The Texas Department of Motor Vehicles (department) adopts amendments to Subchapter A, §217.3, Motor Vehicle Titles, and Subchapter B, §217.22, Motor Vehicle Registration, both relating to Vehicle Titles and Registration with changes to the proposed text as published in the June 29, 2012, issue of the Texas Register (37 TexReg 4834) and will be republished.

EXPLANATION OF ADOPTED AMENDMENTS

The adopted amendments are necessary to comply with the requirements of House Bill 2357, 82nd Legislature, Regular Session, 2011, which reorganized Transportation Code, Chapters 501, 502, 504, and 520, the motor vehicle statutes, including updating them to reflect automation capability in systems and payment. Many amendments update citation changes made due to the reorganization. Throughout the rules "certificate of title" has been replaced with "title" in accordance with HB 2357 simplification.

In addition, HB 1674, 82nd Legislature, Regular Session, 2011, allows registration renewal to be denied if a child support agency gives the department notice that the obligor failed to pay child support. This changed from the requirement that the department had to be given a final order. The amendments are also necessary to comply with the requirements of House Bill 2017, 82nd Legislature, Regular Session, 2011, which authorizes the department to require identification for titling and initial registration services.

Section 217.3(a)(1) is modified to delete the reference to a motorcycle, motor-driven cycle, or moped designed for or used exclusively on golf courses because these vehicles were removed from the definition of §501.002(17)(E) by HB 2357. Subsection (a)(1)(D) requiring motors installed on bicycles to be certified by the Department of Public Safety (DPS) was removed because DPS does not certify them as a moped.

The definition of "neighborhood electric vehicle" is removed from subsection (a)(3) because it is defined in Transportation Code, §551.301. New paragraph (6) states the department will not title a vehicle that does not have a body, motor, and frame manufactured by a motor vehicle manufacturer, with the exception of a trailer as defined in Transportation Code, §501.002. This is to clarify that only motor vehicles with manufactured major component parts will be titled in order to protect public safety.

Subsection (b)(1)(C) is added to comply with §501.145(c) allowing a member of the military serving on active duty to be able to apply for title no later than the 60th day after assignment of ownership.

Section 217.3(c)(1)(A) allows the department, rather than the division director, to prescribe the manufacturer's certificate of origin form in order to delegate this duty.

New §217.3(c)(6) is modified from the original proposed rules. It is now new §217.3(c)(7). The proposed rules provided that an application for title is not acceptable unless the applicant presents a current photo identification of the owner containing a unique identification number and expiration date. The identification document must be a driver's license or state identification certificate issued by a state or territory of the United States, United States or foreign passport, United States military identification card, North Atlantic Treaty Organization identification or identification issued under a Status of Forces Agreement, or United States Department of Homeland Security, United States Citizenship and Immigration Services, or United States Department of State identification document. These identification documents are the same as those for existing identification necessary for a certified copy of a title, except that all owners must present identification to obtain a certified copy, but only one owner need submit identification to obtain the original title. A certified copy of a title is a duplicate title. By obtaining identification for all owners on the application for a certified copy, then all owners understand that there is a possibility that two titles exist. Within this subsection, "current" is defined as not to exceed 12 months of the expiration date. A person who holds a general distinguishing number issued under Chapter 503 of the Transportation Code or Chapter 2301, Occupations Code, is not required to submit the owner's identification, but must retain a copy of the owner's current photo identification in the purchase and sales records as required under §215.144. These files are auditable.

The language of this paragraph remains, but it is effective on or after September 1, 2013. In response to comments and in order to give the department, counties, and dealers time to train their staff, a less restrictive identification requirement is adopted as §217.3(c)(6). Through August 31, 2013, an applicant may present a government-issued current photo identification of the owner containing a unique identification number, expiration date, and birth date. The identification document may also be a document listed as accepted on or after September 1, 2013.

Section 217.3(e)(2) deletes the requirement that certain requests for certified copies must be made by mail.

Section 217.3(g) is amended to update citations and provide for a $15 administrative fee and appraisal process in accordance with HB 2357. For vehicles that are 25 years or older, the department will not accept an appraisal that is less than $4,000. An out-of-state vehicle may have its vehicle identification number verified by a law enforcement officer, or a department Regional Service Center in addition to a Texas license inspection station in order to broaden the way to obtain that documentation. The form will be prescribed by the department. The remainder of subsection (g) is deleted as it repeats the statutory language of Transportation Code, §501.051. Under HB 2357, the expired bonds no longer need to be returned to the title owner as expired bonds do not have value.

In accordance with HB 2357, a new procedure is provided in subsection (h) that can be utilized when all parties agree to rescind a new vehicle sales transaction. Currently, even if all parties agree to rescind the sale, a court order must be sought. The department may rescind, cancel, or revoke an application for a title if a signed, notarized affidavit is presented within 21 days of initial sale containing: a statement that the vehicle involved was a new motor vehicle in the process of a first sale; a statement that the dealer, the applicant, and any lienholder have canceled the sale; a statement as to whether the vehicle was in possession of the title applicant; and an odometer disclosure statement, if appropriate. The 21-day time period was chosen as adequate time to prepare and submit the affidavits. Furthermore, the time frame accommodates denial of rescission if the vehicle has had an owner for a significant length of time.

