PART 10. TEXAS DEPARTMENT OF MOTOR VEHICLES
CHAPTER 223. COMPLIANCE AND INVESTIGATIONS [DIVISION]
INTRODUCTION. The Texas Department of Motor Vehicles (department) proposes amendments to 43 Texas Administrative Code (TAC) Chapter 223, Subchapter A, Fraud, Waste, or Abuse, §§223.1 - 223.3; new §223.5; and the repeal of Subchapter B, Risk-Based Monitoring and Preventing Fraudulent Activity, §223.101.
The proposed amendments would revise the title to Chapter 223 by removing the word "Division." The proposed amendments would also bring the rules into alignment with statute; clarify existing requirements; improve readability by using consistent terminology; update definitions, terms, and references; and more specifically describe the department's methods and procedures. Proposed new §223.5 is necessary to update the department's process for external risk-based monitoring regarding the external users of the department's Registration and Title System (RTS). Proposed new §223.5 would replace Subchapter B, §223.101.
EXPLANATION. The department is conducting a review of its rules in Chapter 223 in compliance with Government Code, §2001.039. Notice of the department's plan to review Chapter 223 is published in this issue of the Texas Register. As a part of the rule review, the department is proposing necessary revisions as detailed in the following paragraphs.
A proposed amendment would change the title to Chapter 223 to "Compliance and Investigations" by deleting the word "Division." In August of 2021, the department's Compliance and Investigations Division disbanded and became a part of the department's Enforcement Division.
Subchapter A. Fraud, Waste, or Abuse
Proposed amendments to §223.1 would clarify the purpose and scope of §223.3 and expand the scope of Subchapter A to include new §223.5 to replace §223.101, which is proposed for repeal. Section 223.3 authorizes county tax assessor-collectors and deputies to report to the department any suspected fraud, waste, or abuse relating to vehicle registration or titling; however, the deputies report suspected fraud, waste, or abuse to the county tax assessor-collector, who then reports it to the department. A proposed amendment to §223.1 would also delete subsection (b) because amended subsection (a) includes the necessary language regarding the purpose and scope of Subchapter A.
Proposed amendments to §223.2(b) would remove the definitions of "CID" and "Director" because both refer to the Compliance and Investigations Division, which has been disbanded and reorganized within the department's Enforcement Division. A proposed amendment to the definition of "county tax assessor-collector" in §223.2(b) would clarify the definition by referring to the person who serves as the assessor-collector of taxes for a Texas county under Article VIII, §14, of the Texas Constitution. A proposed amendment to the definition of "deputy" in §223.2(b) would clarify that Chapter 217 is in Title 43. A proposed amendment to the definition of "RTS" in §223.2(b) would replace the words "Texas Department of Motor Vehicle's" with the word "department's" because the word "department" is defined in Transportation Code, Chapter 501. Section 223.2(a) says the words and terms defined in Transportation Code, Chapter 501 have the same meaning when used in Chapter 223, with certain exceptions. Proposed amendments to §223.2(b) would also re-letter the subsection due to deletions.
A proposed amendment to §223.3(a) and (c) would delete the words "motor vehicle" from the term "motor vehicle dealer" because the word "dealer" is defined in Transportation Code, Chapter 501, but the term "motor vehicle dealer" is not defined in Chapter 501. Proposed amendments to §223.3 would replace the acronym "CID" with the word "department" to reflect the reorganization within the department. Proposed amendments to §223.3(a) - (c) would remove the words "and possible investigation" as unnecessary. In addition to improving readability, proposed amendments to §223.3(b) would clarify and specify the information that must be included in the detailed narrative that a county tax assessor-collector must submit as part of a request to the department to review suspected fraud, waste, or abuse. A proposed amendment to §223.3(c) would add the word "possible" to be consistent with subsection (a), which includes the word "possible" when referring to suspected fraud, waste, or abuse. A proposed amendment to §223.3(c) would also delete an unnecessary comma. Proposed amendments to §223.3(d) would improve readability by using consistent terminology and removing unnecessary language.
