Petition for Approval of Alternate Odometer Disclosure Requirements

Petition for Approval of Alternate Odometer Disclosure Requirements

Topics: National Highway Traffic Safety Administration

Petition for Approval of Alternate Odometer Disclosure Requirements

O. Kevin Vincent
Federal Register
October 21, 2011

[Federal Register Volume 76, Number 204 (Friday, October 21, 2011)]
[Proposed Rules]
[Pages 65485-65492]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-27089]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 580

[Docket No. NHTSA-2011-0152; Notice 1]

Petition for Approval of Alternate Odometer Disclosure
Requirements

AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.

ACTION: Notice of initial determination.

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SUMMARY: The State of New York has petitioned for approval of alternate
odometer requirements to certain requirements under Federal odometer
law. New York's proposed program would apply to vehicles that have been
transferred to New York motor vehicle dealers. Ultimately, the proposed
program would generate the issuance of a non-secure paper odometer
disclosure receipt when a vehicle is transferred from a licensed New
York dealer to a person other than a licensed New York dealer, such as
an out-of-state person. In view of the nature of this receipt as an
odometer disclosure for vehicle titling, NHTSA preliminarily denies New
York's petition. This notice is not a final agency action.

DATES: Comments are due no later than November 21, 2011.

ADDRESSES: You may submit comments [identified by DOT Docket ID Number
NHTSA-2011-0152] by any of the following methods:
Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting
comments.
Mail: Docket Management Facility: U.S. Department of
Transportation, 1200 New Jersey Avenue, SE., West Building Ground
Floor, Room W12-140, Washington, DC 20590-0001.
Hand Delivery or Courier: West Building Ground Floor, Room
W12-140, 1200 New Jersey Avenue, SE., between 9 a.m. and 5 p.m. ET,
Monday through Friday, except Federal holidays.
Fax: 202-493-2251
Instructions: For instructions on submitting comments and
additional information on the rulemaking process, see the heading of
How Do I Prepare and Submit Comments in this document. Note that all
comments received will be posted without change to http://www.regulations.gov, including any personal information provided.
Please see the Privacy Act heading below.
Privacy Act: Anyone is able to search the electronic form of all
comments received into any of our dockets by the

[[Page 65486]]

name of the individual submitting the comment (or signing the comment,
if submitted on behalf of an association, business, labor union, etc.).
You may review DOT's complete Privacy Act Statement in the Federal
Register published on April 11, 2000 (65 FR 19477-78) or you may visit
http://DocketInfo.dot.gov.
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov or the street
address listed above. Follow the online instructions for accessing the
dockets.

FOR FURTHER INFORMATION CONTACT: Otto G. Matheke, III, Office of the
Chief Counsel, National Highway Traffic Safety Administration, 1200 New
Jersey Avenue, SE., West Building W41-227, Washington, DC 20590
(Telephone: 202-366-5253) (Fax: 202-366-3820).

SUPPLEMENTARY INFORMATION:

I. Introduction

Federal odometer law, which is largely based on the Motor Vehicle
Information and Cost Savings Act (Cost Savings Act) \1\ and the Truth
in Mileage Act of 1986, as amended (TIMA),\2\ contains a number of
provisions to limit odometer fraud and assure that the buyer of a motor
vehicle knows the true mileage of the vehicle. The Cost Savings Act
requires the Secretary of Transportation to promulgate regulations
requiring the transferor (seller) of a motor vehicle to provide a
written statement of the vehicle's mileage registered on the odometer
to the transferee (buyer) in connection with the transfer of ownership.
This written statement is generally referred to as the odometer
disclosure statement. Further, under TIMA, vehicle titles themselves
must have a space for the odometer disclosure statement and States are
prohibited from licensing a vehicle unless a valid odometer disclosure
statement on the title is signed and dated by the transferor. Titles
must also be printed by a secure printing process or other secure
process. Federal law also contains document retention requirements for
odometer disclosure statements.
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\1\ Public Law 92-513, 86 Stat 947, 961 (1972).
\2\ Public Law 99-579, 100 Stat. 3309 (1986).
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TIMA's motor vehicle mileage disclosure requirements apply in a
State unless the State has alternate requirements approved by the
Secretary. The Secretary has delegated administration of the odometer
program to NHTSA. Therefore, a State may Petition NHTSA for approval of
such alternate odometer disclosure requirements.
Seeking to replace an existing system of paper records for dealer
inventories, transfers, and sales--including the transfer of titles and
odometer disclosures--with an electronic system, the State of New York
has petitioned for approval of alternate odometer disclosure
requirements. The New York State Department of Motor Vehicles
(``NYSDMV'') proposes a paperless odometer disclosure program for
transfers to, between and from licensed New York motor vehicle dealers.
The initial transfer of the vehicle to a New York dealer would include
an odometer disclosure on a secure paper title, following the present
practice. The final transfer of the vehicle from a New York dealer to a
non-New York dealer would include an odometer disclosure on a two part
paper receipt. The odometer disclosures would be recorded
electronically.
In 2009, NHTSA reviewed certain requirements for alternative state
programs and approved the Commonwealth of Virginia's alternate odometer
disclosure program. 74 FR 643, 650 (January 7, 2009). New York's
program bears some similarities to Virginia's program in scope. Like
Virginia's program, the scope of New York's proposed program does not
include transactions involving leased vehicles, or odometer disclosures
by power of attorney. However, while Virginia's program was limited to
in-state transfers (Virginia's program required Virginia owners to
obtain a paper title for out-of-state transfers), New York's program is
not so limited. Moreover, aspects of New York's proposed system,
including reassignments between dealers and ultimately from a dealer to
a non-dealer, were not examined in NHTSA's analysis of Virginia's
program.

