The Crittenden Automotive Library

Odometer Disclosure Requirements

Odometer Disclosure Requirements

Mark R. Rosekind
National Highway Traffic Safety Administration
25 March 2016

[Federal Register Volume 81, Number 58 (Friday, March 25, 2016)]
[Proposed Rules]
[Pages 16107-16126]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-06665]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 580

[Docket No. NHTSA-2016-0037]
RIN 2127-AL39

Odometer Disclosure Requirements

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

ACTION: Notice of Proposed Rulemaking (NPRM).

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SUMMARY: This notice is being issued pursuant to the Moving Ahead for
Progress in the 21st Century Act of 2012 requiring NHTSA to prescribe
regulations permitting States to adopt schemes for electronic odometer
disclosure statements. To permit States to allow electronic odometer
disclosures, NHTSA is proposing to amend the existing requirements to
clarify that most of those requirements apply regardless of the
technology used for the disclosure. NHTSA is further

[[Page 16108]]

proposing to add a new section containing specific additional
requirements that would apply only to electronic disclosures to ensure
the secure creation and maintenance of the electronic records. Through
this proposal NHTSA seeks to allow odometer disclosures in an
electronic medium while maintaining and protecting the existing
system(s) that ensure accurate odometer disclosures and aid law
enforcement in prosecuting odometer fraud. NHTSA is also proposing to
extend an existing exemption for vehicles more than 10 years old to 25
years.

DATES: You should submit comments early enough to ensure that Docket
Management receives them not later than May 24, 2016.

ADDRESSES: You may submit comments to the docket number identified in
the heading of this document 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, M-30, U.S. Department of
Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590.
Hand Delivery or Courier: West Building Ground Floor, Room
W12-140, 1200 New Jersey Avenue SE., between 9 a.m. and 5 p.m. Eastern
Standard Time, Monday through Friday, except Federal holidays.
Fax: (202) 493-2251.
Regardless of how you submit your comments, you should mention the
docket number of this document.
You may call the Docket at (202) 366-9324.
Instructions: For detailed instructions on submitting comments and
additional information on the rulemaking process, see the Public
Participation heading of the Supplementary Information section of 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 discussion below.
Privacy Act: 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).
Confidential Information: If you wish to submit any information
under a claim of confidentiality, you should submit two copies of your
complete submission, including the information you claim to be
confidential business information, and one copy with the claimed
confidential business information deleted from the document, to the
Chief Counsel, NHTSA, at the address given below 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 follow the procedures set forth in 49
CFR part 512 and include a cover letter setting forth the information
specified in our confidential business information regulation. (49 CFR
part 512.)
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov and follow the
online instructions for accessing the dockets or go to the street
address listed above.

FOR FURTHER INFORMATION CONTACT:
For policy and technical issues: Mr. David Sparks, Director, Office
of Odometer Fraud, National Highway Traffic Safety Administration, 1200
New Jersey Avenue SE., Washington, DC 20590. Telephone: (202) 366-5953.
Email: David.Sparks@dot.gov.
For legal issues: Ms. Arija Flowers, Trial Attorney, Office of the
Chief Counsel, National Highway Traffic Safety Administration, 1200 New
Jersey Avenue SE., Washington, DC 20590. Telephone: (202) 366-5263.

SUPPLEMENTARY INFORMATION:

I. Background

A. Executive Summary

This document is being issued pursuant to the Moving Ahead for
Progress in the 21st Century Act of 2012 (MAP-21, or Pub. L. 112-141),
which amended Section 32705 of Title 49, United States Code, by adding
the following subsection:

(g) ELECTRONIC DISCLOSURES.--Not later than 18 months after the
date of enactment of the Motor Vehicle and Highway Safety
Improvement Act of 2012, in carrying out this section, the Secretary
shall prescribe regulations permitting any written disclosures or
notices and related matters to be provided electronically.

Sec. 31205, 126 Stat. 761 (2012).

To permit States to allow electronic odometer disclosures, NHTSA is
proposing to amend the existing requirements to clarify that most of
those requirements apply regardless of the technology used for the
disclosure. NHTSA is further proposing to add a new section containing
specific additional requirements that would apply only to electronic
disclosures to ensure the secure creation and maintenance of the
electronic records. Through this proposal NHTSA seeks to allow odometer
disclosures in an electronic medium while maintaining and protecting
the existing system(s) that ensure accurate odometer disclosures and
aid law enforcement in prosecuting odometer fraud. The new issues
addressed by the new requirements are electronic signatures, security
of the hardware in an electronic odometer disclosure system,
determination of official document, power of attorney and record
retention. NHTSA is also proposing to modify an existing exemption for
vehicles more than 10 years old to 25 years.

B. The Cost Savings Act, the Truth in Mileage Act and Subsequent
Amendments

1. The Cost Savings Act
In 1972, Congress enacted the Motor Vehicle Information and Cost
Savings Act (Cost Savings Act) to, among other things, protect
purchasers of motor vehicles from odometer fraud. See Public Law 92-
513, 86 Stat. 947, 961-63 (1972).
To assist purchasers in knowing the true mileage of a motor
vehicle, Section 408 of the Cost Savings Act required the transferor of
a motor vehicle to provide written disclosure to the transferee in
connection with the transfer of ownership of the vehicle. See Public
Law 92-513, 408, 86 Stat. 947 (1972). Section 408 required the
Secretary to issue rules requiring the transferor to give a written
disclosure to the transferee in connection with the transfer of the
vehicle. 86 Stat. 962-63. The written disclosure was to include the
cumulative mileage registered on the odometer, or disclose 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. The rules were to prescribe the manner in which
information is disclosed under this section and in which such
information is retained. Id. Section 408 further stated that it shall
be a violation 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. Id. The Cost Savings Act
also prohibited disconnecting, resetting, or altering motor vehicle
odometers. Id. The statute

[[Page 16109]]

subjected violators to civil and criminal penalties and provided for
Federal injunctive relief, State enforcement, and a private right of
action.
Despite these protections, there were shortcomings in the odometer
provisions of the Cost Savings Act. Among others, in some States, the
odometer disclosure statement was not on the title; instead, it was a
separate document that could easily be altered or discarded and did not
travel with the title. Consequently, the separate disclosure statement
did not effectively provide information to purchasers about the
vehicle's mileage. In some States, the title was not on tamper-proof
paper. The problems were compounded by title washing through States
with ineffective controls. In addition, there were considerable
misstatements of mileage on vehicles that had formerly been leased
vehicles, as well as on used vehicles sold at wholesale auctions.
2. The Truth in Mileage Act
In 1986, Congress enacted the Truth in Mileage Act (TIMA), which
added provisions to the odometer provisions of the Cost Savings Act.
See Public Law 99-579, 100 Stat. 3309 (1986). The TIMA amendments
expanded and strengthened Section 408 of the Cost Savings Act.
Among other requirements, TIMA precluded the licensing of vehicles,
the ownership of which was transferred, in any State unless several
requirements were met by the transferee and transferor. The transferee,
in submitting an application for a title, is required to provide the
transferor's (seller's) title, and if that title contains a space for
the transferor to disclose the vehicle's mileage, that information must
be included and the statement must be signed and dated by the
transferor.
TIMA also precluded the licensing of vehicles, the ownership of
which was transferred, in any State unless several titling requirements
were met. Titles must be printed by a secure printing process or other
secure process. They must indicate the mileage and contain space for
the transferee to disclose the mileage in a subsequent transfer. As to
lease vehicles, the Secretary was required to publish rules requiring
the lessor of vehicles to advise its lessee(s) that the lessee is
required by law to disclose the vehicle's mileage to the lessor upon
the lessor's transfer of ownership of the vehicle. In addition, TIMA
required that auction companies establish and maintain records on
vehicles sold at the auction, including the name of the most recent
owner of the vehicle, the name of the buyer, the vehicle identification
number and the odometer reading on the date the auction took possession
of the vehicle.
As amended by TIMA, Section 408(f) (1) of the Cost Savings Act
provided that its provisions on mileage statements for licensing of
vehicles (and rules involving leased vehicles) apply in a State, unless
the State has in effect alternate motor vehicle mileage disclosure
requirements approved by the Secretary. Section 408(f)(2) stated that
``[t]he 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.''
3. Amendments Following the Truth in Mileage Act and the 1994
Recodification of the Cost Savings Act
In 1988, Congress amended section 408(d) of the Cost Savings Act to
permit the use of a secure power of attorney in circumstances where the
title was held by a lienholder. The Secretary was required to publish a
rule to implement the provision. See Public Law 100-561 Sec. 40, 102
Stat. 2805, 2817 (1988), which added Section 408(d)(2)(C). In 1990,
Congress amended section 408(d)(2)(C) of the Cost Savings Act. The
amendment addressed retention of powers of attorneys by States and
provided that the rule adopted by the Secretary not require that a
vehicle be titled in the State in which the power of attorney was
issued. See Public Law 101-641 Sec. 7(a), 104 Stat. 4654, 4657 (1990).
In 1994, in the course of the 1994 recodification of various laws
pertaining to the Department of Transportation, the Cost Savings Act,
as amended by TIMA, was repealed. It was reenacted and recodified
without substantive change. See Public Law 103-272, 108 Stat. 745,
1048-1056, 1379, 1387 (1994). The statute is now codified at 49 U.S.C.
32705 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), which were
added by TIMA (and 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).
4. FAST Act Amendments
Section 24111 of the Fixing America's Surface Transportation Act of
2015 (FAST Act, or Public Law 114-94), signed into law on December 4,
2015, allows States to adopt electronic odometer disclosure systems
without prior approval of the Secretary (``the Secretary'') of the
Department of Transportation. Any such system must comply with
applicable State and Federal laws regarding electronic signatures under
15 U.S.C. 7001 et seq., meet the requirements of 49 U.S.C. 32705 and
provide for ``appropriate authentication and security measures,''
Public Law 114-94 Sec. 24111. States may only adopt electronic
odometer systems without prior approval of the Secretary until the
effective date of the rules proposed in this notice. Id.
In providing States with the opportunity to implement electronic
odometer disclosure systems until the effective date of the regulations
now being proposed, the FAST Act amendments do not alter existing
statutory odometer disclosure requirements or modify the intent of
those requirements. Effective odometer disclosure systems are essential
to protecting consumers from odometer fraud and must reduce or
eliminate opportunities for such fraud to the greatest practicable
extent. Federal and State governments have an interest in preventing
such fraud.
The agency's proposed regulations, as contained in this notice, as
well as our prior responses to State petitions for approval of
alternative disclosure schemes (discussed below) contain guidance on
the potential strengths and weaknesses of electronic odometer
disclosure schemes and may serve as a resource for States implementing
electronic odometer disclosure systems under the FAST Act. NHTSA
respectfully requests that States adopting electronic odometer
disclosure schemes under the authority granted by the FAST Act be
mindful of the persistence and ingenuity of those who would commit
odometer fraud as well as their propensity to find and exploit
weaknesses in the disclosure requirements of particular jurisdictions.
The agency therefore suggests that the issues considered in this notice
and the accompanying regulatory proposals be carefully considered in
the formulation of any electronic odometer disclosure system.

C. Overview of NHTSA's Odometer Disclosure Regulations

The implementing regulations for the odometer provisions of the
Cost Savings Act, as amended, are found in Part 580 of Title 49 of the
Code of Federal Regulations (CFR). These regulations establish the
minimum requirements for odometer disclosure, the form of certain
documents employed in disclosures, and the security of title documents
and power of attorney forms. The regulations also set the rules for

