PART 4. TEXAS DEPARTMENT OF LICENSING AND REGULATION

CHAPTER 87. USED AUTOMOTIVE PARTS RECYCLERS

16 TAC §§87.1, 87.10, 87.71, 87.72, 87.78, 87.81

The Texas Department of Licensing and Regulation (Department) proposes amendments to existing rules at 16 Texas Administrative Code (TAC), Chapter 87, §§87.1, 87.10, 87.71, 87.72, and 87.78, and a new rule at §87.81 regarding the Used Automotive Parts Recyclers program. These proposed changes are referred to as "proposed rules."

EXPLANATION OF AND JUSTIFICATION FOR THE RULES

The rules under 16 TAC, Chapter 87, implement Texas Occupations, Chapter 2309, Used Automotive Parts Recyclers.

The proposed rules implement Senate Bill (SB) 224, 88th Legislature, Regular Session (2023), the Deputy Darren Almendarez Act, which addresses the issue of catalytic converter theft. Section 5.01 of the Act provides for the coordination of efforts between the Department and other state agencies, including the Motor Vehicle Crime Prevention Authority, the Department of Motor Vehicles, and the Department of Public Safety, in order for the respective agencies to effectively review records involving the purchase, acquisition, sale, or transfer of catalytic converters removed from motor vehicles and to respond to suspicious activities that may be detected through the analysis of these records.

Section 3.12 of the Act amends Occupations Code, Chapter 2305, Records of Certain Vehicle Repairs, Sales, and Purchases, by enacting new subchapter D, pertaining to records of sales or transfers of catalytic converters removed from vehicles. Occupations Code §2305.152 clarifies that the subchapter is applicable to used automotive parts recyclers (UAPRs). Section 2305.153 requires UAPRs to maintain accurate transaction records of the transaction for a period of two years. Under §2305.153(b), the record must contain a description made in accordance with the custom of the trade for the volume of catalytic converters sold or transferred, the name of the person to whom the catalytic converters were sold or transferred, and the date of the transaction. Section 2305.155 grants the Department authority to enter a licensee's premises for purpose of examining the records. The proposed rules implement these provisions by requiring UAPRs to maintain these records and furnish them to the Department for inspection upon request. The proposed rules additionally incorporate by reference the two-year records retention period required by SB 224.

The proposed rules additionally make changes in response to concerns raised during the Department's four-year rule review process under Government Code §2001.039. These changes include insertion of a reference to a newly adopted statute, Transportation Code §551A.001, which pertains to definitions related to off-highway vehicles, and the removal of an obsolete reference to §502.001. These changes also include additional amendments to clarify the duty to produce records for inspection, the record retention requirements for different types of records, and that both license plates and registration insignia must be removed. Lastly, the proposed rules make other clarifying changes, including the addition of language concerning the applicability of the rules and the statutes implemented by the rules.

Advisory Board Recommendations

The proposed rules were presented to and discussed by the Used Automotive Parts Recyclers Advisory Board at its meeting on August 22, 2024. The Advisory Board referred the proposed rules to a work group for further development. On October 1, 2024, the work group met and recommended changes, including the insertion of references to Subchapter D of Occupations Code Chapter 2305 where relevant, the removal of a change to §87.10 that would have defined catalytic converters as a used automotive part, the removal of a change to §87.20 that would have clarified which persons were required to have a license, a change in a required record retention period in §87.71(b), the addition of clarifying language to §87.78 concerning the destruction of license plates, and the removal of tagging, inventorying, and certain identification and recordkeeping requirements from new §87.81 concerning catalytic converter theft prevention. The proposed rules, with the changes recommended by the work group, were presented to the Advisory Board at its November 20, 2024 meeting. The Advisory Board made the following changes to the proposed rules: the Advisory Board disregarded the work group's recommended change to the record retention period in §87.71(b). The Advisory Board voted and recommended that the proposed rules with changes be published in the Texas Register for public comment.

SECTION-BY-SECTION SUMMARY

The proposed rules amend §87.1, Authority. The proposed rules modify the rule heading to "Authority and Applicability." The rule is divided into two subsections, with the current substantive text stated in subsection (a) and new language inserted in the last sentence of subsection (a) and in subsection (b). The language inserted in subsection (a) clarifies that specific rule provisions implement Occupations Code, Chapter 2305, Transportation Code, Chapter 501, and other applicable statutes. The language consisting of subsection (b) clarifies that rules under 16 TAC Chapter 60, Procedural Rules of the Commission and the Department, are also applicable to the UAPR program.

The proposed rules amend §87.10, Definitions. References to Transportation Code §551A.001 are added to the introductory paragraph and to subparagraph (9)(D), and an obsolete reference to Transportation Code §502.001 is deleted from subparagraph (9)(D).

