Petition for Approval of Alternate Odometer Disclosure Requirements |
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David L. Strickland
National Highway Traffic Safety Administration
January 10, 2011
[Federal Register: January 10, 2011 (Volume 76, Number 6)]
[Rules and Regulations]
[Page 1367-1375]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10ja11-18]
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
49 CFR Part 580
[Docket No. NHTSA-2010-0046; Notice 2]
Petition for Approval of Alternate Odometer Disclosure
Requirements
AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.
ACTION: Final Determination.
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SUMMARY: The State of Wisconsin has petitioned for approval of
alternate requirements to certain requirements under Federal odometer
law. NHTSA is issuing this final determination granting Wisconsin's
petition as it pertains to vehicle transfers. This determination does
not include vehicles covered by a lease agreement.
DATES: Effective Date: February 9, 2011.
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov or the street
address listed above. Follow the online instructions for accessing the
dockets. Anyone is able to search the electronic form of all comments
received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review DOT's
complete Privacy Act Statement in the Federal Register published on
April 11, 2000 (65 FR 19477-78) or you may visit http://
DocketInfo.dot.gov.
FOR FURTHER INFORMATION CONTACT: David Case, Office of the Chief
Counsel, National Highway Traffic Safety Administration, 1200 New
Jersey Avenue, SE., Washington, DC 20590 (Telephone: 202-366-2239)
(Fax: 202-366-3820).
SUPPLEMENTARY INFORMATION:
I. Introduction
Federal odometer law, which is largely based on the Motor Vehicle
[[Page 1368]]
Information and Cost Savings Act (Cost Savings Act) \1\ and the Truth
in Mileage Act of 1986 \2\, as amended (TIMA), contains a number of
provisions to limit odometer fraud and assure that the purchaser of a
motor vehicle knows the true mileage of the vehicle. The Cost Savings
Act requires the Secretary of Transportation to promulgate regulations
requiring the transferor (seller) of a motor vehicle to provide a
written statement of the vehicle's mileage registered on the odometer
to the transferee (buyer) in connection with the transfer of ownership.
This written statement is generally referred to as the odometer
disclosure statement. Further, under TIMA, vehicle titles themselves
must have a space for the odometer disclosure statement, and States are
prohibited from licensing vehicles unless a valid odometer disclosure
statement on the title is signed and dated by the transferor. Titles
must also be printed by a secure printing process or other secure
process. TIMA also contains specific disclosure provisions on transfers
of leased vehicles. Federal law also contains document retention
requirements for motor vehicle dealers and lessors.
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\1\ Public Law 92-513, 86 Stat. 947, 961 (1972).
\2\ Public Law 99-579, 100 Stat. 3309 (1986).
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TIMA's motor vehicle mileage disclosure requirements apply in a
State unless the State has alternative requirements approved by the
Secretary. The Secretary has delegated administration of the odometer
program to NHTSA. A State may petition NHTSA for approval of such
alternate odometer disclosure requirements.
The State of Wisconsin has petitioned NHTSA for approval of
alternate odometer disclosure requirements under TIMA. The Wisconsin
Department of Transportation (WisDOT) proposes a paperless electronic
title transfer scheme, described more fully in section IV, similar to
the Commonwealth of Virginia's alternate odometer disclosure program,
approved by NHTSA on 2 January 2009. 74 FR 643, 650 (January 7, 2009).
Wisconsin's program will not apply to, or in lieu, of the provisions of
Federal odometer law related to, transactions involving at least one
out-of-State party.\3\
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\3\ It also does not apply to disclosures by power of attorney
where the title is held by a lien holder because, in Wisconsin,
lienholders do not hold the vehicle title.
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With limited exceptions, NHTSA initially determined that
Wisconsin's proposal satisfied Federal odometer law, and proposed
granting Wisconsin's petition on the condition that it amend its
program or demonstrate that it meets the requirements of Federal law.
See 75 FR 20965 (April 22, 2010). To gain final approval, Wisconsin was
required to demonstrate that its program conforms to Federal odometer
law disclosure requirements specifying that an odometer disclosure
statement, including the brand, be made at the time of transfer when
the seller is unavailable.\4\ NHTSA's Initial Determination also asked
Wisconsin to address aspects of its e-Odometer program relating to
transfer of leased vehicles. As addressed below, Wisconsin will submit
a separate petition regarding transfer of leased vehicles. After
careful consideration of comments, and the entire record, NHTSA is
granting Wisconsin's petition for title transfers other than those
involving a lease agreement. NHTSA's analysis is set forth below in
Section VI.
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\4\ See Section 408 of the Cost Savings Act, recodified at 49
U.S.C. 32705, and 49 CFR 580.5(c).
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II. Statutory Background
NHTSA reviewed the statutory background of Federal odometer law in
its consideration and approval of Virginia's petition for alternate
odometer disclosure requirements. See 73 FR 35617 (June 24, 2008) and
74 FR 643 (January 7, 2009). The statutory background of the Cost
Savings Act and TIMA, and the purposes behind TIMA, are discussed at
length in NHTSA's Final Determination granting Virginia's petition. 74
FR 643, 647-48. A brief summary of the statutory background of Federal
odometer law and the purposes of TIMA follows.
In 1972, Congress enacted the Cost Savings Act, among other things,
to prohibit tampering of odometers on motor vehicles and to establish
certain safeguards for the protection of purchasers with respect to the
sale of motor vehicles having altered or reset odometers. See Public
Law 92-513, section 401, 86 Stat. 947, 961-63 (1972). The Cost Savings
Act required that, under regulations to be published by the Secretary,
the transferor of a motor vehicle provide a written vehicle mileage
disclosure to the transferee, prohibited odometer tampering and
provided for enforcement. See Id. at section 408, 86 Stat. at 947.