[[Page 16110]]

transactions involving leased vehicles, set recordkeeping requirements
including those for auctions, and authorize the use of powers of
attorney in limited circumstances. In addition, Part 580 also contains
provisions exempting certain classes of vehicles from the disclosure
regulations and provides a petition process by which a State may obtain
approval of alternate disclosure requirements. The following paragraphs
summarize some of the important aspects of the regulations.
Regulations governing disclosures are codified in 49 CFR 580.5,
580.7 and 580.13. Section 580.5(c) requires, in connection with the
transfer of ownership of a motor vehicle, the odometer disclosure by
the transferor to the transferee on the title. Following the initial
execution on a title, reassignment documents may be used. As provided
by the regulations, 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. Section 580.5(c) requires a
transferor to sign, and to print his/her name on an odometer disclosure
statement with the following information: (1) The odometer reading at
the time of transfer (not to include tenths of miles); (2) the date of
transfer; (3) the transferor's name and current address; (4) the
transferee's name and current address; and (5) the identity of the
vehicle, including its make, model, year, body type, and VIN. The
transferor must also, under Sec. 580.5(e), certify whether the
odometer reading reflects the vehicle's actual mileage, disclose
whether the odometer reading reflects mileage in excess of the
odometers mechanical limit or, if the odometer does not reflect the
actual mileage, must state that the odometer reading should not be
relied on. The transferee must sign the statement. Each title, at the
time it is issued to the transferee, must contain the mileage disclosed
by the transferor.
To ensure that vehicles subject to leases of 4 months or more have
accurate odometer readings executed on titles at the time of transfer,
Sec. 580.7(a) requires lessors to provide written notice to the lessee
of the lessee's obligation to disclose the mileage of the leased
vehicle and the penalties for failure to disclose the information. In
connection with the transfer of ownership of a leased vehicle, lessees
are required by Sec. 580.7(b) to provide disclosures comparable to
those required by Sec. Sec. 580.5(c) and (e), noted above, to the
lessor along with the date the lessor notified the lessee of disclosure
requirements. Additionally, the lessor must state the date the lessor
received the lessee's completed disclosure statement and must also sign
it. Under Sec. 580.7(d) a lessor transferring ownership of a vehicle
(without obtaining possession) may indicate the mileage disclosed by
the lessee on the vehicle's title unless lessor has reason to believe
the lessee's disclosure is inaccurate.
If allowed by State law, the transferor may give the transferee a
power of attorney to execute the mileage disclosure on the title, as
provided by Sec. 580.13(a) when the title is physically held by a
lienholder or has been lost and the transferee obtains a duplicate
title on behalf of a transferor. Sections 580.13(b) and (d) provide
that the transferor must disclose information identical to that
required by Sec. Sec. 580.5(c) and (e) on part A of the secure power
of attorney form. The transferee is required to sign the power of
attorney form part A and print his/her name. See Sec. 580.13(e). In
turn, Sec. 580.13(f) requires the transferee, upon receipt of the
transferor's title, to make on the title exactly the mileage disclosure
as disclosed by the transferor on the power of attorney.
After part A of the power of attorney form has been used, part B
may be executed when a vehicle addressed on part A is resold. Part B of
the secure power of attorney form, if permitted by State law, allows a
subsequent transferee to give a power of attorney to his transferor to
review the title and any reassignment documents for mileage
discrepancies, and if no discrepancies are found, to acknowledge
disclosure on the title, while maintaining the integrity of the first
seller's disclosure. The disclosure required to be made by the
transferor to the transferee for this transaction on part B of the
power of attorney form tracks information required to be made by the
transferor to the transferee on the title when ownership of a vehicle
is transferred on a title under 49 CFR 580.5. Among other things, the
power of attorney must contain a space for the transferor to disclose
the mileage to the transferee and sign and date the form, and a space
for the transferee to sign and date the form.
To ensure that disclosures made through a power of attorney are
accurate, Sec. 580.15 requires the person exercising the power of
attorney to certify, on part C of the form, that the disclosures made
on a title or reassignment document on behalf of the original seller
are identical to those found on part A of the power of attorney. This
section also requires a certification, when part B is used, that the
mileage disclosed and acknowledged under part B is greater than the
mileage disclosed in part A.
Odometer disclosures may only be made on certain documents. These
specified documents are a vehicle title (Sec. 580.5(a)), a
reassignment document when used by transferors other than those in
whose name the vehicle is titled (Sec. Sec. 580.5(b) and (c)), a
disclosure statement made by a lessee (Sec. 580.7(b)), and a power of
attorney when the title is held by a lienholder or is lost (Sec.
580.13(a)). When the power of attorney authorized by Sec. 580.13(a) is
used, a further power of attorney authorized by Sec. 580.14(a) may be
employed to allow a subsequent transferee to approve the seller's
disclosure, per Sec. 580.16. Both of the aforementioned powers of
attorney must be on the same form.
Section 580.4 requires titles, reassignment documents, and the
power of attorney form described Sec. Sec. 580.13 and 580.14 to be
protected against counterfeiting and tampering by a secure printing
process or other secure process. These titles, reassignment documents,
and powers of attorney must contain a statement referring to Federal
odometer law and a warning that failure to complete the form or
providing false information may result in fines or imprisonment
pursuant to Sec. Sec. 580.5(d), 580.13(c), and 580.14(c). For a leased
vehicle, the lessor is obligated to provide the lessee with written
notice of the obligation to make a mileage disclosure and that notice
must contain the same warnings (Sec. 580.7(a)). Except in the limited
context of the proper use of the power of attorney forms, no person
shall sign an odometer disclosure statement as both the transferor and
transferee in the same transaction (Sec. 580.5(h)).
Part 580 establishes minimum requirements for record retention,
which ensures that adequate records exist to create a ``paper trail''
sufficient to support detection and prosecution of odometer fraud.
Section 580.8(a) requires motor vehicle dealers and distributors who
are required to issue an odometer disclosure to retain copies of each
odometer statement they issue and receive for five years. Lessors of
leased vehicles must retain the odometer statement they receive from
their lessee for five years from the date they transfer ownership of
the leased vehicle (Sec. 580.8(b)). If a power of attorney authorized
by Sec. Sec. 580.13 and/or 580.14 has been used, dealers must retain
copies of the document for five years (Sec. 580.8(c)). Section 580.9
requires auction companies to retain the name of the most recent owner
on the date the auction took possession of the motor

[[Page 16111]]

vehicle, the name of the buyer, the vehicle identification number and
the odometer reading on the date the auction company took possession of
the motor vehicle for five years from the date of sale. States are
required, under Sec. 580.13(f) to retain the original copy of the
power of attorney authorized by Sec. 580.13(a) or (b) and the title
for a period of three years or a time period equal to the State's
titling record retention period, whichever is shorter.
In addition to the recordkeeping requirements, Part 580 also
requires that subsequent buyers of a vehicle that was transferred to
their seller through a disclosure made with a Part A power of attorney
under Sec. 580.13(a) have access to that power of attorney if they
elect not to use Part B and return to the seller to acknowledge
disclosure on the title itself (Sec. 580.16).
Other sections of Part 580 establish a petition process by which
States may seek assistance in revising their odometer laws (Sec.
580.10), may seek approval of alternative odometer disclosure schemes
(Sec. 580.11), and establish exemptions from the disclosure
requirements of Sec. 580.5 and Sec. 580.7 (Sec. 580.17). The
exemptions in 580.17 apply to transfers or leases for: (1) Vehicles
with a Gross Vehicle Weight Rating (GVWR) over 16,000 pounds; (2)
vehicles that are not self-propelled; (3) vehicles manufactured in a
model year beginning ten years before January 1 of the calendar year in
which the transfer occurs; (4) certain vehicles sold by the
manufacturer to any agency of the United States; and (5) a new vehicle
prior to its first transfer for purposes other than resale.

D. Previous State Petitions for Approval of Electronic Odometer
Disclosure Schemes

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 (now recodified
at 49 U.S.C. 32705(d)) provides that 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. (Subsections 408(d), (e) of the Costs Savings Act were
recodified to 49 U.S.C. 32705(b) and (c).)
Six States--Virginia, Wisconsin, Florida, New York, Texas, and
Arizona--have filed petitions with NHTSA seeking approval of electronic
alternative odometer programs under 49 U.S.C. 32705(d)). NHTSA has
approved, in whole or in part, five of these six petitions and has not
yet taken final action on the sixth and most recent petition. A review
of these petitions and the agency's responses is instructive regarding
the various concerns raised by the implementation of electronic
odometer disclosure systems.
1. Virginia
In December 2006, the Commonwealth of Virginia petitioned NHTSA to
approve the Commonwealth's proposed electronic odometer disclosure
requirements for intrastate transactions involving vehicles not subject
to a lien. Virginia's proposal contemplated a paperless system where
users would enter data directly into a State electronic system. To
authenticate the identity of the participants, Virginia's petition
stated that a unique personal identification number (PIN) and a unique
customer number that would both be physically mailed to the individual
would be used in conjunction with the customer's date of birth (DOB) to
allow creation of an electronic odometer disclosure statement and
signature. For dealers, the Virginia proposal stated that each dealer
would provide the State with a list of employees authorized to make
disclosures for the dealership. These individuals would be provided
customer number PINS by mail and would use these identifiers in the
same fashion as a private individual to verify their identity so they
could complete transactions. In addition, transactions involving
dealerships would require that the dealership enter a dealer number to
complete the transaction.
Virginia's proposed electronic odometer disclosure would be made in
the same way a paper disclosure would be made. The transferor would
fill out the electronic form that contained the same entries and
warnings as those found on a paper title and then sign it
electronically. The transferee would then examine the odometer
disclosure executed by the transferor and either accept it or reject
it. The disclosure statement would be linked to the electronic title
and the transferor would be instructed to mail any existing paper title
to the State for destruction. The proposal also stated that the
transferee could obtain a paper copy of the title upon request.
After finding that the Virginia proposal would properly verify the
identity of users, would provide an equivalent level of security to the
paper system, and would create an adequate system of records, NHTSA
granted Virginia's request on January 7, 2009 (74 FR 643).
2. Texas
Texas filed a petition seeking approval of alternative odometer
disclosure requirements in June 2008. The State proposal would transfer
vehicles' titles electronically for in-state transactions between
residents where there are no security interests in the vehicle. The
proposal did not encompass leased vehicles, the use of a power of
attorney, or interstate transactions. Texas's system would eliminate
paper titles (except as requested) by creating an electronic title and
require transfers of vehicle title for in-state transactions to be made
using the internet. The identities of the parties, who would have to be
Texas residents holding a valid State identification credential, would
be verified by matching four personal data elements and two forms of
identification against a State database. Odometer mileage disclosures
would be made by requiring the seller and buyer to separately log into
a secure Web site and each enter the odometer mileage. Upon successful
completion of the transaction, the seller would mail the paper title to
the State for destruction. The title would remain as an electronic
record and the transferee could receive a paper title on request.
NHTSA's initial determination, published on November 18, 2009, 74
FR 59503, preliminarily granted the Texas petition on the condition
that Texas amend its program to enable transferees to obtain a paper
copy of the title that met the requirements of TIMA, require dealers to
retain a copy of all odometer disclosures that they issue and receive,
and require disclosure of the brand (the brand states whether the
odometer reflects the actual mileage, reflects the mileage in excess of
the designated odometer limit or differs from the actual mileage and is
not reliable.) Id. at 59506. Following submission of comments by Texas
clarifying features of its proposal, NHTSA granted the Texas petition
in a final determination issued on April 22, 2010. 75 FR 20925. The
final determination noted that the Texas petition and comments
indicated that the proposed system contained sufficient safeguards and
record keeping requirements to meet the purposes of TIMA. Further, the
agency noted that since Texas would require persons with an electronic
title to submit any paper titles to the State for destruction, the
proposal would prevent potential mischief caused by duplicate titles.
Id. at 20929.

[[Page 16112]]

3. Wisconsin
In September 2009, Wisconsin filed a petition seeking approval of
an electronic odometer disclosure system limited to intrastate
transactions involving motor vehicle dealers. Identity verification
would be based on customers entering a minimum of three personal
identifiers--name, address, date of birth, product number, Driver
License/ID number, and a Federal Employer Identification Number or
partial Social Security Number--in the State system. Once the user is
verified under this scheme, the user could begin the title transaction.
As with the earlier petitions, Wisconsin proposed that electronic
odometer disclosures be linked to, and become part of, the title record
in the State's database and a title transfer could not be completed
unless an electronic odometer disclosure had been completed. Also, if a
paper title is needed, the Wisconsin DMV would print the title on
secure paper with the odometer disclosure statement in the proper
location and format under existing rules.
In April 2010, NHTSA published an Initial Determination proposing
to approve Wisconsin's program, subject to the resolution of certain
concerns. 75 FR 20965 (Apr. 22, 2010). In particular, NHTSA raised
questions about how the Wisconsin program would manage odometer
disclosures for leased vehicles. In response to NHTSA's concerns,
Wisconsin submitted comments stating that lessee odometer disclosures
would be addressed in the future.
NHTSA published a Final determination approving a revised Wisconsin
electronic odometer disclosure plan on January 10, 2011. 76 FR 1367.
The Agency found the Wisconsin proposal to be consistent with the
odometer disclosure requirements. The verification scheme and form of
the electronic disclosure provided adequate assurances that the persons
executing the disclosure were the actual transferor and transferee.
Thereafter the odometer disclosure statement would reside as an
electronic record in the Wisconsin database and would be linked to the
vehicle's title. NHTSA also noted that the electronic title would,
under Wisconsin law, be the official title and that paper titles would
be issued only if needed for an interstate transaction or a transfer
that could not be completed electronically.
4. Florida
In December 2009, Florida proposed a hybrid electronic disclosure
system in which the electronic transactions would be performed through
authorized tag agents. Because the electronic data entries would only
be made through terminals located at tag agent locations, Florida
proposed that the required odometer disclosures for certain
transactions would be made on physical documents that would then be
delivered to tag agents who would then enter disclosure information
into the State system. Under Florida's proposal a seller with a vehicle
having an electronic title wishing to sell the car would visit a tag
office with the buyer. After providing adequate identification to the
tag agent, the buyer and seller would sign, in the presence of the tag
agent, a secure reassignment form transferring ownership and disclosing
the odometer reading. A title would then be issued in the buyer's name
and stored electronically, or the buyer could choose to have the title
printed as a physical document.
For transactions involving dealers, Florida proposed that a seller
with e-title would bring the vehicle to a dealership. The seller and
dealer would complete a secure reassignment form with odometer
disclosure. When the dealer sold the vehicle to another buyer, the
dealer and buyer would complete another secure reassignment form with
odometer disclosure. The dealer would take both of the secure
reassignment forms to a tag agency. The vehicle title would then be
transferred to the buyer and the buyer would have the option to obtain
a paper title or have Florida's Department of Transportation hold the
title electronically.
Under Florida's proposal, the lessor of a leased vehicle would hold
an e-title. When the lease ends, the lessee would bring the vehicle to
a dealership. The lessee would sign an odometer disclosure statement on
a secure physical document. The lessor would then sign a secure
physical power of attorney to the dealer authorizing the dealer to
execute the odometer disclosure. The dealer would then sign a physical
secure reassignment form agreeing with the odometer disclosure. When
the dealer sold the vehicle to another buyer, the dealer would take the
various physical documents (bill of sale, reassignment document, and
power of attorney) to the tag agency, where the title would be
transferred to the buyer. The buyer would then have the option of
obtaining a new paper title or having the Florida Department of
Transportation hold the vehicle title electronically.
NHTSA's final determination granted the Florida petition in part
and denied it in part. 77 FR 36935 (June 20, 2012). Florida's request
was granted for electronic transactions involving transfers between
private parties but was denied for transactions involving dealers and
leased vehicles. Among other things, NHTSA's final determination
observed that transactions involving dealers relied on a number of
odometer disclosures being made on documents other than the title
itself. This, in the Agency's view, was inconsistent with TIMA's
command that disclosures be made on the title and not on a separate
document. Further, the Florida scheme for dealer transactions would
result in new registrations being issued after submission of a
disclosure statement made on a physical reassignment document rather
than on the title itself, thereby violating the requirement that a
vehicle may only be registered if the new owner submits a title
containing the odometer disclosure statement. NHTSA denied Florida's
proposed requirements for leased vehicles on similar grounds. Because
of the proposed system's reliance on tag agents as the only point of
data entry, completion of a transaction and execution of the required
disclosure statements required that the disclosures be made on a number
of documents, none of which were the actual title. These documents also
did not meet other content and security requirements. Moreover, the use
of a power of attorney in an instance where the lessor would have
access to the title, was viewed by the Agency as inconsistent with the
narrow set of circumstances under which such a power of attorney could
be used under TIMA.
5. New York
The State of New York filed a petition with NHTSA in November 2010,
seeking approval of alternative odometer disclosure requirements. The
New York petition sought to convert the State's existing paper process
for dealer transactions to an electronic process in which an authorized
dealership user would sign on to the State's planned 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.
Access to the system itself would occur only at dealerships by specific
dealer employees whose identity would be verified by State issued
credentials.
If that dealer sold a vehicle to another licensed New York dealer,
the selling dealer would sign on to the proposed electronic system and
enter current vehicle information, including the current odometer
reading, as well as seller and purchaser information. The

