TITLE 43. TRANSPORTATION

PART 10. TEXAS DEPARTMENT OF MOTOR VEHICLES

CHAPTER 217. VEHICLE TITLES AND REGISTRATION

SUBCHAPTER A. MOTOR VEHICLE TITLES

43 TAC §217.11

INTRODUCTION. The Texas Department of Motor Vehicles (department) adopts amendments to Title 43 of the Texas Administrative Code (TAC) §217.11 concerning rescission, cancellation, or revocation of an existing title or application by affidavit. The department adopts the amendments to §217.11 without changes to the proposed text as published in the April 17, 2020, issue of the Texas Register (45 TexReg 2519). The rule will not be republished.

REASONED JUSTIFICATION. The amendments help remove barriers to Texas businesses, streamlines administrative processes for efficiency, and protects consumers from fraud. The amendment to §217.11(a) extends the deadline to submit to the department an affidavit asking the department to rescind, cancel, or revoke an existing title or application for a title for a vehicle involved in the process of a first sale. The deadline is extended from within 21 days of initial sale to within 90 days of initial sale. By extending the deadline, the department is giving motor vehicle dealers and their customers more time to ask the department to rescind, cancel, or revoke a title to a new motor vehicle in cases where title was applied for in the customer's name, but the dealer, customer, and any lienholder have all agreed to cancel the sale. The amendment does not change any existing sales or contracting requirements under the Transportation Code or Finance Code, but merely extends the deadline to submit an affidavit to the department.

The rescission of title related to a cancelled sale on a new motor vehicle involved in a first sale results in the title record being deleted from the department's title records. This allows a motor vehicle dealer to obtain a duplicate Manufacturer's Certificate of Origin (MCO). Once a dealer has obtained a duplicate MCO, the dealer may treat a subsequent sale to another buyer as a first sale of a new motor vehicle rather than a used car sale, provided the vehicle never left the dealer's possession. Extending of the deadline for title rescission requests eliminates confusion for subsequent purchasers as to whether they purchased a new motor vehicle or a used motor vehicle, while maintaining the true value of a vehicle that has never really been the subject of a first sale.

Transportation Code §501.051 provides the department authority to rescind, cancel, or revoke an application for a title if a notarized or county-stamped affidavit is presented, but does not state a deadline for the affidavit to be presented to the department. By extending the deadline to 90 days, the department is balancing the needs of businesses and consumers. The new deadline provides ample time for businesses to recognize that an affidavit needs to be submitted, while protecting consumers and preventing fraud by not allowing for sale recessions, cancellations, and revocations to take place indefinitely and having the transactions take place within the administrative process.

SUMMARY OF COMMENTS.

The department received written comments from the Denton County Tax Assessor-Collector and the Texas Automobile Dealers Association:

Comment.

A commenter asks for text in the rule to clarify if the title process will include Manufacturer's Certificate of Origin (MCO) and/or used vehicles and notes that the rule assumes inferred knowledge of the MCO process when a buyer doesn't complete a first sale.

Response.

The commenter is correct that the MCO is discussed in the preamble as background information. The purpose of this is to provide context to the process that results in applying the rule. Once the affidavit process described in the rule is followed, additional statutes and rules apply to the transaction, not §217.11. As a result, no changes were made to the rule text. The affidavit process outlined in §217.11 is available only for vehicles that were in the process of a new sale. Any vehicle that has been subject to a prior sale, a used vehicle, is not eligible for a sale rescind under Transportation Code §501.051(b) and is not subject to the extended timeline in §217.11.

Comment.

A commenter endorses the addition of time from 21 to 90 days and notes that while Transportation Code §501.051 does not state a deadline for the affidavit to be presented to the department, it concurs with the TxDMV that the extended deadline balances the needs of businesses and consumers.

Response. The department appreciates the supportive comment and understands the importance of balancing the needs of businesses and consumers.

STATUTORY AUTHORITY. The department adopts amended §211.17 under Transportation Code §1002.001 which provides the board of the Texas Department of Motor Vehicles with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department; and more specifically, Transportation Code §501.051 which provides the department authority to rescind, cancel, or revoke an application for a title if a notarized or county-stamped affidavit is presented.

CROSS REFERENCE TO STATUTE. Transportation Code, §503.051 and §1002.001.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 11, 2020.

TRD-202002359

Tracey Beaver

General Counsel

Texas Department of Motor Vehicles

Effective date: July 1, 2020

Proposal publication date: April 17, 2020

For further information, please call: (512) 465-5665


SUBCHAPTER B. MOTOR VEHICLE REGISTRATION

43 TAC §§217.22, 217.27, 217.32, 217.38, 217.41, 217.55, 217.58 - 217.64

INTRODUCTION. The Texas Department of Motor Vehicles (department) adopts amendments to 43 TAC §§217.22, 217.27, 217.32, 217.38, 217.41, 217.55 and new 43 TAC §§217.58 - 217.64. The department adopts §§217.22, 217.27, 217.32, 217.38, 217.41, 217.55, 217.60, 217.61, 217.63, and 217.64 without changes to the proposed text as published in the April 17, 2020, issue of the Texas Register (45 TexReg 2521). The department adopts §§217.58, 217.59 and 217.62 with changes to the proposed text as published in the April 17, 2020 issue of the Texas Register (45 TexReg 2521).

REASONED JUSTIFICATION. These new and amended sections are necessary to implement Senate Bill 604, 86th Legislature, Regular Session (2019), which amended Transportation Code Chapter 504 by adding Subchapter B-1 to allow certain vehicles to be equipped with digital license plates.

The adopted amendments to §217.22 are necessary to add definitions that relate to digital license plates.

Amended §217.22(11) defines "digital license plate" to create a conforming reference to Transportation Code §504.151.

Amended §217.22(12) defines "digital license plate owner" to create a conforming reference to Transportation Code §504.151.

