INTRODUCTION. The Texas Department of Motor Vehicles proposes amendments to 43 TAC §§217.3, 217.141 - 217.143 and new §§217.401 - 217.407, concerning assembled vehicles. The amendments and new sections are necessary to implement Transportation Code Chapter 731, as added by House Bill 1755, 86th Legislature, Regular Session (2019). The department also proposes amendments in §217.3 that are necessary to conform those provisions with statute, including Transportation Code §501.036, concerning farm trailers and farm semitrailers; Transportation Code §501.037, concerning trailers and semitrailers; and Transportation Code §541.201, and other changes made in HB 3171, 86th Legislature, Regular Session (2019), concerning motor-driven cycles.

EXPLANATION. Transportation Code Chapter 731 establishes titling and registration requirements for assembled vehicles. House Bill 1755, Section 12, directs the board of the Texas Department of Motor Vehicles, as soon as practicable after the effective date of HB 1755, to: (1) adopt the rules required under Transportation Code Chapter 731; and (2) adopt or modify any rules necessary to implement the changes in law made by HB 1755. Transportation Code Chapter 731 requires rules concerning eligibility for title and registration in Transportation Code §731.051(a); rules concerning procedures and requirements for title and registration in Transportation Code §731.052(a); and rules concerning inspection requirements for issuance of title in Transportation Code §731.101(c). The proposed amendments to §217.3 and §§217.141 - 217.143 and new §§217.401 - 217.407 provide the necessary rules and implement Transportation Code Chapter 731 as required in HB 1755, Section 12.

Transportation Code §731.051 provides that the owner of an assembled vehicle may apply for a title and register the vehicle in accordance with Transportation Code Chapters 501 and 502 and the rules adopted to implement Chapter 731. The department applies that provision in these rules to create a certain and workable path for owners to title and register assembled vehicles, but also to maintain the purpose of Transportation Code Chapter 501 that is stated, in part, in Transportation Code §501.003 as 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.

This proposal also makes amendments to §217.3 concerning motor-driven cycles; farm trailers and farm semitrailers; and trailers, semitrailers, and house trailers. The amendments are unrelated to Transportation Code Chapter 731, but are necessary to conform those provisions with statute.

The proposed amendments to §217.3 conform the rules to existing statute, including statutory amendments passed by the 86th Legislature, Regular Session (2019). The proposed amendment to §217.3 conforms the opening sentence with changes in statute made by HB 1548, 86th Legislative Session (2019), that allow for certain vehicles, for example off-highway vehicles, to be titled under Transportation Code Chapter 501 without a registration requirement. The proposed amendment also adds Transportation Code Chapter 731, concerning assembled vehicles, to reflect changes in statutes made by HB 1755.

The proposed amendment to §217.3(1) removes the term "motor-driven cycle." House Bill 3171 repealed the definition of the term in Transportation Code §541.201 and removed all uses of the term in the Transportation Code.

The proposed amendment to §217.3(2)(D) concerning farm trailers and farm semitrailers conforms the subparagraph with Transportation Code §501.004(b)(1) and §501.036. These statutes require a farm trailer or semitrailer with a gross weight of more than 34,000 to be titled, while permissively allowing farm trailers or semitrailers with a gross weight of 34,000 or less to be titled.

The proposed amendment to §217.3(4) conforms the paragraph with Transportation Code §501.037 concerning trailers, semitrailers, and house trailers, by removing terms that are not in that section or the Transportation Code, and makes nonsubstantive changes to conform with department style.

The proposed amendments to §217.3(5) and (6) are necessary to implement Transportation Code Chapter 731 concerning assembled vehicles, as added by HB 1755. The proposed amendment to §217.3(5) removes the existing language and adds a reference to proposed new Subchapter L of Chapter 217, which will implement Transportation Code Chapter 731 concerning assembled vehicles.

The proposed amendment to §217.3(6)(A) conforms the language to Transportation Code §731.051(b)(6), which prohibits titling of a vehicle that has been stripped to the extent that the vehicle loses its original identity. The proposed amendment to §217.3(6)(B) removes the prohibition against titling a dune buggy, because a dune buggy is an assembled vehicle and eligible for title under Transportation Code Chapter 731. The proposed amendment to §217.3(6)(C) redesignates the subparagraph as subparagraph (B) and conforms the language to Transportation Code §731.051(b)(5), which prohibits titling of a vehicle that the manufacturer has designated for on track racing only. Additionally, the proposed amendments to §217.3(6) redesignate the subparagraphs following subparagraph (B), and change "and/or" to "or" to reflect current department style guidelines.

The proposed amendments to §§217.141 - 217.143 implement the assembled vehicle inspection requirements under Transportation Code §731.101 and §731.102 as enacted by HB 1755. The department has proposed amending the existing sections related to the Transportation Code §504.501(e) street rod and custom vehicle registration inspection because it is the same inspection that will be applied to titling assembled vehicles under Transportation Code §731.101.