[[Page 16113]]

purchasing dealer would subsequently sign on to the system and review
the vehicle's identifying information, including the odometer
disclosure statement made by the selling dealer, and either accept or
reject the transaction. If the purchasing dealer accepted the
transaction it would be considered complete. The original pre-dealer
title (still in the prior owner's name) would be surrendered to the
purchasing dealer at the time of sale. Subsequent transfers between
licensed New York dealers would be recorded in the same manner. The
history of the vehicle's identifying information entered into the
system at each transfer would be maintained 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, out-of-state
buyer or other non-New York dealer purchaser, the selling dealer would
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. 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 the 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, while 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.
NHTSA's initial determination denied the New York petition because
it used a non-secure receipt for odometer disclosure in transfers
between New York dealers and out-of-state buyers and was therefore
inconsistent with Federal odometer law. 76 FR 65487, 65491 (Oct. 21,
2011). New York subsequently amended its proposal by replacing the non-
secure document with a secure State issued paper, New York State MV-50
(Retail Certificate of Sale) form. The result of this change was that a
consumer purchasing a vehicle from a dealer would then receive the
original title and odometer statement executed by the owner who sold
the vehicle to the dealer and the secure MV-50 form with an odometer
disclosure. In addition, the mileage disclosed at the time of the sale
to the dealer and the mileage disclosed at the time the dealer sold the
vehicle to the subsequent retail purchaser would be recorded in New
York's system and available for viewing through a web portal.
The Agency's final determination, 77 FR 50381 (Aug. 12, 2012),
granted the New York petition as amended. NHTSA found that the
employment of the secure State issued and numbered MV-50 form, in
conjunction with the odometer disclosure on the original seller's title
and the recording of these disclosures in New York's electronic system,
met the purposes of TIMA.
6. Arizona
In December 2011, Arizona filed a petition with NHTSA seeking
approval of alternative odometer disclosure requirements. The Arizona
proposal was limited to transactions involving licensed Arizona dealers
and did not encompass interstate transactions. Under this proposal,
dealers would electronically scan and upload documents to the State.
Dealers would scan documents using a specified format and resolution,
encrypt the scanned images and transmit the images to a secure system
using account codes, user/group profiles, and passwords. The State
would retain electronic files in a document management system, and
dealers would be required to retain hard copies of the documents. The
disclosures would not be made on a title but on a form described as a
Secure Odometer Disclosure. This form would be completed and signed by
hand and submitted to Arizona along with other documents after being
scanned. The petition appears to propose that the title would not be
among the documents submitted to Arizona, and it may be that this
procedure would be followed if the seller's title is an electronic
title. If the dealer sells the vehicle, that dealer would again scan
and electronically submit a Secure Odometer Disclosure, but not the
title, to Arizona after selling the vehicle. The dealer would retain
the original Secure Odometer Disclosure forms for the retention periods
specified by Federal and Arizona law.
In instances where a dealer sought to sell a vehicle that had been
purchased from an owner with a paper title, Arizona also proposed that
the vehicle would be resold by a dealer using the paper title from the
transferor. It appears, based on this description and the requirements
of Arizona law that a dealer's name shall be recorded on a title
certificate as transferee or purchaser and that a title include space
for dealer reassignment information, that the dealer would make an
odometer disclosure on the paper title at the time it resells the
vehicle. However, the petition also specifies that if the dealer
applies for a new title in the name of the vehicle purchaser, the
dealer and purchaser would complete a Secure Odometer Disclosure form.
The dealer would then scan and electronically submit a title
application, the paper title, the Secure Odometer Disclosure form, and
supporting documents to Arizona. The dealer would retain the original
documents (including the original paper title) for the retention
periods specified by Federal and Arizona law. According to the
petition, a new title would be sent to the buyer if there is no lien on
the vehicle. If there is a lien, both the lien and the title would be
maintained as electronic records by the Arizona Department of
Transportation.
NHTSA issued an initial determination denying the Arizona petition
on August 20, 2012. 77 FR 50071. In this initial determination, the
Agency stated that the Arizona petition did not meet 49 CFR 580.11(b),
which establishes the requirements for alternative disclosure
requirement petitions. The petition did not, in NHTSA's view, set forth
the motor vehicle disclosure requirements in effect in the State or
adequately demonstrate that the proposal was consistent with the
purposes of the Motor Vehicle Information and Cost Savings Act. In
regard to the latter, the agency found that making disclosures on
documents other than the title, the proposed use of non-secure forms,
the failure to address record keeping requirements, and the potential
for alterations posed by the use of scanned documents were all
inconsistent with the purposes of TIMA.
7. Ongoing Concerns Regarding Electronic Odometer Disclosures in Light
of Previous State Petitions
NHTSA's experience in processing State petitions for alternative
electronic odometer disclosure schemes illustrates a number of concerns
that remain relevant for the purposes of this rulemaking. First and
foremost, any electronic odometer disclosure system must be conceived
with a full appreciation of the importance of following the command
found in TIMA that odometer disclosures must be made on the title
itself, or the electronic equivalent of that title, and not, except for
a very limited number of exceptions, on any other document. In
particular, an electronic odometer disclosure system should minimize or
eliminate odometer disclosures made on physical documents instead of
promoting the use of such documents as some proposals

[[Page 16114]]

examined by NHTSA have done. Similarly, an electronic odometer
disclosure system may not rely on a method of transmitting secure paper
documents if that method does not preserve the security features now
present in physical titles, reassignments, and powers of attorney. A
low resolution scan of such a document is not secure and such a scan
may not reveal forgeries or alterations.
In addition, as addressed below, any electronic odometer disclosure
system must provide adequate means for verifying the identity of
transferors and transferees. In the absence of such verification,
unauthorized and inaccurate disclosures could easily be entered into
State systems by imposters, defeating the purposes of the Cost Savings
Act and enhancements established in TIMA and the subsequent amendments.
Electronic title and odometer disclosure systems must also foreclose
the possibility that a seemingly valid physical paper title and an
electronic title may co-exist. The presence of two such ``valid''
titles invites fraud and creates opportunities for confusion and
deception. While States are under no obligation to implement electronic
odometer disclosure systems that accommodate transactions involving
leased vehicles, any system that proposes to do so must employ measures
that meet the existing regulatory requirements without employing
physical forms such as a power of attorney that are not authorized
under agency regulations. Finally, all electronic odometer disclosure
systems must be designed not to impede interstate vehicle sales while
providing consumers with protection against odometer fraud. Unless and
until electronic odometer disclosure is implemented in all States,
Territories, and the District of Columbia, secure paper titles or their
equivalent will be needed for the purposes of making odometer
disclosures in interstate transactions.

II. e-Manifest

In developing this proposal, NHTSA reviewed the experience of the
Environmental Protection Agency (EPA) during the development of its
requirements for electronic manifests for hazardous waste. See 79 FR
7517 (Feb. 7, 2014). While the authority EPA was operating under is
different from NHTSA's current authority, and the existing system
differed from the current odometer disclosure system, NHTSA believes
there are lessons to be learned from EPA's experience transitioning
from a paper to electronic environment.
The EPA proposal envisioned the agency setting minimum standards
for an e-manifest system and various private entities stepping forward
to develop and make available such systems. The ``EPA proposed
standards in 3 distinct areas: (1) Standard electronic data exchange
formats for the manifest; (2) electronic signature methods that could
be used to execute manifest signatures electronically; and (3) standard
system security controls and work flow procedures to ensure the
reliable and consistent processing of manifest data by electronic
manifest systems, as well as to ensure the availability and integrity
of manifest data submitted through the electronic systems.'' \1\
Commenters expressed concern that this proposal could lead to numerous
inconsistent approaches to e-manifest, a particular problem for
companies with large numbers of inter-state transactions. Others
criticized the rigor of the standards proposed which set a higher bar
than existed for paper documents. Still others noted that such detailed
requirements could frustrate technology in an area which was constantly
changing.
---------------------------------------------------------------------------

\1\ 79 FR 7517, 7519 (Feb. 7, 2014).
---------------------------------------------------------------------------

The EPA's ultimate solution was to develop a centralized system
controlled by the EPA and funded by user fees. This option is not
available to NHTSA for odometer disclosures. Nevertheless, we are
mindful of the comments EPA received. Vehicle transactions cross State
boundaries and the need for various State systems to interact must be
considered. Further, both traditional paper-based and electronic
systems are likely to exist in neighboring States for some time and
must facilitate interstate transactions while providing protection
against odometer fraud. The MAP-21 mandate to permit electronic
odometer disclosures could be frustrated by requirements that set an
unnecessarily higher bar than currently exists for paper documents.
However, NHTSA believes that achieving the objectives of the statute--
to ensure that consumers receive valid representations of the actual
vehicle mileage at the time of transfer and to detect, prevent, and aid
in prosecuting odometer fraud--some aspects of the specific disclosure
requirements may need to differ for traditional and electronic systems.
It is also neither helpful to the public nor wise to create rules that
NHTSA must regularly amend to adapt to technological changes.
Accordingly, NHTSA has been, and remains, aware of these lessons in
developing this proposal.

III. Current Proposal

A. Purpose of Odometer Disclosure Requirements

The overall purpose of the odometer disclosure provisions of the
Cost Savings Act, as amended, is to protect consumers by assuring that
they receive valid representations of a vehicle's actual mileage at the
time of transfer. An additional purpose is to create a system of
records and a ``paper trail'' to facilitate detection and prosecution
of odometer fraud. The statutory scheme and the current regulations
adopted by NHTSA aim to achieve these overall purposes.
In developing the current proposal for electronic odometer
disclosures pursuant to MAP-21, NHTSA desires a regulation that
continues to achieve these purposes without imposing overly burdensome
requirements that are not necessary to achieve these purposes in an
electronic environment. That is, electronic disclosures must be made
accurately by the actual parties to the transaction to protect
consumers and provide assurances that a transferee receives a valid
representation of a vehicle's actual mileage at the time of transfer.
In addition, electronic disclosure schemes must have retention
requirements to create a secure and reliable electronic trail to
facilitate detection and prosecution of odometer fraud. Unique issues
the agency considered were the ability of different State electronic
systems to share data, and the security of that information sharing, as
well as the ability to issue secure paper documents for use in States
which do not choose to adopt electronic disclosure requirements.
An additional issue considered by the agency was the possibility
that, if NHTSA were to adopt only minimum requirements necessary to
achieve the above stated purposes, States that voluntarily chose to
permit electronic odometer disclosures could do so in ways which could
eventually create enough variation to hinder on-going efforts among the
States to develop a national system for electronic titling of motor
vehicles. However, NHTSA determined that its authority under MAP-21 was
intended only to facilitate the change to electronic odometer
disclosures, not to impose additional requirements for odometer
disclosures. NHTSA requests comments, however, on whether it should go
further than proposed in this notice in order to prevent, or limit,
variation among the various State systems.