Amended §217.22(21) defines "GPS" as a global positioning system (GPS) tracking device to address the collection of information by a receiver in a digital license plate that can determine the location of the digital license plate. GPS features are not expressly addressed in Transportation Code Chapter 504 Subchapter B-1.

Amended §217.22(25) defines "legend" to clarify the meaning of the term as it is used in the definition of the phrase "required digital license plate information" in these adopted rules. The term "legend" is defined as a name, motto, slogan, or registration expiration notification appearing on and centered horizontally at the bottom of the license plate. The definition is also necessary to clarify that a digital license plate must display a registration expiration notification.

Amended §217.22(27) defines "metal license plate" to differentiate between a metal license plate and a digital license plate.

Amended §217.22(30) defines "optional digital license plate information" as any information authorized to be displayed on a digital license plate in addition to required digital license plate information. Amended §217.22(30)(A) - (D) list examples of optional digital license plate information.

Amended §217.22(31) defines "park" to conform with the statutory meaning in Transportation Code §541.401.

Amended §217.22(33) defines "primary region of interest" to describe the size requirements of the alphanumeric characters representing the plate number.

Amended §217.22(35) defines "required digital license plate information" to clarify the minimum information that must be displayed on a digital license plate. This definition is necessary to clarify that the same information required to be displayed on a metal license plate must also be displayed on a digital license plate: alphanumeric characters representing the plate number, the word "Texas," the legend, and the registration expiration month and year, if applicable. The definition also clarifies that digital license plates must also display the registration expiration notification if the vehicle's registration is expired. The department has sole control over the design, typeface, color, and alphanumeric pattern for all license plates under Transportation Code §504.005.

Amended §217.22(36) defines "secondary region of interest" to describe the size requirements for the field with the word "Texas" centered on the top of the plate.

The amendments to §217.27 are necessary to clarify the exclusions for digital license plates from the existing paragraph, and clarify existing requirements for metal license plates. Amended §217.27(a)(2) exempts digital license plates from existing requirements for displaying vehicle registration insignia for certain vehicles without a windshield. Amended §217.27(a)(3) clarifies that if a vehicle has a digital license plate, then the expiration month and year will appear digitally on the electronic visual display, and any registration insignia issued by the department must be retained in the vehicle. Vehicles with a digital license plate will be issued a voided registration sticker that will not to be affixed to the windshield. Vehicles with metal license plates that do not have a windshield are issued registration stickers that must be adhered to the rear metal license plate. This amendment provides consistency for law enforcement for metal license plates and digital license plates. The amendment also helps the digital license plate owner because they will have the metal license plate in their vehicle and their registration receipt in the event their digital license plate becomes inoperable or unreadable.

Amendments to §217.27(b)(1) add language clarifying that license plates must be clearly visible, readable, and legible and that the rear license plate must be in an upright horizontal position. These amendments are necessary to assist law enforcement by facilitating a quicker replacement of license plates that have become unreadable or illegible due to age or wear and to facilitate enforcement when a license plate is not placed on the vehicle in an upright position. These amendments also help ensure that license plates are readable and legible as required by §217.32, as well as Transportation Code §§502.475, 504.155(b)(2), and 504.945.

The amendments to §217.32 are necessary to differentiate between metal license plates and digital license plates. Amended §217.32(a) - (b) add "metal" and "metal license plate" to differentiate between metal license plates and digital license plates. A replacement digital license plate will be obtained from a digital license plate provider, rather than from a county tax assessor-collector

The amendment to §217.38 is necessary to differentiate between metal license plates and digital license plates. Amended §217.38(1) adds "metal" to differentiate between metal license plates and digital license plates. The customer is not required to return the digital license plate to the county tax assessor-collector when applying for a registration fee credit.

The amendments to §217.41 are necessary to differentiate between metal plates and digital license plates. A replacement digital license plate will be obtained from a digital license plate provider, rather than from a county tax assessor-collector.

The amendments to §217.55 are necessary to differentiate between metal license plates and digital license plates. Amended §217.55(c)(1) and (2) add "metal license" to differentiate between metal license plates and digital license plates. A replacement digital license plate will be obtained from a digital license plate provider, rather than from a county tax assessor-collector.

New §217.58 lists the types of vehicles that are eligible and ineligible for a digital license plate and the requirements for eligibility verification and issuance of digital plates. New §217.58(a) lists the statutorily-eligible vehicles as any vehicle owned or operated by a governmental entity, any commercial fleet vehicle, or a truck, motorcycle, moped, trailer, semitrailer, or sport utility vehicle or other vehicle that is required to be registered under Transportation Code Chapter 502. Changes were made to the proposed language in amended §217.58 to clarify the reference to fleet vehicle and to ensure that the previously listed vehicles included all possible eligible vehicles under Transportation Code Chapter 502. These amendments to the rule text do not alter the eligibility requirements for a digital license plate outlined in statute, do not put additional stakeholders on notice, and add no additional costs.

New §217.58(b) lists which vehicles are ineligible for a digital license plate. The proposed language in §217.58(b) was amended for clarity. Section §217.58(b) was amended after proposal to clarify that any vehicle registered as a passenger vehicle, that is not part of a commercial fleet or owned or operated by a governmental entity, is ineligible for a digital license plate. These amendments to the rule text do not alter the eligibility requirements for a digital license plate outlined in statute, do not put additional stakeholders on notice, and add no additional costs.

New §217.58(c) is necessary to ensure that digital license plate providers and applicants are aware that registration is completed separately from digital license plate issuance and that all digital license plate owners are issued their metal license plates to attach to the vehicle in case of digital license plate removal or malfunction. The proposed rule text in Section 217. 58(c)(5) has been deleted because it was unnecessary and may cause confusion as to whether a digital license plate could be replaced if it was lost or malfunctioned. The original purpose of the requirement, to prevent one vehicle from being linked to two or more different digital license plates, will be achieved through department programming controls.

