TITLE 16.ECONOMIC REGULATION

Part 2. PUBLIC UTILITY COMMISSION OF TEXAS

Chapter 26. SUBSTANTIVE RULES APPLICABLE TO TELECOMMUNICATIONS SERVICE PROVIDERS

Subchapter Q. 9-1-1 ISSUES

16 TAC §26.435

The Public Utility Commission of Texas (commission) proposes new §26.435, relating to Cost Recovery Methods for 9-1-1 Dedicated Transport. The proposed new rule will ensure consistency and uniformity of cost recovery for dedicated transport for 9-1-1. Project Number 24305 is assigned to this proceeding.

John Mason, Director, Legal Division-Telecommunications and James Kelsaw, Network Analyst, Telecommunications Industry Analysis, have determined that for each year of the first five-year period the proposed rule is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Mr. Mason and Mr. Kelsaw have determined that for each year of the first five years the proposed rule is in effect the public benefit anticipated as a result of enforcing the section will be enhancement of 9-1-1 service quality by requiring uniform cost recovery methods for all certificated telecommunications utilities (CTUs). There will be no effect on small businesses or micro-businesses as a result of enforcing this section. There is no anticipated economic cost to persons who are required to comply with the section as proposed.

Mr. Mason and Mr. Kelsaw have also determined that for each year of the first five years the proposed rule is in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under Administrative Procedure Act §2001.022.

The commission staff will conduct a public hearing on this rulemaking, if requested pursuant to Government Code §2001.029, at the commission's offices located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas 78701 on Thursday, April 25, 2002 at 9:30 a.m. The request for a public hearing must be received within 30 days after publication.

Comments on the proposed new rule (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas 78711-3326, within 30 days after publication. Reply comments may be submitted within 45 days after publication. Comments should be organized in a manner consistent with the organization of the proposed rule(s). All comments should refer to Project Number 24305. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed section. The commission will consider the costs and benefits in deciding whether to adopt the section. In addition, the commission requests specific comments on the following questions:

1. Should the costs for 9-1-1 dedicated transport be apportioned equally between CTUs originating the 9-1-1 call and the 9-1-1 network service provider, as defined in §26.433 of this title (relating to Roles and Responsibilities of 9-1-1 Service Providers)? In your response, please compare and contrast possible network arrangements (e.g. incumbent local exchange company (ILEC) to ILEC vs. competitive local exchange company (CLEC) to ILEC).

2. Is there a more appropriate allocation method to apportion costs than the method proposed in (d)(1)? If so, what?

3. Does the proposed rule adequately address CTUs' concerns regarding alleged discriminatory rates that are charged by the applicable 9-1-1 network service provider, as defined in §26.433 of this title (relating to Roles and Responsibilities of 9-1-1 Service Providers)? Please explain fully.

4. If the proposed rule does not adequately address CTUs' concerns regarding alleged discriminatory rates, is the following language appropriate: "A 9-1-1 network service provider as defined in §26.433(b) of this title (relating to Roles and Responsibilities of 9-1-1 Service Providers) that provides transmission facilities from the point of interconnection with a CTU to the 9-1-1 selective router shall charge the CTU an amount not to exceed the pro rata share of the amount the CTU is entitled to recover from the 9-1-1 entity under paragraph (1) of this subsection."

This new section is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2002) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, PURA §58.051 which requires PURA Chapter 58 electing companies to offer access for all residential and business end users to 9-1-1 service provided by a local authority and access to dual party relay service; §60.001 which requires the commission to ensure that the rates and rules of an incumbent local exchange company are not unreasonably preferential, prejudicial, or discriminatory and are equitably and consistently applied; §60.122 which grants the commission exclusive jurisdiction to determine rates and terms for interconnection for a holder of a certificate of convenience and necessity, a certificate of operating authority, or a service provider certificate of operating authority; and §60.124 which requires each telecommunications provider to maintain interoperable networks.

Cross Reference to Statutes: Public Utility Regulatory Act §§14.002, 58.051, 60.001, 60.122, and 60.124.

§26.435.Cost Recovery Methods for 9-1-1 Dedicated Transport.