Section 408 states that the Secretary shall prescribe rules requiring
any transferor of a motor vehicle to provide a written disclosure to
the transferee that includes the cumulative mileage on the odometer and
if the odometer reading is known to be different than the miles the
vehicle has actually traveled, a statement that the actual mileage is
unknown. In general, the purpose for the disclosure was to assist
purchasers to know the true mileage of a motor vehicle.
A major shortcoming of the odometer provisions of the Cost Savings
Act was that they did not require that the odometer disclosure
statement be on the title. In a number of States, they were on separate
documents that could be altered easily or discarded and did not travel
with the title. See 74 FR 644. Consequently, the disclosure statements
did not necessarily deter odometer fraud employing altered documents,
discarded titles, and title washing. Id.
Congress enacted TIMA in 1986 to address the Cost Savings Act's
shortcomings. It amended the Cost Savings Act to prohibit States from
licensing vehicles after transfers of ownership unless the new owner
(transferee) submitted a title from the seller (transferor) containing
the seller's signed and dated statement of the vehicle's mileage, as
previously required by the Cost Savings Act. See Public Law 99-579, 100
Stat. 3309 (1986); 74 FR 644 (Jan. 7, 2009). TIMA also prohibits the
licensing of vehicles for use in any State unless the title issued to
the transferee is printed using a secure printing process or other
secure process, indicates the vehicle mileage at the time of transfer,
and contains additional space for a subsequent mileage disclosure by
the transferee when it is sold again. Id. Other provisions created
similar safeguards for leased vehicles.
TIMA added a provision to the Cost Savings Act that, with the
approval of the Secretary of Transportation, allows States to have
alternate requirements to those required under TIMA respecting the
disclosure of mileage. It amended Section 408 of the Cost Savings Act
to add a new subsection (f), which provided that the requirements of
subsections (d) and (e)(1) respecting the disclosure of motor vehicle
mileage when motor vehicles are transferred or leased shall apply in a
State unless the State has in effect alternate motor vehicle mileage
disclosure requirements approved by the Secretary. Subsection (f)
provided further that the Secretary shall approve alternate motor
vehicle mileage disclosure requirements submitted by a State unless the
Secretary determines that such requirements are not consistent with the
purpose of the disclosure required by subsection (d) or (e), as the
case may be.
In 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
[[Page 1369]]
section 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 section 7(a), 104 Stat.
4654, 4657 (1990).
In 1994, in the course of the recodification of various laws
pertaining to the Department of Transportation, the Cost Savings Act,
as amended, was repealed, reenacted, and recodified without substantive
change. See Public Law 103-272, 108 Stat. 745, 1048-1056, 1379, 1387
(1994). The odometer statute is now codified at 49 U.S.C. 32701 et seq.
In particular, Section 408(a) of the Cost Savings Act was recodified at
49 U.S.C. 32705(a). Sections 408(d) and (e), 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).
III. Statutory Purposes
As discussed above, the Cost Savings Act, as amended by TIMA in
1986, states that NHTSA ``shall approve alternate motor vehicle mileage
disclosure requirements submitted by a State unless the [NHTSA]
determines that such requirements are not consistent with the purpose
of the disclosure required by subsection (d) or (e) as the case may
be.'' (Subsections 408(d), (e) of the Cost Savings Act were recodified
to 49 U.S.C. 32705(b) and (c)). In light of this provision, we now turn
to our interpretation of the purposes of these subsections as germane
to Wisconsin's petition.
Our Final Determination granting Virginia's petition for alternate
odometer disclosure requirements identified the purposes of TIMA
germane to petitions for approval of odometer disclosure requirements
that did not include disclosures involving leased vehicles or
disclosures by power of attorney.\5\ 74 FR 643, 647-48 (January 7,
2009). A brief summary of the purposes identified in the Virginia Final
Determination follows. In the Initial Determination of Wisconsin's
petition, the Agency identified the purposes of TIMA relevant to
odometer disclosures for transfer of leased vehicles. 75 FR 20972-73.
Since, as explained below, Wisconsin has indicated that it will submit
a separate petition regarding transfer of leased vehicles, the purposes
of TIMA relevant to leased vehicles are not discussed here.
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\5\ Since Virginia's program did not cover disclosures involving
leased vehicles or disclosures by power of attorney, the purposes of
Sections 408(d)(2)(C) and 408(e) of the Cost Savings Act, as
amended, were not germane and were not addressed in the notice
approving the Virginia program. See 74 FR 647 n. 12.
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One purpose of TIMA is to assure that the form of the odometer
disclosure precludes odometer fraud. 74 FR 647. To prevent odometer
fraud facilitated by disclosure statements that were separate from
titles, TIMA required mileage disclosures to be on a secure vehicle
title instead of a separate document. These titles also had to contain
space for the seller's attested mileage disclosure and a new disclosure
by the purchaser when the vehicle was sold again. This discouraged
mileage alterations on titles and limited opportunities for obtaining
new titles with lower mileage than the actual mileage. Id.
A second purpose of TIMA is to prevent odometer fraud by processes
and mechanisms making odometer mileage disclosures on the title a
condition of any application for a title and a requirement for any
title issued by a State. 74 FR 647. This provision was intended to
eliminate or significantly reduce abuses associated with lack of
control of the titling process. Id.
Third, TIMA sought to prevent alterations of disclosures on titles
and to preclude counterfeit titles through secure processes. 74 FR 648.
In furtherance of these purposes, paper titles (incorporating the
disclosure statement) must be produced using a secure printing process
or protected by ``other secure process.'' \6\ Id.
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\6\ Congress intended to encourage new technologies by including
the language ``other secure process.'' The House Report accompanying
TIMA noted that `` `other secure process' is intended to describe
means other than printing which could securely provide for the
storage and transmittal of title and mileage information.'' H.R.
Rep. No. 99-833, at 33 (1986). ``In adopting this language, the
Committee intends to encourage new technologies which will provide
increased levels of security for titles.'' Id. See also Cost Savings
Act, as amended by TIMA, section 408(d), recodified at 49 U.S.C.