New §217.59 outlines the requirements for digital license plate testing. New §217.59 requires a digital plate provider to provide the department with documentation demonstrating that testing was completed on a digital license plate model before the approval and initial deployment of that digital license plate model, and for each subsequent hardware upgrade. A hardware upgrade is any upgrade to any physical aspects of the digital license plate except for the mounting bracket. The documentation demonstrating that testing was completed must be sufficient for the department to be assured that the digital license plate approved for use was tested in a manner set forth by the department. The documentation must include a description of the testing protocols and methods and must be conducted by governmental entities, universities, or independent nonprofit research and development organizations. New §217.59 is necessary to ensure that digital license plates meet the statutory requirements for license plates and that the testing is conducted by the types of organizations with which the department has established relationships. The department works with these types of entities on a regular basis for different projects and requiring these types of entities to perform testing will ensure consistency and independence in testing. The testing must be conducted for four separate issues: reflectivity, legibility, readability, and network and data security. As discussed in the response to comments, the proposed rule text has been changed to require reflectivity testing with results demonstrating that the digital license plates are manufactured utilizing reflectorized material as required by Transportation Code §504.005, and are reflective in daytime, as defined in Transportation Code §541.401 and nighttime, as defined in Transportation Code §541.401 with the use of low beam headlights, at a distance of no less than 75 feet. Reflectivity testing with results demonstrating that the digital license plates perform consistently with the International Organization for Standardization ISO 7591, clauses 6 and 7 is preferred. This change is necessary to provide an incentive for digital license plate providers to achieve retroreflectivity as the technology develops, while not creating a barrier to enter the market if the standard is not currently possible. The digital license plate provider must comply with the requirement in Transportation Code §504.005(d), which promotes highway safety by requiring that each license plate is made with a reflectorized material that provides effective and dependable brightness for the period for which the plate is issued. New §217.59(2) requires legibility testing with results demonstrating that digital license plates are legible during daytime and also during nighttime using low beam headlights, under optimal conditions, at a distance of no less than 75 feet. New §217.59(2) also requires readability testing with results demonstrating that digital license plates are readable with commercially-available automated license plate readers, and in a variety of weather conditions. This is necessary to comply with the industry standard and to comply with the requirement that the digital license plate display be legible under Transportation Code §504.155(b)(2); to ensure that law enforcement can read the digital license plate to determine compliance with Transportation Code §504.945; and to ensure that law enforcement and toll entities can read the digital license plates with commercially-available automated license plate readers. New §217.59(3) requires commercially-available penetration testing for protection of the digital license plate, the electronic display information, and the digital license plate provider's systems. The penetration testing will be decided by the department and the provider in the contracting process. New §217.59(3) is necessary to ensure the safety and security of the digital license plates for the benefit of the digital license plate owner, law enforcement, and the public. If the digital license plate or the provider's system are vulnerable to penetration, this could enable fraud and jeopardize public safety. In addition to testing before initial approval and each subsequent hardware upgrade, penetration testing must be completed for each software or firmware upgrade. This requirement is necessary to ensure that new vulnerabilities are not instituted in subsequent updates.

New §217.60 outlines the specifications and requirements for digital license plates. New §217.60(a) requires digital license plate providers to ensure that the digital license plate meets or exceeds the benefits to law enforcement provided by metal license plates. This requirement is necessary to conform to the statutory requirement in Transportation Code §504.155(b)(4). New §217.60(a) paragraphs §217.60(a)(1) - (4) provide further requirements for the digital license plate. Paragraph §217.60(a)(1) outlines the physical requirements for a digital license plate. Paragraph §217.60(a)(2) requires that the digital license plate include one or more security features that verify the plate was issued by an approved digital license plate provider. Paragraph §217.60(a)(2) is necessary to provide benefits to law enforcement by allowing them to visually ensure that a digital license plate is not a counterfeit. Metal license plates have two security features that law enforcement can visually check to see if the metal license plate is counterfeit. Paragraphs §217.60(a)(3) - (4) require a digital license plate to display the same information as a metal license plates while not in park. This includes displaying required digital license plate information and the registration expiration month and year in the same font size and location as the information displayed on the corresponding metal license plate; as well as ensuring that the required information continues to display when the digital license plate is not connected to a wireless network. These requirements are necessary to fulfill the requirement under Transportation Code §504.155 for the board of the Texas Department of Motor Vehicles (board) to set the specifications and requirements for digital license plates. By setting consistent standards and features, the department is aiding law enforcement by preventing fraud and aiding consumers by ensuring their digital license plate displays the information required by law.

New §217.60(b) outlines the requirements for placement of a digital license plate and the vehicle registration insignia for a vehicle displaying a digital license plate. New §217.60(b)(1) requires that the digital license plate must be attached to the exterior rear of the vehicle. This requirement is necessary to comply with the definition of digital license plate defined in Transportation Code §504.151, which states that a digital license plate is designed to be placed on the rear of a vehicle in lieu of a physical, metal license plate. This requirement is also necessary to comply with Transportation Code §504.154(a), which states a digital license plate is placed on the rear of the vehicle in lieu of a physical, metal license plate. New §217.60(b)(2) requires a metal license plate to be attached to the exterior front of the vehicle, unless the vehicle is not required to display a plate on the front of the vehicle under this chapter. This requirement is necessary to comply with the requirements in Transportation Code §504.943 and 43 TAC §§217.27(b), 217.46(b)(3), and 217.56(c)(2)(E). New §217.60(b)(3) requires that the vehicle's registration insignia for validation of registration must be displayed in accordance with 43 TAC §217.27. Owners of vehicles with digital license plates will keep their registration receipt in or on the vehicle, and their registration month and year will be displayed on the electronic visual display of the digital license plate. New §217.60(b)(3) is necessary to provide consistency for law enforcement and limit fraud.