II. Statutory Background

As noted above, NHTSA recently reviewed the statutory background of
Federal odometer law in its consideration and approval of Virginia's
Petition for alternate odometer disclosure requirements. See 73 FR
35617 (June 24, 2008) and 74 FR 643 (January 7, 2009). The statutory
background of the Cost Savings Act and TIMA and the purposes behind
TIMA, as they relate to odometer disclosure, are discussed at length in
NHTSA's Final Determination granting Virginia's Petition. 74 FR 643,
647-48. A brief summary of the statutory background of Federal odometer
law and the purposes of TIMA follows.
In 1972, Congress enacted the Cost Savings Act to, among other
things, prohibit tampering with odometers on motor vehicles and to
establish certain safeguards for the protection of buyers with respect
to the sale of motor vehicles having altered or reset odometers. See
Public Law 92-513, section 401, 86 Stat. 947, 961-63 (1972). Section
408 of the Cost Savings Act required that, under regulations to be
published by the Secretary, the transferor of a motor vehicle provide a
written vehicle mileage disclosure to the transferee.\3\ In general,
the purpose for the disclosure was to assist buyers to know the true
mileage of a motor vehicle. The Act also prohibited odometer tampering
and provided for enforcement.
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\3\ Section 408 stated:
(a) Not later than 90 days after the date of enactment of this
Act, the Secretary shall prescribe rules requiring any transferor to
give the following written disclosure to the transferee in
connection with the transfer of ownership of a motor vehicle:
(1) Disclosure of the cumulative mileage registered on the
odometer.
(2) Disclosure that the actual mileage is unknown, if the
odometer reading is known to the transferor to be different from the
number of miles the vehicle has actually traveled.
Such rules shall prescribe the manner in which information shall
be disclosed under this section and in which such information shall
be retained.
(b) It shall be a violation of this section for any transferor
to violate any rules under this section or to knowingly give a false
statement to a transferee in making any disclosure required by such
rules.
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A major shortcoming of the odometer provisions of the Cost Savings
Act was their failure to require that the odometer disclosure statement
be on the vehicle's title. In a number of States, the disclosures were
on separate documents that could be easily altered or discarded and did
not travel with the title. See 74 FR 644. Consequently, the disclosure
statements did not necessarily deter odometer fraud employing altered
documents, discarded titles, and title washing. Id.
Congress enacted TIMA in 1986 to address the Cost Savings Act's
shortcomings. It amended Section 408 of the Cost Savings Act to add a
new subsection (d) to prohibit States from licensing vehicles unless
the new owner (transferee) submitted a title from the seller
(transferor) containing the seller's signed and dated vehicle mileage
statement. See Public Law 99-579, 100 Stat. 3309 (1986); 74 FR 644
(Jan. 7, 2009). Section 408(d) also prohibits the licensing of
vehicles, for use in any State, unless the title issued to the
transferee is printed using a secure printing process or other secure
process, indicates the vehicle mileage at the time of transfer and
contains additional space for a subsequent mileage disclosure by the
transferee when it is sold again. Id. TIMA also added subsection
408(e)(1), which provided for the use of odometer

[[Page 65487]]

disclosure statements when leased vehicles are sold or transferred.
TIMA added a provision to the Cost Savings Act allowing States to
have alternate odometer disclosure requirements with the approval of
the Secretary of Transportation. Section 408(f) of the Cost Savings Act
states that the odometer disclosure requirements of subsections (d) and
(e)(1) shall apply in a State unless the State has alternate motor
vehicle mileage disclosure requirements approved by the Secretary in
effect. Section 408(f) further states that the Secretary shall approve
alternate motor vehicle mileage disclosure requirements submitted by a
State unless the Secretary determines that such requirements are not
consistent with the purpose of the disclosure required by subsection
(d) or (e), as the case may be.
In 1994, in the course of the recodification of various laws
pertaining to the Department of Transportation, the Cost Savings Act,
as amended, was repealed, reenacted and recodified without substantive
change. See Public Law 103-272, 108 Stat. 745, 1048-1056, 1379, 1387
(1994). The odometer statute is now codified at 49 U.S.C. 32701 et seq.
In particular, Section 408(a) of the Cost Savings Act was recodified at
49 U.S.C. 32705(a). Sections 408(d) and (e) as later amended were
recodified at 49 U.S.C. 32705(b) and (c). The provisions pertaining to
approval of State alternate motor vehicle mileage disclosure
requirements were recodified at 49 U.S.C. 32705(d).