32705(b).
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A fourth purpose is to create a record of vehicle mileage and a
paper trail. 74 FR 648. The underlying purposes of this record and
paper trail were to better inform consumers and provide mechanisms for
tracing odometer tampering and prosecuting violators. TIMA's
requirement that new applications for titles include signed mileage
disclosure statements on the titles from the prior owners creates a
permanent record that is easily checked by subsequent owners or law
enforcement officials. This record provides critical snapshots of
vehicle mileage at every transfer, which are the fundamental links of
this paper trail.
Finally, the general purpose of TIMA is to protect consumers by
assuring that they receive valid representations of the vehicle's
actual mileage at the time of transfer based on odometer disclosures.
74 FR 648.
IV. The Wisconsin Program
As explained in NHTSA's Initial Determination, Wisconsin petitions
for approval of alternate odometer disclosure requirements. 75 FR
20965, 20967 (Apr. 22, 2010). Wisconsin requests alternate disclosure
requirements for motor vehicle private party (including motor vehicle
dealers) transfers, including transactions involving a lienholder.\7\
Wisconsin's petition included a request for alternate odometer
disclosure requirements for transactions involving leased vehicles but,
as explained below, Wisconsin states that it will submit a separate
petition addressing electronic odometer disclosure for leased vehicle
transfers.
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\7\ Under Wisconsin law, a lienholder does not physically
possess the title to the vehicle; the title remains with the vehicle
owner. Thus, Wisconsin does not permit odometer disclosure by power
of attorney when title is held by a lienholder and does not petition
for alternate requirements regarding odometer disclosure by power of
attorney. Wisconsin does accept a written odometer disclosure by
power of attorney from an out-of-state party that registers the
vehicle in Wisconsin.
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Recent Wisconsin legislation establishes that the title, title
application, and other specified information maintained by the DMV in
its database are the original and controlling title records for a
vehicle. See Wis. Stat. Ann. Sec. 342.01(2)(ac) and Sec. 342.09(4)
(2009). Wisconsin proposes creating an electronic odometer statement
(e-Odometer) residing in the WisDOT Department of Motor Vehicles (DMV)
database as the official odometer statement. Under the proposal, a
distinct e-Odometer system will be created to accept and maintain e-
Odometer statements as stand-alone electronic records, separate from an
electronic title. E-Odometer statements will be linked to, and become
part of the title record in the DMV database. The DMV's titling system
will automatically link the e-Odometer statements to a vehicle's title
whenever an electronic title transaction occurs, and a title transfer
could not be completed unless proper odometer disclosure is entered in
the e-Odometer record. According to Wisconsin's petition, if a paper
title is needed, the DMV will print it on secure paper with the
odometer disclosure
[[Page 1370]]
statement in the proper location and format.
Wisconsin's original petition encompassed transfers of leased
vehicles. In the Initial Determination, NHTSA raised questions about
this aspect of Wisconsin's program. In its comments on that
Determination, Wisconsin stated that lessee odometer disclosure would
be addressed in the second implementation phase, and that the State
would consult with NHTSA. Wisconsin asked that NHTSA approve its
petition with the understanding that Wisconsin would consult with NHTSA
to satisfy all requirements. If NHTSA is unable to approve the State's
petition with that provision, the State requested approval of the
petition except for the lessor/lessee transaction process. The State
would expect to file a separate petition for approval of the lessor/
lessee transaction in the future. NHTSA cannot approve a petition or
part of a petition on the basis of future consultations. As a result,
NHTSA is unable to grant Wisconsin's petition as it pertains to
transfers of vehicles involving a lease agreement. This is without
prejudice for Wisconsin to develop e-Odometer provisions for the
transfer of leased vehicles in a future phase of its implementation
plan and to petition NHTSA for approval of electronic leased vehicle
odometer disclosure in the future. We will not discuss Wisconsin's
proposal for leased vehicles below.
A. Overview of Wisconsin's Electronic Titling System
Wisconsin has implemented a titling system that permits
individuals, organizations and businesses (collectively, DMV Customers)
to process vehicle title transactions electronically through its
automated processing partnership system (APPS) program. See Wis. Admin.
Code Sec. Trans 1565.01. Under APPS, a vendor \8\ approved by the DMV
\9\ creates a computer system to link or interface DMV customers with
the DMV database. The link permits the DMV customer to access the DMV
database and conduct authorized title transactions.
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\8\ According to Wisconsin's petition, a ``vendor'' is a person,
business or organization that contracts with the DMV to provide a
host computer system by which agents may obtain access to specified
information services. Wis. Admin. Code Sec. Trans 156.02(8). An
approved vendor must work with Wisconsin's DMV to develop an
automated interface software application that meets the automated
interface specifications prescribed by DMV. Wis. Admin. Code Sec.
Trans 156.03(4).
\9\ In order to become an approved vendor, an entity must submit
an application with certain information to DMV, submit an approved
implementation plan, work with DMV to meet the automated interface
specifications prescribed by DMV and execute a contract with DMV.
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In order to gain direct access to the DMV's database under the
vendor system, a DMV customer must enter into an agreement with an
approved vendor, obtain DMV approval to process title transactions, and
enter into a contract with the DMV. To maintain system security and
integrity, employees of DMV customers using the interface will have to
submit a signed affidavit to the DMV before accessing the system. Once
the DMV customer complies with these requirements, the DMV customer
will be able to perform authorized title transactions directly within
the DMV's system.
Currently, Wisconsin requires motor vehicle dealers to
electronically process title transactions for vehicles that they sell.
See Wis. Stat. Ann. Sec. 342.16(1)(a) and (am) (2009); Wis. Admin.