(a) Purpose. The purpose of this section is to establish uniform cost recovery methods for dedicated trunks used in the provision of 9-1-1 service to end users by certificated telecommunications utilities (CTUs).

(b) Application. This section applies to all CTUs providing local exchange service.

(c) Definitions. The following words and terms when used in this section shall have the following meaning unless the context indicates otherwise:

(1) 9-1-1 entity--A regional planning commission as defined in Texas Health & Safety Code Annotated §771.001(10) and an emergency communication district as defined in the Texas Health & Safety Code Annotated §771.001(3).

(2) 9-1-1 Service Agreement--The contract addressing the 9-1-1 service arrangement(s) for the relevant local area that the 9-1-1 entity and the CTU shall negotiate and execute.

(3) Dedicated trunk--A 9-1-1 digital signal trunk that originates at a CTU switching office or point of presence and terminates at a 9-1-1 selective router on a port termination, regardless of the type of application (with a presumption for the use of the most up-to-date industry standard application, where technically feasible, unless otherwise specified in the 9- 1-1 Service Agreement), and as described to the CTU by the applicable 9- 1-1 entity in its service arrangement requirements in each applicable rate center requiring termination to a 9-1-1 selective router. 9-1-1 dedicated trunks shall be assigned to 9-1-1 transmission facilities. Each CTU shall be responsible for providing such 9-1-1 transmission facilities from the CTU switching office or point of presence to the 9-1-1 selective router.

(4) Service arrangement--Each particular arrangement for 9-1-1 emergency service specified by the 9-1-1 entity for the relevant rate center(s) within its jurisdictional area.

(d) Reimbursable costs.

(1) Subject to the applicable law regarding payments by the 9-1-1 entity, the 9-1- 1 entity shall reimburse a CTU a maximum non-recurring rate of $165 and recurring rate of $39 per month as the total compensation for each dedicated trunk and any associated dedicated transmission facilities, unless:

(A) the CTU provides evidence to the commission that based upon certain technology deployment a different rate should apply; and

(B) after appropriate review, the commission approves such rate as requested by the CTU.

(2) The number of dedicated trunks needed for 9-1-1 purposes shall be determined by the CTU following industry standards to provide a grade of service of P.01 or greater, but the minimum number of dedicated trunks to each 9-1-1 selective router per service arrangement shall not be less than two.

(3) As a prerequisite to receiving compensation for more than the minimum number of dedicated trunks required to meet the P.01 grade of service, the CTU must provide to the 9-1-1 entity, at least 30 days prior to seeking additional compensation, copies of traffic studies, performed using measured call volumes on the individual trunk group, establishing that more than the minimum number of dedicated trunks required to meet the P.01 grade of service are necessary.

(4) The traffic study or summary provided in response to paragraph (3) of this subsection shall be provided to the 9-1-1 entity at no cost. Any other traffic studies to evaluate current network performance will be provided to the 9-1-1 entity upon request, and the CTU shall be compensated by the 9-1-1 entity on a time and materials basis at rates that do not exceed the tariff rates approved as reasonable by the commission for the dominant CTU in the rate center.

(5) Only the CTU originating the dedicated trunk from the switching office or point of presence to the 9-1-1 selective router can submit charges to the 9-1-1 entity for the maximum reimbursement required in paragraph (1) of this subsection.

(6) Where the same dedicated trunks are permitted by the relevant service arrangements to serve areas administered by multiple 9-1-1 entities, a CTU shall contact the 9-1-1 entity serving the largest number of access lines for the area served by the CTU with those dedicated trunks and there shall be a rebuttable presumption that the 9-1-1 entity serving the largest number of access lines is the appropriate 9-1-1 entity to receive the billings for these dedicated trunks. The 9-1-1 entity that is responsible for receiving the billings for dedicated trunks pursuant to this subsection, may seek reimbursement of such expense from other 9-1-1 entities within the affected rate center.

(7) CTUs that provide 9-1-1 transmission facilities to other CTUs shall charge no more than the actual costs to provide such facilities.

(8) The 9-1-1 network services provider as defined in §26.433(b) of this title (relating to Roles and Responsibilities of 9-1-1 Service Providers) shall charge nondiscriminatory rates for all services provided to CTUs.

