The Texas Department of Motor Vehicles (department) adopts amendments to §217.3, Motor Vehicle Titles, with changes to the proposed text as published in the November 29, 2013, issue of the Texas Register (38 TexReg 8624). The adopted rule will be republished.

EXPLANATION OF ADOPTED AMENDMENTS

The amendments are necessary to implement the legislative requirements of HB 2741, 83rd Legislature, Regular Session, 2013; HB 2357, 82nd Legislature, Regular Session, 2011; and HB 2553, 81st Legislature, Regular Session, 2009.

Amendments to §217.3(a)(5) authorize owners of trailers with a gross weight of 4,000 pounds or less to apply for and receive a Texas title. Amendments to §217.3(a)(5)(A) delete "manufacturer's rated carrying capacity" related to the carrying capacity. The amendments are adopted in compliance with Transportation Code, §501.037, added by HB 2741, 83rd Legislature, Regular Session, 2013.

Amendments to §217.3(a)(6) delete the requirement that the body, motor, and frame of an assembled vehicle must be manufactured by a motor vehicle manufacturer. Under the amendments, the department may issue a title for an assembled vehicle that is assembled and completed with a body, motor, and frame, except that a motorcycle must have a frame and a motor, and a trailer or semitrailer will not have a motor. In addition, the vehicle must not be created from different vehicle classes, must have all federally required safety components, and cannot be a vehicle designed as a dune buggy, on track race car, or off road passenger vehicle. To be titled, an assembled motor vehicle must pass a required Automotive Service Excellence inspection by a Certified Master Automobile and Light Truck Technician. This inspection is required in addition to the inspection required under Transportation Code, Chapter 548. The amendments are adopted pursuant to Transportation Code, §501.0041, which provides the department may adopt rules to administer Chapter 501, Certificate of Title Act, and are intended to facilitate titling of assembled vehicles that are structurally stable.

The amendments add §217.3(b)(2)(C), allowing an applicant to file a vehicle title application in a bordering county if the county tax assessor-collector office in which the owner resides is closed for more than one week and if the tax assessor-collector in the bordering county agrees to accept the application. The amendments ensure compliance with Transportation Code, §501.023, as amended by HB 2741, 83rd Legislature, Regular Session, 2013.

The amendments to §217.3(b)(3)(A) delete "model" and "manufacturer's rated carrying capacity" from the minimum information required to be included in the department application form for an initial title. Additionally, the amendments to §217.3(b)(3)(D) provide that the department application for initial title require an applicant to provide the legal name and complete mailing address of the previous owner, if known. The amendments to §217.3(b)(3)(E) require that the applicant's legal name be provided as stated on the identification presented with the application. The legal name shown on the identification establishes a standard for developing a customer-centered database. The amendments add "frame" to §217.3(b)(4) and also add §217.3(b)(5)(F), which specifies that documents related to bonded titles under amended subsection (g) are supporting documentation that must accompany an application for an initial title. The amendments are adopted in conformance with Transportation Code, §501.021, as amended by HB 2741, 83rd Legislature, Regular Session, 2013; and §501.0235, as added by HB 2357, 82nd Legislature, Regular Session, 2011.

Amendments to §217.3(c)(1)(A)(i) delete "model" from the minimum information required to be included in the department's prescribed manufacturer's certificate of origin form, because some vehicles do not have models. Amendments to §217.3(c)(1)(A)(ii) and (c)(4)(C)(iv) delete "manufacturer's rated carrying capacity" from the department's prescribed manufacturer's certificate of origin form, and corrected manufacturer's certificate of origin form, respectively. "Empty or Shipping weight" and "gross vehicle weight" are added as renumbered §217.3(c)(1)(A)(ii) and (iii), respectively, as minimum information required to be included in the certificate of origin forms. The amendments implement Transportation Code, §501.023, as amended by HB 2553, 81st Legislature, Regular Session, 2009.

The amendments to §217.3(c)(3)(B) exempt an applicant who is an active duty member of the U.S. Armed Forces or is from the immediate family of an active duty member returning to Texas with proof of the active duty status of the family member, from vehicle identification number (VIN) verification requirements applicable to a motor vehicle last registered or titled in a foreign country and brought into the United States. The amendments are adopted under the authority of Transportation Code, §501.030, as amended by HB 2357, 82nd Legislature, Regular Session, 2011.

