Petition for Approval of Alternate Odometer Requirements

David Strickland
National Highway Traffic Safety Administration
August 21, 2012

[Federal Register Volume 77, Number 162 (Tuesday, August 21, 2012)]
[Rules and Regulations]
[Pages 50381-50388]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-20463]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 580

[Docket No. NHTSA-2011-0152; Notice 2]


Petition for Approval of Alternate Odometer Requirements

AGENCY: National Highway Traffic Safety Administration (NHTSA).

ACTION: Notice of final determination.

-----------------------------------------------------------------------

SUMMARY: The State of New York (``New York'') has petitioned for 
approval of alternate odometer requirements. New York's petition, as 
amended, is granted.

DATES: Effective Date: September 20, 2012.

ADDRESSES: New York's petition and comments are available for public 
inspection at the Docket Management Facility of the U.S. Department of 
Transportation, 1200 New Jersey Avenue SE., West Building Ground Floor, 
Room W12-140, Washington, DC 20590-0001.

FOR FURTHER INFORMATION CONTACT: Marie Choi, Office of the Chief 
Counsel, National Highway Traffic Safety Administration, 1200 New 
Jersey Avenue SE., Washington, DC 20590 (Telephone: 202-366-1738) (Fax: 
202-366-3820).

SUPPLEMENTARY INFORMATION: Anyone is able to search the electronic form 
of all comments received into any of our dockets by the 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. For access to the docket to read background 
documents or comments received, go to http://www.regulations.gov. 
Follow the online instructions for accessing the dockets. You may also 
review the docket at the address listed above.

I. Introduction

    Federal odometer law, which is largely based on the Motor Vehicle 
Information and Cost Savings Act of 1972 (Cost Savings Act) \1\ and 
Truth in Mileage Act of 1986, as amended

[[Page 50382]]

(TIMA),\2\ contains a number of provisions to limit odometer fraud and 
ensure 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 vehicles unless a 
valid odometer disclosure statement on the title is signed and dated by 
the transferor. Titles must also be printed by a secure process. 
Federal law also contains document retention requirements for odometer 
disclosure statements.
---------------------------------------------------------------------------

    \1\ Sec. 401-413, Public Law 92-513, 86 Stat. 961-963.
    \2\ Sec. 1-3, Public Law 99-579, 100 Stat. 3309-3311.
---------------------------------------------------------------------------

    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, New York has 
petitioned for approval of alternate odometer disclosure requirements. 
In its initial determination, NHTSA reviewed the statutory background 
and set out the agency's tentative view on applicable statutory factors 
governing whether to grant a state's petition. NHTSA determined that 
New York's initial petition \3\ for approval of alternate disclosure 
requirements did not satisfy Federal odometer law because transfers to 
out-of-state purchasers involved the issuance of non-secure paper 
odometer disclosure receipts. See 76 FR 65485, Oct. 21, 2011. NHTSA 
invited public comments.
---------------------------------------------------------------------------

    \3\ New York's Petition for Approval of Alternate Odometer 
Disclosure Requirements dated September 30, 2010 shall be referred 
to as the ``initial petition.''
---------------------------------------------------------------------------

    As part of its comments, New York submitted an amended petition.\4\ 
After careful consideration of comments, NHTSA has made a final 
determination, which is set forth below.
---------------------------------------------------------------------------

    \4\ New York's Amended Petition for Approval of Alternate 
Odometer Disclosure Requirements dated November 8, 2011 shall be 
referred to as the ``amended petition.''
---------------------------------------------------------------------------

II. Statutory Background and Purposes

A. Statutory Background

    NHTSA reviewed the statutory background of Federal odometer law in 
its consideration of petitions for approval of alternate odometer 
disclosure requirements by Virginia, Texas, Wisconsin, Florida, and New 
York. See 74 FR 643, Jan. 7, 2009 (granting Virginia's petition); 75 FR 
20925, Apr. 22, 2010 (granting Texas' petition); 76 FR 1367, Jan. 10, 
2011 (granting Wisconsin's petition in part); 77 FR 36935, June 20, 
2012 (granting Florida's petition in part, and denying Florida's 
petition in part); see also 76 FR 65485, Oct. 21, 2011 (initial 
determination denying New York's petition). The statutory background of 
the Cost Savings Act and TIMA, as related to odometer disclosure 
requirements, other than in the transfer of leased vehicles and 
vehicles subject to liens where a power of attorney is used, is 
discussed at length in NHTSA's final determination granting Virginia's 
petition. 74 FR 643; see also 77 FR 36935; 76 FR 48101, Aug. 8, 2011 
(addressing leased vehicles and powers of attorney).\5\ A brief summary 
of the statutory background of Federal odometer law follows.
---------------------------------------------------------------------------