New §217.61 outlines the prohibitions and requirements for digital plate designs and display. New§217.61(a)(1) prohibits digital license plate providers from creating or designing a specialty license plate under Transportation Code Chapter 504 unless they have a contract with the department under Transportation Code §504.851. This is necessary to ensure that the department is aware of and approves all specialty license plates in the state of Texas. If specialty plates were created without the department's knowledge and approval it would be difficult to verify the legitimacy of the license plates. New §217.61(a)(2) requires the digital license plate provider to enter into a licensing agreement, with standard language as approved by the department, for the display of any third party's intellectual property on a digital license plate. New §217.61(a)(2) is necessary to protect third-party intellectual property.

New §217.61(b) outlines the requirements for the display of information on a digital license plate. New §217.61(b)(1) requires that the display of electronic information on a digital license plate be approved by the department. New §217.61(b)(1) provides that the digital license plate may not be personalized under any region of interest except under current rules governing specialty license plates. New §217.61(b)(1) is necessary to maintain consistency between digital license plates and metal license plates which assists law enforcement by ensuring that the digital license plate information is readable and legible. New §217.61(b)(2) - (4) describe the requirements for the display of optional digital license plate information while the vehicle is in park. These requirements are necessary to permit digital license plates to display an emergency alert, public safety alert, manufacturer or safety recalls, advertising or parking permits, while ensuring that the required digital license plate information remains legible and readable for law enforcement when the vehicle is in park. New §217.61(b)(5) permits the digital license plate provider to electronically collect tolls with approval by and agreement with the appropriate toll entity. New §217.61(b)(5) provides a possible benefit to digital license plate owners.

New §217.61(c) requires that digital license plate providers display an expiration message on the digital license plate if registration has not been renewed at the time of registration expiration, and that the expiration message may not be removed until after the department confirms renewal of expired registration and clarifies that optional digital license plate information may not encroach on the primary and secondary regions of interest. New §217.61(c) is necessary because Transportation Code §504.155(b)(4) requires a digital license plate to provide benefits to law enforcement that meet or exceed the benefits provided by a metal license plate.

New §217.61(d) prohibits digital license plate providers from displaying an emergency alert or other public safety alert, vehicle manufacturer safety recall notices, advertising, or a parking permit on a digital license plate without authorization from the digital license plate owner. This is necessary to ensure that the digital license plate does not display this optional digital license plate information without the owner's approval. For example, a person who graduated from a university might not like it if they were required to display the logo of a rival university on their license plate. New §217.61(d)(2) - (3) discuss the disclosure of GPS data. Unless the disclosure of the GPS data is required by law, the digital license plate provider may not disclose GPS data to any person unless it explains to the digital license plate owner how the GPS data will be used and to whom it will be disclosed, and the digital license plate owner consents to its disclosure. This is necessary to protect the privacy and safety of digital license plate owners. Additionally, the department's Vehicle Titles and Registration Advisory Committee recommended these disclosure requirements and their recommendation was adopted by the board at its February 6, 2020 board meeting. New §217.61(d)(4) prohibits the digital license plate provider from requiring the owner to authorize the display of optional digital plate information or the disclosure of GPS data as a condition of purchase of lease of a digital license plate. This is necessary to protect the digital license plate owner's right to decide whether to opt in. New §217.61(d)(5) and (d)(6) require the digital license plate provider to immediately discontinue the display of optional digital license plate information at the digital license plate owner's request and to have the same mechanism for opting in and out of the display of the optional digital license plate information. This requirement is necessary to allow the digital license plate owner a consistent way to opt out of the display of optional digital license plate information on their digital license plate after they have opted in.

New §217.62 outlines the requirements for a digital license plate provider if a digital license plate is removed or malfunctions. New §217.62(a) requires that the digital license plate provider have a mechanism to prevent theft and tampering with the digital license plate. New §217.62(a)(1) and (a)(2) require the digital license plate provider to ensure that the digital license plate ceases the display of required digital license plate information in case of malfunction, if service is terminated, or if it determines that the digital license plate has been compromised, tampered with, or fails to maintain the integrity of registration data. The proposed rule text in 217.62 (a)(1) has been new to add a missing word. New §217.62(a) is necessary to help prevent fraud and protect consumers if their digital license plate is stolen.

New §217.62(b) outlines when the digital license plate provider must notify the department. New §217.62(b)(1) - (4) require digital license plate providers to immediately notify the department in case of digital license plate commencement of service, termination of service, determination that the digital license plate has been compromised, or the transfer of a digital plate to a new owner. These requirements are necessary to ensure that the department has accurate and current data on the digital license plates.

New §216.62(c) permits a digital license plate provider to disable the display of a digital license plate if the digital license plate owner fails to pay the provider's fees. This is necessary to allow a digital license plate provider to discontinue service when the digital license plate owner is not paying the fees required by their contract.

New §217.63 outlines the digital plate fees and payment. New §217.63(a) requires that a person applying for a digital license plate must pay an administrative fee of $95.00 upon application for a digital license plate and annually on renewal of registration for a vehicle with a digital license plate. The fee will be aligned with the registration period and adjusted to yield the appropriate fee. The administrative fee is necessary to recoup the department's costs to implement and then administer the digital license plate program for the first five years. The implementation and administration cost is estimated to be $1.8 million. The breakdown of this estimate is as follows:

Programming- Information Technology - $1,036,550

Program Specialists (two FTEs) - $815,625

IMPLEMENTATION COST - $1,852,175 Total

To determine an administrative fee, the total estimated implementation cost was divided by the number of digital license plates issued in California (1,300 plates total), since that is the only jurisdiction with a digital plate program that has been operational for several years. That amount was divided by fifteen with the goal of recouping the implementation and administration cost in approximately fifteen years. The amount of the fee and the time of its collection were recommendations from the department's Vehicle Titles and Registration Advisory Committee, and the recommendations were adopted by the board at its February 6, 2020 board meeting. New §217.63(a)(3) clarifies that a digital license plate administrative fee will be refunded only when registration fees are overcharged under Transportation Code §502.195. This is necessary to inform consumers of when a refund will be issued.