The proposed amendment to §217.141 accounts for the changed scope of §§217.141 - 217.143. The sections now address the new initial titling inspection of assembled vehicles required under Transportation Code §731.101, and the existing registration inspection required for street rods and custom vehicles under Transportation Code §504.501(e).

The proposed amendments to §217.142 provide definitions for terms used in §§217.141 - 217.143. The proposed amendment to §217.142(a) incorporates terms defined in Transportation Code §731.001. Because Transportation Code §731.001 and the existing text of §217.142(2) and (4) both define the terms "street rod" and "custom vehicle" by reference to Transportation Code §504.501, the existing definitions of "street rod" and "custom vehicle" in this section have been removed.

The proposed amendment to §217.142(b)(1) adds the term "modification" to clarify that the defined phrase "altered from the manufacturer's original design" is not limited to the "removal, addition, or substitution, of at least one major component part." In addition, the department has proposed amending the definition to include a direct reference to the definition of a major component part under Transportation Code §501.091. The change is to clarify that the term "major component part" continues to apply to making a determination under Transportation Code §504.501(f) of whether a vehicle qualifies as a custom vehicle or street rod, but is not a definition for general application in Subchapter G. The department will remove the existing stand-alone definition of "major component part" in §217.142. The department has also proposed removing the quotation marks around the defined term in accordance with current agency style.

The terms "basic component part," "equipment," and "major component part" are substantively independent, and each term serves a different purpose in the proposed rules. The term "basic component part" is used in Subchapter L to identify the items for which evidence of ownership will need to be established for titling assembled vehicles. The term "major component part" is only used in the definition of "altered from the manufacturer's original design" in §217.142(b)(1) of Subchapter G to identify the elements of a motor vehicle that, when modified, substituted, removed, or added, are relevant to the classification of a vehicle as a custom vehicle or street rod. The term "equipment" is used in Subchapter G to establish the items and systems that need to be inspected under Transportation Code §504.501(e) or §731.101.

The terminology used in the definitions is based on statute, historical application, and purpose. In scope the definitions all three terms refer to portions of a vehicle. As defined, the term "major component part" would include all items that are "basic component parts," but not all items and systems that are "equipment."

The proposed amendment to §217.142(b)(2) defines the term "applicant." The term clarifies the types of owners that would apply for title to an assembled vehicle. The term is defined in §217.402 with the same meaning and for the same purpose.

The proposed amendment to §217.142(b)(3) defines the new term "equipment" to describe the items and systems that the inspector will need to inspect. The inspection will be of those items and systems required by law to present on the vehicle as inspected, which may not include all the listed items and systems depending on the type of vehicle. The definition also distinguishes "equipment" from "basic component part" and "major component part" as previously discussed in this proposal.

The proposed amendment to §217.142(b)(4) defines the term "manufacturer" by reference to the definition in Occupations Code §2301.002. The definition also clarifies that a hobbyist is not a manufacturer, which is consistent with the definition of hobbyist in Transportation Code §731.001. The term is also defined in §217.402 with the same meaning and for the same purpose.

The proposed amendment to §217.142(b)(5) clarifies that the definition of "master technician" used in this subchapter refers to a Certified Master Automobile and Light Truck Technician, which is required under Transportation Code §731.101(b)(2). The clarification is necessary because Transportation Code §731.101(a) requires an assembled vehicle to pass an inspection based on the type of assembled vehicle being inspected. Transportation Code §731.101(b) requires the applicant to submit proof that the assembled vehicle passed the inspection and a copy of the master technician's Automobile and Light Truck certification. The limitation of the credentialing requirement in §731.101(b)(2) limits the titling inspection requirement to those assembled vehicles types that can be inspected by an individual holding an Automobile and Light Truck master certification. The relevant types of assembled vehicles are assembled motor vehicles, custom vehicles, replicas, and street rods, as described in proposed amendments to §217.143(a). The legislative requirement limiting the inspection to the Automobile and Light Truck certification is also consistent with the consideration that a master certification does not exist for motorcycles or trailers; and the limited number of individuals holding a Medium and Heavy Truck master certification could create an impediment to titling glider kits.

The proposed amendments to §217.143 implement the new initial titling inspection requirements under Transportation Code §731.101 and maintain the existing custom vehicle and street rod registration requirement under Transportation Code §501.504(e). To reflect the change, the department proposes changing the title of §217.143 to "Inspection Requirements."

The proposed amendments to §217.143(a) provide that an assembled motor vehicle, replica, custom vehicle, or street rod must be inspected by a master technician as required under Transportation Code Chapter 731 and 43 Texas Administrative Code, Chapter 217, Subchapter L. For reasons previously discussed regarding the definition of "master technician," the inspection is not required for an assembled motorcycle, assembled trailer, or glider kit. The titling inspection is only required when the assembled vehicle is titled for the first time. A subsequent titling inspection would be required if the vehicle is disassembled and reassembled as described in proposed §217.407.

