Petition for Approval of Alternate; Odometer Disclosure Requirements

Topics:  National Highway Traffic Safety Administration

O. Kevin Vincent
Federal Register
August 8, 2011

[Federal Register Volume 76, Number 152 (Monday, August 8, 2011)]
[Proposed Rules]
[Pages 48101-48116]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-19920]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 580

[Docket No. NHTSA-2011-0109; Notice 1]


Petition for Approval of Alternate; Odometer Disclosure 
Requirements

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

ACTION: Notice of initial determination.

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SUMMARY: The State of Florida has petitioned for approval of alternate 
odometer requirements to certain requirements under Federal odometer 
law. NHTSA preliminarily grants Florida's petition regarding proposed 
alternate disclosure requirements for vehicle transfers involving 
casual or private sales. NHTSA preliminarily denies Florida's petition 
regarding proposed alternate disclosure requirements for sales 
involving licensed dealers. NHTSA preliminarily denies Florida's 
petition regarding proposed alternate disclosure requirements for sales 
of leased vehicles.

DATES: Comments are due no later than September 7, 2011.

ADDRESSES: You may submit comments [identified by DOT Docket ID Number 
NHTSA-2010-] by any of the 
following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
     Mail: Docket Management Facility: U.S. Department of 
Transportation, 1200 New Jersey Avenue, SE., West Building Ground 
Floor, Room W12-140, Washington, DC 20590-0001.
     Hand Delivery or Courier: West Building Ground Floor, Room 
W12-140, 1200 New Jersey Avenue, SE., between 9 a.m. and 5 p.m. E.T., 
Monday through Friday, except Federal holidays.
     Fax: 202-493-2251.
    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

[[Page 48102]]

without change to http://www.regulations.gov, including any personal 
information provided. Please see the Privacy Act heading below.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (65 FR 19477-78) or you may visit http://DocketInfo.dot.gov.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov or the street 
address listed above. Follow the online instructions for accessing the 
dockets.

FOR FURTHER INFORMATION CONTACT: Otto Matheke, Office of the Chief 
Counsel, National Highway Traffic Safety Administration, 1200 New 
Jersey Avenue, SE., West Building W41-227, Washington, DC 20590 
(Telephone: 202-366-5263) (Fax: 202-366-3820).

SUPPLEMENTARY INFORMATION:

I. Introduction

    Federal odometer law, which is largely based on the Motor Vehicle 
Information and Cost Savings Act (Cost Savings Act) \1\ and Truth in 
Mileage Act of 1986, as amended (TIMA),\2\ contains a number of 
provisions to limit odometer fraud and assure that the buyer of a motor 
vehicle knows the true mileage of the vehicle. The Cost Savings Act 
requires the Secretary of Transportation to promulgate regulations 
requiring the transferor (seller) of a motor vehicle to provide a 
written statement of the vehicle's mileage registered on the odometer 
to the transferee (buyer) in connection with the transfer of ownership. 
This written statement is generally referred to as the odometer 
disclosure statement. Further, under TIMA, vehicle titles themselves 
must have a space for the odometer disclosure statement and States are 
prohibited from licensing vehicles unless a valid odometer disclosure 
statement on the title is signed and dated by the transferor. Titles 
must also be printed by a secure process. With respect to leased 
vehicles, TIMA provides that the regulations promulgated by the 
Secretary require written mileage disclosures be made by lessees to 
lessors upon the lessor's transfer of the ownership of the leased 
vehicle. Lessors must also provide written notice to lessees about 
odometer disclosure requirements and the penalties for not complying 
with them. Federal law also contains document retention requirements 
for odometer disclosure statements.
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    \1\ Public Law 92-513, 86 Stat. 947, 961 (1972).
    \2\ Public Law 99-579, 100 Stat. 3309 (1986).
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    TIMA's motor vehicle mileage disclosure requirements apply in a 
State unless the State has alternate requirements approved by the 
Secretary. The Secretary has delegated administration of the odometer 
program to NHTSA. Therefore, a State may petition NHTSA for approval of 
such alternate odometer disclosure requirements.
    Seeking to implement an electronic vehicle title transfer system, 
the State of Florida has petitioned for approval of alternate odometer 
disclosure requirements. In 2009, NHTSA reviewed certain requirements 
for alternative state programs and approved the Commonwealth of 
Virginia's alternate odometer disclosure program. 74 FR 643, 650 
(January 7, 2009). Florida's program is similar to Virginia's program 
in some respects and appears broader in scope than Virginia's in 
others. Like Virginia's program, the scope of Florida's proposed 
program does not include transactions involving an out-of-state party. 
Unlike Virginia's program, Florida's proposed program encompasses 
transactions involving leased vehicles and odometer disclosures by 
power of attorney. In addition, Florida's proposed program would use 
different mechanisms to document mileage than Virginia's.
    As discussed below, NHTSA's initial assessment is that the portions 
of Florida's proposed program involving private sales satisfy the 
requirements for approval under Federal odometer law, while other 
portions involving transfers between individual owners and dealers, 
transfers of leased vehicles and transfers in which a power of attorney 
is used for purposes of mileage disclosure, do not.

II. Statutory Background

    NHTSA recently reviewed the statutory background of Federal 
odometer law in its consideration and approval of Virginia's petition 
for alternate odometer disclosure requirements. See 73 FR 35617 (June 
24, 2008) and 74 FR 643 (January 7, 2009). The statutory background of 
the Cost Savings Act and TIMA and the purposes behind TIMA, as they 
relate to odometer disclosure, other than in the transfer of leased 
vehicles and vehicles subject to liens where a power of attorney is 
used in the disclosure, are discussed at length in NHTSA's Final 
Determination granting Virginia's petition. 74 FR 643, 647-48. A brief 
summary of the statutory background of Federal odometer law and the 
purposes of TIMA, including odometer disclosure requirements for leased 
vehicles, follows.
    In 1972, Congress enacted the Cost Savings Act, among other things, 
to prohibit tampering with odometers on motor vehicles and to establish 
certain safeguards for the protection of buyers with respect to the 
sale of motor vehicles having altered or reset odometers. See Public 
Law 92-513, Sec.  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, Sec.  408.\3\ In general, the purpose 
for the disclosure was to assist buyers to know the true mileage of a 
motor vehicle.
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    \3\ Section 408 stated:
    (a) Not later than 90 days after the date of enactment of this 
Act, the Secretary shall prescribe rules requiring any transferor to 
give the following written disclosure to the transferee in 
connection with the transfer of ownership of a motor vehicle:
    (1) Disclosure of the cumulative mileage registered on the 
odometer.
    (2) Disclosure that the actual mileage is unknown, if the 
odometer reading is known to the transferor to be different from the 
number of miles the vehicle has actually traveled.
    Such rules shall prescribe the manner in which information shall 
be disclosed under this section and in which such information shall 
be retained.
    (b) It shall be a violation of this section for any transferor 
to violate any rules under this section or to knowingly give a false 
statement to a transferee in making any disclosure required by such 
rules.
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    A major shortcoming of the odometer provisions of the Cost Savings 
Act was their failure to require that the odometer disclosure statement 
be on the vehicle's title. In a number of States, the disclosures were 
on separate documents that could be easily altered or discarded and did 
not travel with the title. See 74 FR 644. Consequently, the disclosure 
statements did not necessarily deter odometer fraud employing altered 
documents, discarded titles, and title washing. Id.
    Another significant shortcoming involved leased vehicles. The 
lessor is considered the transferor of the vehicle in leased vehicle 
sales. Titles to leased vehicles are often transferred without the 
lessor obtaining possession of the vehicle. Lessors without direct 
access to their vehicles had to rely solely on their lessees to provide 
actual mileage information. However, lessees had no obligation to 
provide actual mileage information to lessors upon vehicle transfer. 
This environment facilitated roll backs of odometers.

[[Page 48103]]

    Congress enacted TIMA in 1986 to address the Cost Savings Act's 
shortcomings. It amended the Cost Savings Act by adding section 408(d) 
to prohibit States from licensing vehicles unless the new owner 
(transferee) submitted a title from the seller (transferor) containing 
the seller's signed and dated vehicle mileage statement. See Public Law 
99-579, 100 Stat. 3309 (1986); 74 FR 644 (Jan. 7, 2009). 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.
    TIMA also added section 408(e) to the Cost Savings Act to require 
the Secretary to issue regulations regarding odometer disclosures for 
leased vehicles.\4\ The regulations promulgated by the Secretary were 
to require written mileage disclosures by lessees to lessors upon the 
lessor's transfer of the ownership of the leased vehicle. Lessors must 
also provide written notice to lessees about the odometer disclosure 
requirements and the penalties for not complying with them. Federal law 
also contains document retention requirements for odometer disclosure 
statements. TIMA required lessors to retain disclosures made by lessees 
for at least four years following the date that the lessor transfers 
that vehicle.\5\ Id.
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    \4\ TIMA amended the Cost Savings Act to add section 408(e):
    (e)(1) In the case of any leased motor vehicle, the rules under 
subsection (a) shall require written disclosure regarding mileage to 
be made by the lessee to the lessor upon the lessor's transfer of 
ownership of the leased motor vehicle.
    (2) Under such rules, the lessor of a leased motor vehicle shall 
provide written notice to the lessee regarding
    (A) Such mileage disclosure requirements, and
    (B) The penalties for failure to comply with them.
    (3) The lessor shall retain the disclosure made by any lessee 
with respect to any motor vehicle under paragraph (1) For a period 
of at least 4 years following the date the lessor transfers that 
vehicle.
    (4) For purposes of this section, if the lessor transfers 
ownership of any leased motor vehicle without obtaining possession 
of such vehicle, the lessor may, in making the disclosure required 
by subsection (a), Indicate on the title the mileage disclosed by 
the lessee under paragraph (1) Unless the lessor has reason to 
believe that such disclosure by the lessee does not reflect the 
actual mileage of the vehicle.
    \5\ Regulations implementing TIMA were published on August 5, 
1988. 53 FR 29864. Federal regulations require lessors to retain 
odometer disclosure statements received from lessees for a period of 
five years. 49 CFR 580.8(b).
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    TIMA added a provision to the Cost Savings Act allowing States to 
have alternate odometer disclosure requirements with the approval of 
the Secretary of Transportation. Section 408(f) of the Cost Savings Act 
states that the odometer disclosure requirements of subsections (d) and 
(e)(1) shall apply in a State unless the State has in effect alternate 
motor vehicle mileage disclosure requirements approved by the 
Secretary. Section 408(f)(2) further states that the Secretary shall 
approve alternate motor vehicle mileage disclosure requirements 
submitted by a State unless the Secretary determines that such 
requirements are not consistent with the purpose of the disclosure 
required by subsection (d) or (e), as the case may be.
    In 1988, Congress amended section 408(d)(1) of the Cost Savings Act 
to permit the use of a secure power of attorney for purposes of 
odometer mileage disclosure in circumstances where the title was held 
by a lienholder, if allowed by state law. Public Law 100-561 Sec.  40, 
102 Stat. 2805, 2817 (1988). Congress required NHTSA to issue a rule 
ensuring that disclosures be made on the power of attorney document of 
the actual mileage at the time of transfer and that the mileage be 
restated exactly by the person exercising power of attorney on the 
title in the space therefor. Id. The rule, consistent with the purposes 
of the Act and the need to facilitate enforcement thereof, was to 
prescribe that the power of attorney form be issued by the State to the 
transferee using a secure process, as provided for titles, and provide 
for retention of a copy with the original submitted back to the State. 
Id. In 1989, NHTSA implemented the 1988 statutory amendments by 
promulgating amendments to the odometer disclosure regulations, 
providing that a transferor may give a secure power of attorney to a 
transferee for the purpose of mileage disclosure in two circumstances--
when the transferor's title is physically held by a lienholder or when 
the title is lost. In either instance, use of a power of attorney 
document for mileage disclosure is permissible only if otherwise 
permitted by State law.\6\
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    \6\ Regulations implementing the amendment were published on 
August 30, 1989. 54 FR 35879. The regulations addressed numerous 
aspects of disclosure by power of attorney, including the form, 
certification by the person exercising the power of attorney, and 
access of the transferee to prior title and power of attorney 
documents.
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    In 1990, Congress again amended section 408(d) of the Cost Savings 
Act.\7\ The amendment provided that the rule adopted under the 1988 
amendment not require that a vehicle be titled in the State in which 
the power of attorney was issued and addressed retention of powers of 
attorneys by States. See Public Law 101-641 Sec.  7(a), 104 Stat. 4654, 
4657 (1990).\8\
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    \7\ Section 7(a) of Public Law 101-641 directed that the third 
sentence of subsection (d)(2)(C) be amended. However, there was no 
subsection (d)(2)(C) in section 408. The amendment was restated as 
amending the third sentence of subsection (d)(1)(C) as the probable 
intent of Congress. This amendment is currently codified at 49 
U.S.C. 32705(b)(2)(A).
    \8\ Regulations implementing this amendment were published on 
September 20, 1991. 56 FR 47681.
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    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 Florida's petition.\9\
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    \9\ Florida petitioned NHTSA requesting approval of alternate 
odometer disclosure requirements. Florida's initial petition, dated 
December 21, 2009, set forth Florida's initial request. Florida 
submitted a second, supplemental petition to NHTSA on October 5, 
2010, that restated Florida's request in greater detail and provided 
more specific information on Florida's current e-Title and odometer 
disclosure program and its proposed program. Together, the petitions 
are identified herein as ``petition'' or ``the petition.''
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    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 reassignment documents, 
leased vehicles, or disclosures by power of attorney.\10\ 74 FR 643, 
647-48 (January