The proposed rules amend §87.71, Responsibilities of the Licensee--Record Retention. The heading is modified by adding the phrase "and Production" to reflect the expanded scope of the rule. The language of subsection (b) is modified to reflect that licensees generally must maintain records for three years unless a shorter period is specified elsewhere in the rules chapter. New subsection (c) is inserted with language reflecting a general one-year retention period for records of purchase or receipt of component parts, and a sentence clarifying that this provision does not apply to the receipt of catalytic converters. New subsection (d) is inserted, with language stating that the records retention requirements for catalytic converter transactions are as specified in new rule §87.81. New subsection (e) is inserted, with language setting forth a licensee's duty to produce records to a Department representative on request.

The proposed rules amend §87.72. The heading is modified by adding the phrase "Contact Information and" to reflect the expanded scope of the rule. New subsection (a) is inserted, with language requiring a licensee to notify the department within 30 days following any change in contact information. Existing subsections (a) and (b) are re-lettered as (b) and (c), respectively.

The proposed rules amend §87.78. The heading is modified by the insertion and removal of language to reflect the new scope of the rule. New subsection (a) is inserted, with language reflecting that licensees must remove both the license plates and registration insignia from the vehicles and must securely store the license plates until the plates are destroyed. Existing subsections (a) and (b) are re-lettered as (b) and (c), respectively.

The proposed rules add new §87.81, Responsibilities of the Licensee--Catalytic Converter Theft Prevention. The rule contains three subsections, (a) through (c). Subsection (a) sets forth the requirement to create and maintain accurate records of catalytic converter sales and transfers. Subsection (b) provides that the records must include the name of the purchaser or transferee, a description of the quantity of catalytic converters, and the date of the transaction. Subsection (c) sets forth a two-year retention period for these records and a requirement to produce the records, and any removed catalytic converters, for inspection when directed to do so.

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Tony Couvillon, Policy Research and Budget Analyst, has determined that for each year of the first five years the proposed rule is in effect, enforcing or administering the proposed rule does not have foreseeable implications relating to costs or revenues of state or local governments.

LOCAL EMPLOYMENT IMPACT STATEMENT

Because Mr. Couvillon has determined that the proposed rules will not affect a local economy, the agency is not required to prepare a local employment impact statement under Texas Government Code §2001.022.

PUBLIC BENEFITS

Mr. Couvillon also has determined that for each year of the first five-year period the proposed rules are in effect, the public benefit will be increased transparency in catalytic converter transactions, which will hamper the sale of stolen catalytic converters, reducing the incentive for theft.

PROBABLE ECONOMIC COSTS TO PERSONS REQUIRED TO COMPLY WITH PROPOSAL

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rules.

FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSINESSES, AND RURAL COMMUNITIES

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed rules. Because the agency has determined that the proposed rule will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, is not required.

ONE-FOR-ONE REQUIREMENT FOR RULES WITH A FISCAL IMPACT

The proposed rules do not have a fiscal note that imposes a cost on regulated persons, including another state agency, a special district, or a local government. Therefore, the agency is not required to take any further action under Texas Government Code §2001.0045.

GOVERNMENT GROWTH IMPACT STATEMENT

Pursuant to Texas Government Code §2001.0221, the agency provides the following Government Growth Impact Statement for the proposed rules. For each year of the first five years the proposed rules will be in effect, the agency has determined the following:

1. The proposed rules do not create or eliminate a government program.

2. Implementation of the proposed rules does not require the creation of new employee positions or the elimination of existing employee positions.

3. Implementation of the proposed rules does not require an increase or decrease in future legislative appropriations to the agency.

4. The proposed rules do not require an increase or decrease in fees paid to the agency.

5. The proposed rules create new regulations. The proposed rules require licensees to update their contact information, to remove of registration insignia from vehicles, and to keep and produce certain records.

6. The proposed rules expand, limit, or repeal an existing regulation. The proposed rules expand existing recordkeeping requirements.

7. The proposed rules do not increase or decrease the number of individuals subject to the rules' applicability.

8. The proposed rules do not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

The Department has determined that no private real property interests are affected by the proposed rules and the proposed rules do not restrict, limit, or impose a burden on an owner's rights to his or her private real property that would otherwise exist in the absence of government action. As a result, the proposed rules do not constitute a taking or require a takings impact assessment under Texas Government Code §2007.043.

PUBLIC COMMENTS

Comments on the proposed rules may be submitted electronically on the Department's website at https://ga.tdlr.texas.gov:1443/form/gcerules ; by facsimile to (512) 475-3032; or by mail to Shamica Mason, Legal Assistant, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711. The deadline for comments is 30 days after publication in the Texas Register.