III. Statutory Purposes

As discussed above, the Cost Savings Act, as amended by TIMA in
1986, states that NHTSA ``shall approve alternate motor vehicle mileage
disclosure requirements submitted by a State unless the [NHTSA]
determines that such requirements are not consistent with the purpose
of the disclosure required by subsection (d) or (e) as the case may
be.'' Subsections 408(d), (e) of the Cost Savings Act were recodified
to 49 U.S.C. 32705(b) and (c). In light of this provision, we now turn
to our interpretation of the purposes of these subsections, as germane
to New York's petition.
Our Final Determination granting Virginia's petition for alternate
odometer disclosure requirements identified the purposes of TIMA
germane to petitions for approval of odometer disclosure requirements
on in-state transfers that did not include disclosures involving dealer
reassignments, leased vehicles or disclosures by power of attorney.\4\
74 FR 643, 647-48 (January 7, 2009). New York's petition encompasses
vehicle transfers/reassignments to and among licensed New York dealers
and from licensed dealers to a retail or out-of-state purchaser, but
does not address transfers involving leased vehicles and disclosures by
power of attorney. A brief summary of the purposes identified in the
Virginia Final Determination follows. In addition, we address
reassignments, which were not addressed in the Virginia petition.
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\4\ Since Virginia's program did not cover disclosures involving
leased vehicles or disclosures by power of attorney, the purposes of
Sections 408(d)(2)(C) and 408(e) of the Cost Savings Act, as
amended, were not germane and were not addressed in the notice
approving the Virginia program. See 74 FR 647 n. 12.
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One purpose of TIMA is to assure that the form of the odometer
disclosure precludes odometer fraud. 74 FR 647. To prevent odometer
fraud facilitated by disclosure statements that were separate from
titles, TIMA required mileage disclosures to be on a secure vehicle
title instead of a separate document. These titles also had to contain
space for the seller's attested mileage disclosure and a new disclosure
by the buyer when the vehicle was sold again. This discouraged mileage
alterations on titles and limited opportunities for obtaining new
titles with lower mileage than the actual mileage. Id. In addition, an
aspect of the purpose of assuring that the form of the odometer
disclosure precludes fraud is that the transfer by a titled owner must
be on the title and not a reassignment document, but a reassignment
document subsequently may be used by a transferor in whose name the
vehicle has not been titled.\5\ To preclude fraud, the reassignment
document(s) must have an odometer disclosure executed by the transferor
and transferee, and the reassignment document(s) must be accompanied by
the title transferring ownership of the vehicle to the dealer, with a
proper odometer disclosure. The reassignment document is not a
standalone document.
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\5\ NHTSA amended 49 CFR 580.5(c) to preclude use of a separate
reassignment form at the time of the first transfer, by a titled
owner. See 56 FR 47684-85 (Sep. 20, 1991). Section 580.5 provides
that in the case of a transferor in whose name the vehicle is
titled, the transferor shall disclose the mileage on the title, and
not on a reassignment document.
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A second purpose of TIMA is to prevent odometer fraud by processes
and mechanisms making odometer mileage disclosures on the title a
condition of any application for a title, and a requirement for any
title issued by a State. 74 FR 647. The same applies to reassignment
documents; they must contain odometer disclosures and be presented for
titling. This was intended to eliminate or significantly reduce abuses
associated with lack of control of the titling process. Id.
Third, TIMA sought to prevent alterations of disclosures on titles
and to preclude counterfeit titles through secure processes. 74 FR 648.
In furtherance of these purposes, paper titles and reassignment
documents (incorporating the disclosure statement) must be produced
using a secure printing process or protected by ``other secure
process.'' \6\ Id.
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\6\ Congress intended to encourage new technologies by including
the language ``other secure process.'' The House Report accompanying
TIMA noted that ```other secure process' is intended to describe
means other than printing which could securely provide for the
storage and transmittal of title and mileage information.'' H.R.
Rep. No. 99-833, at 33 (1986). ``In adopting this language, the
Committee intends to encourage new technologies which will provide
increased levels of security for titles.'' Id. See also Cost Savings
Act, as amended by TIMA, Sec. 408(d), recodified at 49 U.S.C.
32705(b); 49 CFR 580.4 which requires that titles and documents used
to reassign titles shall be issued by the State and printed using a
secure process.
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A fourth purpose is to create a record of vehicle mileage and a
paper trail. 74 FR 648. The underlying purposes of this record and
paper trail were to better inform consumers and provide mechanisms for
tracing odometer tampering and prosecuting violators. TIMA's
requirement that new applications for titles include signed mileage
disclosure statements on the titles from the prior owners creates a
permanent record that is easily checked by subsequent owners or law
enforcement officials. Proper reassignment documents, when accompanied
by the title from the initial transferor, similarly create a permanent
record. This record provides critical snapshots of vehicle mileage at
every transfer, which are the fundamental links of this paper trail.
Finally, the general purpose of TIMA is to protect consumers by
assuring that they receive valid representations of the vehicle's
actual mileage at the time of transfer based on odometer disclosures.
74 FR 648.

IV. The New York Petition

New York, which is in the process of implementing an Electronic
Vehicle Inventory and Transfer System (System), petitions for approval
of alternate odometer disclosure requirements. New York requests
alternate disclosure requirements for transfers of motor vehicles in
transactions to, from, and among licensed New York dealers.

[[Page 65488]]

