After 46 scheduled days and one day of overtime, the General Assembly has concluded its 2019 regular session. In Virginia’s 400th year, senators and delegates voted on legislation addressing the state budget, casino gambling, the Equal Rights Amendment, Interstate-81, and a variety of topics in between. They met with constituents and consumers groups, lawyers and lobbyists, auto dealers and others. And, in roughly seven weeks, they performed their central function as legislators by passing laws and sending them to the Governor for consideration.
This session was a very good one for our Association and its members. The General Assembly passed a bill that would make it easier for participants in a new car show to sell used vehicles at that show. They passed legislation to provide greater rights to dealers of a franchise that changes hands from one company to another. They passed a bill to streamline the mechanics lien process by making it easier to post notice of sale. One bill that passed would formalize a process for DMV’s oversight of franchise matters. Two others would limit a manufacturer’s ability to exercise its right of first refusal in a buy-sell.
In addition to supporting our bills, VADA’s Legislative Team also weighed in on others that would impact our membership. For example, we supported Delegate Tim Hugo’s bill that would increase the price of an inspection sticker from $16 to $20. Where Virginia State Police currently receives $0.50 of the $16, on July 1, 2019 they will receive $0.70 of the $20. We worked closely this session with State Police to streamline the safety inspector certification process. With the increased funds, State Police has agreed to hire more non-Troopers to provide greater access to testing and a quicker turnaround for applicants. A more complete list of the bills we proposed, were involved with, and tracked is included at the bottom of our Capitol Briefs newsletter.
***
By far, the bills addressing a manufacturer’s right of first refusal garnered the most attention among those we proposed. By limiting a manufacturer’s ability to exercise the right of first refusal, H.B. 2174 and S.B. 1464, carried by Del. Jason Miyares (R-Virginia Beach) and Sen. Jeremy McPike (D-Prince William) respectively, would protect the assets of new car and truck dealers hoping to sell or expand their business.
The car manufacturers were the first to oppose such legislation. They argued the bills were overbroad and would prevent a manufacturer from being able to control its brand. We defeated those arguments and prevailed 95-2 in the House and 40-0 in the Senate.
After “crossover”—the point in session when all bills the House passed travel to the Senate for consideration and vice versa—Volvo heavy duty trucks entered the game. They are the manufacturer party to the court case that helped give rise to this issue and have their largest manufacturing plant in the world in Dublin, Virginia.
With the help of a former Republican Delegate and one of the largest law firms and lobbying groups in Virginia, Volvo Trucks made the following central arguments: (1) the proposed bills interfere with pending litigation; (2) car and truck dealers are different and should be treated as such; and (3) the legislation would somehow affect Volvo’s existing manufacturing facility in Southwest Virginia and future investments in the state.
For all of Volvo’s arguments and money spent on lobbyists, the House Transportation Committee voted 19-3 in favor of our Senate Bill. The Senate Transportation tally was 11-2 in favor of the House Bill. However, with the third argument above, Volvo brought in the labor community (AFL-CIO & UAW), who opposed the bill for fear of losing jobs at the plant, plus the Governor’s Administration, which encourages corporate investment in the Commonwealth.
Because of the labor unions and their opposition, the Senate Bill received a full House vote of 71-28—a significant departure from the almost unanimous support the bills received to that point. With those numbers, and knowing there would be an amendment from the Governor, we considered the math. We would need 67 members of the House and 28 members of the Senate to overcome such executive action. But in the past five years, no member of the Governor’s party (House or Senate) has gone against a Governor’s veto or amendment.
Knowing labor would obtain more votes, and with our backs against the wall, we had no choice but to negotiate with AFL-CIO and UAW. The result was an amendment to exclude any heavy-duty truck manufacturers involved federal litigation relating to the pertinent statute as of January 1, 2019. That includes Volvo Trucks and their subsidiary, Mack Trucks. Simply, it was smarter to work with the other side during session, and form an amendment on our terms, than put the bills in jeopardy by letting the Governor decide. Bottom line: We need the bill. This was the only way to get it.
Although we would have preferred protection for 100% of our members, this still is a monumental victory for the new car and remaining heavy-duty truck dealers of Virginia. Once this becomes law, for roughly 99% of you, no longer can a manufacturer interrupt an agreed upon buy-sell, cherry pick their store, and put an entire transaction at risk.