Simultaneously with the proposed repeal of Subchapter B and §223.101, the department proposes new §223.5, which would rewrite, reorganize, clarify and specify the department's external risk-based monitoring system required by Transportation Code, §520.004(4). Proposed new §223.5 would subject all Texas county tax assessor-collectors, their contractor's staff, and their deputies, which are external RTS users, to periodic examination to determine whether to assign the RTS user a classification of priority or non-priority. Based on the examination, the department will classify each county tax assessor-collector, each of their contractor's staff, and each deputy as priority or non-priority for the purposes of prioritizing reviews to determine whether there is evidence of fraud by a county tax assessor-collector, their contractor's staff, or a deputy. This classification system will allow the department to determine how to use its limited resources most efficiently to investigate and prevent fraud.
Proposed new §223.5(a) would set out the factors the department considers in classifying a tax assessor-collector, their contractor's staff, or deputy as a priority or non-priority. These proposed factors would reflect the department's current practices in assessing whether to investigate a particular county tax assessor-collector, their contractor's staff, or deputy.
Proposed new §223.5(b) would document the department's goal that each county tax assessor-collector, each of their contractor's staff, or each deputy who is classified as a priority will be reviewed at least once per year; and if classified as a non-priority, a county tax assessor-collector, their contractor's staff person, or deputy will be reviewed at least once every two years. This goal would create predictability for the department, county tax assessor-collectors, their contractor's staff, and deputies; ensure that all county tax assessor-collectors, their contractor's staff, and deputies are reviewed regularly; and allow the department to prioritize its limited resources toward higher-priority reviews.
Proposed new §223.5(c) specifies that the examinations under this section may be virtual, on premises at the county tax assessor-collector's, their contractor's staff person's, or deputy's location, or a combination of both. Allowing virtual examinations would save the department resources and would be more convenient for county tax assessor-collectors.
Proposed new §223.5(d) would provide that the department may notify the county tax assessor-collector of possible fraudulent activity in the county tax assessor-collector's office when the department is authorized by law enforcement. This would clarify the limitations on the department's ability to update a county tax assessor-collector about a department investigation of their office.
Subchapter B. External Risk-Based Monitoring System
The department proposes the repeal of Subchapter B, including §223.101, because the risk-based system of monitoring and preventing fraudulent activity relating to vehicle registration and titling falls within the scope of Subchapter A, which is titled "Fraud, Waste, or Abuse." Also, the definitions in §223.2 apply to the entire Chapter 223, even though §223.2 is contained in Subchapter A. Simultaneously with the repeal of Subchapter B and §223.101, the department proposes new §223.5, which would rewrite, reorganize, clarify, and specify the department's external risk-based system of monitoring and preventing fraudulent activity relating to vehicle registration and titling.
FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT. Glenna Bowman, Chief Financial Officer, has determined that for each year of the first five years the proposed amendments, new section, and repeal are in effect, there will be no significant fiscal impact to state or local governments as a result of the enforcement or administration of the proposal. Enforcement Division Director Corrie Thompson has determined that there will be no significant impact on local employment or the local economy as a result of the proposal.
PUBLIC BENEFIT AND COST NOTE. Ms. Thompson has also determined that for each year of the first five years the proposed amendments, new section, and repeal are in effect, the anticipated public benefit as a result of enforcing or administering the proposal will be the simplification, clarification, and streamlining of agency rules.
Anticipated Cost to Comply with the Proposal. Ms. Thompson anticipates that there will be no costs to comply with the proposed amendments, new section, and repeal.
ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS. As required by Government Code, §2006.002, the department has determined that the proposed amendments will not have an adverse economic impact on small businesses, micro-businesses, and rural communities because there are no anticipated economic costs for persons required to comply with the proposed amendments, new section, and repeal. Therefore, the department is not required to prepare a regulatory flexibility analysis under Government Code, §2006.002.
TAKINGS IMPACT ASSESSMENT. The department has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking or require a takings impact assessment under Government Code, §2007.043.
