TITLE 24. TRANSPORTATION AND MOTOR VEHICLES

MOTOR VEHICLE DEALER BOARD

Fast-Track Regulation

Title of Regulation: 24VAC22-40. Independent Motor Vehicle Dealer Operator Recertification Regulations (repealing 24VAC22-40-10 through 24VAC22-40-70).

Statutory Authority: §§ 46.2-1503.4 and 46.2-1506.1 of the Code of Virginia.

Public Hearing Information: No public hearing is currently scheduled.

Public Comment Deadline: May 10, 2023.

Effective Date: May 25, 2023.

Agency Contact: William Childress, Executive Director, Motor Vehicle Dealer Board, 2201 West Broad Street, Suite 104, Richmond, VA 23220, telephone (804) 367-1100, Extension 3002, FAX (804) 367-1053, or email william.childress@mvdb.virginia.gov.

Basis: The Motor Vehicle Dealer Board is authorized to promulgate regulations pursuant to § 46.2-1503.4 of the Code of Virginia.

Purpose: Since the recertification requirements are now codified in Chapter 15 (§ 46.2-1500 et seq.) of Title 46.2 of the Code of Virginia, the primary purpose of this regulatory action is to ensure there are no conflicts between the Code of Virginia and regulation. The welfare of citizens is positively impacted due to increased frequency of educational training for dealer-operators within the motor vehicle dealer community as the provisions are codified in statute. The goal of this regulatory action is to increase accurate information and reduce confusion.

Rationale for Using Fast-Track Rulemaking Process: This action is appropriate for the fast-track rulemaking process because it's repeal in entirety is due to the provisions established in the regulation being codified in §§ 46.2-1583 through 46.2-1589 of the Code of Virginia pursuant to Chapter 574 of the 2022 Acts of Assembly. Therefore, the action implementing the repeal is deemed to be noncontroversial.

Substance: Pursuant to Chapter 574 of the 2022 Acts of Assembly, the amendments repeal Independent Motor Vehicle Dealer Operator Recertification Regulations (24VAC22-40) in entirety because the provisions are codified in §§ 46.2-1583 through 46.2-1589 of the Code of Virginia.

Issues: The advantage to the public and the agency of the repeal of 24VAC22-40 is less confusion. The provisions regarding dealer community's educational requirements codified in statute are more frequent than what was in the regulation, so the repeal removes conflict between the Code of Virginia and the regulation. There are no disadvantages to the public or the Commonwealth.

Department of Planning and Budget's Economic Impact Analysis:

The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Code of Virginia (Code) and Executive Order 19. The analysis presented represents DPB's best estimate of these economic impacts.¹

Summary of the Proposed Amendments to Regulation. In response to 2022 legislation, the Motor Vehicle Dealer Board (Board) proposes to repeal 24VAC22-40 Independent Motor Vehicle Dealer Operator Recertification Regulations (regulation). An "Independent motor vehicle dealer" or an "independent dealer" is defined in the § 46.2-1583 of the Code of Virginia as "a dealer in used motor vehicles who is not also licensed as a franchise motor vehicle dealer."²

Background. This regulation, which provides the recertification requirements for independent dealer-operators (IDOs), was established on September 2, 2010, and has never been amended. The minimum qualifications for an initial IDO certificate are found in § 46.2-1511 of the Code of Virginia,³ which also exempts the initial certification process from the Administrative Process Act. More recently, Chapter 574 of the 2022 Acts of Assembly codified the requirements for IDO recertification as § 46.2-1583 through § 46.2-1589 of the Code of Virginia.⁴

Estimated Benefits and Costs. Following enactment of the 2022 legislation, the Code of Virginia now addresses all the requirements that are contained in the regulation. However, some of the requirements in the Code differ from those in the regulation. For example, in the Code of Virginia, IDO certificates of qualification are valid for 24 months, while in the regulation they are valid for 36 months. Also, some fees are higher in the Code of Virginia than in the regulation.⁵ Whenever there is conflict between statute and regulation, statute prevails. Thus, repealing the regulation would be beneficial in that it eliminates the possibility the public would be misled concerning the actual legal requirements in effect.