[[Page 48104]]

7, 2009). In addition, because the Florida proposal encompasses 
reassignment documents, transfers of leased vehicles, and disclosures 
by power of attorney, we identify the purposes of TIMA relevant to 
odometer disclosures for leased vehicles (see Initial Determination on 
Wisconsin's petition for alternate odometer disclosure requirements, 75 
FR 20965, 20972-73 (Apr. 22, 2010)) and purposes of allowing for 
disclosures by power of attorney in limited circumstances.
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    \10\ 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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A. TIMA's Purposes Relevant to Vehicle Transfers in the Absence of a 
Lease Agreement

    One purpose of TIMA is to assure that the form of the odometer 
disclosure precludes odometer fraud. 74 FR 647. To prevent odometer 
fraud facilitated by disclosure statements that were separate from 
titles, TIMA required mileage disclosures to be on a secure vehicle 
title instead of a separate document. These titles also had to contain 
space for the seller's attested mileage disclosure and a new disclosure 
by the buyer when the vehicle was sold again. This discouraged mileage 
alterations on titles and limited opportunities for obtaining new 
titles with lower mileage than the actual mileage. Id. This concern 
applies to reassignment documents.\11\
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    \11\ NHTSA amended 49 CFR 580.5(c) to preclude use of a separate 
reassignment form at the time of the first transfer, by a titled 
owner. See 56 FR 47684-85 (Sep. 20, 1991).
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    A second purpose of TIMA is to prevent odometer fraud by processes 
and mechanisms making odometer mileage disclosures on the title a 
condition of any application for a title, and a requirement for any 
title issued by a State. 74 FR 647. 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.'' \12\ Id.
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    \12\ Congress intended to encourage new technologies by 
including the language ``other secure process.'' The House Report 
accompanying TIMA noted that `` `other secure process' is intended 
to describe means other than printing which could securely provide 
for the storage and transmittal of title and mileage information.'' 
H.R. Rep. No. 99-833, at 33 (1986). ``In adopting this language, the 
Committee intends to encourage new technologies which will provide 
increased levels of security for titles.'' Id. See also Cost Savings 
Act, as amended by TIMA, Sec.  408(d), recodified at 49 U.S.C. 
32705(b).
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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.

B. TIMA's Purposes Relevant to Leased Vehicles

    TIMA recognized that additional mechanisms were needed to assure 
accurate odometer disclosures for leased vehicles. In vehicle leases, 
the lessor typically retains ownership of the vehicle, but does not 
possess it. The lessor, as a transferor, must comply with Federal 
odometer disclosure requirements when it subsequently transfers title 
to a leased vehicle. However, prior to TIMA, lessees were not obligated 
by Federal odometer law to provide lessors with accurate odometer 
disclosure statements. TIMA addressed this issue, as discussed above. A 
number of purposes can be derived from TIMA's provisions, discussed 
above, relating to the transfer of ownership of leased vehicles.
    One purpose of TIMA's leased vehicle provisions is to assure that 
lessors have the vehicle's actual odometer mileage at the time of 
transfer.
    A second purpose of TIMA's leased vehicle provisions is to assure 
that lessees provide lessors with an odometer disclosure statement.
    A related purpose is to assure that lessees are formally notified 
of their odometer disclosure obligations and the penalties for failing 
to comply by not providing complete and truthful information.
    A fourth purpose is to set the ground rules for the lessors, 
providing for lessors to indicate the mileage provided by the lessee on 
the title, unless the lessor has reason to believe that the disclosure 
by the lessee does not reflect the actual mileage of the vehicle.
    A fifth purpose of TIMA's leased vehicle provisions is to create 
records and a paper trail. This is an expansion of the fourth general 
purpose of TIMA stated above. The paper trail includes the written, 
dated and signed odometer disclosure statement by the lessee. Unlike 
odometer disclosure statements on vehicle titles that are filed with 
the State, a lessee's odometer disclosure statement is separate from 
the title and not filed with the State. Instead, the disclosure 
statement is sent to the lessor, who must retain a copy for at least 
five years. The retention of lessee odometer disclosure statements by 
lessors permits law enforcement officials to trace fraudulent 
disclosure statements back to lessees, if necessary.
    Last, the overall purpose of TIMA's leased vehicle provisions, 
consistent with the general purposes of TIMA, is to ensure that there 
are valid representations of the vehicle's actual mileage at the time 
of transfer. See H.R. Rep. No. 99-833, at 33 (1986).

C. Mileage Disclosures by Power of Attorney

    NHTSA's rule implementing TIMA provided that ``[n]o person shall 
sign an odometer disclosure statement as both the transferor and the 
transferee in the same transaction.'' \13\ In general, this provision, 
which was intended to limit fraud, was not questioned. However, in 
instances when a lienholder holds title to a vehicle being sold this, 
as a practical matter, presented a considerable regulatory burden, 
because when a dealer bought a used vehicle, it would be required to go 
to the lienholder and obtain the title, and then go back to the seller 
so that the seller could record the mileage on the title. The last step 
often was difficult and could be avoided if the seller executes a power 
of attorney to the buyer authorizing the buyer to record the mileage 
upon receipt of the title.\14\
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    \13\ 49 CFR 580.5(h); 53 FR 29464, 29477 (Aug. 5, 1988).
    \14\ See 134 Cong. Rec. H10079 (daily ed. Oct. 12, 1988).
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    In 1988, Congress amended TIMA to provide for the limited use of 
powers of attorney for recording mileage, when the title is physically 
held by a lienholder at the time of the transfer and is authorized by 
State law. See Pipeline Safety Reauthorization Act of 1988 (PSRA) Sec.  
401, 15 U.S.C. 1988(d)(1) (1988). (Section 401 of the PSRA, as amended 
in 1990 (see below), was recodified at 49 U.S.C. 32705(b)(2)(A).) The 
amendment required NHTSA to issue a rule. The rule, which was to 
address the form and reasonable

[[Page 48105]]

conditions of the limited power of attorney, was to ensure disclosure 
on the power of attorney document of the actual mileage at the time of 
transfer and ensure that such mileage will be restated exactly by the 
person exercising the power of attorney in the space referred to in 
TIMA. Further, consistent with the purposes of the Cost Savings Act as 
amended and the need to facilitate enforcement thereof, the rule was to 
prescribe the form of the power of attorney to be issued by the State 
to the transferee and for retention of a copy of such power of 
attorney. As amended in 1990, this statutory provision provided that 
the rule promulgated by NHTSA must require the person granted the power 
of attorney to retain a copy of the power of attorney form and submit 
the original form to the State along with a copy of the title showing 
the restatement of the mileage. The statute also permitted the agency 
to prescribe that the State retain the power of attorney and copy of 
the title for an appropriate period or that the State adopt alternative 
measures consistent with the purposes of the statute. The statute 
mandated that the rule not require that a vehicle be titled in the 
State in which the power of attorney was issued. Public Law 101-641, 
104 Stat. 4654, 57 (Nov. 28, 1990).
    In 1989, NHTSA implemented the PSRA by promulgating amendments to 
the odometer disclosure regulations.\15\ The rule provides that a 
transferor may give a secure power of attorney to a transferee for the 
purpose of mileage disclosure in two circumstances--when the 
transferor's title is physically held by a lienholder or when the title 
is lost.\16\ In either instance, use of a power of attorney document 
for mileage disclosure is permissible only if otherwise permitted by 
State law. In this rule, NHTSA narrowly amended its earlier rule 
prohibiting any party from signing an odometer disclosure statement as 
both the transferor and transferee in the same transaction to add an 
exception. The amendment allowed the same person to so sign the 
odometer disclosure statement if he or she satisfied the detailed, 
specific provisions on powers of attorney added to the regulations in 
49 CFR 580.13 or 14. These provisions state the form and conditions of 
the power of attorney. Also, the power of attorney document must be 
issued by the State and be set forth by a secure process.\17\ While 
providing for powers of attorney, NHTSA expressed concern that powers 
of attorney that allow a person to sign a disclosure as both the 
transferor and transferee result in only one party to the transaction 
being aware of the previous mileage disclosures, which could jeopardize 
the integrity of the paper trail--the evidence of rollbacks that 
Congress intended to enhance by enacting TIMA.\18\
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    \15\ NHTSA issued an interim final rule on March 8, 1989 (54 FR 
9809) and a final rule on August 30, 1989 (54 FR 35879).
    \16\ 54 FR 35879 (Aug. 30, 1989).
    \17\ See 49 CFR 580.4.
    \18\ 54 FR 9809, 9810 (March 8, 1989). As is self evident, 
ordinarily such a practice provides opportunities for fraud. See 54 
FR 9812; 54 FR 35882.
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    A number of purposes can be derived from the statute directing 
NHTSA to issue a rule and the implementing rule.
    One purpose was to provide limited exception(s) to a rule 
prohibiting a person from signing an odometer disclosure statement as 
both the transferor and transferee in the same transaction, which had 
the effect of prohibiting the use of powers of attorney for purposes of 
recording mileage on titles of motor vehicles.\19\ More particularly, a 
purpose was to permit a power of attorney for disclosure of the 
odometer reading at the time of sale of a vehicle to be given by the 
seller to the buyer, in the limited situation when the owner's title is 
physically held by a lienholder at the time of the transaction and the 
power of attorney is allowed by State law.\20\ Another limited 
situation in which a power of attorney may be used, as recognized in 
the implementing regulation, is where the title is not present because 
it has been lost by the person to whom it was issued by the State, if 
permitted by State law.\21\ In order for a power of attorney to be used 
in the lost title situation, the transferee (e.g., the dealer) must 
apply for the duplicate title on behalf of the transferor. Under these 
circumstances, a power of attorney is available to facilitate consumer 
vehicle sales transactions, but is not available in other than consumer 
sales transactions, where the risk of fraud is considerably 
greater.\22\
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    \19\ As Congressman Whittaker noted, ``we have drafted the 
amendment in a very narrow fashion.'' 134 Cong. Rec. H10079 (daily 
ed. Oct. 12, 1988).
    \20\ This does not include the practice of floor planning. Floor 
planning is a practice by which a financial institution will 
physically hold a title as security for financing, without formally 
filing or recording a security interest, on a vehicle offered for 
sale by a dealer. 54 FR 35885-35886. This also does not include a 
situation in which the lending institution that financed the 
vehicle's purchase is located in a state that requires the 
lienholder to hold the title as security, but the vehicle is 
registered in a different state, which allows the owner, rather than 
the lienholder to hold the title. Under the 1991 amendment to the 
Cost Savings Act, NHTSA considers the creation of another category 
of exempted transferors inappropriate.
    \21\ 49 CFR 580.13, 54 FR 35883.
    \22\ The 1988 amendments did not modify the TIMA provisions 
relating to leased vehicles.
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    A second purpose was to assure that the form of the power of 
attorney document issued by a State precluded odometer fraud. While 
under the limited circumstances discussed above and if allowed under 
State law, with use of a power of attorney one person may sign the 
odometer disclosure on the title as both the transferor and transferee, 
to limit fraud, the power of attorney form must meet certain minimum 
requirements.\23\ Congress specified that NHTSA would prescribe a form 
by rule. Under the rule, the form must be separated into part A, and if 
permitted by State law, B and C.\24\
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    \23\ Among these are the requirements of NHTSA's rule, 49 CFR 
580.13 and 580.14.
    \24\ 49 CFR 580.13; see 54 FR 9812.
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    The transferor's power of attorney to the transferee for mileage 
disclosure must be on part A of a secure form issued by the State to 
the transferee.\25\ Using this form, the transferor appoints the 
transferee his/her attorney-in-fact for the purpose of mileage 
disclosure. The form provides for written disclosure by the transferor 
to the transferee of the information that is stated on a vehicle title 
under 49 CFR 580.5 when ownership of the vehicle is transferred.\26\ 
Among other things, there must be a space in part A for the transferor 
and transferee to sign the power of attorney form and print their names 
and a space for the transferor to disclose the mileage. Part A must 
also contain a reference to the Federal odometer law and state that 
providing false information or the failure of the person granted the 
power of attorney to submit the form to the State may result in fines 
and/or imprisonment. The disclosure on part A of the power of attorney 
form is commonly made by the