GOVERNMENT GROWTH IMPACT STATEMENT. The department has determined that each year of the first five years the proposed amendments, new section, and repeal are in effect, no government program would be created or eliminated. Implementation of the proposed revisions would not require the creation of new employee positions or elimination of existing employee positions. The proposed revisions would not require an increase or decrease in future legislative appropriations to the department or an increase or decrease of fees paid to the department. The proposed revisions do not create a new regulation; however, they expand an existing regulation regarding the department's external risk-based monitoring system of external users of RTS. The proposed revisions do not increase or decrease the number of individuals subject to the rule's applicability. Lastly, the proposed revisions do not affect this state's economy.
REQUEST FOR PUBLIC COMMENT. If you want to comment on the proposal, submit your written comments by 5:00 p.m. CDT on May 28, 2024. A request for a public hearing must be sent separately from your written comments. Send written comments or hearing requests by email to rules@txdmv.gov or by mail to Office of General Counsel, Texas Department of Motor Vehicles, 4000 Jackson Avenue, Austin, Texas 78731. If a hearing is held, the department will consider written comments and public testimony presented at the hearing.
SUBCHAPTER A. FRAUD, WASTE, OR ABUSE
STATUTORY AUTHORITY.
The proposed amendments are proposed under Transportation Code, §520.004, which requires the department by rule to establish a risk-based system of monitoring and preventing fraudulent activity related to vehicle registration and titling in order to efficiently allocate resources and personnel; Transportation Code, §520.010, which authorizes the department to perform an audit and investigation related to registration and titling services; and 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.
CROSS REFERENCE TO STATUTE.
The proposed amendments would implement Transportation Code, §520.004, §520.010 and Chapter 1002.
§223.1.Purpose and Scope.
[(a)] The purpose of this subchapter is
to establish the following:
(1) procedures for county tax assessor-collectors and deputies to report suspected fraud, waste, or abuse to the
department relating to vehicle registration or titling; and[.]
(2) a risk-based monitoring system for the department to monitor county tax assessor-collectors and their deputies who use RTS.
[(b) This subchapter applies to a
county tax assessor-collector, an employee of a county tax assessor-collector,
or a deputy, who wishes to report suspected fraud, waste, or abuse
to the Texas Department of Motor Vehicles.]
§223.2.Definitions.
(a) The words and terms defined in Transportation Code, Chapter 501, have the same meaning when used in this chapter, except as otherwise provided by this chapter, unless the context clearly indicates otherwise.
(b) The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:
[(1) CID--the Compliance and Investigations
Division of the Texas Department of Motor Vehicles.]
(1) [(2)] County tax assessor-collector--the person who serves as the assessor-collector of taxes for a Texas
county under Article VIII, §14, of the Texas Constitution, as
well as [includes] an employee of a county tax assessor-collector.
(2) [(3)] Deputy--a full service
deputy under Chapter 217, Subchapter H of this title (relating
to Vehicle Titles and Registration).
[(4) Director--the director of the
Compliance and Investigations Division.]
(3) [(5)] RTS--the department's
[Texas Department of Motor Vehicle's] registration
and title system.
§223.3.Submission of Request.
(a) A county tax assessor-collector who suspects possible
fraud, waste, or abuse by an employee, [motor vehicle]
dealer, deputy, or any person transacting motor vehicle-related business
for or with the county may submit a request to the department [CID] for review [and possible investigation]. The department
[CID] may forward a submission to an appropriate
law enforcement entity.
(b) To submit a request to the department [CID] for review [and possible investigation], the
county tax assessor-collector must:
(1) request a rejection of the suspected transaction through a department regional service center; and
(2) mail or e-mail the following documents and information,
as applicable, to the department [CID] in an
envelope or e-mail message marked "Red Flag":
(A) the original transaction;
(B) a detailed narrative, including:
(i) the name of a contact person with the county tax assessor-collector, including email address and phone number;
(ii) the name of the employee submitting the request [transaction to the CID];
(iii) a statement as to why the transaction is
suspect [was flagged];
(iv) information about the employee or deputy [if
the employee or deputy is] suspected of committing fraud, waste,
or abuse;
(v) any statements made by the customer submitting the suspect transaction;
(C) any available video surveillance footage; and
(D) any other relevant evidence or information pertaining to the transaction.
