Proposed new §217.403(c) provides that unless the assembled vehicle is ineligible for title under Transportation Code §731.051(b), the department shall issue a title if the assembled vehicle passes the required inspection under proposed amended §217.143 and Transportation Code §731.101; passes any additional inspection required by Transportation Code Chapter 548; and following receipt of a fully completed application and all required forms and fees, as identified in §217.404.

Proposed new §217.404 details the application process. The process differs from ordinary title application transactions, because in this case the department will review the application before it is formally submitted to a county tax assessor-collector. The process should add uniformity, and avoid rejections and the need for resubmission of the application.

Proposed new §217.404(a) lists the information required in the application. Proposed new §217.404(a)(1) requires photographs of the vehicle and, if a replica, a photograph of what the vehicle is a replica of. These will assist in identifying the vehicle.

Proposed new §217.404(a)(2) requires evidence of ownership of the basic component parts of the assembled vehicle as described in §217.405. Evidence of ownership is necessary to establish title to the vehicle or process an application for assignment or reassignment of a vehicle identification number under Transportation Code §501.033 as required by Transportation Code §731.054.

Proposed new §217.404(a)(3) requires, if applicable, proof, on a form prescribed by the department, of a safety inspection required under §217.143. Under the proposal, the requirement is applicable only to assembled motor vehicles, custom vehicles, replicas, and street rods.

Proposed new §217.404(a)(4) requires a copy of the Automobile and Light Truck certification, or a successor certification, for the master technician who completed the inspection described in §217.404(a)(3), if the inspection was required.

Proposed new §217.404(a)(5) requires a copy of the inspection that may be required under Transportation Code Chapter 548 if the assembled vehicle is to be registered for operation on the roadway.

Proposed new §217.404(a)(6) (requires a rebuilt vehicle statement; (7) a weight certificate; and (8) the applicant's identification information as required in §217.5(d).

Proposed new §217.404(a)(9) requires a vehicle identification number to be established by one of the four listed means. The means are authorized in Transportation Code §731.054. Proposed new §217.404(a)(9)(A) and (B) allow for the process of applying for an application for assignment or reassignment of a vehicle identification number. That process is under Transportation Code §501.033 and requires a vehicle identification number inspection under Transportation Code §501.032. The inspection is consistent with Transportation Code §731.051 which requires titling to be done under Chapter 501 and Chapter 731. Transportation Code §501.003 states that Transportation Code Chapter 501 is to be liberally construed to lessen and prevent (1) the theft of motor vehicles, and (2) the importation into this state of and traffic in motor vehicles that are stolen. Proposed new §217.404(a)(9)(C) and (D) are based on the vehicle identification numbers assigned by the maker of a kit or the manufacturer of the assembled vehicle respectively authorized in Transportation Code §731.054.

Proposed new §217.404(b) provides that the department will review the documents and determine that the application is complete and the vehicle meets the qualifications to be titled as an assembled vehicle.

Proposed new §217.404(c) provides that the department will notify the applicant in writing if the department determines the application is complete and the vehicle is determined to qualify for titling as an assembled vehicle.

Proposed new §217.404(d) provides that upon the receipt of the department's written approval, the applicant may proceed to the county tax assessor collector for submission and processing of the application. Proposed new §217.404(d) lists that the applicant must provide the county tax assessor with the department's written letter, a copy of the items required under §217.404(a)(1) - (9) that were submitted to the department, and, if the vehicle is being registered, the requirements identified in §217.23.

Proposed new §217.405 addresses evidence of ownership and how it may be demonstrated either from a manufacturer, a hobbyist or other owner, or with a bond. Proposed new §217.405(a) provides that evidence of ownership must accompany the title application submitted to the department, which is consistent with the requirement in §217.404(a)(2).

Proposed new §217.405(b) provides that evidence of ownership for a replica, custom vehicle, street rod, or glider kit built by a manufacturer must be provided on a manufacturer's certificate of origin and contain the information listed in that subsection.

Proposed new §217.405(c) describes the evidence of ownership requirements for an assembled vehicle that has been built by a hobbyist, or has not otherwise been previously titled by the owner. Evidence is required for the basic component parts of the vehicle. If the basic component parts are from vehicles titled in the name of the owner, evidence of ownership will be based on the identifying numbers on the parts. These will vary based on the type of part and the year of manufacture. Additionally, component parts not titled in the name of the owner may be used with proper documentation, such as a bill of sale.

Proposed new §217.405(d) provides that an owner unable to obtain evidence of ownership may file a bond with the department under Transportation Code §501.053 and §217.9. Proposed new §217.405(e) lays out the process of obtaining the vehicle identification number and the bond. The bond will be the evidence of ownership to obtain the title.