Code Sec. Trans 141.01. Motor vehicle dealers can perform electronic
titling transactions through APPS or through an Internet-based
interface with the DMV, known as e-MV11. In order to process title
transactions using the e-MV11, a DMV customer must apply to the DMV by
submitting an application setting forth the name, address and contact
of the entity and providing the names and access authority of employees
performing title transactions. After setting up the required security
protocols, the DMV customer can enter the appropriate title
transaction.\10\ Also, under Wisconsin's electronic titling program,
motor vehicle dealers are required to maintain and keep their title
transactions records, including odometer disclosure statements, for
five years. See Wis. Admin. Code Sec. Trans 141.08(2).
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\10\ According to Wisconsin's petition, authorized transactions
for amending an electronic odometer record are or will be:
1. Dealer sales to private buyers, including purchases and
trade-ins from private buyers;
2. Dealer reassignments to other dealers;
3. Consignor statement when consigning a vehicle for sale;
4. Dealer or auction purchase of out-of-state vehicle and
subsequent sale of vehicle with Wisconsin title (Wisconsin could
produce a secure paper title for use by the other State.);
5. DMV odometer corrections on title;
6. Involuntary liens from towing/storage, landlord, or mechanic;
7. Repossessions;
8. Private sales where title is processed by DMV agent or
financial institution;
9. Lessee to lessor statement upon relinquishing a leased
vehicle; and
10. Private sales using e-MVPublic.
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According to Wisconsin's petition, the electronic titling program
will be expanded to include other persons, businesses, and
organizations. These businesses and organizations, such as lienholders
or auction companies, will conduct electronic title transactions
through APPS. Individuals conducting private sales of unencumbered
vehicles will eventually have the ability to perform title transfer and
odometer disclosure through an Internet-based application called e-
MVPublic.
B. Wisconsin's e-Odometer Program
Wisconsin asserts that e-Odometer entries will provide a virtual
replacement of existing secure paper odometer disclosure statements for
vehicle transactions. Under Wisconsin's proposal, the e-Odometer system
will be a unique electronic application within Wisconsin's electronic
title transfer system. Although the e-Odometer entry will be a stand-
alone secure electronic record, it will be safely and securely
electronically linked to the electronic title record of the vehicle by
the vehicle identification number (VIN) and become part of the vehicle
title. Title transfer could not occur unless the transferor and
transferee, or other authorized persons such as dealer employees,
perform the required disclosure and acceptance through the e-Odometer
system. Once the odometer disclosure and acceptance is completed, the
statement is stored in the e-Odometer system and linked to the
electronic title record by the VIN.
The petition states that the following information will be stored
in the secure e-Odometer record:
1. VIN;
2. Description of the vehicle by make, model, model year and body
type;
3. Odometer reading and date of the reading;
4. The Brand (actual, not actual or exceeds limits of odometer);
5. Name, address of person disclosing odometer reading (must match
the transferor);
6. Name, address of person accepting odometer reading (must match
the transferee); and
7. Statement reference to Federal law requirement and potential
penalties.
Some of the e-Odometer information and other vehicle information
will be available to DMV personnel through a DMV vehicle inquiry
function, while limited information will be available to the public
through a public inquiry function. The information available to DMV
personnel includes:
1. Vehicle description;
2. Title owner information;
3. Brands, if any;
4. Most current odometer reading, status and date recorded;
5. Odometer reading, status and record date history;
6. Lien information; and
[[Page 1371]]
7. Owner in possession of the vehicle.
The publicly available information includes:
1. Vehicle description;
2. Most current odometer reading, status and date recorded;
3. Brands, if any; and
4. Lien information.
Wisconsin's petition states that creation of or amendments to e-
Odometer records will be possible only when titles are transferred in
the course of authorized transactions by authorized persons.
C. Wisconsin e-Odometer Implementation Schedule
Wisconsin plans to implement its e-Odometer program in three
phases. Because motor vehicle dealers are already required to complete
title transactions electronically, Wisconsin intends to begin the e-
Odometer program with these dealers. See Wis. Stat. Ann. Sec.
342.16(1)(a) and (am) (2009); Wis. Admin. Code Sec. Trans 141.01. The
second phase will implement e-Odometer in title transfers involving
lienholders, motor vehicle auctions, and vehicle repossessions. The
final phase will implement e-Odometer in transfers of unencumbered
motor vehicles between private individuals. Phase two and three are
still under development and Wisconsin has not provided an estimated
implementation schedule. According to the petition, during phase-in,
some odometer disclosure transactions will be electronic but some will
continue to be on the secure paper title and secure paper odometer
statement.
1. Phase One: e-Odometer in Dealer Transactions
Wisconsin's petition states e-Odometer will apply first to motor
vehicle transfers through motor vehicle dealers. During this phase,
eligible title transactions include reassignments among dealers,
consignments, and retail sales. In order to complete a transaction,
there must be an odometer disclosure and acceptance of the odometer
statement. The odometer disclosure and acceptance will be permitted
between the following persons: (1) Authorized dealer personnel and an
individual buyer; (2) an individual seller trading in a vehicle and
authorized dealer personnel; (3) authorized dealer personnel in the
case of dealer reassignments; and (4) an individual vehicle owner and
an authorized person on behalf of a consignee in the case of vehicle
consignment. According to Wisconsin, the identities of all persons
involved will be verified and authenticated through the DMV's
processes.
Under Wisconsin's plan, dealer title transfer transactions will be
completed through an APPS's vendor interface application or the e-MV11
Internet-based application. During these title transfer transactions,
e-Odometer forms will be imported into the transaction and completed by
the authorized persons.
2. Phase 2: e-Odometer in Title Transactions between Private Parties
Involving Lienholders and Other Commercial Entities
Wisconsin's petition states that the second phase will incorporate
e-Odometer procedures into title transfers in a number of
circumstances, including between private parties when there is a lien
on the vehicle. These title transactions will be processed by the
financial institution holding the lien. During this phase, e-Odometer
will be available to the financial institution through the APPS
application or an application WisDOT develops for these lenders.