(e) Reimbursement prerequisites. A CTU must comply with each of the following prerequisites before the CTU can obtain reimbursement from the 9-1-1 entity for dedicated trunks:

(1) Before the CTU initiates the provision of local exchange service in those areas in which the 9-1-1 entity provides 9-1-1 service, the CTU shall execute the 9-1-1 Service Agreement.

(2) The CTU shall provide verification to the applicable 9-1-1 entity that it is complying with all requirements of §26.433 of this title, including, but not limited to, §26.433(e)(2) of this title, requiring "a designated contact person to be available at all times to work with the applicable" 9-1-1 entity.

(3) A CTU that resells its local exchange service to any CTU that, in turn, provides the resold local exchange service to end users, shall demonstrate to the 9-1-1 entity that the CTU initially notified its reselling CTUs:

(A) that it does not remit the required 9-1-1 emergency service fees on behalf of reselling CTUs; and

(B) that, subject to a confidentiality agreement with the 9-1-1 entity, it will release reselling CTUs wholesale billing records to 9-1-1 entities for quality measurement purposes, including, but not limited to, auditing a reselling CTU's collection and remittance of 9-1-1 emergency service fees in accordance with applicable law.

(4) A CTU that provides resold local exchange service to end users must execute a separate service agreement with each 9-1-1 entity and remit the required 9-1-1 emergency service fee to the 9-1-1 entity pursuant to such service agreement.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 13, 2002.

TRD-200200916

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: March 31, 2002

For further information, please call: (512) 936-7208


Part 6. TEXAS MOTOR VEHICLE BOARD

Chapter 103. GENERAL RULES

16 TAC §103.3, §103.15

The Texas Motor Vehicle Board of the Texas Department of Transportation proposes amendments to §103.3, Amended License. The Board also proposes new rule §103.15, Exemption of Certain Vehicles from Definition of Motor Vehicle. The Board proposes the amendments and the new rule pursuant to Section 2001.021 of the Texas Government Code, Administrative Procedure Act, by which an interested party may petition a state agency to initiate a rulemaking proceeding.

The Texas Automobile Dealers Association (TADA) filed a petition requesting that the Board publish amendments to §103.3, proposing the addition of subsections (d) and (e). As proposed, §103.3(d) would permit a franchised motor vehicle dealer who changes or converts its business entity from one form to another to do business as the new entity under the terms of the prior franchise agreement until and unless the parties mutually elect to replace that agreement.

Furthermore, TADA has also requested the Board to publish proposed §103.3(e), allowing a franchised dealer who converts its legal entity from one form to another to file an amendment to its current license to reflect the entity change. The proposed amendment will clarify that a franchised dealer who converts its business form from one legal entity to another can amend the existing license, while a franchised dealer who changes its business entity using a method other than conversion must still file a new application in the successor entity's name.

TADA suggests that adoption of the proposed amendments to §103.3 will benefit the public over the first five years it is in effect by preventing manufacturers or distributors from using a dealership's change of corporate form as a mechanism to require that dealer to sign a new franchise agreement with less favorable terms. Additionally, dealers seeking to convert their business entities would be able to save time and money by avoiding the process involved in reapplying for a new license. The Motor Vehicle Board staff takes no position on the proposed amendments to §103.3.

Kawasaki Motor Corporation (Kawasaki) has also filed a petition requesting that the Board publish proposed new rule §103.15. The purpose of proposed §103.15 is to declare that the definition of motor vehicle does not include utility vehicles that are not regularly titled and not intended for use on public streets. Kawasaki requests the promulgation of this rule as a means to clarify that its Kawasaki Mule utility vehicle, and similar products, were not intended to be regulated as motor vehicles under the Texas Motor Vehicle Commission Code.