The process is similar to that of any other applicant, in that the applicant must take or deliver the documentation required under §217.404(a)(1) - (9) to the department's regional service center for review, except that the applicant utilizing the bond procedure will not be required to have evidence of ownership under §217.405(a) - (c). The documentation requirements for the bond procedure would include a vehicle identification number inspection report if the applicant intends to establish a vehicle identification number under §217.404(a)(9)(A) or (B). The department will review the vehicle identification number inspection report and other documents.

A vehicle identification number will be reassigned based on the report and documentation if a vehicle identification number by which the assembled vehicle will be identified can be determined. If the vehicle identification number cannot be reassigned based on the lack of a number, the department will assign a department-issued number.

The applicant will then need to complete a statement of fact concerning the acquisition of the vehicle. If the application is complete, the department will use the assigned or reassigned number to issue a letter for the applicant to obtain a bond. The applicant will take the bond as evidence of ownership and other required documents to the county tax assessor-collector.

Proposed new §217.406 describes the issuance and form of title. Proposed new §217.406 provides that the county tax assessor-collector will process the transaction and issue a receipt upon receiving the completed application, all required documents, and all required fees.

Proposed new §217.406(b) describes the form of the title. As described in that subsection, the title will comply with the requirements of Transportation Code §731.053 and be issued with the make of "ASVE" unless original parts are used that reflect an established year and make of a manufactured vehicle and will contain the remarks "RECONSTRUCTED" or "REPLICA," as applicable, except for assembled trailers which will be titled with a make of "HMDE."

Proposed new §217.406(c) provides that the department will issue and mail or deliver the title to the owner or lienholder disclosed in the application.

Proposed new §217.406(d) provides that the receipt issued at the time of application for title may be used only as evidence of title and may not be used to transfer any interest or ownership in a motor vehicle or to establish a new lien.

Proposed new §217.407 provides for subsequent transfer of title for a titled assembled vehicle. Proposed new §217.407(a) provides that after an assembled vehicle is titled under Transportation Code Chapter 731 and Subchapter L, the vehicle is then subject to Transportation Code Chapters 501 and 502, and 43 Texas Administrative Code, Chapter 217, Subchapter L. The vehicle may be transferred similarly to any other vehicle, except as provided in §217.407(c).

Proposed new §217.407(b) provides that an assembled vehicle titled or registered in another jurisdiction may be titled and registered in this jurisdiction subject to Transportation Code Chapters 501 and 502, and 43 Texas Administrative Code Chapter 217, Subchapter L, except as provided in §217.407(c). As such, the vehicle does not have to go through the initial title process in Transportation Code Chapter 731 or Subchapter L.

Proposed new §217.407(c) states two statutory limitations that apply to the transfer and construction of assembled vehicles. Proposed new §217.407(c) states the limitation in new Transportation Code §503.013 that ownership of an assembled vehicle may not be transferred to or by a dealer unless the assembled vehicle is a "replica" as that term is defined in Transportation Code §731.001. As defined, a "replica" includes a street rod or custom vehicle. Proposed new §217.407(c) states the limitation in new Occupations Code §2302.009 that a salvage vehicle dealer may not rebuild an assembled vehicle.

Proposed new §217.407(d) provides that if an assembled vehicle is disassembled and then reassembled, the resulting vehicle is subject to the initial titling requirements in Transportation Code Chapter 731 and 43 Texas Administrative Code Chapter 217, Subchapter L.

FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT. Linda M. Flores, Chief Financial Officer, has determined that for each year of the first five years the proposed amendments and new sections will be in effect, there will be no significant fiscal impact to state or local governments as a result of the enforcement or administration of the proposal. The proposal requires a review of the title application before it is submitted to county tax assessor-collector. While creating some additional work for the department on the front end of the transaction, the review process will not require additional department employees and should reduce county tax assessor-collector processing time and associated costs to issue the title and registration, and department costs related to canceling titles and registrations that may be issued in error. Other fiscal costs related to allowing hobbyist and other owners to title and register assembled vehicles under Transportation Code Chapter 731 are a result of statute and not a cost of this proposal. Jeremiah Kuntz, Director of the Vehicle Titles and Registration Division, has determined that there will be no measurable effect on local employment or the local economy as a result of the proposal.

PUBLIC BENEFIT AND COST NOTE. Mr. Kuntz has also determined that for each year of the first five years the proposed sections are in effect, public benefits are expected as a result of enforcing the proposed amendments and new sections. The public benefits resulting from the adoption of the proposed amendments and new sections will be the implementation of HB 1755 and conforming rule text with statute. The benefits resulting from the implementation of HB 1755 include allowing hobbyists and owners of assembled vehicles to register and receive a title for vehicles they may have put significant amounts of time, money, and effort into building and that do not present a public danger.