[[Page 48106]]

seller when he or she trades-in a vehicle at a dealer.
---------------------------------------------------------------------------

    \25\ 49 CFR 580.13; see 54 FR 9812.
    \26\ 49 CFR 580.13 requires the form to contain, in part A, a 
space for: (1) The odometer reading at the time of transfer; (2) the 
date of transfer; (3) the transferor's name and current address; (4) 
the transferee's name and current address; and (5) the vehicle make, 
model, year, body type, and vehicle identification number (VIN). 
Part A shall also contain a space for the transferor to certify that 
to the best of his knowledge either: (1) The odometer reading 
reflects the actual mileage; or (2) if the transferor knows that the 
odometer reading reflects mileage in excess of the designed 
mechanical odometer limit, he shall include a statement to that 
effect; or (3) if the transferor knows that the odometer reading 
differs from the mileage and the difference is greater than that 
caused by a calibration error, he shall include a statement that the 
odometer reading does not reflect the actual mileage and should not 
be relied upon with a warning notice to alert the transferee that a 
discrepancy exists between the odometer reading and the actual 
mileage.
---------------------------------------------------------------------------

    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.\27\ 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.\28\ 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.
---------------------------------------------------------------------------

    \27\ 49 CFR 580.14.
    \28\ 49 CFR 580.14 requires part B of the form to contain a 
space for the mileage disclosure from the transferor to the 
transferee, and contain space for the following information: (1) The 
odometer reading at the time of the transfer; (2) the date of the 
transfer; (3) the transferor's name and current address; (4) the 
transferee's name and current address; and (5) the vehicle make, 
model year, body type, and VIN. Part B shall also contain a 
reference to the Federal odometer law and state that providing false 
information or the failure of the person granted the power of 
attorney to submit the form to the State may result in fines and/or 
imprisonment. Part B shall also contain a space for the transferor 
to certify that to the best of his knowledge either: (1) The 
odometer reading reflects the actual mileage; or (2) if the 
transferor knows that the odometer reading reflects mileage in 
excess of the designed mechanical odometer limit, he shall include a 
statement to that effect; or (3) if the transferor knows that the 
odometer reading differs from the mileage and the difference is 
greater than that caused by a calibration error, he shall include a 
statement that the odometer reading does not reflect the actual 
mileage and should not be relied upon, with a warning notice to 
alert the transferee that a discrepancy exists between the odometer 
reading and the actual mileage.
---------------------------------------------------------------------------

    Commonly, part B is used in the sale of a trade-in vehicle by a 
dealer. If for example, a dealer does not have possession of the title, 
because the vehicle was a trade-in and the lienholder has not yet 
released the title, or because the title was lost and the dealer has 
not yet obtained a duplicate title on behalf of the transferor who sold 
the vehicle to the dealer, the subsequent buyer of the used vehicle 
(the transferee) is permitted to give a power of attorney to the 
transferor/selling dealer to acknowledge the mileage disclosure on 
their behalf. This power of attorney from the transferee to the 
transferor allows the transferor (who is the original seller's attorney 
in fact under Part A) to sign the title as both the transferor and 
transferee in the same transaction.\29\ In addition, because the same 
person signs the title as the transferor and transferee, the 
appointment of the transferor as the transferee's attorney-in-fact must 
be made on part B of the same secure power of attorney form, issued by 
a State, upon which the transferor was appointed the attorney-in-fact 
by the original transferor on part A.\30\ This form enables purchasers 
to examine the previously issued power of attorney for alterations, 
erasures, and other marks, and to learn the name of the prior owner 
without the additional cost of a title search. This is the same 
information that purchasers would receive if the title was not held by 
a lienholder since, under TIMA, the transferor is required to disclose 
mileage on the vehicle's title.
---------------------------------------------------------------------------

    \29\ 49 CFR 580.14.
    \30\ This is done pursuant to 49 CFR 580.13.
---------------------------------------------------------------------------

    The secure power of attorney form with a part B must contain a 
certification in part C.\31\ To ensure that a person exercising a power 
of attorney under both sections 580.13 and 580.14 (parts A and B) is 
fully aware of his/her obligation and their liability for any action 
that is inconsistent with the power of attorney, the rule (Sec.  
580.15) requires the completion, on part C, of a certification 
attesting that the signer has disclosed the mileage on the title 
document consistent with the mileage disclosed on the power of attorney 
form. The signer of part C also attests that he or she has examined the 
title, and that the mileage disclosure made on the title executed under 
the power of attorney is greater than the mileage previously stated on 
the title and any reassignment form.\32\
---------------------------------------------------------------------------

    \31\ The part C certification shall include space for: (1) The 
signature and printed name of the person exercising the power of 
attorney; (2) the address of the person exercising the power of 
attorney; and (3) the date of the certification.
    \32\ As a practical matter, the mileage entered by the dealer 
could never be lower than the mileage already on the title, since if 
the power of attorney set forth a lower mileage, it would void the 
power of attorney as discussed above, and the dealer would not be 
authorized to sign the disclosure on behalf of the transferor.
---------------------------------------------------------------------------

    The part C certification requirement need only apply to the 
subsequent sale situation (typically a trade-in) where the second 
purchaser's only link to the title will be the transferor (dealer). 
Thus, section 580.15 provides that the certification requirement 
applies only when the transferor is exercising a power of attorney for 
both the first sale and second sale customers, as provided for in 
sections 580.13 and 580.14. If the title is present at the time of the 
second sale, the purchaser will be able to review the title himself/
herself to assure that the mileage is entered in accordance with the 
initial transferor's power of attorney and is higher than the mileage 
appearing on the title and reassignment documents.
    Finally, the State itself must issue the power of attorney 
form.\33\
---------------------------------------------------------------------------

    \33\ 54 FR 9812.
---------------------------------------------------------------------------

    A third purpose was to set ground rules for transferors and 
transferees, providing that both parties provide all of the information 
and signatures required in parts A, and as applicable B, and C of the 
secure power of attorney form. This ensures that upon receipt of the 
first transferor's title, the transferee (typically a dealer) must 
complete the space for mileage disclosure on the title exactly as the 
mileage was disclosed by the first transferor on the power of attorney 
form.
    A fourth purpose was to prevent odometer fraud by establishing 
processes, mechanisms and conditions calculated to result in the 
disclosure of the actual mileage on the title.\34\ As provided in the 
PSRA of 1988, NHTSA's rule is to ensure that transferors disclose the 
actual mileage at the time of the transfer on the power of attorney 
document and that persons exercising the power of attorney restate that 
mileage exactly on the title in the space provided. Toward these ends, 
one condition, required by the implementing rule, is inclusion of the 
printed names and signatures of the first transferor and the first 
transferee (typically a dealer) accompanying the mileage disclosure, as 
well as a statement of liability for fines for false statements. The 
transferor shall also certify on the power of attorney form that to the 
best of the transferor's knowledge, either: (1) The odometer reading 
reflects the actual mileage; or (2) if the transferor knows that the 
odometer reading reflects mileage in excess of the designed odometer 
limit, he shall include a statement to that effect; or (3) if the 
transferor knows that the odometer reading differs from the mileage and 
the difference is greater than that caused by a calibration error, he 
shall include a statement that the odometer reading does not reflect 
the actual mileage and should not be relied upon, and a warning notice 
to alert the transferee that a discrepancy exists

[[Page 48107]]

between the odometer reading and the actual mileage.
---------------------------------------------------------------------------

    \34\ Of course, other purposes of TIMA apply, including 
processes and mechanisms making the disclosure of an odometer's 
mileage on the title a condition of the application for a title and 
a requirement for the title issued by the state.
---------------------------------------------------------------------------

    There are additional mechanisms employed in the power of attorney 
regulations to ensure accurate disclosures of the odometer reading and 
to limit fraud. As provided in the rule, upon receipt of the first 
transferor's title, the transferee has a duty to complete the space for 
mileage disclosure on the title exactly as the mileage was disclosed by 
the first transferor on the power of attorney form.\35\ Further, the 
certification provision discussed above provides a mechanism applicable 
to the second sale. As provided by section 580.15, the person 
completing part C of the secure power of attorney form issued by the 
State certifies that he or she has disclosed the mileage on the title 
document consistent with the mileage disclosed to him or her on the 
power of attorney form, that he or she examined the title and the 
mileage disclosure on that title and the mileage disclosure he or she 
is making on the power of attorney is greater than the mileage 
previously stated on the title.
---------------------------------------------------------------------------