In its petition, Kawasaki argues that a fair and reasonable interpretation of the numerous definitions of "motor vehicle" found in the Transportation Code would allow utility vehicles like the Kawasaki Mule to be exempt from the definition of "titled vehicle," and thereby escape regulation under the Texas Motor Vehicle Commission Code. Under the Texas Motor Vehicle Commission Code §1.03(25)(B), the definition of motor vehicle includes titled vehicles that are not manufactured for street use. However, Kawasaki challenges the idea that its utility vehicle could fall within the parameters of this definition. According to its own research, Kawasaki has determined that its utility vehicle is treated by the Texas Department of Transportation, Vehicle Title and Registration Division, in the same manner as a golf cart.

Under §502.284 of the Transportation Code, a golf cart must be titled as a slow-moving vehicle if operated on the public streets, unless it adheres to certain specific conditions. Kawasaki maintains that, although its utility vehicle occasionally has been registered as a slow-moving vehicle operated on public streets, the vehicle was not manufactured to be operated on public streets or highways. Therefore, it should not be included in the definition of motor vehicle. Kawasaki further distinguishes this utility vehicle from other off-road vehicles required to be titled in Texas, such as ATVs, by emphasizing the fact that the Mule does not have a saddle-type seat that allows it to be ridden like a motorcycle. Also, it asserts in its petition that the Mule does not meet basic safety requirements for street or highway use.

Since 1999, the Motor Vehicle Board staff has interpreted the definition of "titled vehicle" under the Texas Motor Vehicle Commission Code to include utility vehicles. As a consequence, retail outlets of these vehicles are considered subject to regulation under the Code and are required to maintain franchised dealer licenses to sell utility vehicles. Kawasaki asserts that many retailers who sell utility vehicles are not motor vehicle dealers, but instead retailers of general products or farm implements. As such, it is burdensome for these retail stores to go to the added expense of applying for franchised motor vehicle dealer licenses. Furthermore, Kawasaki claims that the regulation is not enforced uniformly.

Kawasaki represents that the proposed new §103.15 will benefit the public over the first five years it is in effect by reducing the extent of regulation, and the expense to utility vehicle retailers who are not otherwise qualified or required to maintain franchised dealer licenses.

Brett Bray, Director, Motor Vehicle Board, has determined that for the first five-year period the proposed sections are in effect, there will be no fiscal implications for state or local government as a result of enforcing or administering the sections.

Mr. Bray anticipates that there will be some indeterminate economic savings to persons currently subject to regulation under the Texas Motor Vehicle Commission Code. Mr. Bray also certifies that there will be no impact on local economies or overall employment as a result of enforcing or administering the proposed sections.

The Board requests comments from any interested person. Comments (16 copies) may be submitted to Brett Bray, Director, Motor Vehicle Board, Texas Department of Transportation, P.O. Box 2293, Austin, Texas, 78768, (512) 416-4910. The Motor Vehicle Board will consider adoption of the proposals at its meeting on April 25, 2002. The deadline for receipt of comments on the proposed amendments and new rule is 5:00 p.m. on April 5, 2002.

The amendments and new rule are proposed under the Texas Motor Vehicle Commission Code, §3.06, which provides the Board with authority to adopt rules as necessary and convenient to effectuate the provisions of the Act and to govern practice and procedure before the Agency.

Texas Motor Vehicle Commission Code §§1.03 and 4.01 are affected by the proposed amendments and the proposed new rule.

§103.3.Amended License.

(a)-(c) (No change.)

(d) If a licensed new motor vehicle dealer changes or converts from one type of business entity to another, the submission of a franchise agreement in the name of the new entity is not required in conjunction with an application. The franchise agreement on file with the Board prior to the change or conversion of the dealer's business entity applies to the successor entity until the parties agree to replace the franchise agreement.

(e) If a dealer adopts a plan of conversion under a state or federal law that allows one legal entity to be converted into another legal entity, only an application to amend the license is necessary to be filed with the Board. The franchise agreement on file with the Board continues to apply to the converted entity. If the entity change is accomplished by any means other than conversion, a new application is required, subject to subsection (d) of this section.

§103.15.Exemption of Certain Vehicles from Definition of Motor Vehicle.