The amendments delete existing §217.3(c)(6), which was effective through August 31, 2013. Existing §217.3(c)(7), renumbered as §217.3(c)(6), details the identification requirements an applicant for a motor vehicle title must meet, effective September 1, 2013. Amendments to renumbered §217.3(c)(6)(B) clarify the identification procedures applicable to leasing companies by permitting the company to submit the identification of the lessee as the "registrant," or to submit the identification of a company employee signing the application for the leasing company, and including a printed business card or employer letter of authorization matching the employee identification. Amendments to renumbered §217.3(c)(6)(C) clarify the identification required when a power of attorney is used in connection with an application for title. Amendments to §217.3(c)(6)(D) clarify when identification documents are considered to be current. The amendments to §217.3(c)(6)(E) permit the use of an original or a photocopy of a letter of authorization, a business card, or a power of attorney as acceptable identification documents under the subsection. The amendments to renumber existing §217.3(c)(6)(E) as §217.3(c)(6)(F) are adopted in compliance with Transportation Code, §501.021, as amended by HB 2741, 83rd Legislature, Regular Session, 2013; and §501.0235, as added by HB 2357, 82nd Legislature, Regular Session, 2011.

Amendments to §217.3(d)(1) and §217.3(e)(1) mandate that applications for an initial title and for a certified copy of a title must be accompanied by the same required identification documents. The amendments to §217.3(d)(2) provide that when a title is issued, it will be mailed or delivered to the applicant or, if there is a lien, to the lienholder, unless the title is an electronic record of a title, in which case it will not be mailed. The amendments to §217.3(e)(1)(D) extend from six to twelve months the time during which the department considers an expired identification document to be "current." This is the same time permitted for an initial title application under amended §217.3(c)(6)(D). The purpose of the amendments is to create a standard time period during which the department will accept an expired identification. The amendments are adopted in compliance with Transportation Code, §501.021, as amended by HB 2741, 83rd Legislature, Regular Session, 2013; and §501.134, as amended by, and §501.0235, as added by, HB 2357, 82nd Legislature, Regular Session, 2011.

The amendments to §217.3(e)(2) prohibit a certified copy of a title from being issued until at least 14 days after the original title was issued. Amendments to §217.3(e)(4) also prohibit an additional certified copy of a title from being issued more often than once every 30 days. Additionally, the amendments to the paragraph provide that the department will eliminate the designation "Certified Copy" when there is a subsequent title. The amendments are required by HB 2357, 82nd Legislature, Regular Session, 2011, which repealed Transportation Code, §501.133, and amended §501.134.

The amendments to §217.3(g) revise requirements and procedures related to applications for bonded titles. The amendments permit an applicant for a bonded title to file a bond with the department if the vehicle is in possession of the applicant and the department has no previous record; there is a record, but no recorded lien; a lien is recorded, but is 10 or more years old; or if there is a recorded lien less than 10 years old and a release of lien(s) or certification of the bonding company that any liens have been satisfied is attached to a valid bond. The amendments clarify that for a VIN verified by a law enforcement officer, the officer must hold an auto theft certification and delete verification by a department Regional Service Center. If the department issues a rejection letter, the applicant may obtain a bond and make application to the county for a bonded title. The applicant must submit to the county the rejection letter, bond, certification of lien satisfaction, and any other required documentation. The surety must report payment of any judgment to the department within 30 days, in accordance with Transportation Code, §501.053. The amendments are adopted in compliance with Transportation Code, §§501.051 - 501.053, as amended by HB 2741, 83rd Legislature, Regular Session, 2013.

The amendments to existing §217.3(g)(2), renumbered as §217.3(h), revise procedures for appeal to the county if the department refuses to issue, revokes, or suspends a title. The amendments to existing §217.3(h), renumbered as §217.3(i), provide that in addition to a notarized affidavit, the department may rescind, cancel, or revoke an application for a title if a county-stamped affidavit is completed and presented. In addition, the amendments renumber existing §217.3(i) as §217.3(j), and existing §217.3(j) as §217.3(k). The amendments are adopted in compliance with Transportation Code, §§501.051 - 501.053, as amended by HB 2741, 83rd Legislature, Regular Session, 2013.

Nonsubstantive amendments to correct punctuation, grammar, and capitalization were made throughout the amended section.

COMMENTS AND RESPONSES

The department received written comments from State Representatives Ed Thompson, Dennis Bonnen, Larry Taylor, and Joan Huffman; the Specialty Equipment Market Association (SEMA); the Insurance Council of Texas (ICT); the National Association of Mutual Insurance Companies (NAMIC); the Surety and Fidelity Association of America (SFAA); Insurance Auto Auctions (IAA); and the Texas Automobile Dealers Association (TADA).

SEMA commented on §217.3(a)(6) suggesting the addition of a definition for "assembled vehicle." As a result, clarifying language was added to the section to establish a definition for "assembled vehicle."

In addition, SEMA expressed concern that "custom vehicles" and "street rods" as defined in Transportation Code, §504.501 would be required to meet the same safety requirement standards as assembled vehicles. Clarifying language was added to the section to exempt vehicles from having to meet these standards if they meet the definition of, and are registered as, a custom vehicle or street rod pursuant to Transportation Code, §504.501. Additional language concerning the inspection requirements for custom vehicles and street rods was in the original proposed language which states "unless it is being inspected pursuant to Subchapter G of this chapter (relating to Inspections)" which pertains to the specific inspection requirements of these two types of vehicles.