A. Overview of Current New York Transfer/Odometer Disclosure System

As New York stated in its petition, odometer disclosures are made
on securely printed documents produced by NYSDMV. Each document--the
Certificate of Title (MV-999), the Retail Certificate of Sale (MV-50)
(Dealers Reassignment Form), and the Wholesale Certificate of Sale (MV-
50W)--may be used depending on the circumstances of the transfer. In
order to comply with Federal odometer disclosure requirements, all
three documents include built-in security features along with an area
to disclose the odometer reading. They have been designed with unique
numbers. The MV-999 has space for one odometer disclosure statement and
is used where title is held by the transferor. If this space has been
filled by an odometer disclosure statement in a prior transaction, New
York dealers must use either the MV-50 or MV-50W reassignment document,
as appropriate, to make the required odometer disclosure statement and
transfer vehicle title. See 15 NYCRR section 78.10.
Currently, in New York, dealers are required by NYSDMV to keep a
paper inventory (Book of Registry) in which dealers record identifying
information about vehicles they purchase and sell. NYS Vehicle and
Traffic Law section 415(15); 15 NYCRR section 78.25. When a New York
dealer sells a vehicle to another New York dealer, the purchasing
dealer is required to enter the vehicle identifying information
including the odometer disclosure statement in its Book of Registry. A
dealer's Book of Registry is subject to review during on-site audits by
NYSDMV.
When a New York dealer sells a vehicle to a purchaser, an MV-50/MV-
50W is filled out with the vehicle identifying information, the name
and address of the dealer, and the name and address of the purchaser.
The dealer fills in the odometer disclosure statement found on the MV-
50/MV-50W and then both the dealer and purchaser sign the statement.
Odometer readings are recorded in the selling dealer's Book of
Registry, a purchasing dealer's Book of Registry (if the purchaser is a
New York dealer), and the MV-50, all of which are subject to audit by
NYSDMV. In cases where the purchaser is not another New York dealer,
the purchaser would take a copy of the MV-50, along with other
ownership documentation provided by the dealer (e.g. original title,
prior MV-50/MV-50Ws), and a completed Vehicle Registration/Title
Application (MV-82) to a NYSDMV office to apply for a new title.

B. New York's Proposed Electronic Vehicle Inventory and Transfer System

1. Accessing the Proposed System
According to New York's petition, the System will control access to
MV-50 processing. New York dealerships would access the System to enter
inventory and record vehicle sales transactions, including making the
odometer disclosure statements required under TIMA. Dealers will be
required to join the System when they are due for business license
renewal. Each licensed New York dealer is required to renew its
business license every two years.
To join the System, a dealer first would request access to the
system from NYSDMV. NYSDMV would register the dealership as a group and
would designate a System administrator for that dealership (a
dealership employee chosen by the dealer) to be responsible for
assigning System accounts to employees (users) within the
dealership.\7\ The number of users and the level of access for each
user would be determined and controlled at the administrator's
discretion. User accounts created by the dealership's administrator
would be subject to review during onsite audits by NYSDMV and
Enforcement staff.
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\7\ Each user would be prompted at first sign-on to the System
to change his or her password. Every 90 days, the user would need to
change his or her password. The new password must be different than
the last three passwords. Passwords will be stored in the System and
encrypted.
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Each year, the administrator would be prompted by the System to re-
certify the facility on the System with the NYSDMV. If the
administrator does not comply with the System recertification prompt,
dealership access to the System would be turned off, preventing the
dealership from completing any sales transaction. An entire dealership
or an individual working at a dealership could be denied access to the
System any time NYSDMV deemed it necessary. The System would be limited
to New York dealer transactions, as others except for NYSDMV would not
have access to it.
2. Using the Proposed System
Under New York's proposal, when a vehicle is transferred to a
dealership, the vehicle's identifying information would be entered into
the System using a standardized template through a user's account. The
vehicle identification number would be automatically verified by the
System using the appropriate Vehicle Identification Number Analysis
(VINA) file. (VINA is a system used to verify and decode information
contained in vehicle identification numbers.) If the vehicle is sold to
another New York dealer, the purchasing dealer's System template for
that vehicle would pre-fill with the vehicle's identification
information from the System. During sales/transfer transactions, the
seller would electronically disclose vehicle information including the
current mileage and would be issued a unique transaction number.
Because it relies primarily on dealers making entries into the
system, New York's proposed Electronic Vehicle Inventory and Transfer
System encompasses only transactions involving dealers: Sales of
vehicles by non-dealer vehicle owners to dealers, sales of vehicles
between licensed New York dealers and vehicle sales from licensed New
York dealers to non-dealers, including retail consumers, out of state
dealers, vehicle dismantlers, and junk and salvage dealers.
More specifically, NYSDMV's proposed process for handling vehicle
transfers to licensed New York dealers would be as follows. When the
dealer receives a vehicle (whether from a manufacturer, a customer, or
another dealer), including the vehicle ownership documentation, an
authorized dealership user would sign on to the System and enter the
vehicle's identifying information. The vehicle's odometer reading,
disclosed on the title in the case of a consumer trading in or selling
a vehicle to the dealer, would be recorded in the system by the dealer.
If a dealer sells a vehicle to another licensed New York dealer,
the selling dealer would sign on to the System using its unique sign on
and password and would access the vehicle's identifying information on
the System. The selling dealer would enter current vehicle information
including the current odometer reading and would enter seller and
purchaser information on the System. The System would then generate a
transaction number. The purchasing dealer would sign on to the System
using its unique sign on and password and would access the vehicle's
identifying information on the System using the transaction number. The
purchasing dealer would then review the vehicle's identifying
information, including the odometer disclosure statement made by the
selling dealer,\8\ and would accept or reject the