    \35\ 49 CFR 580.13(f).
---------------------------------------------------------------------------

    In addition, the PSRA, as amended in 1990, provided another process 
to ensure accurate disclosure of the odometer reading. It required that 
the rule ensure that the person granted a power of attorney must submit 
the completed original power of attorney to the state along with a copy 
of the title (showing the restatement of mileage) and must also retain 
a copy. As directed, NHTSA issued implementing regulations providing 
that the transferee must submit the completed original power of 
attorney form to the State that issued it along with either a copy or 
the actual transferor's title when submitting a new title application. 
This allowed for review of the mileage on the power of attorney form 
and corresponding title.
    NHTSA's regulations provide an additional mechanism facilitating 
verification of previous mileage statements by affording subsequent 
purchasers access to previous title and power of attorney documents. 
Under section 580.16(a), if the second-sale transferee applies for 
title in his own name (in other words, if the second-sale transferee 
does not give power of attorney to his transferor to review the title 
and reassignment documents), then that transferor must show him, upon 
his request, a copy of the power of attorney form completed by the 
previous owner. In any event, under section 580.16(b) of the rule, a 
transferor who was given power of attorney by his transferor and who 
holds title to the vehicle in his name, must, upon request of the 
purchaser (second-sale transferee), show his/her purchaser a copy of 
the previous owner's title and a copy of the power of attorney form 
completed by the previous owner.
    A further mechanism in the rule was its voiding mechanism. As 
provided by the rule, 49 CFR 580.15(b), any mileage discrepancies void 
the power of attorney. NHTSA has characterized this provision as vital; 
\36\ if the mileage reflected by the transferor on the power of 
attorney is less than that previously stated on the title and any 
reassignment documents, the power of attorney shall be void. The power 
of attorney is voided by the existence of a discrepancy, not by an 
action causing a discrepancy.
---------------------------------------------------------------------------

    \36\ 54 FR 35885 (Aug. 30, 1989).
---------------------------------------------------------------------------

    A fifth purpose is to prevent alterations on odometer disclosures 
by powers of attorney and to preclude counterfeit powers of attorney 
through secure processes. In furtherance of these purposes, the power 
of attorney (incorporating the disclosure statement) must be on a form 
issued by the State that is set forth by means of a secure printing 
process or other secure process. It has to be no less secure than the 
title document itself.
    A sixth purpose is to create a record of the mileage on vehicles 
and a paper trail. The PSRA referred to the need to facilitate 
enforcement. In addition, and more specifically, the amended statute 
provided ``the person granted such power of attorney * * * shall submit 
the original back to the State with a copy of the title showing a 
restatement of the mileage.'' \37\ This paper trail includes the 
written, signed (by both the transferor and transferee), and dated 
odometer disclosure statement on the secure power of attorney form, and 
the corresponding entry on the vehicle title, which, as discussed 
above, must read exactly as it was disclosed by the transferor on the 
power of attorney document. The transferee is required to file the 
original power of attorney form with the State that issued it, with a 
copy of the transferor's title or with the actual title when the 
transferee submits a new title application at the same time. The 
transferee is required to return a copy of the power of attorney form 
to the transferor. The State shall retain the original power of 
attorney form for the shorter of (a) Three years or (b) a period equal 
to the State titling record retention period. As stated in the 
rulemaking, the State may retain the copy in any medium by which such 
information may be stored, provided there is no loss of information. 
States are not limited to retaining the records in paper form.
---------------------------------------------------------------------------

    \37\ The definition of ``original power of attorney'' permits a 
secure copy of the power of attorney to be considered an 
``original.'' This is implemented in part in 40 CFR 580.13(f).
---------------------------------------------------------------------------

    The retention of the power of attorney form by the State permits 
law enforcement officials to trace fraudulent disclosure statements 
back to transferors, if necessary.
    Moreover, Section 401 of the PSRA, as amended in 1991, requires 
NHTSA's rules to provide for the retention of the power of attorney 
form. The rule added section 580.8(c), which concerns odometer 
disclosure statement retention. Under this paragraph, motor vehicle 
dealers and distributors who are assigned a power of attorney by their 
transferors are required to retain, for five years, a copy of each 
power of attorney they receive. These documents must be retained at the 
primary place of business of the dealer or distributor in an order that 
is appropriate with business requirements and that permits systematic 
retrieval.
    Seventh, the overall purpose is to protect consumers by assuring 
that they receive valid representations of a vehicle's actual mileage 
at a time of transfer. This includes the ground rules for transferors 
and transferees, providing that both parties provide all of the 
information and signatures required in parts A, B, and C of the secure 
power of attorney form. This ensures that 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.

IV. The Florida Petition

    Florida, which is in the process of implementing an electronic 
title transfer system (e-title), petitions for approval of alternate 
odometer disclosure requirements.\38\ Florida requests alternate 
disclosure requirements for transfers of motor vehicles in transactions 
between private parties (casual sales) and transfers of motor vehicles, 
whether subject to a lien \39\ or

[[Page 48108]]

not subject to a lien, between private parties and motor vehicle 
dealers. Florida also requests alternate disclosure requirements for 
transactions involving leased vehicles.
---------------------------------------------------------------------------

    \38\ We note that Florida's petition differs markedly from other 
petitions for alternate odometer disclosure requirements NHTSA has 
received from other states. Florida's proposal relies on tag agents, 
rather than an online system, to verify the identity of the 
transferor and transferee in casual sales. These tag agents also 
verify chain of ownership and odometer disclosure in all transfers 
before title can be issued. Identity verification in transactions 
other than casual sales (for which identity of the parties is 
verified by a tag agent) is left to the parties to the 
transaction(s). Florida's proposal encompasses a wide variety of 
transactions and relies on paper forms for a number of these 
transactions.
    \39\ Under Florida law, a lienholder physically possesses the 
title to the vehicle. Thus, Florida permits odometer disclosure by 
power of attorney when title is held by a lienholder and now 
petitions for alternate requirements regarding odometer disclosure 
by power of attorney.
---------------------------------------------------------------------------

    Florida law authorizes the Florida Department of Highway Safety and 
Motor Vehicles (the Department) to accept any application for vehicle 
title by electronic means. See Fla. Stat. Ann. Sec.  319.40 (1997). The 
Department is proposing amendments to the Florida statutes to allow the 
continuation of an electronic certificate of title in lieu of a paper 
certificate of title for transfers of motor vehicles. With electronic 
titling there would not be a paper certificate of title on which to 
disclose the vehicle's mileage at the time of transfer of ownership.

A. Overview of Florida's Electronic Titling System

    Currently Florida stores its titling and registration information 
(including images of all supporting title documentation) in a secure 
database referred to as the Florida Real-time Vehicle Information 
System, or FRVIS. According to Florida's petition, either a Department 
employee or an authorized tag agent at a state-authorized tag office 
enters information into this database. Only a Department employee or 
tag agent can change FRVIS title information, including owner 
information and the odometer disclosure. For title images (scanned, 
electronic copies of vehicle title documents), FRVIS stores all 
applicable data and stores images of documents that remain in the title 
history for the vehicle. Florida law also requires that the Department 
retain all documents regarding applications for, and issuance of, 
certificates of title--including titles, manufacturers' statements of 
origin, applications, and supporting documents submitted with the 
application such as odometer statements, VIN verifications, bills of 
sale, indicia of ownership, dealer reassignments, photographs, and any 
personal identification, affidavits, or documents required by or 
submitted to the Department--for a period of at least 10 years. Fla. 
Stat. Ann. Sec.  319.23(11). The title resides as an electronic record 
in FRVIS; however, secure paper copies of the title can be generated 
from FRVIS if needed.
    Florida intends to use a secure reassignment form in lieu of a 
paper title to capture odometer disclosure and transfer of e-titles. 
Florida law currently allows licensed dealers to use a secure 
reassignment form when making dealer reassignments and odometer 
disclosures after all reassignment and odometer disclosure spaces on 
the reverse side of the Certificate of Title have been used. The form 
links the vehicle to the title record by the VIN and includes the 
required odometer disclosure statements. The Department scans the form 
and stores it in the title history for the vehicle. Florida proposes to 
use a similar form for odometer disclosure in its e-title program.
    In Florida, lienholders hold the title to the vehicles securing the 
loan. Florida began its electronic title and lien (ELT) program in 
2001. Under the current process, the Department contracts with vendors 
who provide secure electronic interface with Florida's titling system 
to participating lienholders. The vendors then contract with financial 
institutions who wish to participate in Florida's electronic title and 
lien program. The participating lienholders allow their titles to 
remain electronic. Electronic liens are satisfied through the secure 
electronic interface and the title is retained electronically until a 
paper copy is requested.\40\
---------------------------------------------------------------------------

    \40\ Approximately 24 percent of the more than ten million 
vehicle lien records Florida has are electronic. Additionally, 
almost 50 percent of all new transactions with liens are maintained 
electronically under ELT.
---------------------------------------------------------------------------

B. Florida's Proposed e-Odometer Program

    Florida's proposed e-Odometer program can be divided into three 
transaction types: (1) Casual or private sales; (2) sales involving 
licensed motor vehicle dealers (including sales from private owners to 
licensed dealers, sales between licensed dealers, and sales from 
licensed dealers to private buyers); and (3) sales involving leased 
vehicles. The Agency understands that the program, as proposed, applies 
only when the transferred vehicle is electronically titled at the time 
of transfer of the vehicle.
1. Casual or Private Sales
    Currently, a Florida resident wishing to sell his/her vehicle in a 
casual or private sale needs to have a paper title. The seller signs 
the paper title and discloses the odometer reading to the buyer on the 
title. The buyer then signs the paper title verifying the odometer 
reading. (The odometer disclosure is made on the title and signed by 
the buyer and seller at the time of transfer, in accordance with 49 
U.S.C. 32705 and 49 CFR 580.5.) The buyer takes the paper title to a 
tag office, which processes the transfer of ownership and prints a new 
paper title in the buyer's name, or, if the buyer so elects, creates an 
e-title to be held by the Department.\41\ Whether the buyer elects to 
maintain the title electronically or in paper form, the tag office 
sends the old paper title and any other supporting documentation to the 
Department for scanning into FRVIS.
---------------------------------------------------------------------------

    \41\ The buyer can request a paper title from the tag agent and 
pay a $10 fee, or request a paper title online and pay a $2.50 fee. 
The fee is intended to encourage buyers to maintain vehicle title 
electronically. This fee applies to any paper title request under 
Florida's current system and under the State's proposed program.
---------------------------------------------------------------------------

    Under Florida's proposed e-title program,\42\ if a seller of a 
vehicle has an electronic title and wants to transfer that title, the 
seller and buyer would visit an authorized tag office together. 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 is then issued in the buyer's name and is stored 
electronically, or the buyer may choose to have a paper title issued. 
The secure reassignment form and copies of the identification are 
scanned into the title record in FRVIS.\43\ Florida maintains that 
these would travel with the title.
---------------------------------------------------------------------------

    \42\ Florida's proposed program does not apply in a casual 
vehicle sale by a seller holding a paper title, only those with e-
title. A seller holding a paper title must follow the current 
procedures to transfer the vehicle--the buyer and seller sign and 
make the required odometer disclosure on the back of the paper 
title. The buyer then can bring the signed title containing the 
required odometer disclosure statement to an authorized tag agent 
and elect at that time to have the title maintained by the State 
electronically. If the buyer elects e-Title and later sells the 
vehicle in a casual sale, he can do so by following the procedures 
for transferring e-title.
    \43\ The Agency understands that the electronic documents are 
linked to the vehicle title history by title number and VIN.
---------------------------------------------------------------------------