    \5\ New York's petition does not address leased vehicles or 
powers of attorney.
---------------------------------------------------------------------------

    In 1972, Congress enacted the Cost Savings Act to establish 
safeguards for consumers which prohibited odometer tampering. Among 
other things, the Cost Savings Act made it unlawful to alter an 
odometer's mileage, and required written disclosure of odometer mileage 
in connection with any transfer of ownership of a motor vehicle.\6\ 
However, the Cost Savings Act had a number of shortcomings, which are 
discussed below.
---------------------------------------------------------------------------

    \6\ In 1976, Congress amended the odometer disclosure provisions 
in the Cost Savings Act to provide further protections to purchasers 
from unscrupulous car dealers. See Public Law 94-364, 90 Stat. 981 
(1976).
---------------------------------------------------------------------------

    In 1986, Congress enacted TIMA to address the Cost Savings Act's 
shortcomings. Congress was specifically concerned with addressing 
odometer fraud in the commercial market, and noted that used car 
auctions, distributors, wholesales, dealers, and used car lots of new 
car dealers often may be directly involved in fraud.\7\ TIMA also added 
a provision to the Cost Savings Act, allowing States to obtain approval 
for alternate odometer disclosure requirements. Pursuant to Section 
408(f) of the Cost Savings Act, as amended by TIMA: 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.
---------------------------------------------------------------------------

    \7\ S. Rep. No. 99-47, at 2 (1985), reprinted in 1986 
U.S.C.C.A.N. 5620, 5621.
---------------------------------------------------------------------------

    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. 
Section 408(a) of the Cost Savings Act was recodified at 49 U.S.C. 
32705(a). Sections 408(d) and (e), which were added by TIMA, with 
subsequent amendments, 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).

B. Statutory Purposes

    In our final determinations, after notice and comment, granting the 
petitions for approval of alternate odometer disclosure requirements of 
Virginia, Texas, and, in part, Wisconsin and Florida, we identified the 
statutory purposes of TIMA.\8\ 74 FR 643; 75 FR 20925; 76 FR 1367; 77 
FR 36935. These purposes are summarized below.\9\
---------------------------------------------------------------------------

    \8\ Any statements which refer to the ``purposes of TIMA'' or a 
``purpose of TIMA'' should be interpreted to refer to the purpose of 
the disclosure required by subsection (d) or (e), as the case may 
be, as stated in Section 408 of the Cost Savings Act, as amended by 
TIMA.
    \9\ New York's amended petition does not pertain to leased 
vehicles or powers of attorney. Accordingly, the purposes of TIMA 
addressed below do not address these matters.
---------------------------------------------------------------------------

    One purpose of TIMA was to ensure that the form of the odometer 
disclosure precluded odometer fraud. The Cost Savings Act did not 
require odometer disclosures to be made on a vehicle's title. This 
created a potential for odometer fraud, because a transferor could 
easily alter the odometer disclosure or provide a new statement with 
different mileage.\10\ TIMA addressed this shortcoming of the Cost 
Savings Act by requiring mileage disclosures to be on a vehicle's title 
instead of a separate document. Titles

[[Page 50383]]

also had to contain space for the seller's attested mileage disclosure.
---------------------------------------------------------------------------

    \10\ See S. Rep. No. 99-47, at 2-3 (1985), reprinted in 1986 
U.S.C.C.A.N. 5620, 5621-22; H. Rep. No. 99-833, at 33 (1986).
---------------------------------------------------------------------------

    A second purpose of TIMA was 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 to be issued by the State.\11\ This was intended to eliminate 
or significantly reduce abuses associated with lack of control of the 
titling process.\12\ Prior to TIMA, odometer fraud was facilitated by 
the ability of transferees to apply for titles without presenting the 
transferor's title with the disclosure.
---------------------------------------------------------------------------