(c) If a deputy suspects possible fraud,
waste, or abuse[,] by an employee, [motor vehicle]
dealer, or any person transacting motor vehicle-related business for
or with the deputy, the deputy must report the suspected fraud, waste,
or abuse to the county tax assessor-collector. The county tax assessor-collector
may then submit a request to the department [CID]
for review [and possible investigation] in accordance with
subsection (b) of this section.
(d) If the department [CID] determines
it will not open [conduct] an investigation
after reviewing a submitted request [submitted by
a county tax assessor-collector], the department [CID
] will notify [provide a notification to]
the submitting county tax assessor-collector.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 11, 2024.
TRD-202401483
Laura Moriaty
General Counsel
Texas Department of Motor Vehicles
Earliest possible date of adoption: May 26, 2024
For further information, please call: (512) 465-4160
STATUTORY AUTHORITY.
The new provision is proposed under Transportation Code, §520.004, which requires the department by rule to establish a risk-based system of monitoring and preventing fraudulent activity related to vehicle registration and titling in order to efficiently allocate resources and personnel; Transportation Code, §520.010, which authorizes the department to perform an audit and investigation related to registration and titling services; and 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.
CROSS REFERENCE.
The proposed new provision would implement Transportation Code, §520.004, §520.010 and Chapter 1002.
§223.5.External Risk-Based Monitoring System.
(a) All county tax assessor-collectors, their contractor's staff, and the deputies who use RTS are subject to periodic examination by the department. As a result of the examination, the department will classify each county tax assessor-collector, each of their contractor's staff, and each deputy as priority or non-priority for the purposes of prioritizing reviews to determine whether there is evidence of fraud by the county tax assessor-collector, their contractor's staff, or a deputy. In classifying a county tax assessor-collector, their contractor's staff, or a deputy, the department may consider factors, including, but not limited to:
(1) referrals or complaints received from partner state agencies;
(2) referrals or complaints received from public safety agencies;
(3) the retirement, resignation, or impeachment of the county tax assessor-collector;
(4) a contingency that disrupted county motor vehicle title and registration operations, such as a natural disaster or the theft or the burglary of a county tax assessor-collector's premises;
(5) previous compliance review designations;
(6) previous instances of non-compliance; and
(7) a complaint filed through an internal reporting mechanism, such as a Red Flag referral, telephone call, or an email received by the department's Consumer Relations Division (CRD), or any other means of communication with the department.
(b) It is the department's goal to review each county tax assessor-collector, each of their contractor's staff, and each deputy as follows:
(1) if the county tax assessor-collector, their contractor's staff person, or deputy is classified as a priority, they will be reviewed at least once per year; or
(2) if the county tax assessor-collector, their contractor's staff person, or deputy is classified as a non-priority, they will be reviewed at least once every two years.
(c) Examinations under this section may be virtual, on premises at the county tax assessor-collector's, their contractor's staff person's, or deputy's location, or a combination of both.
(d) The department may notify the county tax assessor-collector of possible fraudulent activity in the county tax assessor-collector's office when the department is authorized by law enforcement.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 11, 2024.
TRD-202401484
Laura Moriaty
General Counsel
Texas Department of Motor Vehicles
Earliest possible date of adoption: May 26, 2024
For further information, please call: (512) 465-4160
STATUTORY AUTHORITY.
The repeal is proposed under Transportation Code, §520.004, which requires the department by rule to establish a risk-based system of monitoring and preventing fraudulent activity related to vehicle registration and titling in order to efficiently allocate resources and personnel; Transportation Code, §520.010, which authorizes the department to perform an audit and investigation related to registration and titling services; and 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.
CROSS REFERENCE TO STATUTE. The proposed repeal would implement Transportation Code, §520.004, §520.010 and Chapter 1002.
§223.101.External Risk-Based Monitoring System.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 11, 2024.
TRD-202401485
Laura Moriaty
General Counsel
Texas Department of Motor Vehicles
Earliest possible date of adoption: May 26, 2024
For further information, please call: (512) 465-4160