Under Texas Motor Vehicle Commission Code §1.03(25)(B), the Board construes the term "titled vehicle" to mean those types of vehicles that are required to be registered and titled by the State for off-road use, including off-road motorcycles and all-terrain vehicles. Vehicles such as utility vehicles that are not intended for use on public streets and are only registered and titled occasionally on an individual basis for limited or restricted use on public streets as slow-moving vehicles or golf carts will not be construed by the Board to be "titled vehicles" or "motor vehicles" under Texas Motor Vehicle Commission Code §1.03(25)(B).

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 15, 2002.

TRD-200200978

Brett Bray

Director

Texas Motor Vehicle Board

Proposed date of adoption: April 25, 2002

For further information, please call: (512) 416-4899


Chapter 105. ADVERTISING

16 TAC §105.10

The Texas Motor Vehicle Board proposes amendments to §105.10(a), 105.10(c)(1), 105.10(c)(2) and 105.10(c)(3). The rules provide guidelines for truthful and accurate practices in the advertising of motor vehicles. The previously published proposed amendments to §105.10(a), 105.10(c)(1), 105.10(c)(2), and 105.10(c)(3) in the November 9, 2001, issue of the Texas Register (26 TexReg 8969) are withdrawn and simultaneously republished for consideration with changes to those previously published concerning §105.10(a).

In section 105.10(a) the word "a" is replaced with the word "the highest" to provide greater clarity. The proposed amendment to §105.10(c)(2), Figure: 16 TAC 105.10(c)(2), clarifies the example of acceptable dealer price advertising of rebate incentives. It shows that the rebate must be subtracted from the advertised price to depict the ultimate sales price in an advertisement. Amendments to 105.10(c)(1)and 105.10(c)(3) correct typographical errors in previous publications.

The purpose of proposing amendments to §105.10(a) is to provide needed clarification and definition, and address the issue of bait and switch tactics utilized by some dealerships, that is, advertising one price, but then making higher offers to consumers that respond to the advertisement. As written, the rule lends itself to such a practice. Amending the rule to refer to "the highest" price instead of "a" price, makes the language more definitive.

Section 105.6 of the Board's Advertising Rules states that "All advertised statements shall be accurate, clear, and conspicuous." The current language of §105.10(a) with the language "a" price, does not meet that standard.

It has been suggested that adopting any language other than "a" price would require dealers to sell only at the advertised price and not allow consumers an opportunity to negotiate a lower-than-advertised price. The converse to that position is that there is no rule preventing consumers or dealers from negotiating a transaction at a price lower than advertised. On the other hand, a consumer is not going to negotiate upward from the advertised price and the dealer might find it economically unsound to drop the price lower than already advertised. The primary purpose of advertising is to draw consumers to the dealership. To do so and remain competitive, the dealership is likely to advertise its lowest available prices.

Regarding the situation in which a consumer trades in a vehicle owing more than the vehicle is worth, a dealer is not allowed under the Finance Code to alter the cash price of the vehicle. Negative equity may be itemized separately in a retail installment contract, but it cannot be added to the cash price. Thus, even in a situation where the consumer owes money on a trade-in, the advertised price must remain definite for the benefit of the consumer.

Another suggestion to address this issue is to amend the pertinent language in subsection (a) to state, "When featuring an advertised sale price of a new or used motor vehicle, the dealer must be willing to sell the vehicle for such advertised price to any retail buyer. The advertised sale price shall be the price before the addition or subtraction of any other negotiated items such as additional products or services, as well as the trade-in value, or any special rebates only available to a selected portion of the public." Other suggested language is, "When advertising a sales price of a new or used motor vehicle, the dealer must be willing to sell the vehicle for such advertised price, exclusive of a rebate, to a retail buyer. A retail buyer may negotiate to purchase additional products or services as well as the trade-in value which allows for the sales price to be higher or lower than the advertised price."

The Board intends to consider this language and any other suggestions that may be made as alternatives to the published amendment, to address the issue of inhibiting bait and switch advertising without hampering a dealer's and purchaser's ability to negotiate a mutually agreeable transaction.

Brett Bray, Director, Motor Vehicle Division, has determined that for the first five-year period the amendments are in effect there will be no fiscal implication for state or local government as a result of enforcing or administering the amendments.

