INTRODUCTION. The Texas Department of Motor Vehicles adopts amendments to 43 TAC §§217.3, 217.141 - 217.143 and new §§217.401 - 217.407, concerning assembled vehicles and additional changes in §217.3 to conform provisions that are not related to assembled vehicles with statute. The department adopts §§217.141, 217.143, 217.401 - 217.403, and 217.407 without changes to the proposed text as published in the December 20, 2019 issue of the Texas Register (44 TexReg 7866). The department adopts §§217.3, 217.142, and 217.404 - 217.406 with changes to the proposed text as published in the December 20, 2019 issue of the Texas Register (44 TexReg 7866). The rules will be republished.

REASONED JUSTIFICATION. The amendments to §217.3(5) and (6), §§217.141 - 217.143, and new §§217.401 - 217.407 are necessary to implement Transportation Code Chapter 731, as added by House Bill (HB) 1755, 86th Legislature, Regular Session (2019). 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 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.

Also, the department adopts amendments to §217.3(1), (2), and (4) 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. The amendments to §217.3(1), (2), and (4) are unrelated to Transportation Code Chapter 731, but are necessary to conform those provisions with statute.

The amendment to §217.3 conforms the opening sentence with changes in statute made by HB 1548, 86th Legislative Session, Regular 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 amendment also adds Transportation Code Chapter 731, concerning assembled vehicles, to reflect changes in statutes made by HB 1755.

The amendments to §217.3(1), (2), and (4) conform the rules to existing statute, including statutory amendments passed by the 86th Legislature, Regular Session (2019). The amendments to §217.3(5) and (6) are necessary to implement Transportation Code Chapter 731, concerning assembled vehicles, as added by HB 1755.

The 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 amendment to §217.3(2)(D) concerning farm trailers and farm semitrailers conforms the subparagraph to Transportation Code §501.004(b)(1) and §501.036. These statutes require a farm trailer or farm semitrailer with a gross weight of more than 34,000 pounds to be titled, while permissively allowing farm trailers or farm semitrailers with a gross weight of 34,000 pounds or less to be titled. As addressed in response to comments, the proposed rule text has been changed to remove the first sentence referring to registration under Transportation Code §502.146, because Transportation Code §501.036 does not require a farm trailer or farm semitrailer to be eligible for registration under Transportation Code §502.146. Thus, a reference to Transportation Code §502.146 is not necessary for permissive titling purposes under Transportation Code §501.036.

The 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 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 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 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 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 amendment to §217.3(6) redesignates the subparagraphs following subparagraph (B), and changes "and/or" to "or" to reflect current department style.

The 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 amended 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 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 amendments to §217.142 provide definitions for terms used in §§217.141 - 217.143. The 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 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 amended 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 has removed the existing stand-alone definition of "major component part" in §217.142. The department has also removed the quotation marks around the defined term in accordance with current department 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 of 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 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 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 be 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 definition has been changed to correct the references to the defined terms "basic component part" and "major component part."

As addressed in the response to comments, the definition of "equipment" includes four systems: brakes, steering, fuel supply, and exhaust; and the "integral items" to those systems. All the systems are items currently inspected for an assembled vehicle on the ASE Safety Inspection for Assembled Vehicles (Form VTR-64). The inspection will be of parts that cause the system to function to ensure that they are designed for the purpose for which they are being used, meet applicable safety standards, and are assembled for stable and safe operation on the roadway.

The 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 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 vehicle 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.

As discussed in response to comments, the inspection will apply to assembled vehicles newly constructed and required to be titled under Transportation Code Chapter 731. Previously titled vehicles or newly manufactured vehicles that are not assembled vehicles would be titled under the same requirements that existed prior to the enactment of Transportation Code Chapter 731. The inspection would apply to the equipment listed in §217.142(b)(3) and be based on the standards in §217.143.

The 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 has changed the title of §217.143 to "Inspection Requirements."

The 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.

As discussed in response to comments, the inspection is not limited to the items listed in Transportation Code §731.102. Transportation Code §731.101(c) provides that the "[T]he board by rule shall establish procedures and requirements for the inspection required by this section. Rules adopted under this subsection: (1) must establish inspection criteria; [and] (2) may specify additional items of equipment that must be inspected by a master technician and may specify different items of equipment that must be inspected based on the type of assembled vehicle."

The 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 discussed in response to comments, 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.

A street rod and custom vehicle inspection is only required if the owner of the vehicle desires street rod or custom vehicle license plates. The street rod and custom vehicle inspection is required under Transportation Code §504.501, and it applies to the owner of any vehicle seeking street rod or custom vehicle license plates. However, the department will accept a single inspection if street rod or custom vehicle license plates are requested during the initial title application process, because the inspections are the same, except for meeting the additional street rod and custom vehicle requirements.

The 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 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).

As discussed in response to comments, the master technician is not required to certify that the vehicle has not been built using a body or frame from a "nonrepairable" vehicle or that it does not contain any electrical or mechanical components from a "flood-damaged" vehicle. The items are prohibited under Transportation Code §731.051(2) and (3), but commenters did not describe the means, process, or costs for a master technician to reasonably make such determinations. In reviewing applications, the department will check the National Motor Vehicle Title Information System (NMVTIS) as is the department's current procedure. Purchasers and others may also inspect the motor vehicle before acquiring it as is the case with any used motor vehicle.

The 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 amendments to §217.143 also add new §217.143(f) and (g) relating to the payment of fees. Under 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.