[[Page 65489]]

transaction. If the purchasing dealer accepts the transaction it would
be considered complete. The original pre-dealer ownership document
(still in the prior owner's name) would be surrendered to the
purchasing dealer at the time of sale.
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\8\ The System automatically checks the odometer disclosure
statement entered by the seller against the odometer disclosure
statement previously recorded on the System for that vehicle. If the
odometer reading entered by the seller is lower than what was
previously recorded, the transaction would not be processed without
a proper notation explaining the odometer discrepancy. According to
the NYSDMV, this notation can be either ``true mileage unknown'' or
``exceeds mechanical limits'', as indicated in a check-box in the
System. This notation would remain in the vehicle's history through
all subsequent transactions.
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If, during the purchasing dealer user's review of the vehicle's
identifying information on the System, the user did not agree with all
of the information, the user could reject the transaction. Subsequent
transfers between licensed New York dealers would be recorded in the
same manner. It is the Agency's understanding that the entire history
of the vehicle's identifying information entered into the System at
each transfer would be maintained indefinitely on the System.
Under the New York proposal, when a vehicle owned by a New York
dealer is sold to a retail purchaser, salvage dealer, auction house,
out-of-state buyer or other non-New York dealer purchaser, an
authorized user at the selling dealer would sign on to the System and
access the vehicle information on the System. The selling dealer would
enter current vehicle information including the current odometer
reading, and would enter seller and purchaser information on the
System. A two-part sales receipt/odometer statement would be created on
the System. The purchaser would then review the information, including
the odometer statement, on a draft receipt displayed on the computer
screen. If the purchaser agrees with the odometer statement and other
information, the authorized dealer representative would save the data
in the system and then print a two-part sales receipt. Both parties
would then sign the odometer disclosure statement printed on each of
the two parts of the receipt. The dealer would retain the dealer part
of the receipt for its files. The purchaser would be given the
purchaser's copy of the receipt along with the original title acquired
by the dealer when it purchased the vehicle.
If the purchaser does not agree with any of the information
displayed on the dealer's computer screen,\9\ the purchaser could
reject the transaction. In that case, the dealer would have to cancel
the transaction in the System and resubmit using the correct
information.
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\9\ As with transfers between licensed New York dealers
described above, the System automatically checks the odometer
disclosure statement entered by the seller against the odometer
disclosure statement previously recorded on the System for that
vehicle. If the odometer reading entered by the seller is lower than
what was previously recorded, the transaction would be cancelled.
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New York's petition further states that during vehicle registration
by a New York purchaser, NYSDMV office staff would review the vehicle's
data and odometer disclosure on New York's system and compare it to the
paper ownership documents and the purchaser's copy of the
aforementioned two-part receipt. This would verify the mileage reported
on the paper documents. If a vehicle had gone in and out of New York
State multiple times, New York's petition states that the proposed
system would show the New York State history for the vehicle, which
would help to identify gaps in mileage and ownership.

C. New York's Position on Meeting the Purposes of TIMA

New York contends that its proposed program meets the purposes of
TIMA as described by NHTSA in its Final Determination on the
Commonwealth of Virginia's Petition for alternate odometer disclosure
requirements. The Petition identified the purposes of TIMA and the
State's position that its proposed program satisfied each purpose.
One purpose is to assure that the form of the odometer disclosure
precludes odometer fraud. As noted by New York based on NHTSA's
Virginia program approval notice, the disclosure must be contained on
the title provided to the transferee and not on a separate document.
New York states that its proposal satisfies this purpose because the
odometer disclosure will remain on the back of the New York Certificate
of Title (MV-999) and will be added to the Electronic Vehicle Inventory
and Transfer System. Other transactions, currently recorded on paper
reassignment documents (MV-50 or MV50W), will be recorded in the
proposed electronic system. For dealer to dealer transactions that
presently use a paper reassignment document, dealers would make
disclosures directly into the Electronic Vehicle Inventory and Transfer
System after both buyer and seller agree electronically that the
information, including the odometer disclosure, is correct. For
transactions where a dealer transfers a vehicle to a consumer or other
buyers who are not New York dealers, the odometer disclosure would,
with the buyer's assent, be entered into the System. The electronic
disclosure would also be recorded on a two-part receipt generated by
the System and printed by the dealer. Both buyer and seller would sign
this paper disclosure and each would retain one part of the two part
form. This paper receipt would then be presented when the buyer wishes
to register the vehicle and checked against the electronic record by
New York DMV personnel.
A second purpose is to prevent odometer fraud by processes and
mechanisms making the disclosure of an odometer's mileage on the title
a condition of the application for a title and a requirement for the
title issued by the State. New York contends that its proposal
satisfies this purpose by requiring odometer disclosures to remain on
the back of the New York DMV Certificate of Title, requiring electronic
odometer disclosures for subsequent reassignments at the time of
transfer and requiring that non-dealer purchasers be issued a receipt
documenting the electronic disclosure made at the time of purchase.
Because these documents will be required when a purchaser applies for a
title and NYSDMV will verify the odometer reading through a review of
both the Electronic Vehicle Inventory and Transfer System and the
documents before issuing a title, New York contends that its proposal
meets this TIMA purpose.
A third purpose is to prevent alterations of disclosures on titles
and to preclude counterfeit titles through secure processes. New York
states that its proposal satisfies the purpose because the paper title
(MV-999) will continue to be produced through a secure printing
process. Further, the paper reassignment documents (MV-50 or MV50W)
used in transfers between licensed New York dealers will be replaced
with the secure Electronic Vehicle Inventory and Transfer System that
will prevent odometer tampering and allow individuals and NYSDMV to
trace a more definitive mileage history. According to New York, the
proposed electronic odometer disclosure scheme would also meet this
purpose in sales from dealers to consumers and other non-dealer buyers.
In that case, the odometer disclosure would be made electronically on
the secure System and on a two-part receipt generated by that system.
New York contends that the security of the Electronic Vehicle Inventory
and Transfer System that will prevent odometer tampering and allow
individuals and NYSDMV to trace a more definitive mileage history.
A fourth purpose is to create a record of the mileage on vehicles
and a paper