Mr. Bray has also determined that for each of the first five years the amendments are in effect, the public benefit anticipated from enforcement of the proposed amendments will be stronger protection of the public and dealers from those dealers who engage in false, deceptive or misleading practices, as well as better understanding by licensees required to comply with the rules. Mr. Bray has also certified that there will be no impact on small businesses, local economies or overall employment as a result of enforcing or administering the sections. Finally, Mr. Bray has certified that there will be no economic costs for those persons required to comply with the proposed amendments.

Comments on the proposed amendments may be submitted to Brett Bray, Director, Motor Vehicle Division, P.O. Box 2293, Austin, Texas 78768. The deadline for submitting comments is April 5, 2002. Please submit sixteen copies. The Texas Motor Vehicle Board will consider the adoption of the proposed amendments at its meeting on April 25, 2002.

The amendments are proposed under the Texas Motor Vehicle Commission Code, §3.06, which provides the Board with authority to amend rules as necessary and convenient to effectuate the provisions of this act.

Texas Motor Vehicle Commission Code §5.01A is affected by the proposed amendments.

§105.10.Dealer Price Advertising.

(a) The featured sale price of a new or used motor vehicle, when advertised, must be the highest [ a ] price for which a dealer is willing to sell the advertised vehicle to any retail buyer. The only charges that may be excluded from the advertised price are:

(1) any registration, certificate of title, license fees, or an additional registration fee, if any, charged by a full service deputy as provided by County Road and Bridge Act, §4.202(g);

(2) any taxes; and

(3) any other fees or charges that are allowed or prescribed by law.

(b) A qualification may not be used when advertising the price of a vehicle such as "with trade," "with acceptable trade," "with dealer-arranged financing," "rebate assigned to dealer," or "with down payment."

(c) If a price advertisement discloses a rebate cash back or discount savings claim, the price of the vehicle must be disclosed as well as the price of the vehicle after deducting the incentive.

(1) If an advertisement discloses a discount savings claim, this incentive must be disclosed as a deduction from the manufacturer's suggested retail price (MSRP). The following is an acceptable format for advertising a price with a discount savings claim.

Figure: 16 TAC §105.10(c)(1)

(2) If an advertisement discloses a rebate, this incentive must be disclosed as a deduction from the advertised price. The following is an acceptable format for advertising a price with a rebate.

Figure: 16 TAC §105.10(c)(2)

(3) If an advertisement discloses both a rebate and a discount savings claim, the incentives must be disclosed as a deduction from the manufacturer's suggested retail price (MSRP). The following is an acceptable format for advertising a price with a rebate and a discount savings claim.

Figure: 16 TAC §105.10(c)(3)

(d) In the event that the manufacturer offers a discount on a package of options then that discount should be disclosed above or prior to the manufacturer's suggested retail price (MSRP) with a total price of the vehicle before option discounts. The following is an acceptable format.

Figure: 16 TAC §105.10(d) (No change.)

(e) If a rebate is only available to a selected portion of the public and not the public as a whole, the price should be disclosed as in subsection (c) of this section first and then the nature of the limitation and the amount of the limited rebate may be disclosed. The following is an acceptable format.

Figure: 16 TAC §105.10(e) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 15, 2002.

TRD-200200979

Brett Bray

Director

Texas Motor Vehicle Board

Proposed date of adoption: April 25, 2002

For further information, please call: (512) 416-4899


Chapter 107. WARRANTY PERFORMANCE OBLIGATIONS

16 TAC §§107.6, 107.7, 107.8, 107.10

The Motor Vehicle Board of the Texas Department of Transportation proposes amendments to 16 TAC §§107.6, 107.7, 107.8, and 107.10, Warranty Performance Obligations.

The proposed amendments clarify the procedure for the filing of motions for rehearing related to contested case hearings conducted under §§ 6.07 or 3.08 of the Texas Motor Vehicle Commission Code (Vernon's Texas Civil Statutes, art. 4413(36) and (36a)). The proposed amendments also increase the useful life of motorized vehicles, thereby decreasing the reasonable allowance for use, and eliminate the 10% minimum reasonable allowance for use for non-motorized or towable recreational vehicles. Additionally the proposed changes delegate to the director authority to hear motions to suspend enforcement of final orders for complaints in which the director decided the motions for rehearing. There are also two minor, non-substantive, wording changes to clarify a sentence and to correct an outdated reference.