[[Page 16115]]

B. Odometer Disclosure Requirements

As noted earlier, NHTSA believes that meeting the objectives of the
statute will require some variation in the requirements for traditional
and electronic systems. To achieve this, NHTSA is proposing to
restructure the requirements to accommodate both ``physical'' and
``electronic'' documents. Therefore we are proposing to amend 580.1 to
add the option of electronic disclosures; 580.3 to add new definitions
and amend existing definitions to accommodate physical and electronic
filings; 580.4 to clarify separate requirements for the security of
physical disclosures and electronic disclosures; 580.5 to clarify
methods of disclosure for physical and electronic systems; 580.7 to add
provisions allowing for the option of electronic disclosures for leased
motor vehicles; 580.8 to include electronic copies among the forms of
disclosures that must be retained and general requirements for that
retention; 580.10 to update the address for NHTSA; 580.11 to add the
newly created 580.6 to the sections a State may seek exemption from via
petition for alternative disclosure requirements and update the address
for NHTSA; 580.13 and 580.14 to revise the provisions relating to the
use of a power of attorney to address the potential that transferors
from an electronic title State wishing to convey a vehicle to a
transferee in a physical title State may not have an opportunity to
obtain a State issued secure physical title before transferring
ownership of the vehicle and to correct a typographical error that
would bring the disclosure requirements into conformity with the
disclosure requirements under 580.5 and 580.7; 580.15 to add language
clarifying that power of attorney certification is limited to physical
document disclosures; and 580.17 to extend the disclosure exemption
from ten years to twenty-five years and provide an updated example.
NHTSA is proposing to strike the regulatory text in section 580.12 as
the provision is obsolete and to reserve the section. Finally, NHTSA is
proposing to create a new section 580.6 (previously reserved) which
would contain unique requirements for electronic odometer disclosures.
1. Definitions
The most basic proposed change NHTSA is making is to add new
definitions for the terms ``Electronic Document,'' ``Physical
Document,'' and ``Sign or Signature,'' which are necessary to provide
clarity in the requirements for each, taking into account the different
security concerns and practical challenges that arise under the
different disclosure systems. NHTSA requests comments on whether the
following new definitions are appropriate and properly identify the
items and actions intended.
a. Electronic Document. NHTSA proposes to add ``Electronic
Document'' to the defined terms in part 580.3. This addition is
necessary to provide clarity for the requirements and procedures
applicable to these documents, as opposed to documents in paper format.
NHTSA proposes to define ``Electronic Document'' to mean ``a title,
reassignment document or power of attorney that is maintained in
electronic form by a state, territory or possession that meets all the
requirements of this part.''
b. Physical Document. NHTSA proposes to add ``Physical Document''
to the defined terms in part 580.3. This addition is necessary to
provide clarity for the requirements and procedures applicable to these
documents, as opposed to documents in electronic format. NHTSA proposes
to define ``Physical Document'' to mean ``a title, reassignment
document or power of attorney printed on paper that meets all the
requirements of this part.''
c. Sign or Signature. NHTSA proposes to add definitions for ``Sign
or Signature'' applicable to physical document disclosures and to
electronic document disclosures to the terms defined in part 580.3.
This addition is necessary to clarify the actions and requirements that
qualify as a signature or the signing of a document in the different
contexts of physical and electronic disclosures. Further, electronic
records of contractual agreements are capable of verification through
methods other than written words, and may include sounds, other
symbols, or processes. See 15 U.S.C. 7006(5) (providing a definition of
``electronic signature''). NHTSA proposes to define ``Sign or
Signature'' as meaning ``[f]or a paper odometer disclosure, a person's
name, or a mark representing it, as hand written personally'' and
``[f]or an electronic odometer disclosure, an electronic sound, symbol,
or process using an authentication system equivalent to or greater than
Level 3 as described in National Institute of Standards and Technology
(NIST) Special Publication 800-63-2, Electronic Authentication
Guideline, which identifies a specific individual.''
2. Identity of Parties to a Motor Vehicle Transfer and Security of
Signatures
One issue NHTSA considered was the electronic equivalent of the
existing requirements for physical signatures on odometer disclosures
and how to securely authenticate an electronic signature. This is
particularly important because in an electronic environment documents
may be ``signed'' remotely. To address this issue, NHTSA reviewed the
guidance in the National Institute of Standards and Technology (NIST)
Special Publication 800-63-2, Electronic Authentication Guideline. The
publication defines four levels of assurance, Levels 1 to 4, in terms
of the consequences of authentication errors and misuse of credentials,
with Level 1 being the lowest assurance level, and Level 4 as the
highest. Based on the level, different levels of authentication are
recommended to help ensure the security of the information. NHTSA also
reviewed a December 16, 2003 memorandum from the Director of the Office
of Management and Budget (OMB) to the Heads of all Federal Departments
and Agencies.\2\ This memorandum guidance was issued by OMB under the
Government Paperwork Elimination Act of 1998, 44 U.S.C. 3504 in light
of the NIST publication. Attachment A to this memorandum supplements
OMB Circular A-130, Management of Federal Information Resources,
Appendix II, Implementation of the Government Paperwork Elimination Act
(GPEA). While both the NIST publication and the OMB memorandum are
directed towards Federal Departments and Agencies, NHTSA believes they
provide good guidance in this instance also.
---------------------------------------------------------------------------

\2\ OMB Memorandum M-04-04, 12/16/03, https://www.whitehouse.gov/sites/default/files/omb/assets/omb/memoranda/fy04/m04-04.pdf.
---------------------------------------------------------------------------

NHTSA is aware that the American Association of Motor Vehicle
Administrators (AAMVA) published a report from its Electronic Odometer
Task Force in December 2014 (E-Odometer Task Force Report).\3\ In this
report AAMVA recommends that States implement an electronic signature
verification system that complies with at least NIST Level 2, however
it also notes that some of the identification discussed would comply
with NIST Level 3. As discussed below, NHTSA has made a preliminary
determination that at least NIST Level 3 verification should be
required, both to prevent the potential harm of fraudulent disclosures
and to aid in their prosecution.
---------------------------------------------------------------------------

\3\ http://www.aamva.org/e-Odometer-Task-Force/.
---------------------------------------------------------------------------

Attachment A to the OMB memorandum sets out six potential

[[Page 16116]]

impact categories, and then, depending on whether the impact is low,
moderate, or high, assigns a NIST assurance level. The Attachment does
not provide specific guidance for how to assign an overall assurance
level if potential impact categories fall in different levels. The
impact categories are:
Inconvenience, distress or damage to standing or
reputation.
Financial loss or agency liability.
Harm to agency programs or public interests.
Unauthorized release of sensitive information.
Personal Safety.
Civil or criminal violations.
In reviewing these impact categories, NHTSA notes a definite
potential for financial loss. The purpose of odometer fraud is to
induce consumers to pay more for a used vehicle than they would if they
knew the accurate mileage. For an individual consumer, it is important
that the value of the vehicle reasonably match the price agreed to, and
paid, based upon the information available to the consumer and provided
by the seller. In addition, odometer fraud is often committed by the
same individual(s) or entities multiple times, resulting in high dollar
amounts of damages. State electronic title and odometer disclosure
systems will also contain sensitive personal information that could be
subject to unauthorized release if the system were not sufficiently
secure. Last, odometer fraud is a criminal offense that victimizes
innocent consumers. NHTSA and other enforcement agencies use odometer
disclosure documents to prove these criminal violations.
Therefore, after reviewing this document, NHTSA has made a
preliminary decision that a high level of assurance in the accuracy of
the identity of the person making an odometer disclosure is necessary,
and therefore the appropriate level of security for odometer
disclosures is Level 3 according to the NIST guidelines. NHTSA is
therefore proposing that any State which allows electronic odometer
disclosures require security protocols at this level or higher. Under
the NIST guidelines (http://nvlpubs.nist.gov/nistpubs/SpecialPublications/NIST.SP.800-63-2.pdf), a Level 3 system must have
certain minimum attributes. These attributes include verification of
the name associated with the user, issuance of a credential to the user
through a separate channel such as postal mail, text message or
telephone call directed at an address or number confirmed through
examination of different independent databases and use of that
credential to gain access to the Level 3 system. For example, a person
wishing to make odometer disclosures electronically without having to
appear in person at a State motor vehicle agency would need to have a
valid Government ID number and a financial institution or utility
account number that could be confirmed through examining records
containing those numbers. The State entity providing the e-title and
odometer disclosure service would then check the information provided
by the individual and confirm that the name, date of birth, and other
personal information in the examined records are consistent and
sufficient to identify a unique individual. The State entity would then
issue a credential by postal mail or some other means that would direct
the credential to the proper person. The issued credential would then
be employed by the user to obtain access to the electronic odometer and
title system. As outlined in the NIST guidelines, other methods may be
employed to attain Level 3 authentication but the important principle,
in NHTSA's view, is that Level 3 requires multi-factor identification
of an individual applicant who, once their identity has been verified,
is provided with a unique credential in order to access the system.
NHTSA is therefore proposing that the requirement for Level 3
authentication be incorporated in the definition of ``signature'' for
electronic disclosures. However, this also will require the use of
computers by all parties for all transfers in electronic title States.
NHTSA requests comments on the appropriate NIST level and if specific
identification verification(s) should be required, and further requests
comments on how such a system should be implemented, including whether
dealers should be required to provide secure computing services to
transferors and transferees and what security measures should be
mandatory for such services.
Next, NHTSA is proposing to require that each ``signature'' in an
electronic environment apply only to a single individual, not to an
organization. For example, if a dealership wished to allow multiple
employees to execute odometer disclosures on behalf of the dealership,
each employee would be required to have and maintain a distinct access
identity or code to the electronic odometer system so that the actual
individual making the disclosure, not just the dealership, is
identified by the ``signature.'' The dealer or entity on whose behalf
the individual is making the disclosure must also be identified in the
transaction and the dealer(s) and entity on whose behalf the individual
works must be recorded as part of the individual's distinct access
identity or code.
NHTSA also considered the existing requirements that various
parties provide copies of documents as part of the odometer disclosure
process, and what would qualify as an equivalent in an electronic
environment. For example, section 580.5(f) requires the transferee to
return a copy of the odometer disclosure document to the transferor
after it is signed. Under the current system, the transferee may apply
for a new title for the vehicle, and generally, a State will not title
a vehicle without an odometer disclosure statement that contains the
signatures of both the transferor and the transferee. However, the
State does not usually verify that a copy of the document was returned
to the transferor or that the transferor retained it. For this reason,
NHTSA is concerned about imposing any requirement in the electronic
environment that would be more restrictive than these current
requirements. NHTSA therefore proposes to specify only that the
requirement to provide a document is satisfied by electronically
transmitting the document, provided that the State allows the parties
to the transaction access to the completed disclosure statements.
As discussed previously, one purpose of the signature requirement
is to aid in the prosecution of odometer fraud. For this reason, NHTSA
proposes requiring an electronic ``signature'' to identify an
individual, not a business, for example. NHTSA requests comment on
whether any other requirements are necessary to ensure that
investigators can back trace an electronic ``signature'' to identify
the individual and/or computer used in the electronic equivalent of a
``paper trail.'' Conversely, if an odometer disclosure is altered, do
the proposed system requirements develop an adequate ``paper trail'' to
lead investigators to the IP address or computer used to alter the
disclosure, and if not, what additional system requirements are
necessary?
3. Security of Title Documents
Currently, Sec. 580.4 requires that titles, which are necessarily
all physical documents except in the five jurisdictions with approved
petitions for electronic systems pursuant to 49 U.S.C. 32705(d), be
printed using a secure printing or other secure process. Further,
currently any power of attorney forms and all documents used to
reassign title must be issued by the State and be created using a
secure process. It is central to the integrity and efficacy of the
motor vehicle titling systems and