    \11\ See S. Rep. No. 99-47, at 2-3 (1985), reprinted in 1986 
U.S.C.C.A.N. 5620, 5621-22; H. Rep. No. 99-833, at 18, 32 (1986).
    \12\ See S. Rep. No. 99-47, at 2-3 (1985), reprinted in 1986 
U.S.C.C.A.N. 5620, 5621-22; Sec. 2, Public Law 99-579, 100 Stat. 
3309.
---------------------------------------------------------------------------

    Third, TIMA sought to prevent alterations of disclosures on titles 
and to preclude counterfeit titles through secure processes. Prior to 
TIMA, titles could be printed through non-secure processes, and could 
be easily altered or laundered.\13\ To address this shortcoming of the 
Cost Savings Act, TIMA required titles to be printed by means of a 
secure printing process or protected by other secure processes.\14\
---------------------------------------------------------------------------

    \13\ See S. Rep. No. 99-47, at 3 (1985), reprinted in 1986 
U.S.C.C.A.N. 5620, 5622.
    \14\ See H. Rep. No. 99-833, at 18, 33 (1986).
---------------------------------------------------------------------------

    A fourth purpose of TIMA was to create a record of the mileage on 
vehicles and a paper trail.\15\ This would allow consumers to be better 
informed and provide a mechanism for tracing odometer tampering and 
prosecuting violators. Under the Cost Savings Act, prior to TIMA, 
odometer disclosures could be made on pieces of paper and did not have 
to be submitted with new title applications. TIMA required new 
applications for title to include the transferor's mileage disclosure 
statement on the title, creating a permanent record that could easily 
be checked by subsequent owners or law enforcement officials. This 
record would provide critical snapshots of the vehicle's mileage at 
every transfer, which are fundamental links in the paper trail.
---------------------------------------------------------------------------

    \15\ See H. Rep. No. 99-833, at 18, 33 (1986).
---------------------------------------------------------------------------

    Finally, the general purpose of TIMA was to protect consumers by 
ensuring that they received valid representations of the vehicle's 
actual mileage at the time of transfer based on odometer 
disclosures.\16\ The TIMA amendments were directed at resolving 
shortcomings in the Cost Savings Act.
---------------------------------------------------------------------------

    \16\ See Preamble, Public Law 99-579, 100 Stat. 3309.
---------------------------------------------------------------------------

III. New York's Program

    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.

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

    In New York, odometer disclosures are currently made on securely 
printed documents produced by NYSDMV. A Certificate of Title (MV-999), 
Retail Certificate of Sale (MV-50) (Dealers Re-assignment Form), and/or 
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 including unique numbers, along with an area to disclose the 
odometer reading. 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, the 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 must 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 initial petition, the System would 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 would be required to join the System when they were due 
for business license renewal. Each licensed New York dealer would be 
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 
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.\17\ The number of 
users and the level of access for each user would be determined and 
controlled by the administrator. User accounts created by the 
dealership's administrator would be subject to review during onsite 
audits by NYSDMV and enforcement staff.
---------------------------------------------------------------------------

    \17\ 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 would have to be 
different than the last three passwords. Passwords would be stored 
in the System and encrypted.
---------------------------------------------------------------------------

    Each year, the administrator would be prompted by the System to re-
certify the facility on the System with the NYSDMV. If the 
administrator did not comply with the System recertification prompt, 
dealership access to the System would be turned off, preventing the 
dealership from completing any sales transactions. 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.