New §217.63(b) clarifies that the $95 administrative fee is due upon receipt of an application for a digital license plate and annually on renewal of registration for a vehicle with a digital license plate. This is necessary to ensure that the fees for digital license plates are being paid and timely deposited into the state treasury under Government Code §404.094. It also clarifies that a digital license plate provider that collects the administrative fee must submit payment of the fee to the department in full on behalf of the digital license plate owner.

New §217.64 outlines the services that a digital license plate provider is required to provide, including digital license plate replacement when necessary. New §217.64(a)(1) requires a digital license plate provider to provide customer support for customers during standard business hours, Central Time. This requirement is necessary to ensure that customers can access support if they have issues with their digital plate and it corresponds to the hours that customer service is available for a metal license plate. New §217.64(a)(2) clarifies that a customer must go to the digital plate provider for repair, service, and replacement of a digital license plate. This clarification is necessary so that customers are aware of who to contact in case an issue arises with their digital license plate.

New §217.64(b) informs the customer where they can obtain a replacement license plate. New §217.64(b)(1) clarifies that if a customer wants a replacement digital license plate they can obtain one from the provider. New §217.64(b)(2) permits the customer to install the rear metal license plate issued for the vehicle in lieu of the digital license plate. New §217.64(c) explains how to obtain a replacement metal license plate. New §217.64(b) and (c) are necessary because customers need to know where to obtain replacement plates if their digital license plate malfunctions or is destroyed, or if their metal license plate is lost, stolen, mutilated, or needs to be replaced for cosmetic or readability reasons. Digital plate owners cannot operate their vehicle until the digital license plate is repaired or replaced, or until they remove the digital license plate and replace it with a metal license plate.

REGULATORY COMPLIANCE DIVISION

The new and amended sections were reviewed by the Governor's Division of Regulatory Compliance (Division). The Division gave the Board permission to adopt the new and amended sections on June 9, 2020.

SUMMARY OF COMMENTS AND AGENCY RESPONSE.

The department received written comments requesting clarifications or changes in the proposed text from: Collin County Sheriff Office, Central Texas Regional Mobility Authority, North Texas Tollway Authority, The Tax Assessor-Collectors Association of Texas, Lubbock County Tax Assessor-Collector, Harris County Toll Road Authority, 3M, and Denton County Tax Assessor-Collector.

General Comment.

A commenter requests that the initial registration and the renewal process should remain the same, as with any other vehicle, through the county tax assessor's office and suggests that if the digital license plate provider would like the county to collect and remit the digital license plate fees this can be accomplished, however, should the provider prefer to collect the fees independently for their digital plates they can bill separately.

Agency Response.

The department disagrees with the comment because there is no change to how a vehicle is initially registered or renewed.

§217.22(27)

Comment.

A commenter requests that the county should be the responsible entity to issue non-digital plates and not the department.

Agency Response.

The department disagrees with the comment because there is no change to the current process on issuing metal license plates.

§217.27(b)

Comment.

A commenter notes that §217.27(b) and §217.60(b) appear to contemplate that most registered vehicles that are eligible for a digital license plate will still display two plates and notes that this is consistent Transportation Code 504.154(a), which generally requires preservation of the two-plate rule for vehicles using a digital license plate.

Agency Response.

The department agrees with the comment and confirms that all vehicles that are required to have two license plates will continue to be required to display two license plates.

§217.27(a)

Comment.

A commenter requests that the department clarify the difference between references to the department, TxDMV, and the county tax accessor's office in §217.27(a).

Agency Response.

The department disagrees with the comment and declines to amend the rule to clarify the definitions. The proposed rule is consistent with statutory language in Transportation Code §502.059(b).

§217.58

Comment.

A commenter supports the following proposed rules relevant to tolling operations in their current form:

(a) 217.58 - Digital License Plate Eligibility

(b) 217.61 - Digital License Plate Designs and Displays

Agency Response.

The department appreciates the supportive comment.

§217.58(a)(2)(b)

Comment.

A commenter requests a clarification between the definition of passenger and non-passenger vehicles.

Agency Response.

The department disagrees with the comment and declines to make the clarification in §217.58(a)(2)(B) because the term passenger car and other vehicle classifications are currently defined in Transportation Code, Chapter 502.

§217.59

Comment.

A commenter believes that the testing requirements in §217.59 should be more robust and should be confirmed to work properly based on real world tests utilizing toll cameras, automatic license plate readers and other equipment actually in use in the major metro areas of Texas, including Harris County and the surrounding counties. Furthermore, the rules should require at least six (6) months of legibility and readability testing with results demonstrating that the digital license plate technology works properly, without adverse impacts from strobing or glaring effects, for toll projects in Harris County and the surrounding area and the county constables and other law enforcement agencies patrolling those projects, whether in daytime or nighttime and during varying weather conditions, including specifically during peak periods of heat in the summer months and peak periods of cold during the winter months.

Response.

The department disagrees with the comment and declines to make the requested change. The department agrees that accurately assigning tolls to the registered vehicle owner is important. The department intends to include toll entities in testing their license plate readers and will require that digital plate providers supply digital plates to toll entities for testing, under the department's contract with any digital plate provider.

§217.59(1)

Comment.

A commenter discussed the importance of retroreflective license plate specifications and encourages the department to retain the requirements in §217.59, which call for testing of the license plate retroreflectivity according to IS0 7591 clauses 6 and 7, to ensure a method of fail-safe functionality for the safety of Texas motorists.

Agency Response.