Because lienholders do not possess titles under Wisconsin law, a
satisfied lienholder will access e-Odometer to electronically release
the lien to allow production of a clear title. To facilitate this
process, e-Odometer forms will be available to buyers and sellers
through an Internet application allowing completion of the required
odometer disclosures and acceptances.
During this second phase, Wisconsin also plans to incorporate use
of the e-Odometer system into title transfers involving motor vehicle
auctions, involuntary vehicle transfers (i.e. involuntary liens and
repossessions), corrections to odometer information on titles, and
other transactions involving secure odometer statements.
3. Phase 3: e-Odometer in Private Sales
The last phase of Wisconsin's program will incorporate e-Odometer
entries into private sales of unencumbered vehicles. The title transfer
will be conducted through an on-line application called e-MVPublic.\11\
For private transfers of motor vehicles, odometer disclosure and
acceptance will be accomplished by the seller and buyer through e-
MVPublic once their identities are verified by DMV processes.
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\11\ For individuals without Internet access, Wisconsin is
considering providing access to e-MVPublic at its DMV service
centers. At a minimum, Wisconsin states that public libraries offer
public access to computers and the Internet, which will enable
individuals without Internet to use e-Odometer.
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D. Identity Verification Under Wisconsin e-Odometer
Wisconsin's petition describes two verification processes whose
operation differs depending on whether the user is a DMV partner or
regular customer (such as a dealer or financial institution) or an
intermittent user. For a DMV partner or regular customer, the first
step is being approved by the DMV to access its database. As part of
the approval process, the entity must provide the legal business name
and address of the business. After approval, identity verification
procedures will require these users to enter into an agreement with the
DMV that includes security procedures--including establishing an
account and secure logon ID. The users are identified and authenticated
through a unique ``user ID'' and password that are traced to a
particular person on the account.
Vendors will manage the verification process. The Wisconsin APPS
program requires approved vendors to design precise electronic security
and audit trail procedures into its interface, which DMV will then
verify. This interface requires three administrative steps to identify,
authenticate, and authorize users of the DMV's database. First, vendors
must create an audit journal to identify the individual responsible for
each transaction. Vendors assign each user a ``user ID'' that can be
traced to the individual user. Next, to authenticate the user, a
password known only to the user that is associated with the ``user ID''
is entered before a transaction is allowed. If an individual user is
not authorized by the vendor for the type of transaction requested, the
system will immediately terminate the transaction. Last, vendors must
authorize the user to access the appropriate information. In addition
to the identification protocols, vendors must create and maintain
access logs that can be used for auditing and recording keeping, which
include, among other things, a history of each customer transaction.
Under Wisconsin's plan, DMV partners and regular customers must
submit the identity of each employee who will conduct title
transactions and specify each employee's authority to perform
transactions in the DMV's database. Prior to obtaining authorization
from the DMV to conduct title transfer transactions, each employee must
submit a signed affidavit acknowledging security procedures and
safeguards. The DMV must confirm each user's authorization before the
user can process title transactions.
For individuals who are not DMV partners or regular customers,
[[Page 1372]]
Wisconsin will require individuals to establish an electronic signature
that can uniquely identify the person. Identity verification begins
with the customer entering a minimum of three personal identifiers for
the correct customer record in the DMV database. Personal identifiers
include name, address, date of birth, product number, Driver License/ID
number, and a Federal Employer Identification Number or partial Social
Security Number (possibly the last four or five digits).\12\ After the
user inputs the personal identifiers into the system, the system will
check DMV customer records and verify that the user is the correct
individual or business, and will authorize the customer to update the
odometer statement. Once the user is verified, the user can begin the
title transaction.
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\12\ Wisconsin prohibits nonresidents from applying for a
Wisconsin title, except in certain limited exceptions. See Wis.
Admin. Code Sec. Trans 154.13(2). A nonresident who is eligible to
apply for a Wisconsin title will not be considered a DMV partner or
regular customer. These nonresidents will be subject to the e-
Odometer requirements as long as the vehicle is titled and
transferred within Wisconsin.
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E. Odometer Disclosure Under Wisconsin e-Odometer
Wisconsin's petition states that two parties must engage in an
authorized e-Odometer transaction to effectuate the odometer
disclosure. In order to conduct the e-Odometer disclosure, each party
will access the DMV database by providing information to satisfy the
identity verification requirements of the system and the VIN of the
vehicle. Under Wisconsin's proposal, a transferor must disclose the
odometer reading and brand (actual/not actual/exceeding odometer
limits) and the transferee must accept the odometer reading to allow
the transaction to go forward.\13\ The e-Odometer transaction will
remain in a pending status between the transferor and transferee until
each party completes the required actions, e.g., disclosure by the
seller and acceptance by the buyer. Once both actions have been
accomplished, the e-Odometer record will be secured within DMV's
database and become part of the electronic title through the VIN.
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\13\ Wisconsin states that there are a limited number of
exceptions under Wisconsin law and e-Odometer to the requirement for
two parties to engage in a transaction to update a title. One
exception is involuntary transfer of the vehicle through
repossession by a financial institution in which the title is issued
to the financial institution. This exception is permissible under
Federal odometer law because repossession is not a transfer of
ownership and does not require an odometer disclosure statement. See
49 CFR 580.3. Another exception is when the seller is not available.
If the seller is not available, the DMV database permits the
transferee to state the odometer reading with a brand of ``not
actual.'' If the transferor becomes available to make the
disclosure, DMV will change the recorded status to ``actual.'' This
exception does not conform to Federal odometer law, which requires
an odometer disclosure statement, including the brand, at the time
of transfer of ownership. 49 U.S.C. 32705(a)(1); 49 CFR 580.5(a).
Federal odometer law does not permit subsequent alterations to the
brand as contemplated by Wisconsin. NHTSA believes that permitting
such an exception could create a loophole that will be abused.