Following this procedure does not negate the fact that the vehicle has been subject to a previous retail sale. The proposed rule required that if the vehicle was in the possession of the title applicant, then the dealer would disclose to the subsequent purchaser that the vehicle was subject to a prior retail sale and the effect, if any, the prior retail sale has on the warranty coverage of the vehicle. The dealer would also provide a copy of the written disclosure to the subsequent purchaser and maintain another copy in the sales file of the motor vehicle. In response to comments from Texas Automobile Dealers Association (TADA), the requirements for notification to the subsequent purchaser and maintenance in the sales file have been removed.

Amendments to §217.22(b)(4)(C)(ii) allow a registration receipt that is not more than six months past the date of expiration to be used as accompanying documentation to support a registration application. This broadens the types of verifiable documentation that can be used.

Amendments to §217.22(b)(4) require the same identification as §217.3(c)(6) and (7), regarding application for titles, to apply for initial registration, except the registration paragraphs are clarified to specify that the requirements do not apply to non-titled vehicles.

The amendments to subsection (c) require that a motor vehicle must display two license plates, one at the exterior front and one at the exterior rear of the vehicle that are securely fastened at the exterior front and rear of the vehicle in a horizontal position of not less than 12 inches from the ground, measuring from the bottom, except that a vehicle described by Transportation Code, §621.2061 may have its rear plate placed so that it is clearly visible. However, if the vehicle is a road tractor, motorcycle, trailer or semitrailer, the vehicle must display one plate that is securely fastened at, or as closely practical to, the exterior rear of the vehicle in a position not less than 12 inches from the ground, measuring from the bottom.

Subsection (d)(6) is amended to comply with HB 1674 which allows a child support agency to give the department notice of a child support delinquency in order for a denial flag to be placed on the registration renewal. Previously, a final order was required. Transportation Code, §502.045, requires the department to adopt a list of evidentiary items sufficient to establish good reason for delinquent registration. The amendments to subsection (d) establish that valid reasons may include extensive repairs, being out of the country, using the vehicle only for seasonal use, military service, storage of the vehicle, a medical condition such as an extended hospital stay, and any other reason submitted with evidence that the tax assessor-collector determines is valid. Evidence of a valid reason may include receipts, passport dates, and military orders.

COMMENTS

The department received twenty-four written comments.

COMMENT

The Texas Independent Automobile Dealers Association (TADA) commented that any government-issued identification should be allowed until TxDMV has established the ability to access verifiable databases.

RESPONSE

The department is modifying the proposed rules to allow a one-year period for government-issued identification. After that period, the e-title system and database access should be much more than a pilot program.

COMMENT

TADA commented on the amendments to §217.3(h) regarding the rescission cancellation or revocation by affidavit. TADA states: "TADA does not dispute that if a vehicle is used, it must be so sold, i.e., a vehicle that has been the subject of a retail sale, regardless of mileage, is a used vehicle." TADA asks that the affidavit not contain language that requires the dealer to disclose to a subsequent purchaser that the vehicle was subject to a prior sale and the effect, if any, on the warranty or that a copy of this written disclosure be maintained in the sales file. TADA points out that the statute does not require such disclosure. TADA provided oral testimony that the Federal Trade Commission requires dealers to display a Buyer's Guide in the window of the vehicle. This guide states: "Ask the dealer for a copy of the warranty document for a full explanation of warranty coverage, exclusions, and the dealers' repair obligations."

TADA noted a typographical error in the amendments which omitted some of the allowable identifications for initial registration that were given for titles.

TADA requested that the requirements for identification documents should be deleted for leasing companies, trustees, businesses, government entities, and other organizations as the employee may be unwilling to have his or her identification used. TADA asked four specific questions. The first was: If a dealer sells police vehicles to the Texas Department of Public Safety (DPS), is the dealer required to obtain a business card or written authorization on DPS letterhead along with a driver's license matching the business card or written authorization? The second was: If Chase bank purchases a vehicle, as trustee, what documents must a dealer obtain in order to title and register that vehicle to the trust? The third was: If a dealer sells 100 vehicles to Enterprise Leasing, is the dealer required to obtain a business card or written authorization on Enterprise Leasing letterhead along with the driver's license from the person who gave their business card? The fourth was: Is Blue Bell Ice Cream required to give a business card or written authorization or letterhead along with a driver's license of the person who gave the business card or written authorization on letterhead in order for Blue Bell's trucks to be titled and registered?

RESPONSE

The language requiring disclosure to the subsequent purchaser and maintenance of this notification was removed as the consumer will be provided with a statement recommending that the consumer ask about the warranty and because other laws exist such as the Deceptive Trade Practices Act, Bus. & Com. Code, Chapter 17, that provide remedies for misrepresentation of warranty information.