[[Page 50384]]

2. Using the Proposed System
    Under New York's proposal, if a vehicle were 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 (VIN) would automatically be 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 were 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 on dealers making entries into the system, New 
York's proposed Electronic Vehicle Inventory and Transfer System 
encompasses only transactions involving dealers.
a. Transactions to and Between New York Dealers
    NYSDMV's proposed process for handling vehicle transfers to and 
between licensed New York dealers would be as follows. When a dealer 
receives a vehicle (whether from a manufacturer, a customer, or another 
dealer) and 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 sold 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 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,\18\ and would accept or reject the transaction. If the 
purchasing dealer accepted 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.
---------------------------------------------------------------------------

    \18\ The System would automatically check 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 was 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 could 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.
---------------------------------------------------------------------------

    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.
b. Transactions Between New York Dealers and Non-New York Dealer 
Purchasers, Both In-State and Out-of-State
    If a vehicle owned by a New York dealer were sold to an in-state or 
out-of-state retail purchaser, salvage dealer, auction house, or other 
non-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.
    Under the initial proposal (which New York later amended), 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 agreed 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. If the purchaser did not agree with any 
of the information displayed on the dealer's computer screen,\19\ the 
purchaser could reject the transaction. In that case, the dealer would 
have to cancel the transaction in the System and resubmit it using the 
correct information.
---------------------------------------------------------------------------

    \19\ As with transfers between licensed New York dealers 
described above, the System would automatically check 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 were lower 
than what was previously recorded, the transaction would be 
cancelled.
---------------------------------------------------------------------------

    New York's initial petition stated that during vehicle registration 
by a New York purchaser, NYSDMV staff would review the vehicle's data 
and odometer disclosures on New York's System. NYSDMV staff would 
compare the information in the System to the information on 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 initial petition stated that the proposed system 
would show the New York State history for the vehicle, which would help 
to identify gaps in mileage and ownership.

IV. NHTSA's Initial Determination

    In its initial determination, NHTSA restated the statutory purposes 
of the disclosure required by TIMA as amended. 76 FR 65487. NHTSA 
discussed New York's petition (Id. at 65487-65490) and analyzed whether 
it was consistent with the statutory purposes (Id. at 65490-65492). 
NHTSA preliminarily denied New York's petition because it was not 
consistent with certain purposes of the disclosure required by TIMA. 
Our concerns centered on sales to out-of-state purchasers.
    NHTSA stated that New York's alternate disclosure requirements did 
not meet the third purpose of preventing alternations of disclosure on 
titles and precluding counterfeit titles through secure processes, 
because the odometer disclosure statement printed by a New York dealer 
as part of a sale to a non-New York dealer would not be made by a 
secure process. Id. at 65491. In particular, the receipt that New York 
proposed using in transactions between New York dealers and out-of 
state-buyers would be susceptible to alteration and counterfeiting. Id.
    NHTSA further stated that New York's proposed program would not be

[[Page 50385]]

consistent with the fourth purpose of creating a record of mileage on 
vehicles and a paper trail in cases where a vehicle would be titled in 
a state other than New York. Id. Unlike the current MV-50 form printed 
on secure paper with a control number, the receipt that New York 
proposed using to title vehicles out-of-state would not be printed on 
secure paper, and could be easily substituted with another document. 
Id. NHTSA stated that the resolution of whether New York's proposed 
program satisfied the purpose of creating a paper trial turned on the 
security of the final reassignment document used to obtain title. Id.
    NHTSA discussed TIMA's overall purpose of protecting consumers by 
ensuring that they receive valid odometer disclosures representing a 
vehicle's actual mileage at the time of transfer. NHTSA stated that 
other than the portions of New York's proposed program related to the 
security of the odometer disclosure statement in the sale of a vehicle 
from a licensed New York dealer to an out-of-state buyer, New York's 
proposal likely would provide more protection for consumers than the 
current procedure. Id. at 65492.

V. Summary of Public Comments

    NHTSA received two comments. The first was from the New York 
Division of Motorist Services (New York).\20\ In its comment, New York 
amends its petition. For transfers to out-of-state buyers, New York 
states that it will use a secure MV-50 form instead of the two-part 
paper receipt it initially proposed. The second comment was from the 
National Auto Auction Association (NAAA).\21\ NAAA's comments are 
largely based on portions of New York's initial petition which New York 
amended.
---------------------------------------------------------------------------

    \20\ Letter from Ida L. Traschen, First Assistant Counsel, State 
of New York Department of Motor Vehicles, to O. Kevin Vincent, Chief 
Counsel, National Highway Traffic Safety Administration (``New 
York's Comment'') (Nov. 8, 2011).
    \21\ Letter from Bertha M. Phelps, Chair, Legislative and 
Government Relations Committee, National Auto Auction Association, 
to O. Kevin Vincent, Chief Counsel, National Highway Traffic Safety 
Administration (``NAAA's Comment'') (Nov. 21, 2011).
---------------------------------------------------------------------------