2. Sales Involving Licensed Motor Vehicle Dealers
a. Retail Sales of Vehicles With an e-Title But Not Subject to a Lien
    Currently, when a licensed motor vehicle dealer is involved, the 
process for transferring a title to a vehicle with an e-title and not 
subject to a lien is as follows. The seller with e-title brings the 
vehicle to a dealership. The seller and dealer complete a secure power 
of attorney with odometer disclosure. The dealer obtains the paper 
title from a tag agency or online from the Department. The dealer 
transfers the odometer disclosure information from the secure power of 
attorney to the title and signs the title as buyer and seller. When the 
dealer sells the vehicle to another buyer, the dealer and buyer 
complete the reassignment on the paper title with an

[[Page 48109]]

odometer disclosure. The dealer takes both the secure power of attorney 
and the paper title to a tag agency. The title is then transferred to 
the buyer and a receipt is provided. The buyer has the option to obtain 
a new paper title or have the Department hold the title electronically. 
The secure power of attorney and old paper title are scanned and stored 
with title history in FRVIS.
    Under Florida's proposed program, a seller with e-title would bring 
the vehicle to a dealership. The seller and dealer complete a secure 
reassignment form with odometer disclosure. When the dealer sells the 
vehicle to another buyer, the dealer and buyer complete another secure 
reassignment form with odometer disclosure. The dealer takes both of 
the secure reassignment forms to a tag agency. The vehicle title is 
then transferred to the buyer and a receipt is provided. The buyer has 
the option to obtain a paper title or have the Department hold the 
title electronically. The secure reassignment forms are scanned and 
stored with the vehicle title history in FRVIS.
b. Sales of Vehicles With e-Title Subject to a Lien (e-lien in Florida)
    Currently, when a licensed motor vehicle dealer is involved, the 
process for transferring a vehicle subject to an e-lien with e-title is 
as follows. A seller with e-title/e-lien brings the vehicle to a 
dealership. The seller and dealer complete a secure power of attorney 
with odometer disclosure. The dealer pays off the lien and the 
lienholder electronically releases the lien via a secure electronic 
interface with the Department (ELT). The dealer then obtains the paper 
title from a tag agency or online from the Department. The dealer 
transfers the odometer information from the secure power of attorney to 
the title and signs the title as buyer and seller. When the dealer 
sells the vehicle to another buyer, the dealer and buyer complete the 
reassignment on the title with odometer disclosure. The dealer takes 
both the secure power of attorney and the paper title to the tag 
agency. The vehicle title is transferred to the buyer and a receipt is 
provided. The buyer has the option to obtain a new paper title or have 
the Department hold the title electronically. The secure power of 
attorney and old paper title are scanned and stored with title history 
in FRVIS.
    Under Florida's proposed program, a seller with e-title would bring 
the vehicle to a dealership. The seller and dealer complete a secure 
reassignment form with an odometer disclosure. The dealer pays off the 
lien and the lienholder electronically releases the lien via secure 
electronic interface with the Department (ELT). When the dealer sells 
the vehicle to another buyer, the dealer and buyer complete another 
secure reassignment form with an odometer disclosure. The dealer then 
takes both secure reassignment forms to a tag agency, where the title 
is transferred to the buyer and a receipt is provided. The buyer has 
the option to obtain a paper title or have the Department hold the 
title electronically. The secure reassignment forms are scanned and 
stored with the vehicle title history in FRVIS.
c. Dealer Reassignments
    Florida currently does not allow for an e-title in the dealer 
reassignment process. A dealer must obtain a paper title prior to being 
able to resell the vehicle. Once there is a paper title, the dealer 
uses the current paper process. The dealer uses the back of the title 
to include reassignments, including odometer disclosure. Once this form 
is full (Florida allows for three reassignments on the title), the 
dealer will use a secure title reassignment supplement (HSMV 82994). 
This form also includes the required odometer disclosures. When a 
vehicle is ultimately sold to a customer, the paper title and all 
secure title reassignment supplements are provided to the tag agency 
and forwarded to the Department for scanning and storing in the title 
record.
    For an e-title, the Department is proposing that the dealer use a 
secure reassignment supplement instead of having to obtain a paper 
title. Any subsequent reassignments would also use the secure 
reassignment supplement. When the vehicle is ultimately sold to a 
retail customer, all secure reassignment supplements would be provided 
to the tag agency for verification of the chain of ownership and 
verification of the odometer disclosure. All documents would be 
forwarded to the Department for scanning and storing in FRVIS.
3. Sales Involving Leased Vehicles
    In the case of leased vehicles, the lessor typically retains 
ownership of the vehicle, but does not possess it. The lessor, as a 
transferor, must comply with the federal odometer disclosure 
requirements when it subsequently transfers title of a leased vehicle. 
As noted by Florida, Federal laws require written mileage disclosures 
be made by lessees to lessors upon the lessor's transfer of the 
ownership of the leased vehicle.
    Currently, Florida's process for transferring leased vehicles is as 
follows. The lessor holds the vehicle's paper title. When the lease 
ends (for example, in a trade-in or buyout situation), the lessee 
brings the vehicle to a dealership. The lessee signs an odometer 
disclosure Statement. The lessor then transfers the odometer reading to 
the title. The lessor signs title over to the dealer (or other party) 
along with the odometer disclosure statement. When the dealer sells the 
vehicle to a buyer, the dealer and buyer complete the reassignment on 
the paper title with the odometer disclosure. The documents are then 
sent to an authorized tag agency, where the title is transferred to the 
buyer and a receipt is provided. The buyer has the option to obtain a 
new paper title or have the Department hold the title electronically. 
The old paper title and supporting documentation are scanned and stored 
with the vehicle title history in FRVIS.
    Under Florida's proposal, the lessor holds an e-title. When the 
lease ends, the lessee would bring the vehicle to a dealership. The 
lessee signs an odometer disclosure statement. The lessor then signs a 
secure power of attorney to the dealer which includes the odometer 
disclosure. The dealer signs a secure reassignment form agreeing with 
the odometer disclosure. When the dealer sells the vehicle to another 
buyer, the dealer takes the documents (bill of sale, reassignment 
document, and power of attorney) to the tag agency, where the title is 
transferred to the buyer and a receipt is provided. The buyer has the 
option to obtain a new paper title or have the Department hold the 
vehicle title electronically. All documents are sent to Department and 
scanned into the vehicle title history in FRVIS.

C. Florida e-Odometer Implementation Schedule

    Florida is implementing its electronic title or ``e-title'' system 
in three phases. Under the first phase, which Florida states is 
complete, participating lienholders are allowed, but not required, to 
have their titles and liens held electronically by the Department. This 
option allows lienholders to avoid maintaining paper lien portfolios. 
The Department and the lienholders encourage owners who satisfy their 
liens to continue to maintain the title electronically.
    Under the second phase of the e-title project, dealers would be 
allowed to buy and sell e-title vehicles and take e-title vehicles in 
on trade without acquiring a paper title. It is the Agency's 
understanding that the program will extend to leased vehicles, 
including end-of-lease vehicles coming back to the

[[Page 48110]]

dealer and vehicles being traded in prior to the end of the lease. 
Lessors will give the dealer power of attorney to disclose the vehicle 
mileage, as indicated by the lessee on an odometer disclosure 
statement, on a secure reassignment form, which will then be used to 
transfer title from the Lessor to a subsequent purchaser. This process 
will obviate the need for the dealer to obtain a paper title.
    The third phase of the project would extend e-title capability to 
private or casual sales. Under the proposal, the seller (transferor) 
and buyer (transferee) will have two options for completing a motor 
vehicle sale. Currently, the vehicle's title is either held physically 
by the vehicle owner or the vehicle is titled electronically. If the 
vehicle is titled electronically, the owner now must acquire a secure 
paper copy of the title prior to transferring the vehicle. The 
transferor makes the required odometer disclosure on the title and both 
parties sign the title, effectuating transfer of the vehicle. Under 
Florida's proposed program, if the vehicle has an e-title, the 
transferor would not be required to obtain a paper title to transfer 
it. The transferor and transferee will have the option to go to a tag 
agent or tax collector's office and, after providing adequate 
identification to the agent, execute a secure reassignment form to 
transfer title from the transferor to the transferee without the need 
to first acquire a paper title.\44\
---------------------------------------------------------------------------

    \44\ The secure reassignment form contains an odometer 
disclosure statement that is required to transfer the vehicle title. 
Sellers would accurately disclose vehicle mileage in the presence of 
both the buyer as well as a tag agent. The tag agent will verify 
that the buyer agrees to the mileage being disclosed and will 
require proper identification from both the buyer and the seller. 
(Currently, a vehicle owner with an e-title who wants to transfer or 
sell the vehicle must acquire a paper title from the State to 
process the transaction.)
---------------------------------------------------------------------------

D. Florida's Position on Meeting the Purposes of TIMA

    Florida submits that its e-Odometer program meets the purposes of 
TIMA as described by NHTSA summarized above and described more fully in 
the Agency's Final Determination on the Commonwealth of Virginia's 
petition for alternate odometer disclosure requirements. See 74 FR 643, 
647-48 (January 7, 2009). The petition identified the purposes of TIMA 
and the State's assessment on how its proposed program would comply 
with each purpose.
1. Vehicle Transfers in the Absence of a Lease Agreement
a. Casual or Private Sales
    One purpose is to assure that the form of the odometer disclosure 
precludes odometer fraud. Florida asserts that the secure reassignment 
form will have the same security features currently included on title 
paper and will travel with the title record in FRVIS; both parties will 
be present together in a tag agency with identification in order to 
process the title transfer, which includes execution of the odometer 
disclosure statement on the secure reassignment form.
    A second purpose of TIMA is to prevent odometer fraud by processes 
and mechanisms making the disclosure of an odometer's mileage on the 
title both a condition of the application for a title and a requirement 
for title issuance by a state. Florida states that under its proposal, 
odometer disclosure would remain a required data input for application 
of a title and a required output on the title. By having both parties 
present with required identification, Florida states the process would 
be more secure than the current process, which allows the owner to sign 
the title over to the buyer who then produces the document when 
obtaining title without the seller present.
    A third purpose is to prevent alterations of disclosures on title 
and to preclude counterfeit titles through secure processes. Florida 
states in its petition that, with both parties present at a tag agency 
with identification, this process will prevent alterations and preclude 
counterfeit titles. If changes are necessary, a new secure document 
will be signed by both parties present in front of an authorized tag 
agent.
    A fourth purpose is to create a record of the mileage on vehicles 
and a paper trail. Florida states that under its proposal, the secure 
document, whether a secure reassignment form or secure paper title, 
signed by both the buyer and seller will be scanned and stored as 
evidence of the agreement by both the buyer and seller of the odometer 
reading. This creates a permanent record that is easily checked by 
subsequent owners or law enforcement officials.
    A fifth purpose is to protect consumers by assuring that they 
received valid representations of the vehicle's actual mileage at the 
time of transfer based on odometer disclosures. Under its proposal, 
Florida states this purpose is served because consumers (buyers) will 
be present with sellers at the time the title is transferred (currently 
this is not usually the case).
b. Sales Involving Licensed Dealers (With and Without a Lien)
    One purpose is to assure that the form of the odometer disclosure 
precludes odometer fraud. Florida states its proposal would meet this 
purpose because the secure reassignment form will have the same 
security features currently included on title paper. The dealer will 
use secure reassignment forms, which will travel with the title, which 
the dealer would sign with the previous owner and with the new buyer.
    A second purpose is to prevent odometer fraud by processes and 
mechanisms making the disclosure of an odometer's mileage on the title 
a condition of the application for a title and a requirement for the 
title issued by the State. Florida states that the e-title process 
requires disclosure of an odometer's mileage on a secure document. The 
secure reassignment forms would have the same security features 
currently included on title paper and would travel with the title 
record.
    A third purpose is to prevent alterations of disclosures on a title 
and to preclude counterfeit titles through secure processes. Florida 
states that a title would not be issued to a buyer if the chain of 
ownership cannot be established. The submission of all secure 
reassignment forms would establish the chain of ownership. Odometer 
disclosures would be part of those forms.
    A fourth purpose is to create a record of the mileage on vehicles 
and a paper trail. Florida notes that the secure document signed by the 
previous owner, the dealer, and the buyer would be scanned and stored 
as evidence of the agreement by both the buyer and seller of the 
odometer reading.
    A fifth purpose is to protect consumers by assuring that they 
received valid representations of the vehicle's actual mileage at the 
time of transfer based on odometer disclosures. According to Florida, 
the secure reassignment forms would allow for valid representation of 
the odometer during both transactions (the original owner to dealer 
transaction and the subsequent dealer to buyer transaction).
2. Transfers Involving Leased Vehicles
    One purpose is to assure that lessors have the vehicle's actual 
odometer mileage at the time of transfer. Florida states that the only 
change proposed by its e-title proposal from the current process is 
that, instead of signing an actual paper title, the lessor would sign a 
power of attorney and disclose the odometer reading as provided to it 
by