The department disagrees with the comment and declines to retain the proposed requirement in §217.59(1). Upon further research and discussion with the American Association of Motor Vehicle Administrators, the department has determined that current digital license plates do not have retroreflectivity capabilities. While the department prefers uniform standards for retroreflectivity for all license plates, it understands the importance of adopting safety standards that are achievable by a digital license plate while also ensuring that all license plates meet the reflectivity requirements under Transportation Code §504.005. In order to ensure that the requirements are achievable, the department is amending the language in §217.59(1) to read, "(1) reflectivity testing with results demonstrating that the digital license plates are manufactured utilizing reflectorized material as required by Transportation Code, §504.005, and are reflective in daytime, as defined in Transportation Code, §541.401 and nighttime, as defined in Transportation Code, §541.401 with the use of low beam headlights, at a distance of no less than 75 feet. Reflectivity testing with results demonstrating that the digital license plates perform consistently with the International Organization for Standardization ISO 7591, clauses 6 and 7 is preferred." Recognizing the importance of retroreflectivity for law enforcement, this updated language provides an incentive for digital license plate providers to achieve retroreflectivity as the technology develops, while not creating a barrier to enter the market if the standard is not currently possible. The change does not add a new requirement or cost for digital license plate providers.

§217.59(2)

Comment.

A commenter is supportive of the department's testing requirements under §217.59(2), but suggests the addition of additional language to preserve the value of existing inventories of automated license plate readers. The commenter suggests that §217.59(2) be amended to read, "demonstrating that digital license plates are ... readable with automated license plate readers that were commercially available as of September 1, 2019."

Agency Response.

The department disagrees with the comment and declines to make the requested change. The department appreciates the comment and understands the importance of preserving the value of automated license plate readers; however, declines to make the suggested change. If the date September 1, 2019, is inserted into the rule, it could subject digital license plate providers to a requirement they cannot meet as technology changes. The current language which specifies that commercially available automated license plate readers be used will allow the technologies to grow and shift together so that the standard can continue to be reached in years to come.

§217.59 and §217.60

Comment.

A commenter notes that if a vehicle does not have a toll transponder, tolling agencies rely on in-lane cameras and optical character recognition (OCR) to capture license plate images, correctly identify the alphanumeric digits on the plate, and accurately assign tolls to the registered vehicle owner. The commenter suggests that there be no fewer than six months of digital plate testing by tolling entities on their in-lane cameras and OCR systems evaluating certain criteria.

Agency Response.

The department agrees with the comment that accurately assigning tolls to the registered vehicle owner is important. The department intends to include toll entities in testing license plate readers and will require that digital plate providers supply digital license plates to toll entities for testing, under the department's contract with a digital plate provider.

Comment.

A commenter notes that tolling agencies, DMV, and law enforcement could encounter toll collection and other enforcement "gaps" as digital plate owners and digital plate providers settle billing disputes.

Agency Response.

The department agrees with the comment that a digital license plate that no longer displays registration information would cause enforcement issues; however, the digital license plate owner is required to replace the digital license plate with the metal license plate that they were provided at time of registration issuance or renewal. Vehicles required to have two license plates will continue to display a metal plate on the front of the vehicle.

§217.61

Comment.

A commenter believes that the DMV should decline to promulgate any rule allowing digital plate vendors to serve as toll account issuers. Should DMV opt for allowing digital plate vendors to process tolls, the commenter recommends the following:

Afford tolling entities full discretion to decline allowing digital plate providers to embed transponders in their service area or, at a minimum, the option to register plate transponder through a local toll authority;

require a digital plate-embedded transponder to be compatible with the protocols approved by the Central U.S. interoperability agreement already in effect (all Texas tolling entities plus Oklahoma and Kansas toll authorities participate in that agreement); and submit the digital plate vendor to the governing statutes and rules of the tolling provider, regional tollway authority, regional mobility authority, or county toll road authority where the vehicle with the digital plate is registered in addition to Transportation Code Chapter 372, the catch-all statute for Texas tolling agencies

Agency Response.

The department disagrees with the comment and declines to make a change. The proposed language in §217.61 only allows such agreement between any digital plate provider and a toll entity as an option. Any such agreement is not required. The department has no regulatory authority over the toll entities operating in Texas.

§217.61(b)(5)

Comment.

A commenter asks if the requirement in §217.61(b)(5) authorizing electronic toll collection with approval from, and agreement between, a digital license plate provider and the appropriate toll entity mean that a person with a digital plate would not need the toll tag sticker on their windshield? Or does it mean there would be a collection mechanism to allow the toll authority to collect tolls using the digital plate owner account?

Agency Response.

The department disagrees with the comment and declines to make a change. The department has no regulatory authority over the toll entities operating in Texas. This matter would be determined by agreement between the toll entity and the digital license plate provider.

Comment.

A commenter requests clarification on what "appropriate toll entity" must enter into an agreement with the digital license plate provider, as the rules are silent on which type of entity may be an appropriate toll entity. Additionally, it believes the term "appropriate toll entity" should be limited to public toll agencies in Texas.

Agency Response.

The department disagrees with the comment and declines to make a change. Section 217.61(b)(5) does not require any toll entity to enter into an agreement with any digital license plate provider, but merely permits them to. The proposed rules only apply to digital license plates and digital plate providers in Texas.

Comment.

A commenter requests that §217.61(b)(5) be withdrawn. The commenter thinks a better approach for toll collection purposes would be for the toll entities to work directly the vendor and the other toll agencies in Texas to ensure that, as this kind of technology is introduced into the tolling market place in Texas, it satisfies the requirements for interoperability and compatibility with the HCTRA system.

Agency Response.

The department disagrees with the comment and declines to withdraw §217.61(b)(5). The proposed language in §217.61(b)(5) only allows such agreement between a digital plate provider and a toll entity as an option. Any such agreement is not required. The department has no regulatory authority over the toll entities operating in Texas.

Comment.

A commenter requests that given increased frustration with toll billing errors, some consideration should be given to customer service experience and resources, including call center and customer account maintenance capabilities, with additional consideration given to the primary transponder used in a particular region of the State. EZ TAG, issued by HCTRA, is the primary transponder used in the Harris County region, while TollTAG, issued by the North Texas Tollway Authority ("NTTA") is the primary transponder used in North Texas. Other regions of the State use TxTAGs issued by the Texas Department of Transportation.

Agency Response.

The department disagrees with the comment and declines to make a change. The department has no regulatory authority over the toll entities operating in Texas. Appropriate handling of these concerns would be determined by agreement between the toll entity and any digital license plate provider.

