhibit a visible sign that shows the licensed name of the auction; and (8) have a display area where potential buyers may inspect or test drive the vehicles that is adjacent to the auction's established place of business.
Public safety and welfare are promoted by ensuring a private room in which to consummate the sale and by providing for an area in which the public may view vehicles prior to the auction. Consumers are assisted by the provision requiring a sign to identify and locate the auction. Public safety is protected by requiring auctions to comply with local building codes, zoning ordinances and fire safety restrictions.
The provision regarding business identity protects the consumer who should be able to determine with whom the consumer is conducting business. The provision prohibiting the auction from conducting activities other than from its established place of business protects consumers by allowing for the Board's inspection and control over auction facilities. This restriction parallels the restriction on licensed vehicle dealers, who are not permitted to conduct business from a location other than their licensed location without obtaining a branch lot license that meets all the facilities requirements imposed on the primary location. Finally, the provision regarding brokering simply restates the prohibition in the act, but should be repeated in the Board's regulations because auctions may look only to the regulations when determining their scope of conduct.
Under § 19.20, wholesale vehicle auctions must maintain a business identity separate from other businesses owned or operated by the auction, may not conduct auction activities other than from the established place of business and may only broker, other than conducting auctions, if the auction also holds a dealer license. In addition, a retail or public auction shall meet the following requirements at its established place of business: (1) have a permanent enclosed building for use as an auction facility within this Commonwealth; (2) include a private office within the permanent enclosed building, separate from display and auction areas and suitable for storing books and records; (3) have a single business line telephone listed in the auction's licensed name; (4) be in compliance with applicable building codes, zoning ordinances and other land-use restrictions; (5) comply with fire-safety and occupancy requirements relevant to the area in which the auction is located; and (6) post a sign indicating the licensed name and that the auction is not open to the general public.
The provisions related to the facility promotes public safety and welfare by requiring a private room in which to consummate the sale, a dedicated telephone number so the licensee may be reached by telephone and compliance with local building codes, zoning ordinances and fire safety restrictions. Finally, the wholesale auction shall be clearly identified so that the general public knows that the wholesale auction is not open to the public, but rather, is restricted to dealers.
The provisions relating to auction activities that prohibit the auction from conducting activities other than from its established place of business protects consumers by allowing for the Board's inspection and control over auction facilities. This restriction parallels the restriction on licensed vehicle dealers, who are not permitted to conduct business from a location other than their licensed location without obtaining a branch lot license that meets all the facilities requirements imposed on the primary location. Finally, the provision regarding brokering simply restates the prohibition in the act, but should be repeated in the Board's regulations because auctions may look only to the regulations when determining their scope of conduct.
Compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation''
The Board sent this proposed rulemaking to dealer organizations, including the Pennsylvania Automobile Dealers Association and Pennsylvania Independent Automobile Dealers Association, as required under the directives of Executive Order 1996-1. In addition, the Board considered the impact the proposed rulemaking would have on the regulated community and on public safety and welfare. The Board finds that the proposed rulemaking addresses a compelling public interest as described in this Preamble and otherwise complies with Executive Order 1996-1.
Fiscal Impact and Paperwork Requirements
The proposed rulemaking will have no adverse fiscal impact on the Commonwealth or its political subdivisions. The proposed rulemaking will impose no additional paperwork requirements upon the Commonwealth, its political subdivisions or the private sector.
Sunset Date
The Board continuously monitors the cost effectiveness of its regulations. Therefore, no sunset date has been assigned.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on October 17, 2002, the Board submitted a copy of this proposed rulemaking to the Independent Regulatory Review Commission (IRRC) and the Chairpersons of the Senate Consumer Protection and Professional Licensure Committee and the House Professional Licensure Committee. In addition to submitting the proposed rulemaking, the Board has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Board in compliance with Executive Order 1996-1. A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, if IRRC has objections to any portion of the proposed rulemaking, it will notify the Board within 10 days of the close of the Committees' review period. The notification shall specify the regulatory review criteria that have not been met by the portion of the proposed rulemaking to which an objection is made. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Board, the General Assembly and the Governor of objections raised.