[[Page 65490]]

trail. New York contends its proposal satisfies this purpose because
the odometer disclosure statement from the consumer to the New York
dealer will remain on the back of the MV-999 and will be added to the
Electronic Vehicle Inventory and Transfer System by the purchasing
dealer. Disclosures made at the time of dealer to dealer transfers and
when dealers sell to consumers and other non-New York dealer buyers
will also be entered into the New York System. As a result, dealers
will be able to check, and NYSDMV will be able to monitor, odometer
history through the System and fraud will be reduced. Subsequent
purchasers, both dealers and consumers alike, will be able to check,
and NYSDMV will be able to monitor, odometer history through the
System.
A fifth purpose is to protect consumers by assuring that they
received valid representations of the vehicle's actual mileage at the
time of transfer based on odometer disclosures. New York states that
its proposal satisfies this purpose because dealers will be able to use
the Electronic Vehicle Inventory and Transfer System to verify the
odometer history of the vehicle, and NYSDMV will be able to monitor
odometer history.\10\ Similarly, New York states that consumers will be
able to check odometer history through a Web-based application and
thereby evaluate the accuracy of the odometer readings for vehicles
they wish to buy.
---------------------------------------------------------------------------

\10\ According to New York's petition, the proposed System has
no effect on the current practice in transfers from consumers to
dealers--the odometer disclosure statement from the consumer to the
dealer will continue to be made on the back of the MV-999.
---------------------------------------------------------------------------

IV. Analysis

Under TIMA, NHTSA ``shall approve alternate motor vehicle mileage
disclosure requirements submitted by a State unless [NHTSA] determines
that such requirements are not consistent with the purpose of the
disclosure required by subsection (d) or (e) as the case may be.'' The
purposes are discussed above, as is the New York alternative. We now
provide our initial assessment whether New York's proposal satisfies
TIMA's purposes as relevant to its Petition.\11\
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\11\ New York would continue to be subject to all Federal
requirements that are not based on Section 408(d) and (e) of the
Cost Savings Act as amended, recodified at 49 U.S.C. 32705(b) and
(c).
---------------------------------------------------------------------------

A. New York's Proposal and the Specific Purposes of TIMA

One purpose is to assure that the form of the odometer disclosure
precludes odometer fraud. When title is held by the transferor, the
disclosure must be contained on the title provided to the transferee
and not on a separate document. In the case of a transferor of a
vehicle in whose name the vehicle is not titled (e.g., the transferor
of the vehicle is the transferee on the title) the odometer disclosure
statement may be made on a secure reassignment document if the title
does not have sufficient space for recording the additional disclosure.
NHTSA has initially determined that New York's proposed alternate
disclosure requirements satisfy this purpose. Under New York's
proposal, when an owner transfers ownership of a vehicle to a dealer,
the odometer disclosure statement would be on the paper title. The
dealer would input the vehicle's identifying information and odometer
disclosure into the Electronic Vehicle Inventory and Transfer System.
The odometer disclosure, including the names of the transferor and
transferee, would be required. Thereafter the odometer disclosure
statement will reside as an electronic record within the System that
will be linked to the vehicle by the vehicle's VIN.
If a dealer transfers a vehicle to another licensed New York
dealer, the selling dealer would sign on to the System using its unique
sign on and password and would access the vehicle's identifying
information on the System. The selling dealer would enter current
vehicle information including the current odometer reading and would
enter seller and purchaser information on the System. The System would
then generate a transaction number. The purchasing dealer would use the
transaction number to access the vehicle's information on the System,
review the information, including the selling dealer's odometer
disclosure statement, and accept or reject the transaction. If the
transaction is accepted, the sale is completed and the odometer
disclosure is recorded in the System. In essence, this is an electronic
reassignment from one licensed dealer to another licensed dealer, using
a transaction based approach in a secure computer system in which both
the selling dealer and purchasing dealer sign off on the odometer
disclosure.
When the vehicle is sold from a licensed New York dealer to a
person or entity other than a licensed New York dealer, the dealer/
seller enters the purchaser's identifying information and the odometer
disclosure statement into the System. If the buyer agrees that the
odometer disclosure in the System is accurate, the System creates a two
part receipt that is signed by the selling dealer and purchaser. The
paper title and one part of the receipt must be presented to a State
motor vehicle titling and registration agency when the purchaser
applies to title and register the vehicle.
NHTSA's initial determination is that the New York proposal meets
the TIMA purpose of assuring that the form of the odometer disclosure
precludes odometer fraud. We note that New York's proposal involves a
proper odometer disclosure on the title itself when the seller is the
person in whose name the vehicle is titled. Following transfer of a
vehicle to a New York dealer, when the vehicle is not re-titled in the
name of the dealer, the proposed New York system would provide for
odometer disclosures to be made electronically in a secure electronic
system with sign offs by the seller and buyer instead of on the paper
reassignment documents currently being used. In addition, the paper
title with an odometer disclosure would be transferred to the
transferee/purchasing dealer. This is comparable to paper reassignments
employing a paper State title and paper State reassignment form.
Ultimately, for sales from New York dealers to consumers and other non-
dealer buyers, the odometer disclosure would be recorded in the State's
electronic system and on a two-part receipt signed by both buyer and
seller. The receipt--a form of paper reassignment document--
memorializes the electronic disclosure. This would accompany the
initial title with an odometer disclosure.
A second purpose of TIMA is to prevent odometer fraud by processes
and mechanisms making the disclosure of an odometer mileage on the
title both a condition for the application for a title and a
requirement for the title issued by the State. NHTSA has initially
determined that New York's proposed process satisfies this purpose. New
York's proposed transfer process requires disclosure of odometer
information on the paper title, at first sale from a titled owner to a
New York licensed dealer, and electronically within the System in
transfers between New York licensed dealers before the transaction can
be completed. In addition, in sales from New York licensed dealers to
non-dealer purchasers, the purchaser must present the prior paper title
from the initial sale to the first dealer and the receipt of purchase
with a mileage disclosure from the last dealer when applying for a
vehicle title and registration. New York's proposal requires that the
vehicle title from the initial owner in the process to the first
dealer--with the odometer disclosure--be provided to the person
purchasing the vehicle from