[[Page 48111]]

the lessee. This power of attorney would then transfer this odometer 
information to the dealer to sell the vehicle.
    A second purpose is to assure that lessees provide lessors with an 
odometer disclosure statement. Florida states that its proposed e-title 
process would not affect this requirement.
    A third purpose is to assure that lessees are formally notified of 
their odometer disclosure obligations and the penalties for failing to 
comply by not providing complete and truthful information. Florida 
states that its proposed e-title process would not affect this 
requirement.
    A fourth purpose is to set rules for accurate disclosure by 
lessors, directing them to indicate on the title the mileage provided 
by the lessee, unless the lessor has reason to believe that the 
disclosure by the lessee does not reflect the actual mileage of the 
vehicle. Florida states that its proposal would satisfy this purpose by 
allowing the lessor to indicate the mileage on a secure reassignment 
form that would travel with the title.
    A fifth purpose is to create records and a paper trail, including 
the written, dated and signed odometer disclosure statement by the 
lessee. Florida states that its proposal would not change this 
requirement. The title would remain in electronic form; however, the 
secure reassignment form with the lessor's odometer disclosure, the 
power of attorney form and bill of sale would all be scanned into the 
title history. The Department's database would store these documents 
with the title.
3. Mileage Disclosures by Power of Attorney
    Florida's proposed program incorporates mileage disclosure by power 
of attorney in one circumstance--when a lessee brings a leased vehicle 
to a dealer, the lessor would give a power of attorney to the dealer 
for the purpose of mileage disclosure on the secure reassignment form 
to effect transfer of the vehicle from the lessor to a third party. 
NHTSA has not previously had occasion to identify and discuss these 
purposes when addressing prior petitions for alternate odometer 
disclosure requirements from other states because other states' 
proposals did not encompass the use of powers of attorney for mileage 
disclosure.

V. Analysis

    Under TIMA, 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.'' The purposes are discussed above, as is Florida's proposed 
program. We now provide our initial assessment whether Florida's 
proposal satisfies TIMA's purposes as relevant to its petition.\45\ We 
first address casual or private sales, followed by sales involving a 
licensed dealer of vehicles with and without a lien, sales of leased 
vehicles, and finally sales using a power of attorney for purposes of 
odometer disclosure.
---------------------------------------------------------------------------

    \45\ Florida would continue to be subject to all Federal 
requirements that are not based on Section 408(d) and (e) of the 
Cost Savings Act as amended, recodified at 49 U.S.C. 32705(b) and 
(c).
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A. Florida's Proposal in Light of TIMA's Purposes Regarding Vehicle 
Transfers in the Absence of a Lease Agreement

1. Casual or Private Sales
    One purpose of TIMA is to assure that the form of the odometer 
disclosure precludes odometer fraud. In this regard, NHTSA has 
initially determined that Florida's proposed alternate disclosure 
requirements satisfy this purpose as the proposal relates to casual or 
private sales. Under Florida's proposal, there would be an e-title. A 
required part of the data to be entered in the transfer of title would 
be the vehicle's odometer reading. In casual/private sales, the seller 
and buyer would visit a tag office together, provide identification to 
the tag agent, and sign a secure reassignment form transferring 
ownership and disclosing the odometer reading. This is one document and 
it would be signed before a tag agent. The secure reassignment form 
including the required odometer disclosure statement would be scanned 
and reside as an electronic record within the Department's database 
that would be linked to the vehicle's title through title number and 
VIN. If a hard copy of the title is needed or desired, Florida can 
generate a paper title with the odometer disclosure statement on the 
title using a secure printing process. As to the form of the title 
containing a space for the transferor to disclose the vehicle's 
mileage, the proposed Florida program would provide an electronic 
equivalent to these requirements for use in a subsequent sale of the 
vehicle, as transfers would be effected electronically on secure 
reassignment forms or paper titles that provide space for the required 
odometer disclosure in keeping with TIMA and current practice.\46\
---------------------------------------------------------------------------

    \46\ Florida notes that paper titles will still be necessary for 
title transactions involving at least one out of state party. For 
instance, if a vehicle enters Florida with an out of state title, 
Florida cannot recognize another state's e-title. The buyer will 
need to obtain a signed paper title from the seller. Conversely, if 
an owner sells a Florida titled vehicle to someone who will title it 
in another state, the owner will need to obtain the paper title to 
allow the buyer to obtain a title in the other state.
---------------------------------------------------------------------------

    Another purpose of TIMA is to prevent odometer fraud by processes 
and mechanisms making the disclosure of odometer mileage on the title a 
condition of the application for a title and a requirement for the 
title issued by the State. NHTSA has initially determined that 
Florida's proposed electronic process satisfies this purpose as it 
relates to casual or private sales. Florida's proposed electronic title 
transfer process would require proper identification of the seller and 
buyer and disclosure and acceptance of odometer information on a secure 
reassignment form in front of a tag agent before the transaction can be 
completed. While the form is referred to as a reassignment form, viewed 
from a e-title transactional standpoint, it appears to be an 
information entry form used in the context where the buyer and seller 
both appear before the tag agent and simply use the document to convey 
odometer information, with their signatures, for the tag agent to 
record in the e-title system. We note that Florida's use of the term 
``secure reassignment form'' in this situation appears to be a 
misnomer. The transfer of title in casual or private sales is not a 
reassignment as there is no prior assignment. The document is more 
accurately described as a secure State title transfer form for use when 
a vehicle has e-title and the title cannot be physically signed.
    Another purpose of TIMA is to prevent alterations of disclosures on 
titles and to preclude counterfeit titles through secure processes. The 
Agency has initially determined that Florida's proposed program 
satisfies this purpose as it relates to casual or private sales. 
Florida's alternate disclosure requirements appear to be as secure as 
current paper titles in casual or private sales. As we understand 
Florida's proposal, the odometer statement would be disclosed initially 
on secure paper--either on the paper title itself or on a secure 
reassignment form at one of Florida's authorized tag agency offices. 
First, both buyer and seller would sign the reassignment form in front 
of a tag agent, which would ensure the security of that aspect of the 
proposed process. Second, Florida's reassignment form would be secure; 
it would be set forth by means of a secure printing process or other 
secure process in compliance with 49 CFR 580.4. On subsequent title 
transfers in casual or private sales, the transferor and transferee 
would have to

[[Page 48112]]

complete the odometer disclosure and acceptance--either on a secure 
paper title issued in a conventional manner by the Department or on a 
secure reassignment form in front of a tag agent for the transaction to 
be completed.
    Another purpose of TIMA is to create a record of the mileage on 
vehicles and a paper trail. The underlying purposes of this record and 
paper trail are to enable consumers to be better informed and provide a 
mechanism through which odometer tampering can be traced and violators 
prosecuted. In NHTSA's preliminary view, Florida's proposed program 
relating to casual or private sales satisfies this purpose. It would 
create a scheme of records equivalent to the current ``paper trail'' 
that assists law enforcement in identifying and prosecuting odometer 
fraud. Under the Florida proposal, creation of a paper trail would 
start with the requirement that a title cannot be transferred until and 
unless both the transferor and transferee execute a secure paper title 
consistent with the Federal regulations or a secure reassignment form, 
including the required odometer disclosure statement in front of a tag 
agent. Scanned copies of the title and secure reassignment form(s) 
would be stored in the vehicle's title record in FRVIS. If a paper 
title is requested, the odometer disclosure statement would be provided 
on the secure paper title.
    The Department would retain an electronic copy of the prior titles 
(including the prior odometer disclosure statements) and any supporting 
documentation, including secure reassignment forms. The Department 
would scan these documents and store them with the vehicle's electronic 
title history. For title images, the Department would store all 
applicable data and images of documents in the title history for the 
vehicle in FRVIS. Furthermore, Florida requires that all documents used 
to issue a title be retained for a period of at least ten (10) years. 
These electronic records would create the electronic equivalent to a 
paper trail in a paper-based system that would be readily available to 
law enforcement. Additionally, the vehicle mileage would be available 
for public view via an online motor vehicle check available to Florida 
customers.
    Whether Florida's program as it relates to casual or private sales 
conforms to TIMA's overall purpose is discussed in subpart D below.
2. Sales Involving Licensed Dealers (Vehicles Without and With a Lien)
    One purpose of TIMA is to assure that the form of the odometer 
disclosure precludes odometer fraud. As discussed above, to prevent 
odometer fraud facilitated by disclosure statements that were separate 
from titles, TIMA required mileage disclosures to be on a secure 
vehicle title, containing space for the seller's attested mileage 
disclosure and a new disclosure by the buyer when the vehicle was sold 
again, instead of a separate document.\47\ NHTSA has initially 
determined that the form of disclosure in Florida's proposal for retail 
vehicle sales to dealers of vehicles without or with a lien would not 
satisfy this purpose, for the reasons discussed below.\48\
---------------------------------------------------------------------------

    \47\ We note that Florida's proposal addresses vehicles subject 
to liens. In amendments to TIMA pertaining to titles in the 
possession of a lienholder when the transferor transfers ownership 
of the vehicle, Congress maintained the requirement that the 
disclosure be on the title itself. It did provide for the use of a 
secure power of attorney under restrictive conditions, as an 
exception to the prohibition that a person may not sign an odometer 
disclosure statement as both the transferor and transferee.
    \48\ If, however, the transfer from the titled seller to a 
dealer was on a title, NHTSA's initial decision would be that 
Florida's proposal insofar as it concerns subsequent transfers of 
the vehicle among licensed Florida dealers meets the purposes of 
TIMA.
---------------------------------------------------------------------------