[[Page 16117]]

odometer disclosure laws that the authenticity and security of title
documents, at a minimum, be maintained at their current levels in
moving to electronic disclosure and titling systems. Currently,
investigators are able to examine physical documents and observe
indicators of tampering. Unlike paper documents, however, alterations
to electronic documents are much more difficult to detect from a visual
inspection. Further, while electronic documents and transactions
provide opportunity to enhance security, as with physical documents,
these systems are still susceptible to manipulation and attacks.
The proposed changes and additions to Sec. 580.4 seek to clarify
that the existing requirements apply to physical documents, moving the
language to a new paragraph (a), and set forth requirements for
electronic documents, in a new paragraph (b), to ensure comparable
levels of security and authenticity in electronic documents as exist
currently for paper documents. Such requirements are necessary to
protect both the financial interests of motor vehicle owner's and
potential buyers, as well as to aid law enforcement in preventing,
detecting, and prosecuting odometer fraud. NHTSA seeks comments as to
whether the proposed changes and additions to Sec. 580.4 appropriately
match the security and authenticity requirement for electronic
documents to the existing requirements, which apply to paper documents.
a. Electronic Odometer Disclosure System Security
As discussed previously, Sec. 580.4 requires the title, power of
attorney or reassignment documents used for odometer disclosures to
have certain security safety features to inhibit altering the
disclosure and to aid in the detection of alterations.
NHTSA contemplated proposing specific minimum requirements for
system security, but has preliminarily determined that it would be
counter-productive, and thus inappropriate, to do so. NHTSA based this
decision on the knowledge that the rulemaking process is typically
slow, while developments in technology are fast and frequent. While
proactive changes to enhance cyber security are constantly evolving and
improving, cyber-attacks and efforts to undermine the security of
electronic data systems are also changing rapidly and frequently. The
rulemaking process would not be able to keep pace with these
technological changes and it is foreseeable that, if NHTSA imposed
specific system requirements, the specific requirements could become
obsolete, yet remain the requirements while a new rulemaking is
undertaken. Alternatively, to the extent that rulemaking by NHTSA would
be able to keep up with the dynamic technological landscape, such
constant revisions to the regulations would result in an ever-changing
set of specific requirements for States to adhere to.
Further, the potential risks to property interests and commerce
presented by insecure vehicle titling and odometer disclosure systems
are obvious, since it is critical that the owners, buyers, and sellers
of motor vehicles have certainty in their ownership status and avoid
being defrauded in the fundamental details about the vehicle they own
or are buying.
By NHTSA's adoption of more general minimum requirements, any State
that choses to adopt an electronic disclosure system will be able to
select the specific system requirements it believes are most
appropriate, while ensuring information security for motor vehicle
owners, buyers, and law enforcement.
While NHTSA's expectation is that any State implementing an
electronic disclosure system would take these various risks into
account and establish appropriate safeguards, NHTSA nonetheless
requests comments on whether it should establish minimum specific
security requirements in this rulemaking and, if so, what requirements
would be appropriate. NHTSA requests comment on whether requirements
should be included for the hardware used in an electronic odometer
system to protect the system from threats which could disrupt the
electronic records, either from natural or manmade sources and, if so,
what requirements should be included in a final rule. For example, the
Federal Information Security Management Act (FISMA) defines a framework
to protect Federal government information systems from such threats.
Should NHTSA, for example, require any computer or server attached to
an electronic odometer system comply with FISMA?
4. Odometer Disclosures
NHTSA considered the issue of what odometer information disclosures
and procedures should be required for paper and electronic disclosures,
and what appropriate modifications can and should be made for
electronic disclosures. In an effort to track the electronic disclosure
requirements to the existing requirements, NHTSA makes the following
proposals regarding the odometer disclosures and procedures.
In Sec. 580.5 paragraph (a), NHTSA proposes to add the phrase
``whether a physical or electronic document'' to make clear that the
disclosure requirements specified in Sec. 580.5 apply to all titles
issued. The requirements currently apply to all title transfers and, as
a practical matter, this results in no change in the disclosure
requirements whether made on a physical document or electronically.
Paragraph Sec. 580.5(c) sets forth certain specific disclosures
that must be made as part of a transaction transferring title of a
vehicle, including that the odometer disclosure must be made on the
title, or on a document being used to reassign the title. As currently
written, this requirement necessarily implies the ability to affix
information onto a document. To clarify this requirement, NHTSA
proposes to add language specifying ``physical document'' in instances
of paper title transfers and ``electronic form incorporated into the
electronic title'' for instances of electronic title transfers. The
requirement for making electronic disclosures on an electronic form
incorporated into the electronic title means that paper disclosures
would become the rare exception when electronic disclosure and titling
is available. Further, the electronic systems would need to be designed
to contain or otherwise embed the electronic odometer disclosure in the
electronic title. Finally, for electronic transfers where the
transferor is the individual in whose name the vehicle is titled,
reassignment documents would not be necessary. NHTSA seeks comments on
the proposal that disclosures be made on an electronic form
incorporated into the electronic title.
NHTSA also considered the issue of how to provide the warnings
currently contained in Sec. 580.5(d) to parties conducting electronic
transfers. NHTSA proposes to extend these existing requirements to
electronic transfers by amending Sec. 580.5(d), specifying that in
instances of electronic transfer, the required information must be
displayed on the screen, and acknowledged as understood by that party,
before any signature can be applied to the transaction. This proposed
requirement is intended to ensure that the information is provided in a
size and location that is clearly viewable and readable to individuals
making electronic transfers, and that transferors do not
unintentionally bypass this information without having an opportunity
to review it. NHTSA envisions that the acknowledgement would typically
be a box for the party

[[Page 16118]]

to click acknowledging having seen and understood the information, not
unlike the boxes often seen on Web sites and computer programs today
acknowledging service limits or contractual rights prior to gaining
access to content or services.
NHTSA considered the existing requirements of Sec. 580.5(f), that
a transferee print his or her name on the disclosure and return a copy
to the transferor and believes that the requirement on a transferee to
``print'' their name is inappropriate for electronic transfers, but
that any electronic system should be able to provide some record of the
disclosure for the transferor and transferee. NHTSA proposes to not
extend the printed name requirement to electronic disclosures because
the purpose of the printed name is to provide hand writing exemplars
for use in fraud investigations and prosecutions. However, at present,
NHTSA is not aware of electronic systems that capture handwriting with
the level of clarity and precision that exists when applying hand-
writing to paper. As a result, unlike physical handwriting exemplars,
NHTSA does not currently believe that electronic handwriting exemplars
would provide the intended investigatory and prosecution tools to law
enforcement. The requirement that the transferee print his or her name
on the disclosure therefore need not be extended to electronic
disclosures. In contrast, it remains important for both parties to the
transaction to have access to a record showing the disclosure that was
made, and it is appropriate to extend the current requirement that the
transferee provide a copy of the disclosure to the transferor to
electronic transfers.
In an electronic disclosure jurisdiction, the parties would not
have physical control of the disclosure documents and the
responsibility to provide copies of the disclosure must fall to the
operator(s) of the disclosure system. Thus, NHTSA proposes to amend
Sec. 580.5(f) to require that jurisdictions with electronic disclosure
systems provide a way for the transferor and transferee to obtain
copies, in the form of some detailed record, of the disclosure. These
records not only provide assurance to the parties of what information
was relied upon in the transaction, but could also aid law enforcement
in investigations and prosecutions. NHTSA requests comments on the
proposal to not extend the printed name requirement to electronic
disclosures, including technologies that provide comparable electronic
hand-writing exemplars as paper document exemplars, and on the proposal
to require that any electronic system be capable of providing the
transferor and transferee with a copy or record of the disclosure made.
NHTSA has considered how to handle odometer disclosure for a
vehicle that has not been titled or for which the title does not
contain a space for the information required. Under the existing paper
disclosure systems, in such instances the parties execute the odometer
disclosure as a separate paper document. This system would not make
sense in an electronic disclosure system since the first time a title
was obtained for any given vehicle the odometer disclosure would be
incorporated into that electronic title at the time of creation and no
electronic title system would be created that did not provide space for
the required information. The option relating to insufficient space on
the title is a holdover from when odometer disclosures were first
required on the title and jurisdictions needed time to bring titles
into conformity with the new regulation. That concern is not applicable
here since electronic disclosure systems will be designed and
implemented using the requirements established in this rule. Similarly,
no special provision is needed for providing the information in the
first instance of titling in an electronic disclosure jurisdiction,
since any electronic system will include the execution of an electronic
disclosure that is incorporated into the electronic title upon
creation. NHTSA thus proposes to amend Sec. 580.5(g) to add language
clarifying that the existing regulation allowing for disclosure on a
separate document for first title and instances where the title does
not contain space for the disclosure is limited to transactions
conducted using physical documents while disclosures for first title
issuance in an electronic disclosure system must be made in the
electronic system. NHTSA requests comments on the proposal to limit the
current separate document disclosures for first title issuance and when
the title does not contain sufficient space for the disclosure
requirements to paper title jurisdictions, and requiring disclosures
for first title issuance to be conducted within the electronic title
system in electronic disclosure jurisdictions.
5. Requirements for Electronic Transactions
NHTSA has considered the differences between disclosures made on
physical documents and those made on electronic documents and
preliminarily determined that additional requirements are necessary to
ensure the accuracy and authenticity of electronic disclosures. NHTSA
has also considered the complications that could arise, including
competing claims of vehicle ownership, if both paper and electronic
titles co-exist as an official form of title issued within a
jurisdiction. To address these issues, NHTSA is proposing to add a new
Sec. 580.6 (previously reserved), to provide requirements that apply
only to electronic transactions.
a. Document Integrity
First, NHTSA proposes to add Sec. 580.6(a)(1), requiring that any
electronic record be retained in a format that cannot be altered and,
further, that indicates any attempts to alter it. This proposed
requirement adds as an explicit condition for electronic disclosures an
implicit reality of disclosures on physical documents. Disclosures on
physical documents provide some method for detection of alterations or
attempts to alter the document. While techniques for altering the
physical documents evolve over time, they nonetheless leave an
indicator, however hard to detect, of that alteration or attempt.
Electronic documents thus present a different challenge since many
documents are easily altered, and some of the techniques used can be
difficult to trace. A system that prevents alteration is critical for
consumer confidence in the disclosure system and information relating
to the alteration of disclosure documents is critical to the
enforcement of the odometer disclosure laws and in preventing odometer
fraud. NHTSA requests comments on this proposed additional requirement
for electronic disclosures and what, if any, more specific requirements
would be appropriate to ensure that electronic records are not altered
and indicate any attempts to alter them.
b. Individual Identity Assigned to all Unique Electronic Signatures
Currently, each person signs their own name to a physical document
when completing an odometer disclosure and is uniquely identified as an
individual. Or at least that is presumed for non-fraudulent
transactions. Similarly, in an electronic disclosure system, each
individual person will need to be uniquely identified by their own
unique electronic signature. This is necessary to protect the financial
interests of vehicle owners and purchasers, providing certainty that
the vehicle title remains with the lawful owner and that odometer
disclosures are made by the appropriate individuals, who can be
located, if needed.

[[Page 16119]]

As a practical matter, this is particularly necessary for
transactions involving individuals who complete portions of disclosures
on behalf of others, like an employer. For example, when a vehicle
owner seeks to trade in a car at a car dealership in an electronic
disclosure jurisdiction the parties would no longer need to provide
power of attorney and reassignment documents for the dealer to use in
selling the vehicle at a later date, but instead would simply transfer
title from the vehicle owner to the car dealer and make the odometer
disclosure on the electronic form which is incorporated into the title.
This will require an individual at a car dealership to enter
information into the electronic disclosure system on behalf of the
business or entity on whose behalf that individual is operating.
NHTSA has considered the importance of maintaining confidence that
the parties are who they claim to be for ownership and law enforcement
purposes. NHTSA has also considered challenges created in fraud
investigation and prosecution if both the individual and business, or
entity, are not identified by the code or signature associated with an
individual acting in this capacity to input data into the system.
Accordingly, NHTSA is proposing to add Sec. 580.6(a)(2) requiring that
any electronic signature identify an individual and, further, that if
the individual is acting in a business capacity or otherwise on behalf
of any other individual or entity, that the business or entity also be
identified as part of that unique electronic signature. NHTSA requests
comments on this proposal.
c. Availability of Documentation in Electronic Disclosure Systems
The physical document disclosure system currently established in
Sec. 580 generally requires in various places that individuals be
provided with specific documentation. However, in an electronic system,
in many cases there will not be any document to provide, and instead,
information can be made available to the parties via the electronic
system. Moreover, part of the rationale for using an electronic
disclosure and titling system is to reduce the amount of paper being
used. It would defeat one of the purposes of electronic disclosure to
require the printing and delivery of documentation at various stages.
It could also add unnecessary complications to the electronic delivery
of documentation if specific electronic delivery mechanisms were
required. Having considered this factors, NHTSA proposes to add Sec.
580.6(a)(3), providing that any requirement in the regulations to
disclose, issue, execute, return, notify, or otherwise provide
information to another person is satisfied when a copy of the
electronic disclosure or statement is electronically transmitted or
otherwise electronically accessible to the party required to receive
the disclosure. NHTSA requests comments on the usefulness of this
proposal.
d. Physical Documents Used in Making Electronic Disclosures
The continued use of physical documents to accomplish transfer of
title or odometer disclosure in an electronic disclosure jurisdiction
is strongly discouraged, as each different document presents a new
opportunity for fraudulent activity to occur. However, to the extent
that the continued use of physical documents is necessary in an
electronic system, any physical documents used must comply with all
requirements of this part. NHTSA thus proposes the new Sec.
580.6(a)(7) to require that any physical documents used to make
electronic disclosures comply with the existing applicable
requirements.
e. Co-Existing Physical and Electronic Disclosures and Titles
NHTSA considered the issue of which title and/or odometer
disclosure is, and should be, the official document in certain
situations. In a written environment it is possible to determine which
document has an original signature and, therefore, to distinguish
original (or official) documents from copies. This method of
determining the original/official document is not available when the
original document was created electronically. In addition, when a print
copy is made of an electronic odometer disclosure, what should be done
to specify whether the print document is now the official document or
the electronic document remains the official document? This issue could
arise when a vehicle titled with an electronic odometer disclosure is
moved to a State which either does not participate in electronic
odometer disclosures or which has an electronic odometer system that
cannot communicate directly with the system in the State in which the
vehicle is currently titled. It could also occur if a vehicle owner in
an electronic disclosure State would like a paper copy of a title and/
or odometer disclosure for record-keeping purposes.
First, NHTSA is proposing that once an odometer disclosure is
incorporated in the electronic title, the electronic title containing
the disclosure is the official record of ownership and mileage. The
electronic disclosure does not continue as a record separate from the
electronic title as that would be contrary to TIMA and would provide
additional opportunity for fraud. If an electronic title (containing an
odometer disclosure) must be converted to a paper document as the
official document, NHTSA is proposing additional requirements. First,
only a State or State-authorized entity can create the new official
document. Second, the paper document must be set forth by means of a
secure printing method as a physical, paper document. As a practical
matter, this may present certain logistical challenges, particularly
for individuals in an electronic title State who seek to buy a new car,
and trade-in their old car, in another State. This issue is discussed
at greater length below regarding Power of Attorney, and NHTSA requests
comments on how this logistical challenge can be avoided or mitigated.
Third, the electronic record must be altered to clearly indicate that
an official paper document has been issued, to whom, and the date of
issuance.
Second, NHTSA is proposing to allow States to authorize the
issuance of some type of record of ownership document that would
contain the information on a title and/or odometer disclosure but would
not replace the official document. This document could be used for
persons who would like a paper copy but would not like the official
document to be converted to a paper document. In the proposed Sec.
580.6(a)(5) jurisdictions with electronic title and odometer disclosure
systems would be allowed to provide vehicle owners with a paper record
of ownership including the odometer disclosure information so long as
the document clearly indicates that it is not an official title or
odometer disclosure for that vehicle. NHTSA requests comments on the
benefits and drawbacks of such a record and whether the option of
obtaining such a document should be required under the regulations.
Finally, in reverse situations where a vehicle titled in a State
that does not participate in an electronic odometer system is moved to
a State with an electronic odometer system, NHTSA is proposing a new
Sec. 580.6(a)(4) to require that the prior title and odometer
disclosure be copied electronically for retention by the electronic
system State and that the paper document(s) be destroyed at the time
they are converted to electronic documents. NHTSA further proposes that
the electronic copy of the physical document be retained for a minimum
of five years, in an order that