A. New York's Comment Amending Its Petition

    In its comment, New York first identifies portions of NHTSA's 
initial determination where NHTSA indicated that New York's program was 
not consistent with the third, fourth, and overall purposes of the 
disclosure required by TIMA. New York then amends its petition in a 
manner which it believes addresses NHTSA's concerns.\22\ New York's 
amendments primarily address transactions between New York dealers and 
out-of-state purchasers.
---------------------------------------------------------------------------

    \22\ New York attached an Amended Petition for Approval of 
Alternate Odometer Disclosure Requirements to its comment.
---------------------------------------------------------------------------

1. Transactions Between New York Dealers and Out-of State Purchasers
    Initially, New York proposed using the same procedure for out-of-
state transfers as in-state transfers. This proposal involved the 
issuance of a non-secure paper receipt, which would be used to title 
vehicles outside of New York. As explained in NHTSA's initial decision, 
the non-secure receipt is problematic. New York amended its petition.
    Under New York's amended petition, the first stage of the 
transaction, where the dealer enters the vehicle's information into the 
system, is identical to the procedure described in New York's initial 
petition. However, in a sale of a vehicle to an out-of-state purchaser, 
the second stage of the transaction is different. New York now proposes 
that instead of using a two-part paper receipt, the selling dealer 
would use a secure paper MV-50 (Retail Certificate of Sale) to document 
the transaction. The dealer would indicate the mileage of the vehicle 
in the System and also indicate which uniquely numbered MV-50 was used 
for the transfer. Both parties would sign the MV-50. The dealer would 
retain one copy of the MV-50, and the purchaser would retain another 
copy. If the buyer went to title the vehicle outside of New York, the 
out-of-state department of motor vehicles could use the Polk Motor 
Vehicle Registration Manual and/or a web application to identify that 
the MV-50 was authentic. A web application would be available to both 
in-state and out-of-state purchasers, allowing them to verify basic New 
York State odometer history by entering a vehicle's VIN.
2. Transactions Between New York Dealers and Non-Dealer, In-State 
Purchasers
    New York amends its proposal with respect to transactions between 
New York purchasers and in-state, non-dealer purchasers only slightly. 
New York would continue using the two-part sales receipt, but amends 
its petition to require the two-part sales receipt to contain a 
statement advising purchasers that the receipt may only be used to 
register the vehicle in New York State.\23\ If the purchaser intended 
to register the vehicle outside of New York, the dealer would be 
required to issue a secure paper MV-50 instead of the non-secure two-
part receipt.
---------------------------------------------------------------------------

    \23\ We expect that the sales receipt, along with the 
information the dealer enters into the System, to contain all of the 
information required by 49 CFR 580.5.
---------------------------------------------------------------------------

B. The National Auto Auction Association's Comment

    NAAA represents hundreds of auto auctions. NAAA's comments are 
based on New York's initial petition.
    NAAA comments that New York's proposed system creates a potential 
for odometer fraud and unnecessarily complicates the transfer of 
vehicles across state lines. NAAA states that the non-secure paper 
receipt, which is not generated by a secure process and is separate 
from the original title document, could be altered or counterfeited by 
an out-of-state buyer. NAAA also argues that the information gaps 
created by maintaining odometer information in two separate locations 
(electronically for New York dealers and on paper for everyone else) 
are a cause for concern. NAAA states that without a complete history of 
odometer information in one location, it will be difficult for out-of-
state purchasers to identify potential odometer fraud. If title 
information is altered after a purchase is made from a New York dealer, 
a subsequent purchaser will not be able to ascertain the vehicle's 
odometer history without both the paper title and access to New York's 
System. NAAA states that this would be at odds with the purposes of 
TIMA, and that it could negatively affect interstate commerce and the 
value of vehicles titled in New York. Finally, NAAA states that New 
York's proposed system's susceptibility to odometer fraud, the 
existence of two separate titling processes, and the absence of a 
complete odometer history once a New York dealer vehicle is sold to a 
non-New York dealer may dissuade bidders from purchasing New York 
vehicles at auction. NAAA concludes that New York's system, as 
proposed, does not adequately address the issues created by the 
transfer of vehicles to non-New York dealers.