Public Comment
Interested persons are invited to submit written comments, suggestions or objections regarding this proposed rulemaking to Board Administrator, State Board of Vehicle Manufacturers, Dealers and Salespersons, P. O. Box 2649, Harrisburg, PA 17105-2649, within 30 days following publication of this proposed rulemaking in the Pennsylvania Bulletin.
EDWARD J. CERNIC, Jr.,
ChairpersonFiscal Note 16A-603. No fiscal impact; (8) recommends adoption.
Annex A TITLE 49. PROFESSIONAL AND
VOCATIONAL STANDARDSPART I. DEPARTMENT OF STATE Subpart A. PROFESSIONAL AND
OCCUPATIONAL AFFAIRSCHAPTER 19. STATE BOARD OF
VEHICLE MANUFACTURERS, DEALERS
AND SALESPERSONSAUCTION LICENSE § 19.19. Standards of licensure for retail or public auction.
(a) Auction activities.
(1) Every public or retail auction shall have a business identity separate from other businesses owned or operated by the public or retail auction.
(2) A public or retail auction may not conduct auction activities other than from its established place of business.
(3) An auction license does not permit a public or retail auction to broker, other than the auctioning of vehicles.
(b) Established place of business.
(1) The established place of business for a public or retail auction shall include a permanent enclosed building for use as an auction facility within this Commonwealth.
(2) The established place of business shall include a private office, located within the permanent enclosed building, separate from display areas and auctioning areas, that has space for the storage of books and records.
(3) The established place of business shall have a single business line telephone, located within the permanent enclosed building, that is used for the public or retail auction. The telephone number shall be listed under the public or retail auction's licensed name.
(4) The established place of business shall be in full compliance with applicable building codes, zoning ordinances and other land-use ordinances.
(5) A public or retail auction that is located in Pittsburgh, Philadelphia or Scranton shall possess a certificate of compliance with fire-safety requirements issued by the appropriate fire-safety authority of that city. A public or retail auction that is located somewhere other than in Pittsburgh, Philadelphia or Scranton shall possess a Certificate of Occupancy issued by the Department of Labor and Industry under the act of April 27, 1927 (P. L. 465, No. 299) (35 P. S. §§ 1221--1235), known as the Fire and Panic Act.
(6) A public or retail auction shall post a sign indicating the days and hours that the public may attend for either inspection or auctioning of vehicles.
(7) A public or retail auction shall exhibit a sign, either permanently affixed to the building or erected outdoors in the display area, that shows the licensed name of the auction and that is visible to the public.
(8) A public or retail auction shall have a display area where potential buyers are permitted and invited in the regular course of business to inspect or test drive the vehicles that are being offered for sale by the auction. The display area shall be at or adjacent to the auction's established place of business. The display area may be indoors, outdoors or partly indoors and partly outdoors.
§ 19.20. Standards of licensure for wholesale auction.
(a) Auction activities.
(1) Every wholesale auction shall have a business identity separate from other businesses owned or operated by the wholesale auction.
(2) A wholesale auction may not conduct auction activities other than from its established place of business.
(3) An auction license does not permit a wholesale auction to broker, other than the auctioning of vehicles.
(b) Established place of business.
(1) The established place of business for a wholesale auction shall include a permanent enclosed building for use as an auction facility within this Commonwealth.
(2) The established place of business shall include a private office, located within the permanent enclosed building, separate from display areas and auctioning areas, that has space for the storage of books and records.
(3) The established place of business shall have a single business line telephone, located within the permanent enclosed building, that is used for the wholesale auction. The telephone number shall be listed under the wholesale auction's licensed name.
(4) The established place of business shall be in full compliance with applicable building codes, zoning ordinances and other land-use ordinances.
(5) A wholesale auction that is located in Pittsburgh, Philadelphia or Scranton shall possess a certificate of compliance with fire-safety requirements issued by the appropriate fire-safety authority of that city. A wholesale auction that is located somewhere other than in Pittsburgh, Philadelphia or Scranton shall possess a Certificate of Occupancy issued by the Department of Labor and Industry under the act of April 27, 1927 (P. L. 465, No. 299) (35 P. S. §§ 1221--1235), known as the Fire and Panic Act.
(6) A wholesale auction shall post a sign indicating the auction's licensed name and that the auction is not open to the general public.
[Pa.B. Doc. No. 02-1949. Filed for public inspection November 1, 2002, 9:00 a.m.]