[[Page 65491]]

the last dealer in the dealer chain. This original title--with an
odometer disclosure--along with the buyer's part of the proposed two-
part paper receipt and mileage disclosure must both be presented to
state titling officials in order for the buyer to obtain a new title.
Another purpose of TIMA is to prevent alterations of disclosures on
titles and to preclude counterfeit titles through secure processes. The
agency has initially determined that New York's alternate disclosure
requirements do not satisfy this purpose. When a vehicle is first
transferred to a dealer, the transfer and required odometer disclosure
statement are made using the vehicle's secure paper title document (MV-
999). Subsequent transfers between licensed New York dealers are
processed electronically--the selling dealer submits the vehicle's
identifying information into the System, including the odometer
disclosure statement; the purchasing dealer then verifies the
information on the System, including the odometer disclosure statement
made by the selling dealer, and either accepts or rejects the
transaction electronically.
Under New York's proposal, upon final retail sale of a vehicle to a
consumer or other non-New York dealer entity, the odometer disclosure
statement would be made electronically and on a two part paper receipt,
one part of which is given to the new owner to use in obtaining a
title. More particularly, the selling dealer would access the
Electronic Vehicle Inventory and Transfer System and enter the odometer
disclosure and the dealer's and buyer's information into the system. If
the odometer reading entered is not lower than a prior entry, a two-
part odometer statement and receipt would be then be created
electronically. The purchaser would review the information on the
receipt prior to the receipt being printed and verify the odometer
disclosure statement on the receipt. If the purchaser accepts the
information, then the two-part sales receipt would be printed and both
parties would sign the odometer disclosure statement printed on each
part of the receipt. The dealer would retain the dealer part of the
receipt for its files and the purchaser would be given the purchaser
part of the receipt along with the original ownership document.
New York's petition does not state that the receipt form would be
generated by a secure process, and in any event does not describe any
such processes. NHTSA cannot assume that the reassignment document
would be produced using secure processes. The agency's preliminary
conclusion is that New York's use of a non-secure paper receipt and
disclosure form does not satisfy the TIMA purpose of preventing
alterations of disclosures on titles and precluding counterfeit titles
through secure processes.
When, following New York dealer to New York dealer sale(s), a
vehicle is purchased by an out-of-state buyer, the non-secure receipt
form proposed by New York would be used as a reassignment document
outside of New York. This non-secure document therefore would be used
to satisfy part of the titling requirements for the vehicle in the
State where it would be titled and registered. This non-secure document
could be easily altered or counterfeited and used in those
jurisdictions outside New York. The result is that the odometer
disclosure statement printed by the last New York dealer as part of the
sale to a non-New York dealer would not be made by secure processes,
and thus would not be not in conformance with a TIMA purpose. We
appreciate that the proposed New York system would allow other state
motor vehicle agencies to check the electronic disclosure information
maintained on New York's electronic system, or that the non-dealer
purchaser may be able to obtain a New York title. In our view, as
explained further below, this does not rectify the shortcoming in New
York's proposed program.
Another purpose of TIMA is to create a record of the mileage on
vehicles and a paper trail. The underlying purposes of this record and
paper trail are to enable consumers to be better informed and provide a
mechanism through which odometer tampering can be traced and violators
prosecuted. Under New York's proposal, creation of a paper trail starts
with the requirement that the initial transfer to a dealer is processed
on the vehicle's secure paper title, including the odometer disclosure
statement. Each subsequent dealer-to-dealer transfer is processed
electronically, with the selling dealer inputting the vehicle's
identifying information into the System, and the purchasing dealer
verifying and certifying this information to complete the transfer.
Under New York's proposed program, the most recent vehicle odometer
disclosure will be available for public view via an online application.
A dealer selling a vehicle to a non-dealer would record the odometer
statement in the System at the time of sale. A selling dealer must also
transfer the paper title obtained from the first seller to the
purchasing dealer or retail and/or out of state buyer.
For ultimate sales to New Yorkers, the final retail purchaser would
be required to present paperwork (including the title containing an
executed odometer disclosure statement used to transfer title of the
vehicle from the initial owner to a New York dealer and, if
appropriate, one copy of the receipt generated by the System when the
dealer transferred the vehicle to the purchaser) to the NYSDMV when
applying to register and title the vehicle in the purchaser's name. The
NYSDMV would use this paperwork in conjunction with the vehicle's
identifying information available on the System to verify the trail of
ownership and odometer disclosure statements for the vehicle through
the final retail sale. The paper title used to transfer the vehicle to
the dealer would be retained by the NYSDMV in a file associated with
the vehicle VIN for at least ten years, and it would be available to
dealers and NYSDMV and Enforcement staff. The System will maintain the
vehicle identifying information, including odometer disclosure,
indefinitely. The NYSDMV could track the odometer disclosure statements
through the System. The System would not allow a transfer to be
completed in which the disclosed odometer reading is lower than a prior
odometer disclosure statement. In addition, New York's petition states
that it will not issue a title to the buyer unless the disclosures on
the foregoing paper documents match those found in the System.
In those cases in which a New York dealer sells a vehicle to a
person who would title and register it out-of-state, the buyer would be
provided with the title used to transfer it initially to a dealer and
one part of the two-part receipt. As noted above, the receipt, which is
not specified to be on secure paper, is a vulnerability. A substitute
document could readily be created.
In NHTSA's preliminary view, the New York's proposed program would
create a scheme of records equivalent to the current ``paper trail''
that assists law enforcement in identifying and prosecuting odometer
fraud, except where the vehicle ultimately is titled in a state other
than New York. In those instances, it is less effective than the
current system that employs a Paper MV 50 Retail Certificate of Sale
(Dealers Reassignment form), which is on secure paper with a control
number, and the dealer has a copy. The resolution of whether New York's
proposed program satisfies the purpose of creating a paper trail factor
turns on the security of the final reassignment document used to obtain
a title. At this juncture, it does not satisfy this purpose.

