As the Texas Legislature opens a new session, industries dominant for as long as a century are squaring off against newcomers that want things done differently.
Tesla Motors, maker of a $100,000 electric sports car that it can only sell to Texans online, will seek to end auto dealers’ control. Wal-Mart Stores wants to eliminate a Prohibition-era law that keeps it from selling liquor. Craft-beer brewers are demanding the freedom to auction distribution rights to the highest bidder. Ride-sharing company Uber Technologies is preparing to battle taxi companies that see the newcomer as a threat.
The fights will help determine what echoes louder in the Capitol’s pink-granite halls: entrenched interests or the limited-government ideology often invoked as bedrock politics in the state.
“It’ll be a true test of the power of the legislators’ commitment to free-market principles on the one hand and the push-back they might get from specific businesses in their district,” said Mark Jones, a political science professor at Rice University in Houston. “When rhetoric runs up against political reality, reality often wins.”
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Tesla has enlisted a phalanx of lobbyists, including Mike Toomey, the former chief of staff for outgoing Gov. Rick Perry, to make it legal to buy its cars. A law enacted more than half a century ago requires manufacturers to distribute vehicles through dealerships rather than directly to consumers. Dealers say the law protects family-owned businesses and their customers from automobile makers.
Tesla has opened “galleries” where customers can learn about the car, including one at NorthPark Center in Dallas, though employees are barred from discussing prices or offering test-drives. Texans who want one must have it shipped to a third-party location and even unwrap it from plastic themselves.
“Tesla confronts an artificial regulatory monopoly,” said Diarmuid O’Connell, vice president of business development for Tesla, based in Palo Alto, Calif.
Tesla failed to get a bill passed two years ago. Texas is home to nearly 1,300 auto dealerships, with at least one in almost all the 150 House of Representatives districts and 31 Senate districts, said Bill Wolters, president of the Texas Automobile Dealers Association.
“Dealers are one of the biggest employers, taxpayers and community volunteers,” Wolters said. “Dealers do good things in the communities where these legislators live.”
Wal-Mart, the world’s largest retailer, is also set to fight a law that it says has hamstrung its business. Texas prevents publicly traded companies from selling spirits at the retail level.
“This restriction is not only unconstitutional, but also inconsistent with free market competition and consumer choice — principles in which Texans strongly believe and steadfastly support,” Gerard Dehrmann and Silvia Azrai Kawas, Wal-Mart vice presidents, wrote in a Dec. 4 open letter to the Beer Alliance of Texas.
Uber has been operating for about two years in Texas, one of its fastest-growing markets. The company wants statewide regulations instead of the patchwork of local laws that prevents the ride-booking service from operating in some cities. It faces opposition from taxi operators.
“We have worked closely with city officials to implement smart regulations that protect riders and drivers, and we stand ready to do the same with state legislators should the issue arise this session,” Uber spokeswoman Debbee Hancock said.