The proposed amendment to §217.143(b) requires a custom vehicle or street rod to have a safety inspection performed by a master technician as required under Transportation Code §504.501(e) for initial registration. As with the current requirement, the inspection is required each time the vehicle is initially registered in the name of a new owner. However, because the titling and registration inspections are the same, two inspections will not be required if an assembled vehicle designated as a street rod or custom vehicle is titled and registered in the same transaction.

The proposed amendments to §217.143(c) and (d) provide the inspection requirements for assembled vehicles. The amendment to existing §217.143(c) states that the inspection of an assembled vehicle must evaluate the structural integrity of the equipment. The proposed amendments to §217.143(d)(1), (2), and (4) amend the style of existing text in §217.143(b) requiring the inspector to certify that the vehicle is structurally stable, meets the necessary conditions to be operated safely on the roadway, and is equipped and operational with all equipment required by statute as a condition of sale during the year the vehicle was manufactured or resembles. The proposed amendments to §217.143(d) also add new §217.143(d)(3) that tracks the safety requirement in Transportation Code §731.051(b)(7). The department proposes removing the existing text of §217.143(c) because it is duplicative of the requirement in proposed §217.143(d)(4).

The proposed amendments to §217.143 also add new §217.143(e), which provides that an inspection under §217.143(a) is in addition to any other required inspection of an assembled vehicle, including an inspection required under Transportation Code Chapter 548. An assembled vehicle designated as a custom vehicle or street rod is not subject to the annual Transportation Code Chapter 548 inspection. Other assembled vehicles may be subject to the Chapter 548 inspection requirement.

The proposed amendments to §217.143 also add new §217.143(f) and (g) relating to the payment of fees. Under proposed new §217.143(f), the applicant must pay all fees to the master technician for the inspection of an assembled vehicle required under subsection (a) of this section, including any reinspection. Under proposed new §217.143(g), any additional fees must be paid to the inspector or as otherwise required by law. The subsections clarify that inspection fees under this section are not to be paid to the department. The department does not set any of the inspection fees for an inspection required under this section.

The proposed new Chapter 217, Subchapter L, §§217.401 - 217.407 implements the assembled vehicle titling and registration requirements under Transportation Code Chapter 731, as enacted by HB 1755.

Proposed new §217.401(a) describes the purpose and scope of proposed new Subchapter L. Proposed new §217.401(b) provides that for the purposes of this subchapter a glider kit issued a title with a "RECONSTRUCTED" remark is a replica. The purpose of this is to state the department's interpretation that a dealer may transfer, or be transferred ownership, of a glider kit under new Transportation Code §503.013.

Proposed new §217.402 defines terms that will be used in the subchapter. Proposed new §217.402(a) incorporates terms defined in Transportation Code §731.001.

Proposed new §217.402(b)(1) defines the term "applicant." The term clarifies the types of owners that would apply for title of an assembled vehicle. The term is defined in §217.142 with the same meaning and for the same purpose.

Proposed new §217.402(b)(2) defines the term "basic component part" for use in this chapter. The term is limited to the vehicle's motor, body, and frame, as applicable for the type of vehicle. For example, an automobile would have all three parts; a motorcycle just a motor and frame; and a trailer just a frame and body. Evidence of ownership will be required based on the component part of the assembled vehicle under proposed new §217.405. The definition also distinguishes between "basic component part" and "major component part" as previously discussed in this proposal.

Proposed new §217.402(b)(3) defines the term "continuous sale," which is basic in determining if a person is a hobbyist as defined in Transportation Code §731.001. The definition provides that the term means "offering for sale or the sale of five or more assembled vehicles of the same type in a calendar year when such vehicles are not owned and titled in the name of the owner." The department has proposed five vehicles in the definition because that is the number of vehicles that could classify the person as a dealer under Transportation Code §503.024.

Proposed new §217.402(b)(4) defines the term "manufacturer" by reference to the definition in Occupations Code §2301.002. The definition also clarifies that a hobbyist is not a manufacturer, which is consistent with the definition of hobbyist in Transportation Code §731.001. The term is also defined in §217.142 with the same meaning and for the same purpose.

Proposed new §217.402(b)(4) defines the term "personal use" which is basic in determining if a person is a hobbyist as defined in Transportation Code §731.001. The definition provides that the term means "the construction of an assembled vehicle by a hobbyist for use by the hobbyist."

Proposed new §217.403 provides the basic procedure for issuing an initial title on an assembled vehicle and subsequent transfers of the title. Proposed new §217.403(a) requires an applicant for an initial title on an assembled vehicle to apply for the title in accordance with 43 Texas Administrative Code Chapter 217, Subchapter L, and Transportation Code Chapter 731.

Proposed new §217.403(b) requires a person transferring title on a titled assembled vehicle to transfer title in accordance with proposed new §217.407. That section provides that once an assembled vehicle is titled, including assembled vehicles brought in from another state, title to the assembled vehicle will transfer in that same manner as any other titled vehicle, except that only assembled vehicles that are replicas may be transferred to and by dealers.