[[Page 16120]]

permits systematic retrieval, and in a format that cannot be altered
and that indicates any attempts to alter it. The five year retention
requirement proposed in this paragraph matches the retention period of
similar documentation held by dealers and distributors of motor
vehicles and auction companies. Finally, NHTSA is also proposing that
any paper documents scanned or copied electronically for storage in an
electronic system be converted through a process providing a minimum
resolution of 600 dots per inch (dpi) to ensure the preservation of
security features during the conversion process.
NHTSA requests comments on what standards should be used for
scanning and maintaining the documents including whether the scan must
be in color, be made at a minimum resolution (and if so, what required
minimum resolution should be), or preserve the security features of the
original to ensure that fraud or alteration could be detected, should
it occur.

C. Leased Vehicles

Section 580.7 deals with the disclosure obligations and
requirements for leased vehicles. NHTSA is not aware of any reason why
electronic disclosures could not be made for leased vehicles, though
lessors wishing to utilize such a system for communications between
themselves and lessees would need to develop an electronic system
complying with the technological requirements established in Sec.
580.4(b) of this part unless the jurisdiction where the leased vehicle
is titled provides such a system. These requirements are necessary as
security and authenticity of disclosure information is fundamental to
all types of disclosures within the odometer disclosure system.
Otherwise, disclosures regarding leased vehicles would continue on
physical documents. As with all other electronic disclosures, it is
appropriate and necessary that individuals making the disclosure be
provided with the notice of Federal law and possible penalties for
providing false information. The substantive disclosures would not
change for electronic disclosure except that, as with all other
electronic disclosures, the person making the disclosure need not
provide their ``printed name'' for the reasons previously discussed.
Having considered the issues involved in lessor-lessee
communications regarding odometer disclosure statements, NHTSA proposes
to add language to Sec. 580.7(a) specifying that legal notices given
on paper odometer disclosure documents must be provided to, and
acknowledged by, an individual making an electronic disclosure; add
language to Sec. 580.7(b) clarifying that a printed name need not be
provided for electronic disclosures; and add a new Sec. 580.7(e)
requiring any electronic system maintained by a lessor for the purpose
of complying with this section meet the requirements set forth in
proposed Sec. 580.4(b) or this part. NHTSA requests comments as to
whether electronic disclosures of leased vehicles should be a required
part of the electronic system established by a jurisdiction or are best
left to individual companies/lessors to establish and whether the
current proposal would sufficiently aid law enforcement in detecting
altered documents.

D. Record Retention

Sections 580.8 and 580.9 include requirements for odometer
disclosure record retention by motor vehicle dealers and distributors
and by auction companies, respectively. Section 580.8(a) specifies that
dealers and distributors must retain a ``Photostat, carbon copy or
other facsimile copy of each odometer mileage statement which they
issue and receive.'' An electronic odometer disclosure system that does
not allow for dealers and distributors to maintain records in
electronic format would undermine the purpose for moving to such a
system. NHTSA is therefore proposing to amend this requirement to
include electronic copies or electronic documents as an acceptable form
of record.
Under both sections, records must be stored for five years in a
manner and method so they are accessible to NHTSA investigators and
other law enforcement personnel. The records must also be stored so
they are difficult or impossible to modify. As previously discussed,
unlike paper documents, alterations to electronic documents are much
more difficult to detect from a visual inspection. Therefore, NHTSA is
proposing to add a specific requirement in a new Sec. 580.8(d) and in
Sec. 580.9 that electronic records kept by motor vehicle dealers and
distributors and by auction companies must be stored in a format that
cannot be altered and which indicates any attempts to alter the
document, consistent with the standards set forth in proposed Sec.
580.4(b). NHTSA requests comment on whether this requirement would be
sufficient to allow law enforcement to detect altered documents.

E. Power of Attorney

NHTSA is proposing to modify the power of attorney provisions. A
power of attorney generally should not be needed for transfers and
disclosures within jurisdictions using electronic systems since there
will not be a ``lost'' title, as the State system will hold the title
record with the odometer disclosure, and any lienholder will not
physically hold the title since the title will be on file in the
State's electronic system. However, NHTSA proposes to amend Sec.
580.13(a) and (b), to allow an individual with a vehicle titled in an
electronic title State to use a power of attorney to sell a vehicle in
a paper title State. In this way, the electronic title with the
required odometer disclosure is equivalent to a lost title or a title
held by a lienholder. Without this additional permitted use of power of
attorney, the seller from an electronic title State cannot trade-in his
old car and buy a new car in a paper title State unless the seller
first remembers, and plans ahead, to obtain a printed title from the
electronic title State before going car shopping. For example, assume
Mr. Smith lives in an e-title State but goes to a paper title State to
trade-in his old car and buy a new car. He must either get his paper
title first or there must be some means for him to make his odometer
disclosure without a title. Electronic title States will not likely be
in a position to provide secure paper titles on demand. This means Mr.
Smith cannot buy a new car unless he gets his electronic title printed
as a physical title first. The agency believes this is unlikely to
happen in many, if not most, instances.
While the use of power of attorney provides an additional step in
the transfer process, and thus another opportunity for fraud to occur,
the agency believes as a practical matter that there must be some other
way for a vehicle owner from an electronic title State to sell the
vehicle in a paper title State without first obtaining a converted
official paper title from the electronic title State. However, power of
attorney laws vary from State to State, so even with this modification
there may still be States that retain paper title systems where
vehicles registered in electronic title States could not be sold
without the converted official paper title. NHTSA requests comments on
the benefits and drawbacks of this proposal as well as other ideas to
address this challenge while maintaining adequate safeguards of
accurate disclosures and a paper-trail.
NHTSA also proposes to add the word ``physical'' in multiple places
in Sec. 580.13(f), Sec. 580.14(a), (e), and (f), and in Sec.
580.15(a). In Sec. 580.13(f) this is necessary to make clear that the
title being referenced at the two specified points is a physical title
and not an electronic title, unlike the other references to ``title''
within paragraph

[[Page 16121]]

(f), which apply to either a physical or electronic title depending on
in which format the transferor's title is currently held. The word
``physical'' is needed to clarify three documents in Sec. 580.14(a)
that must be physical documents for the purposes of using reassignment
documents and power of attorney since these documents will only be
utilized in transactions outside of electronic disclosure systems.
Similarly, the word ``physical'' is also needed in Sec. 580.14(e) and
(f) to make clear that power of attorney forms would be physical
documents, since power of attorney would not be needed or utilized in
electronic title and disclosure jurisdictions. Finally, the addition of
the word ``physical'' is necessary in six instances in Sec. 580.15(a)
to clarify that the disclosures made and documents reviewed involved
physical documents, since the use of power of attorney, and related
documents, would not be necessary to accomplish transfers within
electronic title and disclosure jurisdictions.
NHTSA requests comments on whether power of attorney would be
necessary in an electronic odometer system for intra-state transfers.
Second, NHTSA notes that the requirements in section 580.13 permitting
disclosures by power of attorney assume that the power of attorney
document itself is a physical document. Therefore, NHTSA requests
comments on whether odometer disclosure by power of attorney would be
made on other than a paper document, i.e. electronically, in these
situations and, if so, explanation of how that would work. Further,
NHTSA has concerns that the validity of power of attorney may vary from
State to State and the possible implications of that variability in
interstate transactions and requests comment on this issue.
NHTSA proposes to correct a typographical error that appears in
both Sec. 580.13(b)(5) and Sec. 580.14(b)(5) by adding a comma
between ``model year,'' which would bring the disclosure requirements
for power of attorney forms into conformity with standard transfer
disclosures and leased vehicle disclosures. This typographical error in
the regulation creates inconsistency within the reporting scheme.
Accordingly, NTHSA proposes to change ``model year'' to ``model, year''
in these two reporting provisions.

F. Exemptions

Section 580.17(3) currently exempts any vehicle which is more than
10 years old from the odometer disclosure requirements. The average age
of the United States vehicle fleet has been trending upward and
recently reached 11.5 years.\4\ Because of this, NHTSA is proposing to
raise this exemption to 25 years. NHTSA also requests comments on
whether this exemption should be eliminated.
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\4\ Average age of U.S. fleet hits record 11.5 years, IHS says,
Autonews.com (July 29, 2015), http://www.autonews.com/article/20150729/RETAIL/150729861/average-age-of-u.s.-fleet-hits-record-11.5-years-ihs-says (last visited March 14, 2016).
---------------------------------------------------------------------------

G. Miscellaneous Amendments

The agency is no longer located at the address currently provided
in Sec. 580.10. Accordingly, NHTSA is proposing to amend Sec.
580.10(b)(2) to provide the correct address for applications for
assistance to, which is the Office of Chief Counsel, National Highway
Traffic Safety Administration, 1200 New Jersey Avenue SE., W41-326,
Washington, DC 20590.
Section 580.11 provides States with procedures by which to petition
NHTSA for approval of disclosure requirements differing from those
required by 49 CFR part 580, specifically Sec. 580.5, Sec. 580.7, and
Sec. 580.13(f). NHTSA is proposing to amend Sec. 580.11(a) to add the
new Sec. 580.6 to the sections for which a State may petition the
agency to utilize different disclosure requirements and to add Sec.
580.6 to the explanation of the effect of a grant or denial of a
petition contained in Sec. 580.11(c). NTHSA requests comments on
whether a State should be permitted to use alternative disclosure
requirements to those proposed in Sec. 580.6.
Section 580.11 also provides the prior address for the agency, and
NHTSA is proposing to amend Sec. 580.11(b)(2) to provide the current
address, which is the Office of Chief Counsel, National Highway Traffic
Safety Administration, 1200 New Jersey Avenue SE., W41-326, Washington,
DC 20590.
The petition provided for in Sec. 580.12, allowing a State to seek
an extension of time beyond the April 29, 1989 deadline to bring its
laws into conformity with the requirements of Part 580, was due to the
agency by February 28, 1989. These dates having long ago passed and
States having brought applicable laws into compliance, the provisions
within Sec. 580.12 are now obsolete. Accordingly, NHTSA proposes to
strike the regulatory text of Sec. 580.12 and replace it with
``[Remove and Reserve]'' to reserve the section.

IV. Public Participation

How do I prepare and submit comments?