Comment.

A commenter suggests that the proposed rules address compliance with interoperability protocols or requirements for maintaining valid electronic customer accounts such as, the Central United States interoperability hub for the processing of toll transactions from toll agencies in Texas, Oklahoma and Kansas based on specified interoperability protocols and requirements.

Agency Response.

The department disagrees with the comment and declines to make a change. The department has no regulatory authority over the toll entities operating in Texas. This matter would be determined by the agreement between the toll entity and any digital license plate provider.

Comment.

A commenter questions whether a proposed rule, at this time, is necessary to deal with advancements in toll collection technology, as technology develops, the commenter thinks a better approach would be for us to work directly with market innovators, including the digital license plate vendor, to ensure that the proposed technology satisfies the requirements for interoperability and compatibility with the HCTRA system.

Agency Response.

The department disagrees with the comment and declines to make a change. Because the department has no regulatory authority over the toll entities operating in Texas this matter would be determined by agreement between the toll entity and any digital license plate provider. Additionally, proposed §217.61(b)(5) only allows such agreement between a digital plate provider and a toll entity as an option. Any such agreement is not required. Under any agreement, specifics with regard to evolving technology may be required.

Comment.

A commenter notes that it is unclear whether the digital license plate would come with a separate transponder that would be affixed to the front windshield. If the digital license plate comes with a separate transponder to affix on the front windshield, then the commenter questions whether there really would be a public benefit or amenity that is not available with a metal plate.

Agency Response.

The department disagrees with the comment and declines to make a change. Transponder technology would be determined by any optional agreement between the toll entity and a digital plate provider.

Comment.

A commenter notes that it is unclear whether the digital license plate would be linked with an electronic customer account with a valid method of payment and questions whether a digital license plate provider would be able to satisfy the requirements of Senate Bill 198. Although Senate Bill 198 allows toll agencies to contract with each other to allocate responsibilities for sending notices and taking other actions required by the legislation, Senate Bill 198 does not authorize a toll agency to delegate responsibilities to a private vendor.

Agency Response.

The department disagrees with the comment and declines to make a change. Because the department has no regulatory authority over the toll entities operating in Texas, this matter would be determined by agreement between the toll entity and any digital license plate provider. Furthermore, the toll entity and digital license plate provider may work together to ensure that any agreement would comply with all relevant Texas law.

Comment.

A commenter is concerned that rather than providing a public benefit that is no cost to local government, digital license plates may make it easier for toll scofflaws to cheat the system resulting in an increase in lost toll revenue, as well as an increase in collection costs.

Agency Response.

The department disagrees with the comment and declines to make a change. It is the department's understanding that toll entities utilize front license plate readers in addition to rear license plate readers. Vehicles that currently display two license plates will continue to have two plates and those vehicles with a digital license plate will continue to display a metal plate on the front of the vehicle.

§217.62(c)

Comment.

A commenter notes that, specific to proposed §217.62(c), readability would be impossible if a digital plate owner fails to pay fees owed to a digital plate provider for service, resulting in the disabling of the digital plate.

Agency Response.

The department disagrees with the comment and declines to make a change. A digital license plate that no longer displays registration information would cause readability issues; however, the digital plate owner is required to replace the digital license plate with the metal license plate that they were provided at time of registration issuance or renewal. Vehicles required to have two plates will continue to display a metal plate on the front of the vehicle.

Comment.

A commenter requests that the following language be added as §217.62(c)(a)(2): "For each digital license plate fee that is collected by a county assessor-collector and for which the department is allocated a portion of the fee for administrative costs, the department shall credit $2.30 dollars from its administrative costs to the county treasurer of the applicable county, who shall credit the money to the general fund of the county to defray the costs to the county of administering this chapter."

Agency Response.

The department disagrees with the comment and declines to make the suggested addition. The $95 administrative fee is not a plate fee but is intended to recoup the department's cost in implementing the program. The $0.50 county compensation from metal specialty license plates is to defray the cost to the county of administering Transportation Code Chapter 504, and the county will not perform extra duties because the vehicle has a digital license plate. If the digital license plate provider has a licensing agreement with a state specialty plate sponsor, then the county will retain the portion of the plate fee as they do today under Transportation Code §504.008 for a metal specialty plate. Digital license plate issuance will be handled by the department and any digital plate provider, and there will not be additional work associated with processing renewal transactions of vehicles with a digital license plate.

§217.63

Comment.

A commenter asks if the digital license plate owner would pay the administrative fee to the county tax accessor-collector when renewing their registration?

Agency Response.

The department agrees with the comment for any renewal done through the county tax assessor-collector's office.

Comment.

A commenter asked whether the administrative fee would be on the "renewal form," and how the county tax assessor-collector will be informed that the administrative fee needs to be collected apart from it appearing in the Registration & Title System (RTS). The commenter also asked for clarification regarding whether there will be an option to pay the administrative fee directly to the department and if so, would the county tax accessor- collector be required to verify if the administration fee has been paid timely?

Agency Response.

The department disagrees with the comment and declines to make a change. There is not a registration renewal form. The administrative fee for a digital license plate will be line itemed on the renewal notice if applicable. The county will know to collect the administrative fee for a digital plate through RTS. For vehicles for which the department processes the registration or renewal, the customer must pay the fee to the department. At the county, the fee will be collected through RTS so there will be no need to verify collection of the administrative fee.

§217.63(b)(1)

Comment.

A commenter requests that the current county registration renewal fees be collected and credited by each county and the current registration process remain the same for state, county and local fees while the digital license plate provider collects their fees separately.

Response.

The department agrees with the comment. There is no change to how registration renewal fees, including county and local fees, are collected and credited to each county. There is no change to the registration renewal process under the proposed rules. The digital license plate provider(s) will collect the fee for the digital license plate.

§217.64

Comment.