Mr. Kuntz has also determined that for each year of the first five years the proposed sections are in effect, no additional costs are expected as a result of enforcing the proposed amendments and new sections.

The department anticipates that there are no additional costs under these rules resulting from the initial titling application review process under proposed §217.404(a). The information necessary to complete the application consists of information known to the applicant, obtained based on a required inspection, or obtained by the applicant from parts suppliers or the builder of the assembled vehicle. The information should be readily available to the individual completing the application and requires no additional cost to obtain. The applicant may submit the required documents for review by email at no cost to the applicant. The decision of how to submit the application to the service center for review will be the applicant's and is not a requirement of these rules.

Other costs related to initially titling an assembled vehicle result are required by statute and are not a direct cost of the proposed sections. This includes the cost of inspections under §217.143, the cost of a vehicle identification number inspection under §217.404, and the cost of a bond if necessary.

The inspections under §217.143 are required under Transportation Code §504.501(e) and §731.101. The costs of those inspections result from these statutory requirements.

Costs for applicants needing to assign or reassign a vehicle identification number result from Transportation Code §§731.054, 501.032, and 501.033. Transportation Code §731.054 provides that the department shall assign or reassign a vehicle identification number under Transportation Code §501.033. Sections 501.032(a)(1) and (3) requires a vehicle to have a vehicle identification number inspection if the owner is needing an assigned or reassigned vehicle identification number under 501.033. The costs of submitting the application and the inspection result from those statutory requirements.

Additionally, if the applicant has neither evidence of ownership nor the vehicle identification number, the department will assign or reassign a vehicle identification number to the vehicle based on the same inspection so that the applicant may obtain a bond under Transportation Code §501.053, 43 Texas Administrative Code §217.9, and proposed §217.405(e). This would result in no additional inspection cost for an applicant. The cost of a bond is not a requirement of this rule, but is instead a reflection of Transportation Code §501.053 as applied to assembled vehicles. This procedure is an option for the applicant to obtain a title should the vehicle otherwise not be eligible for title based on lack of evidence of ownership.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS. The department has determined that the proposed amendments will not have an adverse economic effect or a disproportionate economic impact on small or micro businesses, or on rural communities. As a result, and in accordance with Government Code §2006.002(c), the department is not required to prepare a regulatory flexibility analysis.

TAKINGS IMPACT ASSESSMENT. The department has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking or require a takings impact assessment under Government Code §2007.043.

GOVERNMENT GROWTH IMPACT STATEMENT. The department has determined that each year of the first five years the proposed amendments and new sections are in effect, the proposed rule:

- will not create or eliminate a government program;

- will not require the creation of new employee positions or the elimination of existing employee positions;

- will not require an increase or decrease in future legislative appropriations to the department;

- will not require an increase or decrease in fees paid to the department, however, the department will collect more title and registration fees if additional vehicles are titled and registered;

- will create new regulations in §§217.401 - 217.407 to implement Transportation Code Chapter 731, concerning assembled vehicles, enacted in HB 1755;

- will expand existing regulations §§217.141 - 217.143 to implement Transportation Code Chapter 731, concerning assembled vehicles, enacted in HB 1755;

- will repeal existing regulations in §217.3, because regulations implementing Transportation Code Chapter 731, concerning assembled vehicles, will be in §§217.141 - 217.143 and 217.401 - 217.407;

- will increase the number of individuals subject to the rule's applicability, because rules concerning assembled vehicles do not currently exist, but are required under Transportation Code Chapter 731; and

- will not positively or adversely affect the Texas economy.

REQUEST FOR PUBLIC COMMENT. If you want to comment on the proposal, submit your written comments by 5:00 p.m. CST on January 21, 2020. A request for a public hearing must be sent separately from your written comments. Send written comments or hearing requests by email to rules@txdmv.gov or by mail to Office of General Counsel, Texas Department of Motor Vehicles, 4000 Jackson Avenue, Austin, Texas 78731. If a hearing is held, the department will consider written comments and public testimony presented at the hearing.

STATUTORY AUTHORITY. The department proposes amendments to §217.3 under Transportation Code §§501.0041, 502.0021, 731.002, and 1002.001.

Transportation Code §501.0041 authorizes the department to adopt rules to administer Chapter 501.

Transportation Code §502.0021 authorizes the department to adopt rules to administer Chapter 502.

Transportation Code §731.002 authorizes the board to adopt rules as necessary to implement and administer Transportation Code Chapter 731.

Transportation Code §1002.001 authorizes the board of the Texas Department of Motor Vehicles to adopt rules that are necessary and appropriate to implement the powers and the duties of the department.

CROSS REFERENCE TO STATUTE. Transportation Code §§501.003, 501.036, and 501.037.