Your comments must be written and in English. To ensure that your
comments are correctly filed in the Docket, please include the docket
number of this document in your comments.
Your comments must not be more than 15 pages long. (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
supporting documents to your comments. There is no limit on the length
of the attachments.
Comments may be submitted to the docket electronically by logging
onto the Docket Management System Web site at http://www.regulations.gov. Follow the online instructions for submitting
comments.
You may also submit two copies of your comments, including the
attachments, to Docket Management at the address given above under
ADDRESSES.
Please note that pursuant to the Data Quality Act, in order for
substantive data to be relied upon and used by the agency, it must meet
the information quality standards set forth in the OMB and DOT Data
Quality Act guidelines. Accordingly, we encourage you to consult the
guidelines in preparing your comments. OMB's guidelines may be accessed
at: http://www.whitehouse.gov/omb/fedreg/reproducible.html. DOT's
guidelines may be accessed at: http://www.bts.gov/programs/statistical_policy_and_research/data_quality_guidelines.

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

[[Page 16122]]

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 will also consider
comments that Docket Management receives after that date. If Docket
Management receives a comment too late for us to consider in developing
a final rule (assuming that one is issued), 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 above under ADDRESSES. The hours of the Docket are
indicated above in the same location. You may also see the comments on
the Internet. To read the comments on the Internet, go to http://www.regulations.gov. Follow the online instructions for accessing the
dockets.
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.

V. Regulatory Notices and Analyses

A. Executive Orders 12866 and 13563 and DOT Regulatory Policies and
Procedures

Executive Order 12866, Executive Order 13563, and the Department of
Transportation's regulatory policies require this agency to make
determinations as to whether a regulatory action is ``significant'' and
therefore subject to OMB review and the requirements of the
aforementioned Executive Orders. Executive Order 12866 defines a
``significant regulatory action'' as one that is likely to result in a
rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or Tribal governments or
communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
We have considered the potential impact of this proposal under
Executive Order 12866, Executive Order 13563, and the Department of
Transportation's regulatory policies and procedures, and have
determined that it is not significant. This proposal amends existing
requirements to allow States a new alternative means of complying with
those requirements. It does not impose any new regulatory burdens.
Therefore, this document was not reviewed by the Office of Management
and Budget under E.O. 12866 and E.O. 13563.

B. National Environmental Policy Act

We have reviewed this rule for the purposes of the National
Environmental Policy Act and determined that it would not have a
significant impact on the quality of the human environment.

C. Regulatory Flexibility Act

Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.,
as amended by the Small Business Regulatory Enforcement Fairness Act
(SBREFA) of 1996), whenever an agency is required to publish a notice
of proposed rulemaking or final rule, it must prepare and make
available for public comment a regulatory flexibility analysis that
describes the effect of the rule on small entities (i.e., small
businesses, small organizations, and small governmental jurisdictions).
The Small Business Administration's regulations at 13 CFR part 121
define a small business, in part, as a business entity ``which operates
primarily within the United States.'' 13 CFR 121.105(a). No regulatory
flexibility analysis is required if the head of an agency certifies the
proposal would not have a significant economic impact on a substantial
number of small entities. SBREFA amended the Regulatory Flexibility Act
to require Federal agencies to provide a statement of the factual basis
for certifying that a proposal would not have a significant economic
impact on a substantial number of small entities.
In compliance with the Regulatory Flexibility Act, NHTSA has
evaluated the effects of this proposed rule on small entities. The head
of the agency has certified that the proposed rule would not have a
significant economic impact on a substantial number of small entities.
This proposal is only allowing States the option of an alternative
means of complying with an existing requirement and therefore would not
impose any new impact on any small entities.

D. Executive Order 13132 (Federalism)

NHTSA has examined today's NPRM pursuant to Executive Order 13132
(64 FR 43255, August 10, 1999). Executive Order 13132 requires agencies
to determine the federalism implications of a proposed rule. The agency
has determined that the proposed rule does not have sufficient
federalism implications to warrant the preparation of a Federalism
Assessment. The proposed rule merely adds another option to the way
States are allowed to process and issue existing odometer disclosure
requirements, and does not alter the effect on the States of existing
statutory or regulatory requirements.

E. Executive Order 12988 (Civil Justice Reform)

When promulgating a regulation, Executive Order 12988 specifically
requires that the agency must make every reasonable effort to ensure
that the regulation, as appropriate: (1) Specifies in clear language
the preemptive effect; (2) specifies in clear language the effect on
existing Federal law or regulation, including all provisions repealed,
circumscribed, displaced, impaired, or modified; (3) provides a clear
legal standard for affected conduct rather than a general standard,
while promoting simplification and burden reduction; (4) specifies in
clear language the retroactive effect; (5) specifies whether
administrative proceedings are to be required before parties may file
suit in court; (6) explicitly or implicitly defines key terms; and (7)
addresses other important issues affecting clarity and general
draftsmanship of regulations.
Pursuant to this Order, NHTSA notes as follows. The preemptive
effect of this proposal is discussed above in connection with Executive
Order 13132. NHTSA has also considered whether this rulemaking would
have any retroactive effect. This proposed rule does not have any
retroactive effect. NHTSA notes further that there is no requirement
that individuals submit a petition for reconsideration or pursue other
administrative proceeding before they may file suit in court.

F. Executive Order 13609: Promoting International Regulatory
Cooperation

The policy statement in section 1 of Executive Order 13609
provides, in part:
The regulatory approaches taken by foreign governments may differ
from those taken by U.S. regulatory agencies to address similar issues.
In some cases,

[[Page 16123]]

the differences between the regulatory approaches of U.S. agencies and
those of their foreign counterparts might not be necessary and might
impair the ability of American businesses to export and compete
internationally. In meeting shared challenges involving health, safety,
labor, security, environmental, and other issues, international
regulatory cooperation can identify approaches that are at least as
protective as those that are or would be adopted in the absence of such
cooperation. International regulatory cooperation can also reduce,
eliminate, or prevent unnecessary differences in regulatory
requirements.
NHTSA requests public comment on whether (a) ``regulatory
approaches taken by foreign governments'' concerning the subject matter
of this rulemaking, and (b) the above policy statement, have any
implications for this rulemaking.

G. National Technology Transfer and Advancement Act

Under the National Technology Transfer and Advancement Act of 1995
(NTTAA) (Pub. L. 104-113), all Federal agencies and departments shall
use technical standards that are developed or adopted by voluntary
consensus standards bodies, using such technical standards as a means
to carry out policy objectives or activities determined by the agencies
and departments, except when use of such a voluntary consensus standard
would be inconsistent with the law or otherwise impractical. Voluntary
consensus standards are technical standards (e.g., materials
specifications, test methods, sampling procedures, and business
practices) that are developed or adopted by voluntary consensus
standards bodies, such as the SAE International. The NTTAA directs
NHTSA to provide Congress, through OMB, explanations when the agency
decides not to use available and applicable voluntary consensus
standards. NHTSA is proposing to reference the standards provided in
NIST Special Publication 800-63-2, Electronic Authentication Guideline,
to determine the appropriate level of security to authenticate
electronic signatures.

H. Unfunded Mandates Reform Act

The Unfunded Mandates Reform Act of 1995 requires agencies to
prepare a written assessment of the costs, benefits and other effects
of proposed or final rules that include a Federal mandate likely to
result in the expenditure by State, local or tribal governments, in the
aggregate, or by the private sector, of more than $100 million annually
(adjusted for inflation with base year of 1995). In 2011 dollars, this
threshold is $139 million.\5\
---------------------------------------------------------------------------

\5\ Adjusting this amount by the implicit gross domestic product
price deflator for the year 2011 results in $139 million (113.361/
81.606 = 1.39).
---------------------------------------------------------------------------

This proposed rule would not result in the expenditure by State,
local, or tribal governments, in the aggregate, or more than $139
million annually, and would not result in the expenditure of that
magnitude by the private sector.

I. Paperwork Reduction Act

Under the procedures established by the Paperwork Reduction Act of
1995 (PRA), a person is not required to respond to a collection of
information by a Federal agency unless the collection displays a valid
OMB control number. Today's NPRM does not propose any new information
collection requirements, it merely allows States to provide an
alternative means of collecting information they already collect.

J. Plain Language

Executive Order 12866 requires each agency to write all rules in
plain language. Application of the principles of plain language
includes consideration of the following questions:
Have we organized the material to suit the public's needs?
Are the requirements in the rule clearly stated?
Does the rule contain technical language or jargon that
isn't clear?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the rule easier to understand?
Would more (but shorter) sections be better?
Could we improve clarity by adding tables, lists, or
diagrams?
What else could we do to make the rule easier to
understand?
If you have any responses to these questions, please include them
in your comments on this proposal.

K. Regulation Identifier Number (RIN)

The Department of Transportation assigns a regulation identifier
number (RIN) to each regulatory action listed in the Unified Agenda of
Federal Regulations. The Regulatory Information Service Center
publishes the Unified Agenda in April and October of each year. You may
use the RIN contained in the heading at the beginning of this document
to find this action in the Unified Agenda.

L. Privacy Act

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 organization, business, labor union, etc.). You may review DOT's
complete Privacy Act statement in the Federal Register published on
April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit
http://www.dot.gov/privacy.html.

List of Subjects in 49 CFR Part 580

Consumer protection, Motor vehicles, Reporting and recordkeeping
requirements.

For the reasons discussed in the preamble, NHTSA proposes to amend
49 CFR part 580 as follows:

PART 580--ODOMETER DISCLOSURE REQUIREMENTS

0
1. Revise the authority citation to read as follows:

Authority: 49 U.S.C. 32705; Pub. L. 112-141; delegation of
authority at 49 CFR 1.95.

0
2. Revise Sec. 580.1 to read as follows:

Sec. 580.1 Scope.

This part prescribes rules requiring transferors and lessees of
motor vehicles to make electronic or written disclosure to transferees
and lessors respectively, concerning the odometer mileage and its
accuracy as directed by sections 408 (a) and (e) of the Motor Vehicle
Information and Cost Savings Act as amended, 15 U.S.C. 1988 (a) and
(e). In addition, this part prescribes the rules requiring the
retention of odometer disclosure statements by motor vehicle dealers,
distributors and lessors and the retention of certain other information
by auction companies as directed by sections 408(g) and 414 of the
Motor Vehicle Information and Cost Savings Act as amended, 15 U.S.C.
1990(d) and 1988(g).
0
3. Amend Sec. 580.3 by adding in alphabetical order, definitions for
``Electronic Document'', ``Physical Document'' and ``Sign or
Signature'' to read as follows:

Sec. 580.3 Definitions.

* * * * *
Electronic Document means a title, reassignment document or power
of attorney that is maintained in electronic form by a state, territory
or possession that meets all the requirements of this part.
* * * * *
Physical Document means a title, reassignment document or power of
attorney printed on paper that meets all the requirements of this part.
* * * * *

[[Page 16124]]

Sign or Signature means either:
(a) For a paper odometer disclosure, a person's name, or a mark
representing it, as hand written personally.
(b) For an electronic odometer disclosure, an electronic sound,
symbol, or process using an authentication system equivalent to or
greater than Level 3 as described in National Institute of Standards
and Technology (NIST) Special Publication 800-63-2, Electronic
Authentication Guideline, which identifies a specific individual.
* * * * *
0
4. Revise Sec. 580.4 to read as follows:

Sec. 580.4 Security of title documents and power of attorney forms.

(a) Each physical title shall be set forth by means of a secure
printing process or other secure process. In addition, physical power
of attorney forms issued pursuant to Sec. Sec. 580.13 and 580.14 and
physical documents which are used to reassign the title shall be issued
by the State and shall be set forth by a secure process.
(b) Each electronic title shall be maintained in a secure
environment so it is protected from unauthorized modification,
alteration or disclosure. In addition, electronic power of attorney
forms maintained and made available pursuant to Sec. Sec. 580.13 and
580.14 and electronic documents which are used to reassign the title
shall maintained by the State in a secure environment so that it is
protected from unauthorized modification, alteration and disclosure.
Any system employed to create, store and maintain the aforementioned
electronic documents shall record the dates and times when the
electronic document is created, the odometer disclosures contained
within are signed and when the documents are accessed, including the
date and time any attempt is made to alter or modify the electronic
document and any alterations or modifications made.
0
5. Amend Sec. 580.5 by revising paragraphs (a), (c), (d), (f), and (g)
to read as follows:

Sec. 580.5 Disclosure of odometer information.

(a) Each title, whether a physical or electronic document, at the
time it is issued or made available to the transferee, must contain the
mileage disclosed by the transferor when ownership of the vehicle was
transferred and contain a space for the information required to be
disclosed under paragraphs (c), (d), (e) and (f) of this section at the
time of future transfer.
* * * * *
(c) In connection with the transfer of ownership of a motor vehicle
using a physical document, each transferor shall disclose the mileage
to the transferee on the physical title or, except as noted below, on
the physical document being used to reassign the title. In connection
with the transfer of ownership of a motor vehicle using an electronic
document, each transferor shall disclose the mileage to the transferee
on an electronic form incorporated into the electronic title. In the
case of a transferor in whose name the vehicle is titled, the
transferor shall disclose the mileage on an electronic form
incorporated into the electronic title or on the physical title, and
not on a reassignment documents. This disclosure must be signed by the
transferor and if made on a physical title, must contain the
transferor's printed name. In connection with the transfer of ownership
of a motor vehicle in which more than one person is a transferor, only
one transferor need sign the disclosure. In addition to the signature
of the transferor, the disclosure must contain the following
information:
* * * * *
(d) In addition to the information provided under paragraph (c) of
this section, the statement shall refer to the Federal law and shall
state that failure to complete or providing false information may
result in fines and/or imprisonment. Reference may also be made to
applicable State law. If the transaction at issue is electronic, the
information specified in this paragraph shall be displayed, and
acknowledged as understood by the party, prior to the execution of any
electronic signatures.
* * * * *
(f) The transferee shall sign the disclosure statement, and in the
case of a disclosure made on a physical title, shall print his name,
and return a copy to his transferor. If the disclosure is incorporated
into an electronic title, the electronic system shall provide a means
for making copies of the disclosure statement available to the
transferee and transferor.
(g) In jurisdictions employing paper title and odometer disclosure
schemes, if the vehicle has not been titled or if the physical title
does not contain a space for the information required, the written
disclosure shall be executed as a separate physical document. In
jurisdictions maintaining electronic title and odometer disclosure
systems, the system shall provide a means for making the disclosure
electronically and incorporating this disclosure into the electronic
title when the title is created.
* * * * *
0
6. Revise Sec. 580.6 to read as follows:

Sec. 580.6 Requirements for Electronic Transactions.