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To clarify the e-Odometer procedure, Wisconsin provides an exemplar
title transaction involving a dealer trade-in. In a vehicle trade-in
transaction, the customer (transferor) must bring the paper title to
the dealer (transferee) at the time of the transfer. After entering all
the required data in the Wisconsin electronic title system and
initiating the e-Odometer process, the dealer will then destroy the
paper title.\14\ Under the e-Odometer process, the customer discloses
the odometer reading (and brand) and the dealer accepts the odometer
reading. The vehicle's odometer reading is then stored in the DMV
database and linked virtually to the vehicle's title through the VIN.
Upon later sale of the trade-in vehicle, the dealer (as the transferor)
must disclose the odometer reading (and brand) and the vehicle buyer
(as the transferee) must accept the odometer reading. The dealer and
buyer will access e-Odometer at the time of the sale to complete the
disclosure and acceptance of the odometer statement, which upon
acceptance by the buyer secures the odometer statement in the DMV's
database. After the sale of the vehicle is completed, the dealer
completes title processing in APPS or e-MV11 by titling the vehicle in
the consumer's name, verifying that secure odometer disclosure has been
completed. After titling is complete, the updated e-Odometer entry
becomes part of the title record. For in-State transactions, a paper
title is issued only upon request.
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\14\ According to Wisconsin, the dealer's failure to destroy the
title subjects the dealer to civil penalties and other sanctions,
such as license suspension or removal.
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F. Wisconsin's Position on Meeting the Purposes of TIMA
Wisconsin has maintained that its e-Odometer program meets the
purposes of TIMA, as described by NHTSA in its Final Determination on
the Commonwealth of Virginia's petition for alternate odometer
disclosure requirements. See 74 FR 643, 647-48 (January 7, 2009).
Wisconsin's petition states that e-Odometer is part of the
vehicle's title. Under e-Odometer, the VIN links the odometer statement
to the title record. The system automatically imports e-Odometer into
the title transfer transaction process conducted by the transferor and
transferee. A title transaction cannot occur unless the odometer
disclosure statement is made and accepted. The e-Odometer information
is then secured, stored, and becomes visible through the vehicle's
electronic title record.
According to the petition, other system requirements provide a
significant level of security for the e-Odometer system. First, title
transfer cannot occur unless the authorized persons update e-Odometer
entries. Second, only those persons authorized to make title transfer
transactions (e.g., authorized dealer personnel or authenticated
private owners) are able to make e-Odometer statements. Third, odometer
disclosure under the e-Odometer system is only permitted when a title
is transferred.\15\ If a title is required to be printed on a secure
title paper, the DMV system will automatically include the odometer
disclosure information on the printed title. If a title on secure title
paper is used in a vehicle transfer, the odometer information shown on
the secure paper title will be entered into the e-Odometer electronic
record during the title transfer transaction process and the paper
title will be destroyed.
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\15\ As noted above, there are some exceptions under Wisconsin
law.
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Wisconsin's petition also states that odometer disclosure is a
required data input for application for a title and a required output
on the title. According to the petition, the odometer disclosure and
acceptance is a required input to an electronic title transaction,
whether performed through APPS or e-MV11. Although APPS permits
odometer disclosure and acceptance at different times, e-Odometer
secures the disclosure and acceptance and stores it electronically
until the odometer disclosure is imported during title processing.
Wisconsin's petition asserts that e-Odometer provides a level of
security against altering, tampering, and counterfeiting equivalent to
the odometer statement on a secure paper title. According to Wisconsin,
the e-Odometer statement is secured in the DMV database as soon as the
transferor electronically discloses and the transferee accepts the
odometer reading. After the transferee accepts the odometer disclosure,
e-Odometer stores that mileage disclosure, the date, and the names and
addresses of the
[[Page 1373]]
transferor and transferee, and will not allow any changes to that
entry.
Finally, Wisconsin's petition contends that the authentication and
verification of the transferor's and transferee's electronic signatures
are readily detectable and reliably traced to the particular
individual. Wisconsin states that the DMV has established extensive
security procedures for vendors who process vehicle transactions on
behalf of the DMV and regularly interact with the DMV, and for
individuals and intermittent business customers who wish to make
entries in DMV records. Wisconsin's security procedures are governed
under Wisconsin statutes, administrative rules, contracts, DMV policy
and procedure, and electronic security protocols. DMV Partners and
regular business customers will access the e-Odometer system through
secure applications that are already in use for vehicle title
transactions. Individuals and intermittent business customers will
access the e-Odometer system through a secure Internet application.
Both applications require information, such as electronic signatures,
that can authenticate and verify the users' identity.
V. Summary of Public Comments
NHTSA received comments from two entities: (1) WisDOT; and (2) the
American Automotive Leasing Association (AALA). The AALA comments are
discussed in section VI below.
WisDOT's comments responded to NHTSA requirements in the Agency's
Initial Determination that Wisconsin (1) conform its program to the
requirements of Federal odometer law by not permitting the alteration
of the brand on an electronic odometer statement when the seller of the
vehicle is unavailable at the time of the transfer, or fully explains
how this exception complies with the law and its purposes; (2) permit
lessors to retain each odometer disclosure statement they give and
receive; and (3) clarify the system's ability to allow lessors to place
a different brand on the disclosure statement in those instances where
the lessor believes, or has reason to believe, that the statement
provided by the lessee is inaccurate. WisDOT submitted comments
indicating that it will manage e-odometer disclosure when a seller is
unavailable by requiring the buyer to give the odometer reading with a
brand of ``not actual,'' and specifying that the ``not actual'' brand
cannot be changed, even if the seller appears later.