VI. Statutory Purposes

    The Cost Savings Act, as amended by TIMA in 1986, contains a 
specific provision on approval of State alternative odometer disclosure 
programs. Subsection 408(f)(2) of the Cost Savings Act as amended by 
TIMA (now recodified at 49 U.S.C. 32705(d)) provides that NHTSA shall 
approve alternate motor vehicle mileage disclosure requirements 
submitted by a

[[Page 50386]]

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. (Subsections 408(d), (e) of the Costs Savings Act, 
which were amended by TIMA and subsequently amended, were recodified to 
49 U.S.C. 32705(b) and (c)).
    Neither New York's nor NAAA's comments dispute the relevant Cost 
Savings Act purposes set forth in NHTSA's initial determination. New 
York restates and applies the purposes of TIMA to its Amended Petition 
for Approval of Alternate Odometer Disclosure Requirements. NAAA does 
not challenge NHTSA's analysis of statutory purposes in the initial 
determination in its comment.
    After careful consideration of the comments, as part of the 
agency's final determination, we adopt the purposes stated in the 
initial determination of New York's petition. 76 FR 65487.

VII. NHTSA's Final Determination

    Section 408(f)(2) of the Cost Savings Act sets forth the legal 
standard for approval of state alternate vehicle mileage disclosure 
requirements: 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) of section 408, as the 
case may be. In this section, we consider New York's program in light 
of the purposes of the disclosure required by subsection (d) of section 
408,\24\ and address New York's and NAAA's comments.
---------------------------------------------------------------------------

    \24\ Subsection (3) of section 408 involves leased motor 
vehicles which are not at issue here.
---------------------------------------------------------------------------

    One purpose is to ensure 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.
    New York's proposed alternate disclosure requirements satisfy this 
purpose. Under New York's amended petition, 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 would reside as 
an electronic record within the System that would 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.
    New York's proposal meets the TIMA purpose of ensuring 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 or MV-50 signed by both buyer and seller. The receipt 
or MV-50--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. 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 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.
    A third purpose of TIMA is to prevent alterations of disclosures on 
titles and to preclude counterfeit titles through secure processes. The 
agency initially determined that New York's alternate disclosure 
requirements did not satisfy this purpose. However, in its comment, New 
York amended its petition. New York's proposal as amended is consistent 
with the third purpose of the disclosure required by TIMA.
    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

[[Page 50387]]

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.
    Upon final retail sale of a vehicle to an in-state 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 was not lower than a prior entry, a two-part odometer 
statement and receipt would 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 accepted 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. Prior to registering and titling the vehicle in the 
new purchaser's name, NYSDMV's System, which would have the odometer 
reading, would check the information on the paperwork submitted by the 
purchaser (i.e. the paper receipt and title) against the information in 
the System.
    Sales to out-of-state purchasers would mirror sales to in-state 
purchasers up to the point of printing a two-part sales receipt. 
Instead of a two-part sales receipt, the dealer would use a secure MV-
50 form to document the transaction. The MV-50 form is printed using a 
secure printing process, and each MV-50 form bears a unique 
identification number. When transferring a vehicle, a dealer would 
indicate which uniquely numbered MV-50 form was being used for the 
transfer in the system. Both parties would complete and sign the MV-50, 
and the dealer and purchaser would each retain a copy of the MV-50. New 
York controls the distribution and use of MV-50 forms and requires 
dealers to account for every MV-50 they receive. 15 NYCRR Sec.  78.10. 
We are satisfied that New York's proposal, as amended, is consistent 
with the purpose of preventing alterations of disclosures on titles and 
precluding counterfeit titles through secure processes. New York's 
amendment of its program from a non-secure paper receipt to the secure 
MV-50 also addresses concerns raised in NAAA's comment that the paper 
receipt could be altered or counterfeited by an out-of-state buyer.
    A fourth 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. We initially determined that New York's alternate 
disclosure requirements did not satisfy this purpose. In response, New 
York amended its petition.
    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 would 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 would also be required to 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's VIN for at least ten years, and it would be available to 
dealers, NYSDMV, and enforcement staff. The System would 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 was lower than a 
prior odometer disclosure statement. In addition, New York's petition 
states that it would not issue a title to the buyer unless the 
disclosures on the foregoing paper documents matched 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, as described in 
the amended petition, the buyer would be provided with the title used 
to transfer it initially to a dealer and a MV-50 containing the 
odometer disclosure. A dealer would be required to annotate the unique 
MV-50 number from the MV-50 being used for the transaction in New 
York's System. This would create a paper trail linking the electronic 
records to the paper MV-50 given to the out-of-state buyer. Both 
parties would receive a copy of the MV-50, which could be authenticated 
outside of New York by using a Polk Motor Vehicle Registration Manual 
and/or Web application. Additionally, as described in New York's 
initial proposal, a Web application would allow both in-state and out-
of-state purchasers to verify basic New York State odometer history by 
entering the vehicle's VIN.
    In NHTSA's view, New York's proposed program, as amended, would 
create a scheme of records equivalent to the current ``paper trail'' 
that assists law enforcement in identifying and prosecuting odometer 
fraud. Use of a secure MV-50 form whose unique identification number is 
recorded in the System adds a level of security that was lacking in New 
York's initial proposal, as it would be executed in out-of-state 
transfers. New York could use the MV-50 form to document in-state 
transfers in lieu of the non-secure paper receipt as well. Accordingly, 
New York's program as amended is consistent with the fourth purpose of 
the disclosure required by TIMA.\25\
---------------------------------------------------------------------------