(a) Additional Requirements for Electronic Odometer Disclosures
(1) Any electronic record shall be retained in a format which
cannot be altered, and which indicates any attempts to alter it.
(2) Any signature shall identify an individual, and not solely the
organization the person represents or is employed by. If the individual
executing the electronic signature is acting in a business capacity or
otherwise on behalf of another individual or entity, the business or
other individual or entity shall also be identified when the signature
is made.
(3) Any requirement in these regulations to disclose, issue,
execute, return, notify or otherwise provide information to another
person is satisfied when a copy of the electronic disclosure or
statement is electronically transmitted or otherwise electronically
accessible to the party required to receive the disclosure.
(4) Upon creation of an electronic title to replace an existing
physical title, an electronic copy of the physical title shall be
created and retained, for not less than five years, by the State
issuing the electronic title and the physical title shall be destroyed
immediately following the successful creation of the electronic record.
The electronic copy of the paper record shall be retained
(i) in a format which cannot be altered, and which indicates any
attempts to alter it; and
(ii) in an order that permits systematic retrieval.
(5) A State allowing electronic odometer disclosures may provide
for a paper record of ownership which includes the odometer disclosure
information, provided the document clearly indicates it is not an
official title, nor official odometer disclosure, for the vehicle.
(6) States maintaining an electronic title and odometer disclosure
system shall retain the capacity to issue physical titles meeting all
the requirements of this part. Once a physical title is created by a
State with an electronic title and odometer disclosure statement
system, the electronic record must indicate that a physical title has
been issued and the electronic title and disclosure statement have been
superseded by the physical title as the official title. The State
electronic title and odometer disclosure

[[Page 16125]]

system shall record the date on which the physical title was issued and
record the identity of the recipient of the physical title as well as
the owner(s) named on the physical title.
(7) Any physical documents employed by transferors and transferees
to make electronic odometer disclosures shall comply with all
requirements of this part.
(8) Any conversion of physical documents to electronic documents
employed to comply with any of the requirements of this part must
maintain and preserve the security features incorporated in the
physical document so that any alterations or modifications to the
physical document can be detected in the physical document's electronic
counterpart. Scanning of physical documents must be made in color at a
resolution of not less than 600 dots per inch (dpi).
0
7. Amend Sec. 580.7 by revising paragraphs (a) and (b), and add
paragraph (e), to read as follows:

Sec. 580.7 Disclosure of odometer information for leased motor
vehicles.

(a) Before executing any transfer of ownership document, each
lessor of a leased motor vehicle shall notify the lessee in writing on
a physical document or within an electronic document stating that the
lessee is required to provide a written disclosure to the lessor
regarding the mileage. This notice shall contain a reference to the
Federal law and shall state that failure to complete or providing false
information may result in fines and/or imprisonment. Reference may also
be made to applicable State law. If the transaction at issue is
electronic, the information specified in this paragraph shall be
displayed, and acknowledged as understood by the party, prior to the
execution of any electronic signatures.
(b) In connection with the transfer of ownership of the leased
motor vehicle, the lessee shall furnish to the lessor a written
statement regarding the mileage of the vehicle. This statement must be
signed by the lessee. If executed using a physical document, this
statement, in addition to the information required by paragraph (a) of
this section, shall contain the information in paragraphs 1 through 9
as set forth below. If executed using an electronic document, this
statement, in addition to the information required by paragraph (a) of
this section, shall contain the name of the person making the
disclosure and the information contained in paragraphs 2 through 9 as
set forth below.
(1) The printed name of the person making the disclosure;
(2) The current odometer reading (not to include tenths of miles);
(3) The date of the statement;
(4) The lessee's name and current address;
(5) The lessor's name and current address;
(6) The identity of the vehicle, including its make, model, year,
and body type, and its vehicle identification number;
(7) The date that the lessor notified the lessee of disclosure
requirements;
(8) The date that the completed disclosure statement was received
by the lessor; and
(9) The signature of the lessor if executed using a physical
document or the electronic signature of the lessor if statement is made
electronically.
* * * * *
(e) Any electronic system maintained by a lessor for the purpose of
complying with the requirements of this section shall meet the
requirements of Sec. 580.4(b) of this part.
0
8. Amend Sec. 580.8 by revising paragraph (a) and to add paragraph (d)
to read as follows:

Sec. 580.8 Odometer disclosure statement retention.

(a) Dealers and distributors of motor vehicles who are required by
this part to execute an odometer disclosure statement shall retain for
five years a photostat, carbon, other facsimile copy or electronic copy
or document of each odometer mileage statement which they issue and
receive. They shall retain all odometer disclosure statements at their
primary place of business in an order that is appropriate to business
requirements and that permits systematic retrieval.
* * * * *
(d) Any electronic record shall be retained in a format which
cannot be altered, and which indicates any attempts to alter it.
0
9. Amend Sec. 580.9 by revising the introductory text to read as
follows:

Sec. 580.9 Odometer record retention for auction companies.

Each auction company shall establish and retain in physical
document form, or electronic document form that complies with the
requirement of Sec. 580.4(b), at its primary place of business in an
order that is appropriate to business requirements and that permits
systematic retrieval, for five years following the date of sale of each
motor vehicle, the following records:
* * * * *
0
10. Amend Sec. 580.10 by revising paragraph (b)(2) as follows:

Sec. 580.10 Application for assistance.

* * * * *
(b) * * *
(2) Be submitted to the Office of Chief Counsel, National Highway
Traffic Safety Administration, 1200 New Jersey Avenue SE., W41-326,
Washington, DC 20590;
* * * * *
0
11. Amend Sec. 580.11 by revising paragraphs (a), (b)(2), and (c) to
read as follows:

Sec. 580.11 Petition for approval of alternate disclosure
requirements.

(a) A State may petition NHTSA for approval of disclosure
requirements which differ from the disclosure requirements of Sec.
580.5, Sec. 580.6, Sec. 580.7, or Sec. 580.13(f) of this part.
(b) * * *
(2) Be submitted to the Office of Chief Counsel, National Highway
Traffic Safety Administration, 1200 New Jersey Avenue SE., W41-326,
Washington, DC 20590;
* * * * *
(c) Notice of the petition and an initial determination pending a
30-day comment period will be published in the Federal Register. Notice
of final grant or denial of a petition for approval of alternate motor
vehicle disclosure requirements will be published in the Federal
Register. The effect of the grant of a petition is to relieve a State
from responsibility to conform the State disclosure requirements with
Sec. 580.5, Sec. 580.6, Sec. 580.7, or Sec. 580.13(f), as
applicable, for as long as the approved alternate disclosure
requirements remain in effect in that State. The effect of a denial is
to require a State to conform to the requirements of Sec. 580.5, Sec.
580.6, Sec. 580.7, or Sec. 580.13(f), as applicable, of this part
until such time as the NHTSA approves any alternate motor vehicle
disclosure requirements.
0
12. Remove and reserve Sec. 580.12.

Sec. 580.12 [Removed and Reserved]

0
13. Amend Sec. 580.13 by revising paragraphs (a), (b), and (f) to read
as follows:

Sec. 580.13 Disclosure of odometer information by power of attorney.

(a) If the transferor's title is physically held by a lienholder,
if the transferor's title exists in electronic form and the transferee
is located in a State that does not create or maintain electronic
titles, or if the transferor to whom the title was issued by the State
has lost his title and the transferee obtains a duplicate title on
behalf of the transferor, and if otherwise permitted by State law, the
transferor may give a power of attorney to his transferee for the
purpose of

[[Page 16126]]

mileage disclosure. The power of attorney shall be on a form issued by
the State to the transferee that is set forth by means of a secure
printing process or other secure process, and shall contain, in part A,
a space for the information required to be disclosed under paragraphs
(b), (c), (d), and (e) of this section. If a State permits the use of a
power of attorney in the situation described in Sec. 580.14(a), the
form must also contain, in part B, a space for the information required
to be disclosed under Sec. 580.14, and, in part C, a space for the
certification required to be made under Sec. 580.15.
(b) In connection with the transfer of ownership of a motor
vehicle, each transferor to whom a title was issued by the State whose
title is physically held by a lienholder, whose title exists in
electronic form and the transferee is located in a State that does not
create or maintain electronic titles or whose title has been lost, and
who elects to give his transferee a power of attorney for the purpose
of mileage disclosure, must appoint the transferee his attorney-in-fact
for the purpose of mileage disclosure and disclose the mileage on the
power of attorney form issued by the State. This written disclosure
must be signed by the transferor, including the printed name, and
contain the following information:
(1) The odometer reading at the time of transfer (not to include
tenths of miles);
(2) The date of transfer;
(3) The transferor's name and current address;
(4) The transferee's name and current address; and
(5) The identity of the vehicle, including its make, model, year,
body type and vehicle identification number.
* * * * *
(f) Upon receipt of the transferor's title, the transferee shall
complete the space for mileage disclosure on the title exactly as the
mileage was disclosed by the transferor on the power of attorney form.
The transferee shall submit the original power of attorney form to the
State that issued it, with a copy of the transferor's physical title or
with the actual physical title when the transferee submits a new title
application at the same time. The State shall retain the power of
attorney form and title for three years or a period equal to the State
titling record retention period, whichever is shorter. If the mileage
disclosed on the power of attorney form is lower than the mileage
appearing on the title, the power of attorney is void and the dealer
shall not complete the mileage disclosure on the title.
0
14. Amend Sec. 580.14 by revising paragraphs (a), (b), (e), and (f) to
read as follows:

Sec. 580.14 Power of attorney to review title documents and
acknowledge disclosure.

(a) In circumstances where part A of a secure power of attorney
form has been used pursuant to Sec. 580.13 of this part, and if
otherwise permitted by State law, a transferee may give a power of
attorney to his transferor to review the physical title and any
physical reassignment documents for mileage discrepancies, and if no
discrepancies are found, to acknowledge disclosure on the physical
title. The power of attorney shall be on part B of the form referred to
in Sec. 580.13(a), which shall contain a space for the information
required to be disclosed under paragraphs (b), (c), (d), and (e) of
this section and, in part C, a space for the certification required to
be made under Sec. 580.15.
(b) The power of attorney must include a mileage disclosure from
the transferor to the transferee and must be signed by the transferor,
including the printed name, and contain the following information:
(1) The odometer reading at the time of transfer (not to include
tenths of miles);
(2) The date of transfer;
(3) The transferor's name and current address;
(4) The transferee's name and current address; and
(5) The identity of the vehicle, including its make, model, year,
body type and vehicle identification number.
* * * * *
(e) The transferee shall sign the physical power of attorney form,
and print his name.
(f) The transferor shall give a copy of the physical power of
attorney form to his transferee.
0
15. Amend Sec. 580.15 by revising paragraph (a) to read as follows:

Sec. 580.15 Certification by person exercising powers of attorney.

(a) A person who exercises a power of attorney under both
Sec. Sec. 580.13 and 580.14 must complete a certification that he has
disclosed on the physical title document the mileage as it was provided
to him on the physical power of attorney form, and that upon
examination of the physical title and any physical reassignment
documents, the mileage disclosure he has made on the physical title
pursuant to the power of attorney is greater than that previously
stated on the physical title and reassignment documents. This
certification shall be under part C of the same form as the powers of
attorney executed under Sec. Sec. 580.13 and 580.14 and shall include:
* * * * *
0
16. Amend Sec. 580.17 by revising paragraph (a)(3) and example to
paragraph (a)(3) to read as follows:

Sec. 580.17 Exemptions.

* * * * *
(a) * * *
(3) A vehicle that was manufactured in a model year beginning at
least twenty five years before January 1 of the calendar year in which
the transfer occurs; or
Example to paragraph (a)(3): For vehicle transfers occurring during
calendar year 2016, model year 1991 or older vehicles are exempt.
* * * * *

Issued in Washington, DC, on March 18, 2016. Under authority
delegated in 49 CFR part 1.95
Mark R. Rosekind,
Administrator.
[FR Doc. 2016-06665 Filed 3-24-16; 8:45 am]
BILLING CODE 4910-59-P