We will note, too, that we worked hard on this legislation with the National Association of Minority Automobile Dealers (NAMAD). Our collaboration with NAMAD ensured the bills would not hinder, but rather facilitate, the increase in minority dealers in the Commonwealth.
***
As you can imagine, our bills required extensive work. That is especially true for those dealing with the right of first refusal. Before the final week of session, we worked with the other side and the Governor’s office Saturday and into the late hours Sunday evening before finding agreement Monday afternoon. All last week, we worked with patrons and party leaders to ensure passage. It was not until Friday, February 22, 2019, one day before the session ended, that the General Assembly finally passed the bills.
Please understand, this is not over until the Governor signs into law, vetoes, or amends our legislation. We will be busy making sure our bills reach the finish line and will notify you should we need your help.
As many of you know, we were not alone in getting our bills to this point. We must thank the MANY dealers who took time out of their busy schedules to participate in the legislative process.
We had 40 dealers participate in our annual Assault the Hill event. When push came to shove on the right of first refusal bills, we had 26 individuals pick up the phone and call their elected representatives to explain how important the bills are to the dealers of this Commonwealth. One of those 26 is a sitting U.S. Congressman, who is a partner of a dealer group in Northern Virginia.
Very significantly, when we asked dealers to travel to the Capitol to appear and/or testify in a Transportation Committee meeting, we had several answer the call. Below is a list of those individuals who traveled to Richmond, most driving several hours to be there, sometimes by 8 AM for a committee meeting. We cannot overstate how important their presence was for the progression of our legislation. Truthfully, this list should be twice the size. But to those on it, YOU made the difference, and we sincerely thank you.
| Liza Borches | Kelly Duke Drewnowski | Charlie Obaugh |
| Gardner Britt | Russ Ellett | Eric Obaugh |
| Ryan Brooks | William Farrell | Greg Obaugh |
| Jay Burchell | Rick Gallaer | Burke O’Malley |
| Zach Cochran | Travis Hepburn | Larry Page |
| Dan Coutu | Cameron Johnson | Dave Perno |
| Tim Cosgrove | Chip Lindsay | Tim Pohanka |
| Lydia Duke | Mike Lorton | |
| Eley Duke | Tom Mohr |
***
Below you will find links to recorded committee meetings, when legislators considered our bills. Also, you will see several pictures of those who traveled to Richmond to lend their support.
If you have any questions, please reach out to one of our two staff attorneys, Anne Gambardella, Esq. or Tommy Lukish, Esq. Anne can be reached at (804) 545-3006 or AGambardella@vada.com. Tommy is available at (804) 545-3028 or TLukish@vada.com.
We will keep you up-to-date on any developments from the Governor’s office.
As always, it is a pleasure to serve the new car and truck dealers of Virginia.
***
Below is a link to the Senate Transportation Committee’s review of S.B. 1333, which addresses dealer rights upon the discontinuation of a manufacturer. The Committee approved 13-0.
VIDEO: SB 1333 – Senate Transportation Committee
Below is video of the Senate Transportation Committee’s consideration of S.B. 1464, which addresses a manufacturer’s right of first refusal. The most extensive opposition from the car manufacturers is seen in this video and the next. The Committee voted 13-0 in support of the bill.
VIDEO: SB 1464 – Senate Transportation Committee
Here is video of the House Transportation Committee’s consideration of H.B. 2174, which addresses both dealer rights upon discontinuation of a manufacturer and the right of first refusal. The Committee voted 22-0 in favor.
VIDEO: HB 2174 – House Transportation Committee
Below is a recording of the Senate Transportation Committee’s review of H.B. 2174. This occurred after “crossover,” when each house considers legislation from the other chamber. This was the first committee meeting at which Volvo Trucks and the labor unions spoke in opposition to our legislation. The Committee voted 11-2 in favor of the bill.
VIDEO: HB 2174 – Senate Transportation Committee
Click the below link to view the Senate Transportation Committee’s consideration of H.B. 2039, which addresses the sale of used vehicles at an auto show. This occurred after “crossover.” The Committee supported the bill 13-0.
VIDEO: HB 2039 – Senate Transportation Committee
Below is video of the House Transportation Committee’s review of S.B. 1464. This also took place after “crossover.” You will find Volvo Trucks repeat many of their arguments. The Committee voted 19-3 in favor of this legislation.
VIDEO: SB 1464 – House Transportation Committee