While Wisconsin will seek approval of alternate odometer disclosure
requirements for leased vehicle transfers at a later date, its comments
addressed NHTSA's concerns about these transfers. Wisconsin indicated
that it will create a mandatory system for lessors to retain all
odometer statements they receive for the five-year period required by
Federal regulations, 49 CFR 580.8(b). Wisconsin also indicated that it
will build e-Odometer to facilitate odometer statements by lessors if
the lessor believes, or has reason to believe, that the lessee's
disclosure does not reflect the actual mileage of the vehicle.
VI. NHTSA's Final Determination
In this part, NHTSA considers the Wisconsin program in light of the
purposes of the disclosure required by subsection (d) of section 408 of
the Cost Savings Act.\16\ We also respond to comments.
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\16\ Since Wisconsin's program does not cover disclosures by
power of attorney or transfers involving leased vehicles, the
purposes of sections 408(d)(1)(c) and (e) of the Cost Savings Act as
amended by TIMA are not germane. Thus, Wisconsin continues to be
subject to all Federal requirements that are not based on sections
408(d)(1)(A), (B), and (2).
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Under the Cost Savings Act, as amended by TIMA, the standard is
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. The purposes are
discussed above, as is the Wisconsin alternate program.
As explained above, one purpose of the disclosures under section
408(d) and (e) of the Cost Savings Act is to assure that the form of
the odometer disclosure precludes odometer fraud. NHTSA has determined
that Wisconsin's alternate electronic odometer disclosure requirements
satisfy this purpose. Under Wisconsin's program, the vehicle's odometer
reading must be entered in the course of the title transfer transaction
for transfer of title to occur. The reading is disclosed by the
transferor and, if valid, accepted by the transferee. Thereafter the
odometer disclosure statement will reside as an electronic record in
the DMV database and will be linked to the vehicle's title by the VIN.
This electronic odometer disclosure is a required element of the
transfer and part of the title record in the DMV database. If a hard
copy of the title is needed, Wisconsin generates a title with the
odometer disclosure statement on the title using a secure printing
process. Wisconsin's system will, therefore, have the odometer
disclosure as part of the vehicle title as required by TIMA. Also,
Wisconsin's electronic title and odometer system provides an electronic
equivalent to TIMA's requirement that the title contain a space for the
transferor to disclose the vehicle's mileage. For conventional paper
transactions in Wisconsin, hard copies of electronic titles will
continue to provide a separate space for owners to execute a proper
odometer disclosure in keeping with TIMA and current practice.\17\
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\17\ Wisconsin notes that paper titles will be produced for
title transfer transactions that involve out-of-state parties, such
as a vehicle sale to an out-of-state dealer or retail purchaser, an
auction sale to an out-of-state dealer or a retail consumer in
Wisconsin that requests a paper title.
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Another purpose of TIMA is to prevent odometer fraud by processes
and mechanisms making the disclosure of an odometer mileage on the
title a condition for the application for a title and a requirement for
the title issued by the State. NHTSA has determined that Wisconsin's
title transfer process satisfies this purpose by requiring disclosure
and acceptance of odometer information before the transaction can be
completed. If the transaction is successful, the DMV's system will
create or amend an electronic title and store the linked electronic
odometer statement. A new title will not be issued without entry and
acceptance of the odometer disclosure. Our Initial Determination raised
a question about alteration of the brand. Wisconsin indicated in its
petition that, if the seller is not available at the time of transfer
of ownership, the DMV database permits the transferee to state the
odometer reading with a brand of ``not actual.'' If the transferor
later becomes available to make the disclosure and does so, DMV would
change the recorded status to ``actual.'' In the Initial Determination,
NHTSA stated that a change to the title subsequent to transfer of the
vehicle does not conform to Federal odometer law, which requires an
odometer disclosure statement, including the brand, to be made at the
time of transfer. 75 FR 20965, 20971 (April 22, 2010) (citing 49 U.S.C.
32705(a)(1); 49 CFR 580.5(a)). Wisconsin's comments to our Initial
Determination indicate that Wisconsin's program will not permit a post-
transfer change of the brand. Wisconsin allows the buyer to give the
odometer reading a brand of ``not actual'' where not properly completed
by the seller, and this brand cannot be changed, even if the seller
appears later. The Agency notes that a transferor and/or transferee
cannot incorporate a ``not actual'' brand to the odometer disclosure
statement as a matter of course or convenience, but only if the mileage
[[Page 1374]]
indicated on the odometer and on the odometer disclosure statement is
inaccurate. 49 U.S.C. 32705(a)(3); 49 CFR 580.5(e)(3). 49 U.S.C.
32705(a)(3).
Another purpose of TIMA is to prevent alterations of disclosures on
titles and to preclude counterfeit titles through secure processes. The
agency has determined that Wisconsin's electronic disclosure
requirements are as secure as current paper titles. Wisconsin's
electronic odometer statement is disclosed by the transferor and
accepted by the transferee, and thereafter stored in a secure DMV
database system. When the State maintains the e-Odometer database with
appropriate levels of security, electronic recording of odometer
readings and disclosures will be maintained in a way in which
alteration is unlikely. The odometer reading, which will be linked to
the electronic title record by the VIN, cannot be altered except when
it is updated during the title transfer process by authorized users. On
subsequent title transfers, the transferor and transferee will have to
complete the odometer disclosure and acceptance for the transaction to
be completed.
When fully implemented, all subsequent title transfers will be
performed through the APPS or e-MV11, or other secure on-line process.
Each time an on-line title transfer occurs, the DMV database system
stores the electronic version of the odometer statement. The DMV will
issue a paper title only when necessary, e.g., title transfer
transactions that involve out-of-State parties. Since the title and
odometer statement remain in electronic form under State care and
custody, the likelihood of an individual altering, tampering or
counterfeiting the title or odometer statement is significantly
decreased. These electronic records will be maintained in a secure
environment and any unauthorized access will be detected by the system.
Moreover, under Wisconsin law, the electronic title record is the
official and controlling title. If a conflict exists between the
electronic title and a paper title, the paper title is void.