Changes specific to each section:

The proposed amendment to §107.6 clarifies the wording to make it clear that complaints satisfying either §3.08 or §6.07 will be set for hearing, to include notification of the date, time, and place of the hearing.

The proposed amendments to §107.7(5) and 107.7(7) direct all motions for rehearing involving a complaint to the same decision authority to avoid conflicting orders by different authorities.

The proposed amendments to §107.8(4) increase the expected useful life of motorized vehicles to 120,000 miles to reflect the improvements in vehicle quality since the 100,000 mile standard was adopted in 1988. Additionally, the changes simplify the proof requirements for vehicles having a useful life other than 120,000 miles.

The proposed amendment to §107.8(5) simplifies the proof requirements for non-motorized or towable recreational vehicles having a useful life other than 120 months and deletes the 10% minimum reasonable allowance for use in the interest of fairness to the consumer.

The proposed addition of paragraph §107.8(5)(C) makes a change in the calculation of the reasonable allowance for use for non-motorized or towable recreational vehicles by eliminating the time the vehicle is out of service for repair because the vehicle is unavailable for the complainant's use.

The proposed addition of §107.10(7) directs all motions filed subsequent to a decision on a motion for rehearing, including motions to suspend the enforcement of final orders for complaints, to the same authority that decided the motion for rehearing.

Brett Bray, Director, Motor Vehicle Division has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local governments as a result of enforcing or administering the sections.

Mr. Bray has also determined that for each year of the first five years the sections are in effect, the anticipated public benefits are that the public will have a clearer understanding of the process required to secure a review of decisions made by the Motor Vehicle Board on complaints related to motor vehicle warranty performance obligations. The public will also benefit by recovering a greater percentage of the purchase price of motorized and non-motorized vehicles or towable recreational vehicles due to the increase in the useful life of motorized vehicles and the elimination of the 10% minimum reasonable allowance for use of non-motorized vehicles or towable recreational vehicles.

There will be no effect on small businesses. The anticipated economic cost to persons required to comply with the sections as amended is indeterminate but manufacturers, converters and distributors of both motorized and non-motorized or towable recreational vehicles will have some increased cost to reacquire, repair and re-market lemon vehicles.

There will be no impact on local economies or overall employment as a result of these amendments.

Comments, in 16 copies, may be submitted to Brett Bray, Director, Motor Vehicle Division, Texas Department of Transportation, P.O. Box 2293, Austin, TX 78768, 512-416-4899. The Motor Vehicle Board will consider adoption of the proposed amendments at its meeting on April 25, 2002. The deadline for receipt of comments on the proposed amendments is 5:00 p.m. on April 5, 2002.

The amendments are proposed under the Texas Motor Vehicle Commission Code, §3.06 which provides that the Motor Vehicle Board with the authority to adopt rules as necessary and convenient to effectuate the provisions of the Act and to govern practice and procedure before the agency.

Texas Motor Vehicle Commission Code §§ 3.08 and 6.07 are affected by the proposed amendments.

§107.6.Hearings.

Complaints which satisfy the jurisdictional requirements of the Texas Motor Vehicle Commission Code, §3.08(i) or [ and ] §6.07, will be set for hearing and notification of the date, time, and place of the hearing will be given to all parties by certified mail.

(1) - (11) (No change.)

§107.7.Contested Cases: Decisions and Final Orders.

To expedite the resolution of Texas Motor Vehicle Commission Code §§3.08(i) and 6.07 cases, the director is authorized to conduct hearings and issue final orders for the enforcement of these sections, including the delegation of this duty to hearing officers. Review of the hearings officers' decisions and final orders shall be according to the procedures as follows:

(1) - (4) (No change.)

(5) A motion for rehearing may be directed either to the director or to the Board, as a body, at the election of the party filing the motion. If the party filing the motion does not include a specific request for a rehearing by the members of the Board, the motion shall be deemed to be a request for a rehearing by the director. If more than one party files a motion for rehearing, the first motion filed will determine the decision authority for all motions.