SEMA also provided comment regarding the proposed language in §217.3(a)(6)(B) that would prevent titling of assembled vehicles created from two different vehicle classes. Clarifying language was added to the section to establish that vehicle classes are those established by the Federal Highway Administration, and to add an exemption to the use of parts from two different classes. This exemption allows for use of component parts from 2-axle, 4-tire passenger cars and 2-axle, 4-tire pickups, panels and vans in the construction of an assembled vehicle. The intent of this rule is to prevent critical parts of an assembled vehicle to be used from vehicles not within the same class when the original manufacturer did not intend for the use of that critical part in that manner. An example of this would be the use of an automobile axle assembly on a motorcycle frame to construct a "trike." Pursuant to Transportation Code, §502.048, the department has determined these vehicles are unfit to be operated on a public highway and therefore will not issue registration or title for such vehicles.

SEMA further provided comment on §217.3(b)(1) regarding the date of assignment, but the department has made no change to the rule in response to this comment. This provision is in the rule as a result of Transportation Code, §501.145, which pertains to the assignment of title. Assembled vehicles, including custom vehicles and street rods, are newly constructed vehicles; and therefore, will not have a certificate of title. The department may not issue a title to a vehicle that is not fully constructed and operational, thus assembled vehicles are not governed by the date of assignment requirements outlined in this section of rule and no changes are necessary. SEMA also indicated that some kit vehicles, which the department handles as assembled vehicles, may have an ownership document. While this is true, the department is unable to issue a title to a vehicle that is not fully assembled. The date of assignment for assembled vehicles is considered to be the date the applicant files for title or the date established on some other ownership document, such as a bill of sale or manufacturer's certificate of origin, only after the vehicle has been fully assembled and is operational.

SEMA provided comment regarding assembled vehicles and establishing whether these vehicles are considered "new" or "used." As SEMA indicated in their comment, depending on the various circumstances involved in the assembled vehicle, there are various ways in which the vehicle could be identified. Current statutory and rule language provides the department sufficient authority to establish processing and handling procedures and therefore no changes were made to the rule. The definitions of a new and used motor vehicle are established in Transportation Code, §501.001.

SFAA provided comment regarding the amendments to §217.3(g)(1), related to surety bonds. The proposed rule did not change a surety's liability under a bond; therefore, the department has made no changes to this section in the adoption. The existing liabilities provided for under Transportation Code, §501.053, remain the only liabilities when a surety bond is issued.

The State Representatives, ICT, NAMIC, IAA, and TADA all commented regarding the amendments to §217.3(c)(6) related to providing personal identification when presenting applications for titling motor vehicles. These commenters generally objected to the language of the proposed rule which would require representatives of business or government entities to provide personal identification documents in support of these entities' applications for the titling of one or more motor vehicles. The commenters suggested that alternative forms of authorization be used, such as company letterhead or business cards, and that the issued title documents should be associated with the business or government entity rather than the individual performing the work on behalf of the entity. NAMIC, ICT and IAA also suggested exempting holders of General Distinguishing Numbers (GDNs) from the identification requirements. The department has made changes to the proposed rule language in response to these comments. Language was added in §217.3(c)(6)(B) to allow for letter authorization of a company employee or agent to submit the titling documents on behalf of a leasing company, business or government entity or other organization, but also requiring a verification of some form of identification to ensure that the person listed in the authorizing document is the person presenting the documents to the titling office. Language was also added to the adopted rule in that subsection to allow for the recording of a Federal Employee Identification Number/Employee Identification Number (FEIN/EIN) rather than an employee or agent's identification when the vehicle is titled in the name of a business, government agency, or organization. Finally, language was added in §217.3(c)(6)(F) and in new §217.3(c)(6)(G) to clarify that the identification requirements do not apply to holders of GDNs.

STATUTORY AUTHORITY

The amendments are adopted under Transportation Code, §1002.001, which provides the board of the Department of Motor Vehicles with the authority to adopt rules that are necessary and appropriate to implement the powers and duties of the Texas Department of Motor Vehicles under the Transportation Code; Transportation Code, §501.0041, which provides the department may adopt rules to administer Chapter 501, Certificate of Title Act; and more specifically, Transportation Code, §501.0235, which authorizes the department to require an applicant for a title to provide current personal identification as determined by department rule, and §501.134, which authorizes the department to provide by rule the manner by which an owner or lienholder disclosed on a lost or destroyed title may obtain a certified copy of the lost or destroyed title.

CROSS REFERENCE TO STATUTE

Transportation Code, §§501.021, 501.023, 501.0235, 501.030, 501.037, 501.051 - 501.053, and 501.134.