STATUTORY AUTHORITY

The proposed rules are proposed under Texas Occupations Code, Chapters 51 and 2309, which authorize the Texas Commission of Licensing and Regulation, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department.

The statutory provisions affected by the proposed rules are those set forth in Texas Occupations Code, Chapters 51, 2305, and 2309. No other statutes, articles, or codes are affected by the proposed rules.

The legislation that enacted the statutory authority under which the proposed rules are proposed to be adopted is Senate Bill 224, 88th Legislature, Regular Session (2023).

§87.1.Authority and Applicability.

(a) This chapter is promulgated under the authority of the Texas Occupations Code, Chapter 51 and Chapter 2309. Specific provisions within this chapter also implement the statutory requirements under Texas Occupations Code, Chapter 2305, Subchapter D, Texas Transportation Code, Chapter 501, and other applicable statutes.

(b) In addition to this chapter, the rules under 16 TAC Chapter 60, Procedural Rules of the Commission and the Department, are applicable to the Used Automotive Parts Recyclers program.

§87.10.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise, or the words or terms conflict with a definition in the Transportation Code, §501.002, [or] §501.091, §551A.001, or Occupations Code, Chapter 2309.

(1) - (8) (No change.)

(9) Motor vehicle--

(A) any motor driven or propelled vehicle required to be registered under the laws of this state;

(B) a trailer or semitrailer, other than manufactured housing, that has a gross vehicle weight that exceeds 4,000 pounds;

(C) a travel trailer;

(D) an all-terrain vehicle or a recreational off-highway vehicle, as defined by Transportation Code, §551A.001, [§502.001,] designed by the manufacturer for off-highway use that is not required to be registered under the laws of this state; or

(E) a motorcycle, motor-driven cycle, or moped that is not required to be registered under the laws of this state.

(10) - (15) (No change.)

§87.71.Responsibilities of the Licensee--Record Retention and Production.

(a) A used automotive parts recycler shall maintain a record of or sales receipt for each motor vehicle, salvage motor vehicle, nonrepairable motor vehicle, and used automotive part purchased.

(b) Unless a shorter period of retention is specified [required] by another section of this chapter, a used automotive parts recycler shall maintain records required by this chapter for a period of three years from the date of the event reflected in the record.

(c) In accordance with Occupations Code §2309.356, records of purchase or receipt of component parts must be maintained by the used automotive parts recycler for a period of one year from the date of the event reflected in the record. This provision does not apply to the receipt of catalytic converters.

(d) Records pertaining to catalytic converter transactions must be retained by the used automotive parts recycler as specified in 16 TAC §87.81.

(e) Upon request by an investigator or other representative of the department, a used automotive parts recycler must produce for examination and copying any records required by this chapter, Occupations Code, Chapter 2305 or 2309, Transportation Code, Chapter 501, or other law.

§87.72.Responsibilities of the Licensee--Contact Information and Registration of New Business Location.

(a) A used automotive parts recycler must notify the department within thirty (30) days following any change of mailing address, phone number, or email address from the contact information provided on the latest license or renewal application.

(b) [(a)] Before moving a place of business, a used automotive parts recycler must notify the department of the new location.

(c) [(b)] The used automotive parts recycler shall provide a storm water permit for the location if a permit is required by the Texas Commission on Environmental Quality.

§87.78.Responsibilities of the Licensee--Removal of License Plates and Registration Insignias and Surrender of Certain Documents [or License Plates].

(a) Upon receipt of a vehicle, a used automotive parts recycler must remove any license plates and registration insignias. The used automotive parts recycler must securely store any license plates until destroyed in accordance with Occupations Code §2309.352.

(b) [(a)] A used automotive parts recycler shall surrender to the Texas Department of Motor Vehicles (DMV) for cancellation a certificate of title or authority, sales receipt, or transfer document, as required by the DMV.

(c) [(b)] For each vehicle for which a document is surrendered in compliance with subsection (b) [(a)], the licensee shall obtain a signed receipt for a surrendered certificate of title.

§87.81.Responsibilities of the Licensee--Catalytic Converter Theft Prevention.

(a) Upon sale or transfer of a catalytic converter, a used automotive parts recycler must create a transaction record as provided in this rule and ensure the accuracy of the information provided in this record.

(b) The transaction record must contain the name of the person to whom the catalytic converter is sold or transferred, a description of the quantity of the catalytic converters sold, and the date of the transaction.

(c) The used automotive parts recycler must maintain the transaction record required by this rule until no earlier than two years from the date of the transaction. The used automotive parts recycler must, upon request by an investigator or other representative of the department, produce for examination any removed catalytic converters in its possession and the records required by this rule.

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 December 9, 2024.

TRD-202405923

Doug Jennings

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: January 19, 2025

For further information, please call: (512) 463-7750