    In instances when a private seller sells a vehicle to a dealer, 
Florida proposes that the seller and dealer complete a secure 
reassignment form to make the odometer disclosure. Florida's assessment 
of its proposal in light of the purposes of TIMA states that the 
reassignment forms will travel with the title. But from a TIMA 
perspective, when there is a transfer involving a transferor in whose 
name the vehicle is titled, the transferor must disclose the mileage on 
a title, and not on a separate reassignment document such as one that 
is supposed to travel with the title. Thus, Florida's proposed program 
is not consistent with a purpose of the disclosure required by TIMA 
pertaining to the form of the disclosure.
    Another purpose of TIMA is to prevent odometer fraud by processes 
and mechanisms making odometer mileage disclosure on the title a 
condition for the application for a title and a requirement for the 
title issued by the State. As explained above, a major shortcoming of 
the odometer provisions of the Cost Savings Act prior to TIMA, was the 
absence of a requirement that the odometer disclosure statement be on 
the vehicle's title that, following the sale of the vehicle, was 
presented to the State for retitling. NHTSA has initially determined 
that Florida's proposed alternate disclosure requirements for vehicles 
transferred from a private owner to a licensed dealer, do not satisfy 
this purpose. We have initially determined that Florida's proposed 
alternate disclosure requirements for subsequent vehicle transfers 
between licensed dealers satisfy this purpose.
    As discussed above, Florida's proposal for sales to dealers 
provides for disclosure and acceptance of odometer information on a 
secure reassignment form, not on a title. Following the ultimate re-
sale of a vehicle to a consumer by a dealer (possibly not the same 
dealer that took the vehicle as a trade-in), that dealer would take 
secure reassignment forms to the tag agency for titling. In this 
respect, Florida does not propose making the disclosure of odometer 
mileage on the title in the initial transaction involving a transferor 
in whose name the vehicle is titled a condition for the application for 
a title and a requirement for the title issued by the State. Florida 
would provide for issuance of a new title based on secure reassignment 
forms. Such a form can be easily discarded and another secure 
reassignment form bearing an inaccurate odometer disclosure could be 
created by an unscrupulous dealer somewhere in the chain of transfers. 
We have tentatively concluded that, in order for the proposed program 
to be consistent with a purpose of TIMA, in the first transfer of title 
of a vehicle from a private seller to a dealer Florida may not provide 
for a mileage disclosure on a secure reassignment form.
    A third purpose of TIMA is to prevent alterations of disclosures on 
titles and to preclude counterfeit titles through secure processes. In 
view of the shortcomings of Florida's proposed program regarding the 
use of secure reassignment forms instead of titles in sales between 
private parties and dealers discussed above, NHTSA believes that it is 
inappropriate to reach a conclusion regarding the security aspects of 
those forms in that context. The Agency has initially determined that 
Florida's proposed alternate disclosure requirements for the subsequent 
transfer of vehicles between dealers satisfy this purpose. As we 
understand Florida's proposal, the secure reassignment form would be 
produced by the State and would be comparable to reassignment forms now 
in use in transfers between dealers.
    A fourth purpose of TIMA is to create a record of the mileage on 
vehicles and a paper trail. The underlying purposes of this record and 
paper trail are to inform consumers and provide a mechanism to trace 
and prosecute odometer tampering. NHTSA's initial determination is that 
Florida's proposed alternative scheme would not, in one critical 
respect, create a scheme of records equivalent to the current ``paper

[[Page 48113]]

trail'' used for identifying and prosecuting odometer fraud. Florida 
proposes widespread use of secure reassignment forms in transfers from 
private parties to dealers. In particular, Florida proposes that, 
instead of a title, a reassignment form would be used to create the 
record of the mileage on the odometer in the case of a transferor in 
whose name the vehicle is titled. This recorded mileage figure 
establishes a critical benchmark for evaluating the remaining mileage 
declarations that will follow. NHTSA has initially determined that in 
these circumstances use of reassignment documents would not create the 
records and paper trail contemplated by TIMA. Our concerns about 
odometer disclosures on these forms in lieu of disclosure on the title 
itself are described above.
    NHTSA tentatively concludes the remainder of Florida's proposal 
would otherwise meet the record creation purposes of TIMA. Regardless 
of whether the buyer requests a paper title or surrenders the title to 
the Department to maintain electronically, the Department would retain 
an electronic copy of the prior titles (including the prior odometer 
disclosure statements) and any supporting documentation, including 
secure reassignment forms and powers of attorney. The Department would 
scan these documents and store them in FRVIS with the vehicle's 
electronic title history. For title images, FRVIS would store all 
applicable data and stores images of documents that remain in the title 
history for the vehicle. Furthermore, Florida requires that all 
documents used to issue a title be retained for a period of at least 
ten (10) years. These electronic records would create the electronic 
equivalent of a paper based system that would be readily available to 
law enforcement. Additionally, the vehicle mileage would be available 
for public view via an online motor vehicle check available to Florida 
customers.
    Whether Florida's program as it relates to sales involving licensed 
dealers conforms to TIMA's overall purpose is discussed in subpart D 
below.

B. Florida's Proposal in Light of TIMA's Purposes Relevant to Leased 
Vehicles

    One purpose of TIMA's leased vehicle provisions is to assure that 
the lessor has the vehicle's actual odometer mileage at the time the 
lessor transfers ownership. The Agency has initially determined that 
Florida's proposed program requirements satisfy this purpose. As we 
understand Florida's proposal, the State proposes to require vehicle 
lessees to sign an odometer disclosure statement that would be provided 
to the buyer by the lessor.
    A second purpose of TIMA's leased vehicle provisions is to assure 
that the lessee provides the lessor with an odometer disclosure 
statement regarding the mileage of the vehicle at the time of transfer. 
The Agency has initially determined that Florida's proposed program 
requirements satisfy this purpose. As discussed above, the lessee would 
provide this to the lessor via an odometer disclosure statement when 
the lessee surrenders the leased vehicle to the dealer, and the lessor 
would provide this statement to the buyer.
    A related purpose is to assure that lessees are formally notified 
of their odometer disclosure obligations and the penalties for failing 
to comply by not providing complete and truthful information. We have 
initially determined that Florida's proposal does not satisfy this 
purpose. As described in the petition, Florida's alternate disclosure 
requirements do not address this purpose other than a statement in the 
petition that the e-title process does not change the current 
requirement. We recognize that Florida's odometer disclosure law 
requires lessors to conform to Federal disclosure regulations under 49 
CFR 580.7. Fla. Stat. Ann. Sec.  319.225(4) (2010). Florida law also 
provides that State statutes regarding vehicle transfer and 
reassignment forms and odometer disclosure statements be construed to 
conform to 49 CFR part 580. Fla. Stat. Ann. Sec.  319.225(9) (2010). 
Further, according to Florida, the requirement that the lessee provide 
the lessor with an odometer disclosure statement when the lessee 
surrenders the vehicle typically is part of the lease agreement, which 
provides notice of the requirement and the penalties for failing to 
comply. But this is not a formal requirement. Underlying the adoption 
of the leased vehicles provisions of TIMA, there was significant 
concern about considerable understatements of mileage on leased 
vehicles that were turned-in and resold. Our initial determination is 
that this reliance on what is typically in a lease is not sufficient to 
assure that lessees are formally notified of their odometer disclosure 
obligations and the penalties for failing to comply by not providing 
complete and truthful information.
    A fourth purpose is to set the ground rules for the lessors, 
providing for lessors to indicate the mileage provided by the lessee on 
the title, unless the lessor has reason to believe that the disclosure 
by the lessee does not reflect the actual mileage of the vehicle. We 
have initially determined that Florida's proposal does not satisfy this 
purpose. A lessee would make an odometer disclosure by executing an 
odometer disclosure statement upon relinquishing the leased vehicle. 
The lessor may transfer the odometer disclosure statement from the 
lessee's statement to a secure power of attorney unless the lessor has 
reason to believe that the lessee's statement does not reflect the 
vehicle's actual mileage, in which case the lessor would be required to 
indicate on the title ``true mileage unknown'' or words to that 
effect.\49\ As explained in the discussion on powers of attorney above, 
odometer disclosure can be made using a secure power of attorney 
document only in the limited circumstances when the transferor's title 
is physically held by a lienholder at the time of the transfer or the 
transferor to whom the title was issued by the State has lost the title 
and the transferee obtains a duplicate title on behalf of the 
transferor. These limited circumstances do not include lessors giving 
power of attorney to dealers for purposes of odometer disclosure. Under 
Florida's proposal, the vehicle title is not unavailable to the 
lessor--the lessor, as the titled owner of the vehicle in Florida, can 
simply request a paper copy of the title from the State and effect 
transfer of the vehicle on the secure paper title.
---------------------------------------------------------------------------

    \49\ Florida recognizes that the electronic process must 
incorporate the brand (actual mileage, exceeds mechanical limits, or 
true mileage unknown) requirement, and Florida would continue to 
show the odometer reading and brand on paper titles and maintain an 
electronic record of the odometer reading and the brand.
---------------------------------------------------------------------------

    A fifth purpose of TIMA's leased vehicle provisions is to create 
records and a paper trail. The paper trail includes the signed odometer 
disclosure statement by the lessee. The Agency has initially determined 
that Florida's proposed alternate disclosure requirements do not 
satisfy this purpose. Under Florida's proposal as we understand it, the 
lessee would be required to sign an odometer disclosure statement when 
the vehicle is surrendered. The lessor would not be required to sign 
this document. The lessor would execute a power of attorney to the 
dealer that would include the odometer disclosure statement as provided 
by the lessee. The dealer then would sign the secure reassignment form 
(apparently for the transferor/lessor and as transferee), providing an 
odometer disclosure provided by the lessor on the secure power of 
attorney. When the dealer sells the vehicle to another buyer, the 
dealer would take the documents (bill of sale, reassignment form, and 
power of

[[Page 48114]]

attorney) to the tag agency. The title would be transferred to the 
buyer. Whether the buyer elects a new paper title or e-title, the 
related documents--including the old title and any supporting 
documentation--would be scanned and stored with the vehicle title 
history by the Department. Florida does not state whether the lessee's 
odometer disclosure statement to the lessor would be scanned. The 
electronic documents would be associated with the vehicle title history 
by title number and VIN.
    Florida's proposed program for leased vehicle transactions would 
not create a scheme of records equivalent to the current ``paper 
trail'' now assisting consumers and law enforcement. Under TIMA as 
implemented, dealers and lessors are required to retain all odometer 
disclosure statements that they issue and receive. However, Florida's 
proposed program does not specify that the dealer and lessor would be 
required to maintain a copy of the lessee's odometer disclosure 
statement, and does not provide an alternative mechanism such as a 
provision that the statement would be forwarded to either a tag agent 
for mileage verification or the Department for scanning and maintaining 
as part of the vehicle's title history. We have tentatively concluded 
that, in the transfer of title of vehicles subject to a lease 
agreement, Florida's proposed program does not satisfy the purposes of 
TIMA because it does not require dealers and lessors to retain odometer 
disclosure statements from lessees.
    The overall purpose of TIMA's leased vehicle provisions is to 
ensure that vehicles subject to leases have adequate odometer 
disclosure statements executed on titles at the time of transfer. The 
Agency has initially determined that Florida's proposed program does 
not meet TIMA's overall requirement. Under Florida's proposal, upon the 
termination of the lease, a lessee would sign an odometer disclosure 
statement. This is an important document that the lessor must sign. But 
under Florida's proposal, the lessor signs a separate secure power of 
attorney to the dealer which only assumedly includes the odometer 
reading. In any event, the lessor's power of attorney to a dealer for 
purposes of odometer disclosure allows the same person to sign an 
odometer disclosure for both parties. That is fraught with potential 
problems of incorrect odometer statements. Congress did not extend the 
use of power of attorney to this circumstance.
    Florida's proposal provides for odometer disclosure in transfer of 
leased vehicles to be made on a secure reassignment form. Lessors 
(transferors) are titled owners in Florida. But as explained above, 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. Florida's proposal runs counter to this 
requirement.
    The dealer would take the documents (bill of sale, reassignment 
document, and power of attorney) to the tag agency; thereafter, the 
documents would be sent to the Department and scanned into the title 
history. However, Florida's proposal does not require the odometer 
disclosure statement made by the lessee to be co-signed by the lessor, 
submitted with title documents, or to be retained by any party. In the 
Agency's view, this is an important link in the chain of odometer 
disclosure for a leased vehicle. This link should be preserved as much 
as any other.
    Because of the above-identified problems, the Agency tentatively 
concludes that Florida's proposed program on leased vehicles does not 
meet TIMA's overall purpose of ensuring that vehicles subject to leases 
have adequate odometer disclosure statements executed on titles at the 
time of transfer.