The additional types of identification were meant to be included and have been added to the amendments regarding initial registration. They are United States Department of Homeland Security, United States Citizenship and Immigration Services, and United States Department of State identification documents.

Someone is signing the purchase documents of behalf of the entity. The identification will ensure that the person has the authority to do so and tie the purchase to the application for title and initial registration. In response to the question concerning government vehicles, there is no need for identification. Government vehicles are exempt from the title and registration fees, so dealers are not required to title and register those vehicles. Titling and registration is performed by the government entities. The Chase Bank employee purchasing on behalf of the trust must present identification along with a business card or written authorization on letterhead because Chase is a business rather than an individual. If Chase were an individual, only the identification would be necessary. The person who makes the purchase for Enterprise Leasing would supply a business card or written authorization on Enterprise Leasing letterhead along with the driver's license. It would be the same for Blue Bell Ice Cream.

COMMENT

The following businesses submitted similar comments: J Baer Remarketing, a used auto dealership; L & L Recovery, a vendor associated with dealerships; Foress Wholesale; Robert Mersch, a wholesaler; Edwin Hummel, a buyer for dealerships; Mid-Tex Auto Sales; West Auto Sales; Auto Show Place, LLC; Jalisco Auto Sales; Sterling Roberts, a wholesaler; San Fernando Motors and Down Under Auto Sales. They all commented they were against the type of identification that can be accepted for sale, titling, registration and renewal of vehicles. They stated that based on their personal experience the real and immediate economic impact would be far greater than the department has anticipated because the calculations did not include the interest earned by "Buy Here, Pay Here" dealers and the loss by wholesalers, auctions and associated vendors. L & L Recovery estimates that it would lose more than 30% of his revenue. Edwin Hummel estimates that his business will lose 33% because one-third of the purchasers do not have Texas driver's licenses. Mid-Texas Auto Sales estimated that 20% to 30% of its vehicle sales in the last six months are to people who present documents that do not comply with the rules. Auto Show Place LLC estimated this at 30%-40%, Jalisco Auto Sales at 40%-50%, and Down Under Auto Sales at 10% to 20%. San Fernando Motors estimated that 60% of its customers present identifications that are not listed in the amendments. RLB Texas Auto Center, LLC estimates that 20% of the vehicles it sells are purchased by consumers with a Matricula Consular identification. Abilene Used Car Sales stated that the amendments would hold back the ability for dealers across the state to do business. Dallas A&M Auto Sales stated that there would be negative impact on the dealerships.

RESPONSE

The amendments apply to titling and initial registration, not registration renewals. The amendments also include identification documents other than Texas driver's licenses. The department's fiscal impact took into consideration the impact to the used automotive industry which would also include wholesalers, auctions, and associated vendors. That impact was estimated to be approximately 1% of profits.

COMMENTS

J Baier Remarketing, stated that dealers should have been surveyed, the rules will affect the ability to retain current levels of employment, the rules will affect the ability of law enforcement to locate owners by license plate, and this will become another tax that would not be paid resulting in increased license plate thefts. J Baier Remarketing suggested that P.I.N. numbers or electronic signatures should be used for e-titling instead.

RESPONSE

The department's estimated impact considered a drop of 1% in profits which should not be large enough to have an overall effect on employment. The amendments should help law enforcement locate owners because law enforcement will have access to more accurate motor vehicle records. This should, in turn, deter the theft of license plates because they can be accurately traced.

United States photo identification is the basis for the department's e-Title system for which TxDMV received approval from the National Highway Traffic Safety Administration (NHTSA) in order to accept electronic signatures. Without the ability to capture an electronic signature, the department cannot process a true paperless electronic title transfer. The department considered using P.I.N. numbers or electronic signatures. However, since identification is necessary in order to be issued a P.I.N. number or electronic signature, those solutions would add another layer of bureaucracy.

COMMENTS

The Dallas County Tax Assessor Collector and Border Network for Human Rights (BNHR) stated that not accepting Matricula Consular cards creates an inconsistency in the department's reasoning and will create additional title fraud. The Dallas Tax Assessor Collector conducted an informal survey of dealerships and found that over a 45-day period, 10.12% of the vehicle sales transactions involved the Matricula Consular as the form of identification. Putting that 10% of revenue in jeopardy would result in a sales tax loss of $26,820.058 and a county loss of $1,341,003. The inconsistency is that foreign passports are not verifiable. He stated that title fraud will increase because residents who only have the Matricula Consular for identification will continue to purchase vehicles, but with fraudulent identifications or friends' or relatives' identifications that could include inaccurate address. This would also increase the fake registration sticker industry. The Dallas County Sheriff agrees that fake registration would increase and that shadow addresses would be used if the Matricula Consular card is not accepted. He thinks that the amendments will create more avenues of fraud and open up the window of opportunity for criminals, and points out that the card is accepted by insurance companies and banks.

RLB Texas Auto Center, LLC agrees that the proposed requirements will promote fraud and theft of registration tags and states consumers will purchase vehicles illegally off the street without transferring title and registration.