A commenter requests that the following language be added as §217.64(e) to align the process with the metal specialty license plate process: (e) If the digital license plate is lost, stolen, mutilated, or needs to be replaced, replacement plate may be obtained as indicated:

- The owner submits a written request to the county tax assessor-collector for replacement digital license plate accompanied by a copy of the registration receipt.

The county tax assessor-collector will:

- order the replacement plates through the system,

- collect the $6 replacement fee and the automation fee.

- After manufacture, the replacement digital plate is mailed directly to the customer.

Agency Response.

The department disagrees with the comment and declines to make the requested change because the digital license plate provider will replace the digital license plate as appropriate for the customer. Replacement of a digital license plate will be handled under contract between the department and any digital license plate provider.

STATUTORY AUTHORITY. The amendments and new sections are adopted under Transportation Code, §1002.001, which provides the board of the Texas Department of Motor Vehicles with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department; and more specifically, Transportation Code, §§504.151-504.157 which authorize digital license plates while giving the department rulemaking authority to implement the statutory provisions including setting specifications and requirements for digital plates and establishing a fee.

CROSS REFERENCE TO STATUTE. Transportation Code, §§504.151- 504.157 and §1002.001.

§217.58.Digital License Plate Eligibility.

(a) Vehicles eligible for a digital license plate. The following vehicles are eligible for a digital license plate, subject to the exceptions in subsection (b) of this section:

(1) any vehicle owned or operated by a governmental entity; or

(2) a vehicle owned or operated by a person other than a governmental entity if the vehicle is:

(A) part of a commercial fleet, as defined by Transportation Code, §502.001; or

(B) a truck, motorcycle, moped, trailer, semitrailer, sport utility vehicle, or other vehicle that is required to be registered under Transportation Code, Chapter 502.

(b) Vehicles not eligible for a digital license plate.

(1) Notwithstanding subsection (a) of this section, a vehicle is not eligible for a digital license plate if the vehicle is not required to display a license plate on the rear of the vehicle, including:

(A) truck-tractors; or

(B) trucks with combination registration under Transportation Code, §502.255.

(2) Notwithstanding subsection (a)(2)(B) of this section, a vehicle registered as a passenger vehicle is not eligible for a digital license plate.

(c) Requirements for Eligibility Verification and Issuance of Digital Plates.

(1) An applicant for a digital license plate may not obtain a digital license plate from a digital license plate provider if the vehicle for which a digital license plate is being sought is not registered. The individual must first submit a complete initial application for registration and the accompanying documents and fees at the county tax assessor-collector's office, or at the department for vehicles that must be registered directly through the department under this chapter. After receipt of the necessary documentation and fees, the department will issue one or two metal license plates, in accordance with this chapter, to the applicant for the digital license plate, depending on the type of vehicle. After the department issues the metal license plate or plates to the applicant, the applicant may then proceed with obtaining a digital license plate from a digital license plate provider.

(2) A digital license plate provider must obtain the following information from a digital license plate applicant before it verifies the vehicle's eligibility for a digital license plate:

(A) the last four digits of the vehicle identification number; and

(B) the existing metal license plate number.

(3) A digital license plate provider may not issue a digital license plate for a vehicle that has not been issued Texas registration in the name of the applicant for the digital license plate.

(4) Any metal license plate issued for the rear of the vehicle and any associated plate sticker issued for a rear metal license plate must be carried in or on the vehicle at all times when using a digital license plate.

§217.59.Digital License Plate Testing.

Before the initial deployment of a digital license plate model and for each subsequent hardware upgrade, which includes all physical aspects of the digital license plate except for the mounting bracket, a digital license plate provider must provide the department with documentation sufficient for the department to be assured that the digital license plate model for which approval is sought was tested in a manner set forth by the department. The documentation must include a description of the testing protocols and methods. Digital license plate testing must be conducted by governmental entities, universities, or independent nonprofit research and development organizations. Testing must include:

(1) reflectivity testing with results demonstrating that the digital license plates are manufactured utilizing reflectorized material as required by Transportation Code, §504.005, and are reflective in daytime, as defined in Transportation Code, §541.401 and nighttime, as defined in Transportation Code, §541.401 with the use of low beam headlights, at a distance of no less than 75 feet. Reflectivity testing with results demonstrating that the digital license plates perform consistently with the International Organization for Standardization ISO 7591, clauses 6 and 7 is preferred;

(2) legibility and readability testing with results demonstrating that digital license plates are legible in daytime, as defined in Transportation Code, §541.401 and nighttime, as defined in Transportation Code, §541.401, using low beam headlights, under optimal conditions at a distance of no less than 75 feet; and are readable with commercially-available automated license plate readers and in a variety of weather conditions; and

(3) commercially-available penetration testing, as approved by the department, for the protection of the digital license plate, the electronic display information, and the digital license plate provider's systems. In addition to testing before initial approval and each subsequent hardware upgrade, testing described in this paragraph must be completed for each software or firmware upgrade.

§217.62.Digital license plate removal and malfunction.

(a) A digital license plate provider must have a mechanism to prevent potential theft of and tampering with the digital license plate. At a minimum, a digital license plate provider must ensure the digital license plate ceases the display of digital license plate information:

(1) when a digital license plate malfunctions or upon termination of services between a digital license plate provider and owner; or

(2) if a digital license plate provider determines that the digital license plate has been compromised, tampered with, or fails to maintain integrity of registration data.

(b) Digital license plate providers must immediately notify the department in the following circumstances:

(1) commencement of services by the digital license plate provider;

(2) termination of services by the digital license plate provider;

(3) determination that the digital license plate has been compromised; or

(4) the transfer of a digital license plate to a different owner.

(c) The digital license plate provider is authorized to disable the display of a digital license plate for failure of the digital license plate owner to pay the fees due to the digital license plate provider.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 11, 2020.

TRD-202002357

Tracey Beaver

General Counsel

Texas Department of Motor Vehicles

Effective date: July 12, 2020

Proposal publication date: April 17, 2020

For further information, please call: (512) 465-5665