[[Page 65492]]

B. New York's Proposal in Light of TIMA's Overall Purpose

TIMA's overall purpose is to protect consumers by assuring that
they receive valid odometer disclosures representing a vehicle's actual
mileage at the time of transfer. Here, except for the portions of the
proposed program relating to the security of the odometer disclosure
statement made on the two-part receipt in a vehicle sale from a
licensed New York dealer to an out of state buyer, New York's proposed
alternate disclosure requirements include characteristics that would
assure that representations of a vehicle's actual mileage would be as
valid as those found in current paper title transfers and
reassignments.
Other than the portions related to the security of the odometer
disclosure statement made at the sale of a vehicle from a licensed New
York dealer to an out of state buyer, New York's proposal likely will
provide more protection for consumers than the current procedures.
Transfers of vehicles between licensed New York dealers, including the
required odometer disclosure statements, would be processed and the
records maintained electronically in the System. Transfer records would
be maintained on the System. The paper title used for the initial
transfer to a licensed New York dealer would follow the vehicle and
would be required when applying for registration and titling of the
vehicle in the final purchaser's (not a licensed New York dealer) name.
Potential buyers can examine the most recent odometer disclosure
statement online before purchasing the vehicle. In-state consumers are
at least as protected under New York's proposed program as they are
under the current system.

V. NHTSA Initial Determination

For the foregoing reasons, NHTSA preliminarily denies New York's
Petition regarding proposed alternate disclosure requirements. During
the comment period, New York may submit additional information
demonstrating how its program satisfies the concerns identified above
or may amend its program to satisfy these concerns.
This is not a final agency action. NHTSA invites public comments
within the scope of this notice. Should NHTSA decide to issue a final
grant of New York's Petition, in whole or in part, it would likely
reserve the right to rescind that grant in the event that future
information indicates that, in operation, New York's alternate
disclosure requirements do not satisfy applicable standards.

Request for Comments

How do I prepare and submit comments?
Your comments must be written and in English. To ensure that your
comments are filed correctly in the Docket, please include the docket
number of this document in your comments.
Your comments must not be more than 15 pages long (see 49 CFR
553.21). We established this limit to encourage you to write your
primary comments in a concise fashion. However, you may attach
necessary additional documents to your comments. There is no limit on
the length of the attachments.
Please submit two copies of your comments, including the
attachments, to Docket Management at the address given under ADDRESSES.
You may also submit your comments to the docket electronically by
logging onto the Dockets Management System Web site at http://dms.dot.gov. Click on ``Help & Information,'' or ``Help/Info'' to
obtain instructions for filing the document electronically.
How can I be sure that my comments were received?
If you wish Docket Management to notify you upon its receipt of
your comments, enclose a self-addressed, stamped postcard in the
envelope containing your comments. Upon receiving your comments, Docket
Management will return the postcard by mail.
How do I submit confidential business information?
If you wish to submit any information under a claim of
confidentiality, you should submit three copies of your complete
submission, including the information you claim to be confidential
business information, to the Chief Counsel, NHTSA, at the address given
above under FOR FURTHER INFORMATION CONTACT. In addition, you should
submit two copies, from which you have deleted the claimed confidential
business information, to Docket Management at the address given above
under ADDRESSES. When you send a comment containing information claimed
to be confidential business information, you should include a cover
letter setting forth the information specified in our confidential
business information regulation (49 CFR Part 512).
Will the Agency consider late comments?
We will consider all comments that Docket Management receives
before the close of business on the comment closing date indicated
above under DATES. To the extent possible, we also will consider
comments that Docket Management receives after that date. If Docket
Management receives a comment too late for us to consider it in
developing the final rule, we will consider that comment as an informal
suggestion for future rulemaking action.
How can I read the comments submitted by other people?
You may read the comments received by Docket Management at the
address given under ADDRESSES. The hours of the Docket are indicated
above in the same location.
You also may see the comments on the Internet. To read the comments
on the Internet, go to http://www.regulations.gov, and follow the
instructions for accessing the Docket.
Please note that even after the comment closing date, we will
continue to file relevant information in the Docket as it becomes
available. Further, some people may submit late comments. Accordingly,
we recommend that you periodically check the Docket for new material.

Issued on: October 14, 2011.
O. Kevin Vincent,
Chief Counsel.
[FR Doc. 2011-27089 Filed 10-20-11; 8:45 am]
BILLING CODE 4910-59-P