Businesses and Other Entities Affected. According to the Board, there are approximately 3,798 certified IDOs in the Commonwealth.

The Code of Virginia requires DPB to assess whether an adverse impact may result from the proposed regulation.⁶ An adverse impact is indicated if there is any increase in net cost or reduction in net revenue for any entity, even if the benefits exceed the costs for all entities combined. Since repealing the regulation would neither increase net cost nor reduce net revenue, adverse impact is not indicated.

Small Businesses⁷ Affected.⁸ The repeal of the regulation would not adversely affect small businesses.

Localities⁹ Affected.¹⁰ The repeal of the regulation would neither disproportionally affect any particular locality, nor affect costs for local governments.

Projected Impact on Employment. The repeal of the regulation would not affect employment.

Effects on the Use and Value of Private Property. The repeal of the regulation would not affect the use and value of private property or real estate development costs.

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¹Section 2.2-4007.04 of the Code of Virginia requires that such economic impact analyses determine the public benefits and costs of the proposed amendments. Further the analysis should include but not be limited to: (1) the projected number of businesses or other entities to whom the proposed regulatory action would apply, (2) the identity of any localities and types of businesses or other entities particularly affected, (3) the projected number of persons and employment positions to be affected, (4) the projected costs to affected businesses or entities to implement or comply with the regulation, and (5) the impact on the use and value of private property.

²See https://law.lis.virginia.gov/vacode/title46.2/chapter15/section46.2-1583/

³See https://law.lis.virginia.gov/vacode/title46.2/chapter15/section46.2-1511/

⁴See https://lis.virginia.gov/cgi-bin/legp604.exe?221+ful+CHAP0574

⁵The recertification application fee is $50 in the Code of Virginia, and $25 in the regulation. In the Code of Virginia, course providers may charge applicants a course fee of no more than $300. In the regulation course providers may charge applicants a course fee of no more than $250.

⁶Pursuant to § 2.2-4007.04 D: In the event this economic impact analysis reveals that the proposed regulation would have an adverse economic impact on businesses or would impose a significant adverse economic impact on a locality, business, or entity particularly affected, the Department of Planning and Budget shall advise the Joint Commission on Administrative Rules, the House Committee on Appropriations, and the Senate Committee on Finance. Statute does not define "adverse impact," state whether only Virginia entities should be considered, nor indicate whether an adverse impact results from regulatory requirements mandated by legislation.

⁷Pursuant to § 2.2-4007.04, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

⁸If the proposed regulatory action may have an adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include: (1) an identification and estimate of the number of small businesses subject to the proposed regulation, (2) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the proposed regulation, including the type of professional skills necessary for preparing required reports and other documents, (3) a statement of the probable effect of the proposed regulation on affected small businesses, and (4) a description of any less intrusive or less costly alternative methods of achieving the purpose of the proposed regulation. Additionally, pursuant to § 2.2-4007.1 of the Code of Virginia, if there is a finding that a proposed regulation may have an adverse impact on small business, the Joint Commission on Administrative Rules shall be notified.

⁹"Locality" can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

¹⁰Section 2.2-4007.04 defines "particularly affected" as bearing disproportionate material impact.

Agency's Response to the Economic Impact Analysis: The Motor Vehicle Dealer Board concurs with the Department of Planning and Budget's economic impact analysis.

Summary:

Chapter 574 of the 2022 Acts of Assembly codifies independent dealer-operator (IDO) requirements in §§ 46.2-1583 through 46.2-1589 of the Code of Virginia, therefore the amendments repeal Independent Motor Vehicle Dealer Operator Recertification Regulations (24VAC22-40) in entirety to eliminate conflict between regulation and statute and redundancy of IDO requirements existing in two places.