C. Florida's Proposal in Light of the Purposes of TIMA as Amended 
Relevant to Odometer Disclosure by Power of Attorney

    One purpose of the power of attorney provision in TIMA as amended 
was to provide limited exception(s) to a rule prohibiting a person from 
signing an odometer disclosure statement as both the transferor and 
transferee in the same transaction, which had the effect of prohibiting 
the use of powers of attorney for purposes of recording mileage on 
titles of motor vehicles. Florida's proposal does not fit within the 
narrow confines of this exception. Under Florida's proposed program, a 
lessor (not a lienholder) would execute a power of attorney. No 
lienholder would be involved nor is there a requirement that the title 
be lost. The overall purposes of TIMA as amended are not preserved by 
this proposed expansion of the Congressional amendment of TIMA. We have 
initially determined that Florida's proposed program is not consistent 
with a purpose of the disclosure required by TIMA, including amendments 
thereto.\50\
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    \50\ We again note that Florida's proposal for leased vehicles 
would not comply with Federal odometer disclosure statutes and 
regulations regarding use of a power of attorney to facilitate 
odometer disclosure. Under the proposal, a lessor would sign a 
secure power of attorney to the dealer that includes the odometer 
disclosure. The dealer would then sign the secure reassignment form 
agreeing with the odometer disclosure. In this scenario, the dealer 
would sign the secure reassignment form as both transferor/lessor 
and transferee/buyer. This practice is not consistent with TIMA as 
amended which precludes execution by one person except in 
specifically identified circumstances, which do not include 
transfers of leased vehicles and the associated odometer disclosure 
statement based on a lessee odometer disclosure statement that may 
or may not have been retained by the dealer and/or lessor and a non-
secure power of attorney document from the lessor to the dealer.
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    A second purpose was to assure that the form of the power of 
attorney document issued by a State precluded odometer fraud. We have 
not made a determination as to whether Florida's proposal meets this 
purpose. Florida's proposal does not address the form of the secure 
power of attorney documents it would use. The requirements for form are 
discussed in section III.C above.
    A third purpose is to set the ground rules for transferors and 
transferees, providing that both parties provide all of the information 
and signatures required in parts A, and as applicable B and C of the 
secure power of attorney form. We have not made a determination as to 
whether Florida's proposal meets this purpose. Florida's proposal does 
not address this purpose.
    A fourth purpose was to prevent odometer fraud by processes, 
mechanisms, and conditions calculated to result in the disclosure of 
the actual mileage on the title. We have not made a determination as to 
whether Florida's proposal meets this purpose. Florida's proposal does 
not address the processes, mechanisms and conditions related to use of 
the secure power of attorney for the purposes of odometer disclosure.
    A fifth purpose is to prevent alterations of odometer disclosures 
by powers of attorney and to preclude counterfeit powers of attorney 
through secure processes. NHTSA has initially concluded that Florida's 
proposed process does not satisfy this purpose. Under NHTSA 
regulations, power of attorney forms shall be issued by the State and 
shall be set forth by a secure process. 49 CFR 580.13(a). As we 
understand Florida's proposal, the power of attorney document used by 
the lessor would not be State-issued and would not be secure. As noted 
above, TIMA was written in part to prevent alterations of disclosures 
on titles and precludes counterfeit titles by requiring secure 
processes. 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.'' 
Allowing lessors to transfer title and make the required odometer 
disclosure

[[Page 48115]]

through a non-secure power of attorney directly contradicts odometer 
disclosure requirements. While this process may add convenience to the 
process of transferring leased vehicles, it does so at the expense of 
the security requirements that are a foundation of TIMA. We have 
tentatively determined that Florida's proposed program does not meet 
this purpose. The power of attorney form--and any document used to 
reassign a vehicle title-- must be issued by the State and produced by 
a secure process.
    A sixth purpose is to create a record on the mileage on vehicles 
and a paper trail. We have not made a determination as to whether 
Florida's proposal meets this purpose. Florida's proposal does not 
address this purpose.
    Seventh, the overall purpose is to protect consumers by assuring 
that they receive valid representations of a vehicle's actual mileage 
at a time of transfer. To the extent Florida's proposal addresses this 
purpose--providing for secure powers of attorney for purposes of 
mileage disclosure in the transfer of leased vehicles--NHTSA has 
initially concluded that Florida's proposed process does not satisfy 
it.
    We note that Florida's proposed program would eliminate a current 
practice by Florida that does not comport with Federal odometer 
disclosure statutes and associated regulations. Florida's petition 
indicates that when an owner transfers a vehicle not subject to a lien 
to a dealer, the owner and dealer would execute a secure power of 
attorney, including an odometer disclosure statement, granting the 
dealer the power to make the odometer disclosure on the vehicle's paper 
title (which it needs to procure from the State before transfer of 
title can occur) and sign the title as transferor and transferee. 
Presumably, this practice would facilitate title transfer when the 
vehicle title is maintained electronically and neither the transferor 
nor dealer has immediate access to the paper title. Under TIMA and 
Agency regulations, a power of attorney may be used in making the 
odometer disclosure statement only if the title is lost or is in the 
possession of a lienholder when the transferor transfers ownership of 
the vehicle.\51\ A party may not sign an odometer disclosure statement 
as transferor and transferee except as set forth in 49 CFR 580.13 or 
580.14.\52\ These regulations do not allow transferring vehicles not 
subject to a lien by power of attorney as is the current Florida 
practice. The Agency encourages Florida to discontinue its current 
practice of using a secure power of attorney to transfer title and 
disclose mileage for vehicles not subject to a lien without lost titles 
and require title transfer in these situations in a manner complying 
with current Federal statutes and regulations.
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    \51\ 49 U.S.C. 32705(b)(2)(A); 49 CFR 580.13. Regulations 
require that this power of attorney be set forth by means of a 
secure printing process or other secure process. 49 CFR 580.4.
    \52\ 49 CFR 580.5(h). Under Sec.  580.13, a transferor may give 
a power of attorney to his transferee for the purpose of mileage 
disclosure if the transferor's title is physically held by a 
lienholder or the transferor has lost his title and the transferee 
obtains a duplicate title on behalf of the transferor (and if 
otherwise permitted by State law). Under Sec.  580.14, if part A of 
a secure power of attorney form has been used pursuant to Sec.  
508.13, and if otherwise permitted by State law, a transferee may 
give a power of attorney to his transferor to review the title and 
any reassignment documents for mileage discrepancies and if none are 
found, to acknowledge disclosure on the title.
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D. Florida's Proposal in Light of TIMA's Overall Purpose

    TIMA's overall purpose is to protect consumers by assuring that 
they receive valid odometer disclosures representing a vehicle's actual 
mileage at the time of transfer. In Florida in casual or private sales, 
the transferor and transferee currently sign the title, disclosing the 
odometer and effecting transfer of title. The transferee then goes to a 
tag agent and presents the title for processing and printing of a new 
paper title in the transferee's name (or the transferee elects e-title 
and the new title, the old title, and any supporting documentation is 
scanned and maintained electronically by the Department). This comports 
with Federal law. Under Florida's proposal, both parties would meet at 
a tag office, provide identification information to the tag agent, and 
execute a secure reassignment form transferring ownership and 
disclosing the odometer reading, which is witnessed by the tag agent. 
The representation of a vehicle's mileage on the secure reassignment 
form in the presence of a tag agent would be at least as valid as that 
in the current paper title transfer--there would be an identification 
requirement and the disclosure would be made in the presence of a tag 
agent who has confirmed the identification of the transferor and 
transferee.\53\ Further, copies of the identification documents, the 
prior title, supporting documents, and (when elected by the transferee) 
the new title, would be maintained electronically by the Department. 
This process likely would provide more (and provides no less) assurance 
of the validity of the odometer disclosure than a paper process. In 
addition, Florida's proposal would offer the public the opportunity to 
view the most recent odometer reading and date of that reading through 
an Internet application. A prospective buyer would be able to access 
the public e-Odometer information using the vehicle's VIN to assess a 
vehicle's true value by comparing the vehicle's current odometer 
reading to the electronic record stored with the Department.\54\
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    \53\ NHTSA observes that the use of a reassignment document in 
the fashion proposed here eliminates the concerns normally 
associated with the use of these documents in lieu of the actual 
title. As we understand the Florida proposal, the reassignment 
document is employed only to provide information to the tag agent 
entering data into the e-title. As the parties must provide adequate 
identification to the tag agent and complete the transaction in the 
agent's presence, the opportunities for fraud are greatly reduced.
    \54\ This would appear to provide the odometer reading upon 
which a CARFAX Vehicle History Report is based.
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    In sales involving licensed dealers (vehicles subject to a lien or 
not subject to a lien), as discussed above, Florida's proposed program 
relies on reassignment documents. Except in transactions following the 
first sale by the transferor in whose name the vehicle is titled, this 
is problematic, as discussed above. In view of this fundamental 
concern, which needs to be addressed by Florida, at this juncture, 
NHTSA is unable to further address the Florida program.
    As discussed above, Florida's proposed program involving sales of 
leased vehicles, does not satisfy the overall purpose of TIMA 
protecting consumers by assuring that they receive valid odometer 
disclosures representing a vehicle's actual mileage at the time of 
transfer.

VI. NHTSA's Initial Determination

    For the foregoing reasons, NHTSA preliminarily grants Florida's 
petition regarding proposed alternate disclosure requirements for 
vehicle transfers involving casual or private sales. NHTSA 
preliminarily denies Florida's petition regarding proposed alternate 
disclosure requirements for sales involving licensed dealers. NHTSA 
preliminarily denies Florida's petition regarding proposed alternate 
disclosure requirements for sales of leased vehicles.
    This is not a final agency action. NHTSA invites comments within 
the scope of this notice from the public including Florida.

Request for Comments

How do I prepare and submit comments?
    Your comments must be written and in English. To ensure that your 
comments are filed correctly in the

[[Page 48116]]

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

    Issued on: August 2, 2011.
O. Kevin Vincent,
Chief Counsel.
[FR Doc. 2011-19920 Filed 8-5-11; 8:45 am]
BILLING CODE 4910-59-P