    \25\ NAAA commented that New York's proposal would create 
information gaps because odometer information would be maintained in 
two separate locations--electronically for New York dealers and on 
paper for everyone else. We do not believe this is a reason to 
disapprove New York's program. Odometer information is currently 
maintained in many locations in New York. Each New York dealer keeps 
records of odometer mileage in vehicles the dealership has 
transferred in a paper Book of Registry. The proposed changes to New 
York's program consolidate the Books of Registry maintained by each 
individual dealer into a single electronic system.

---------------------------------------------------------------------------

[[Page 50388]]

    TIMA's overall purpose is to protect consumers by ensuring that 
they receive valid odometer disclosures representing a vehicle's actual 
mileage at the time of transfer. New York's proposed alternate 
disclosure requirements, as amended are consistent with this purpose. 
New York's proposed alternate disclosure requirements include 
characteristics that would ensure that representations of a vehicle's 
actual mileage would be as valid as those found in current paper title 
transfers and reassignments. 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's) name. Potential buyers could examine the most recent 
odometer disclosure statement online before purchasing the vehicle. 
Mileage disclosures made on paper receipts for in-state transfers would 
be checked against information in the System. Out-of-state transfers 
would be documented on a secure MV-50 form, which could be verified 
outside New York, and which would be linked to a particular transaction 
by a unique MV-50 identification number.
    NAAA commented that New York's proposal was susceptible to fraud 
and that the absence of a complete odometer history would dissuade 
bidders from purchasing New York vehicles at auction. We note that New 
York stated in its initial petition that it would make a Web 
application available to in-state and out-of-state purchasers, which 
would allow purchasers to verify New York State odometer history by 
entering a vehicle's VIN.

VIII. Conclusion

    For the foregoing reasons, and upon review of the entire record, 
the agency concludes that New York's proposed alternate disclosure 
requirements, as amended, are consistent with the purposes of the 
disclosure required by TIMA and its amendments. NHTSA hereby issues a 
final determination granting New York's amended petition for 
requirements that apply in lieu of the federal requirements adopted 
under section 408(d) of the Cost Savings Act. Other requirements of the 
Cost Savings Act continue to apply in New York. NHTSA reserves the 
right to rescind this grant in the event that information acquired 
after this grant indicates that, in operation, New York's alternate 
requirements do not satisfy one or more applicable requirements.

    Authority:  49 U.S.C. 32705; delegation of authority at 49 CFR 
1.50 and 501.8.

    Issued on: August 14, 2012.
David Strickland,
Administrator.
[FR Doc. 2012-20463 Filed 8-20-12; 8:45 am]
BILLING CODE 4910-59-P