Another purpose of TIMA is to create a record of the mileage on
vehicles and a paper trail. The underlying purposes of this record
trail are to enable consumers to be better informed and provide a
mechanism through which odometer tampering can be traced and violators
prosecuted. In NHTSA's view, the proposed Wisconsin's electronic title
transfer system will create a scheme of records, equivalent to the
current ``paper trail,'' that assists law enforcement in identifying
and prosecuting odometer fraud. Under the Wisconsin program, creation
of a paper trail starts with the requirement for certain DMV customers
to process title transactions through the APPS program. Under APPS, a
DMV customer must sign a written agreement with the DMV that includes
security procedures, an account, and a secure logon ID. DMV customers
also must provide the DMV with the names of the individuals authorized
to conduct transactions in APPS. These individuals are issued a secure
logon ID and password that can be traced by the DMV to their
transactions. In addition, APPS vendors must create security protocols
that include an audit journal that can identify each person responsible
for each title transaction. Vendors must also provide the DMV with a
daily report detailing all security violations. Furthermore, Wisconsin
requires motor vehicle dealers to retain copies of electronic titles
for motor vehicles owned and offered for sale and odometer statements
received and given for a period of 5 years.\18\
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\18\ Wisconsin indicates that its e-Odometer system will permit
motor vehicle dealers the ability to retain copies of all odometer
disclosure statements received or given by the dealers.
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For individuals not using APPS, the identity verification
procedures require the establishment of electronic signatures of the
parties. Due to the system's procedures for validating and
authenticating the electronic signature of each individual through
DMV's database, the electronic signatures of the transferor and
transferee are reliable, readily detectable and can easily be linked to
particular individuals.\19\ Because the electronic signature consists
of data elements such as the name, address, date of birth, product
number, driver license or identification card number, and a Federal
Employer Identification Number or the last four or five digits of the
individual's Social Security number, Wisconsin's e-Odometer system can
validate and authenticate individual electronic signatures. This
authentication process also allows Wisconsin to trace the individuals
involved in the transaction. This capacity maintains the purposes of
creating a paper trail since the Wisconsin system will have a history
of each vehicle's title transfer and odometer disclosure. These
electronic records will create the electronic equivalent to a paper
based system that will be readily available to law enforcement.
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\19\ Electronic signatures are generally valid under applicable
law. Congress recognized the growing importance of electronic
signatures in interstate commerce when it enacted the Electronic
Signatures in Global and National Commerce Act (E-Sign). See Public
Law 106-229, 114 Stat. 464 (2000). E-Sign established a general rule
of validity for electronic records and electronic signatures. 15
U.S.C. 7001. It also encourages the use of electronic signatures in
commerce, both in private transactions and transactions involving
the Federal government. 15 U.S.C. 7031(a).
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TIMA's overall purpose is to protect consumers by assuring that
they receive valid odometer disclosures representing a vehicle's actual
mileage at the time of transfer. Here, the alternate disclosure
requirements of Wisconsin's program include characteristics that will
assure that representations of a vehicle's actual mileage will be as
valid as those found in current paper title transfers. Identity
authentication, maintenance in a secure electronic environment, and
transferee verification of the mileage data reported by the transferor
all help to ensure valid disclosures. In addition, by providing rapid
access to records of past transfers and by maintaining audit logs of
each and every title transfer transaction, the Wisconsin program could
potentially provide a superior deterrent to odometer fraud.
Furthermore, Wisconsin's program offers the public the opportunity to
view the most recent odometer reading and date of that reading through
an Internet application. A prospective purchaser can access the public
e-Odometer information to assess a vehicle's true value by comparing
the vehicle's current odometer reading to the electronic record stored
with the DMV.
As discussed above, NHTSA has not approved Wisconsin's plan insofar
as it concerns leased vehicles. That program is under development. We
recognize that while, in general, the AALA supported the Wisconsin
petition, in its comments to the Initial Determination the AALA raised
several concerns. The organization stated that Wisconsin's program
should address interstate transactions. The AALA's comments also
contended that requiring lessors to retain lessee odometer statements
is unnecessary since these statements will be retained in Wisconsin's
e-Odometer system. The AALA further contended that lessees should be
allowed to fill out odometer statements electronically and that the
Secretary should make clear that this practice is allowed. In the
AALA's view, lessors should also be able to electronically submit their
own odometer value when a lessee does not submit an odometer statement
and the lessor is confident that it can provide a valid odometer
reading. The AALA also requested that Wisconsin's system allow lessors
to issue odometer statements that will be verified by purchasers to
account for any miles accrued during the resale process. The
organization added that lessors should be allowed to issue disclosure
statements where
[[Page 1375]]
multiple or amended statements are needed to ensure accurate reporting
when leased vehicles are purchased by lessees or a lessee's employee
but no third-party reseller is involved. Finally, the AALA stated that
Wisconsin's proposal should state clearly that the lessee odometer
disclosure statement may be provided by the driver. Since this notice
does not resolve the leased vehicle part of Wisconsin's program, we are
not addressing AALA's comments. If Wisconsin resubmits a petition
regarding leased vehicles, the AALA will have an opportunity to comment
on it.
For the foregoing reasons, and upon review of the entire record,
NHTSA hereby issues a final determination granting Wisconsin's petition
for requirements that apply in lieu of the Federal requirements adopted
under section 408(d) of the Cost Savings Act, other than the portions
of the petition addressing transfer of leased vehicles, which Wisconsin
indicates in its comments will be addressed in a separate petition.
Other requirements of the Cost Savings Act continue to apply in
Wisconsin. NHTSA reserves the right to rescind this determination in
the event that future information indicates that the operation of
Wisconsin's alternative disclosure system does not satisfy one or more
applicable requirements.
Issued on: January 4, 2011.
David L. Strickland,
Administrator.
[FR Doc. 2011-148 Filed 1-7-11; 8:45 am]
BILLING CODE 4910-59-P