(6) (No change.)

(7) If the director or the Board grants a motion for rehearing, the parties will be notified by first class mail. A rehearing before the director will be scheduled as promptly as possible. A rehearing before the Board will be scheduled at the earliest possible meeting of the Board. After rehearing, the director or Board shall issue a final order and any additional findings of fact or conclusions of law necessary to support the decision or order. The director or the Board may also issue an order granting the relief requested in a motion for rehearing or replies thereto without the need for a rehearing. Any motion for rehearing filed by the parties as a result of the rehearing will be directed to the same decision authority as granted the motion. If a motion for rehearing and the relief requested is denied, an order so stating will be issued.

(8) (No change.)

§107.8.Decisions.

Unless otherwise indicated, this section applies to decisions made pursuant to Texas Motor Vehicle Commission Code §6.07. Decisions shall give effect to the presumptions provided in the Texas Motor Vehicle Commission Code §6.07(d), where applicable.

(1) - (3) (No change.)

(4) There is a rebuttable presumption that a motor vehicle has a useful life of 120,000 miles. Except in cases where the preponderance of the [ clear and convincing ] evidence shows that the vehicle has a longer or shorter expected useful life than 120,000 [ 100,000 ] miles, the reasonable allowance for the owner's use of the vehicle shall be that amount obtained by adding subparagraphs (A) and (B) of this paragraph. [ the following: ]

(A) the product obtained by multiplying the purchase price of the vehicle, as defined in paragraph (3) of this section, by a fraction having as its denominator 120,000 [ 100,000 ] and having as its numerator the number of miles that the vehicle traveled from the time of delivery to the owner to the first report of the defect or condition forming the basis of the repurchase order; and

(B) 50% of the product obtained by multiplying the purchase price by a fraction having as its denominator 120,000 [ 100,000 ] and having as its numerator the number of miles that the vehicle traveled after the first report of the defect or condition forming the basis of the repurchase order. The number of miles during the period covered in this paragraph shall be determined from the date of the first report of the defect or condition forming the basis of the repurchase order through the date of the Board [ TMVC ] hearing.

(5) There is a rebuttable presumption that the useful life of a towable recreational vehicle is 120 months. Except in cases where the preponderance of the [ clear and convincing ] evidence shows that the vehicle has a longer or shorter expected useful life than 120 months, the reasonable allowance for the owner's use of the towable recreational vehicle shall be [ the greater of 10% of the purchase price, as defined in paragraph (3) of this section, or ] that amount obtained by adding subparagraphs (A) and (B) of this paragraph. [ the following: ]

(A) The product obtained by multiplying the purchase price of the towable recreational vehicle, as defined in paragraph (3) of this section, by a fraction having as it denominator 120 months, except the denominator shall be 60 months, if the towable recreational vehicle is occupied on a full time basis, and having as its numerator the number of months from the time of delivery to the owner to the first report of the defect or condition forming the basis of the repurchase order; and

(B) 50% of the product obtained by multiplying the purchase price by a fraction having as its denominator 120 months, except the denominator shall be 60 months, if the towable recreational vehicle is occupied on a full time basis, and having as its numerator the number of months of ownership after the first report of the defect or condition forming the basis of the repurchase order. The number of months during the period covered in this paragraph shall be determined from the date of the first report of the defect or condition forming the basis of the repurchase order through the date of the Board hearing.

(C) Any month or part of a month that the vehicle is out of service for repair will be deducted from the numerator in determining the reasonable allowance for use of a towable recreational vehicle in this subsection.

(6) - (10) (No change.)

§107.10.Compliance with Order Granting Relief.

Compliance with the Board's order will be monitored by the Board.

(1) - (6) (No change.)

(7) All subsequent motions within the Motor Vehicle Board's jurisdiction, including motions to suspend the enforcement of a final order filed pursuant to the Texas Motor Vehicle Commission Code, §7.01(f), will be directed to the same decision authority that heard the motion for rehearing.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 15, 2002.

TRD-200200977

Brett Bray

Director

Texas Motor Vehicle Board

Proposed date of adoption: April 25, 2002

For further information, please call: (512) 416-4899