Petition for Approval of Alternate Odometer Disclosure Requirements, 35617-35623 [E8-13592]

Agencies

• National Highway Traffic Safety Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 73, Number 122 (Tuesday, June 24, 2008)]
[Proposed Rules]
[Pages 35617-35623]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-13592]


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

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 580

[Docket No. NHTSA-2008-0116; Notice 1]


Petition for Approval of Alternate Odometer Disclosure 
Requirements

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

ACTION: Proposed rule; notice of initial determination.

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

SUMMARY: The Commonwealth of Virginia has petitioned for approval of 
alternate requirements governing certain aspects of the Federal 
odometer law. NHTSA has initially determined that Virginia's proposed 
alternate requirements are generally consistent with the purposes of 
the applicable portion of the federal odometer disclosure law. 
Accordingly, NHTSA preliminarily grants Virginia's petition. This is 
not a final agency action.

DATES: Comments are due no later than July 24, 2008.

ADDRESSES: You may submit comments [identified by DOT Docket ID Number 
NHTSA-2008-0116] by any of the following methods:
     Federal eRulemaking Portal: Go to https://
www.regulations.gov. Follow the online instructions for submitting 
comments.
     Mail: Docket Management Facility: U.S. Department of 
Transportation, 1200 New Jersey Avenue, SE., West Building Ground 
Floor, Room W12-140, Washington, DC 20590-0001.
     Hand Delivery or Courier: West Building Ground Floor, Room 
W12-140, 1200 New Jersey Avenue, SE., between 9 a.m. and 5 p.m. ET, 
Monday through Friday, except Federal holidays.

[[Page 35618]]

     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 without change 
to https://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 https://
DocketInfo.dot.gov.
    Docket: For access to the docket to read background documents or 
comments received, go to https://www.regulations.gov or the street 
address listed above. Follow the online instructions for accessing the 
dockets.

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

SUPPLEMENTARY INFORMATION:

I. Statutory Background

A. The Cost Savings Act

    In 1972, Congress enacted the Motor Vehicle Information and Cost 
Savings Act (Cost Savings Act), among other things, to protect 
purchasers of motor vehicles from odometer fraud. See Public Law 92-
513, 86 Stat. 947, 961-63 (1972).
    To assist purchasers to know the true mileage of a motor vehicle, 
Section 408 of the Cost Savings Act required the transferor of a motor 
vehicle to provide written disclosure to the transferee in connection 
with the transfer of ownership of the vehicle. See Public Law 92-513, 
Sec.  408, 86 Stat. 947 (1972). Section 408 required the Secretary to 
issue rules requiring the transferor to give a written disclosure to 
the transferee in connection with the transfer of the vehicle. 86 Stat. 
962-63. The written disclosure was to include the cumulative mileage on 
the odometer and, as the case may be that the actual mileage is 
unknown, if the odometer reading is known to be different from the 
number of miles the vehicle actually traveled. Section 408 stated that 
the Secretary was to prescribe rules requiring any transferor to 
provide written disclosures to the transferee in connection with the 
transfer of ownership of a motor vehicle. Id. The disclosures were to 
include the cumulative mileage registered on the odometer, or disclose 
that the actual mileage is unknown, if the odometer reading is known to 
the transferor to be different from the number of miles the vehicle has 
actually traveled. The rules were to prescribe the manner in which 
information shall be disclosed under this section and in which such 
information shall be retained. Id. Section 408 further stated that it 
shall be a violation for any transferor to violate any rules under this 
section or to knowingly give a false statement to a transferee in 
making any disclosure required by such rules. Id.
    Id. The Cost Savings Act also prohibited disconnecting, resetting, 
or altering motor vehicle odometers. Id. The statute subjected 
violators to civil and criminal penalties and provided for Federal 
injunctive relief, State enforcement, and a private right of action.\1\
---------------------------------------------------------------------------

    \1\ In 1976, Congress amended the odometer disclosure provisions 
in the Cost Savings Act to provide further protections to purchasers 
from unscrupulous car dealers. See Public Law 94-364, 90 Stat. 981 
(1976). It amended section 408(b) and added new subsection 408(c) 
requiring that no transferor shall violate any rule prescribed under 
this section or give a false statement to a transferee in making any 
disclosure required by such rule and no transferee who, for purposes 
of resale, acquires ownership of a motor vehicle shall accept any 
written disclosure required by any rule under this section if such 
disclosure is incomplete.
---------------------------------------------------------------------------

    There were shortcomings in the odometer provisions of the Cost 
Savings Act. Among others, in some states, the odometer disclosure 
statement was not on the title; it was a separate document that could 
easily be altered or discarded and did not travel with the title. 
Consequently, it did not effectively provide information to purchasers 
about the vehicle's mileage or substantially curb odometer fraud. In 
some states, the title was not on tamper-proof paper. The problems were 
compounded by title washing thought states with ineffective controls. 
In addition, there were considerable misstatements of mileage on 
vehicles that had formerly been leased vehicles, as well as on used 
vehicles sold at wholesale auctions.

B. The Truth in Mileage Act

    In 1986, Congress enacted the Truth in Mileage Act (TIMA), which 
added provisions to the Cost Savings Act. See Public Law 99-579, 100 
Stat. 3309 (1986). The TIMA amendments expanded and strengthened 
Section 408 of the Cost Savings Act.
    Among other requirements, TIMA precluded the licensing of vehicles, 
the ownership of which was transferred, for use in any State unless the 
several requirements were met by the transferee and transferor. The 
transferee, in submitting an application for a title, is required to 
provide the transferor's (seller's) title, and if that title contains a 
space for the transferor to disclose the vehicle's mileage, that 
information must be included and the statement must be signed and dated 
by the transferor. TIMA also precluded the licensing of vehicles, the 
ownership of which was transferred, for use in any State unless the 
several titling requirements were met. Titles must be printed by a 
secure printing process or other secure process. They must indicate the 
mileage and contain space for the transferee to disclose the mileage in 
a subsequent transfer. As to leased vehicles, the Secretary was 
required to publish rules requiring the lessor of vehicles with leases 
to advise its lessee that the lessee is required by law to disclose the 
vehicle's mileage to the lessor upon the lessor's transfer of 
ownership. In addition, TIMA required that auction companies establish 
and maintain records on vehicles sold at the auction, including the 
name of the most recent owner of the vehicle, the name of the buyer, 
the vehicle identification number and the odometer reading on the date 
the auction took possession of the vehicle.
    TIMA further provided that its provisions on mileage statements for 
licensing of vehicles (and rules involving leased vehicles) apply in a 
State, unless the State has in effect alternate motor vehicle mileage 
disclosure requirements approved by the Secretary.\2\ In particular, 
Section 408(f)(2) provided 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) of Section 408, as the case may be.
---------------------------------------------------------------------------

    \2\ In particular, section 408 of the Cost Savings Act was 
amended by TIMA to add the following relevant part at the end of 
section 408. Cost Savings Act Section 408(d) (now codified at 49 
U.S.C. 32705(b)) requires the disclosure on the vehicle title. Cost 
Savings Act Section 408(e) (now codified at 49 U.S.C. 32705(c)) 
addresses leased vehicles. Cost Savings Act subsection (g) (now 
codified at 49 U.S.C. 32705(e)) addresses wholesale auctions.

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

[[Page 35619]]

C. Amendments Following the Truth in Mileage Act and the 1994 
Recodification of the Law

    In 1988, Congress amended section 408(d) of the Cost Savings Act to 
permit the use of a secure power of attorney in circumstances where the 
title was held by a lienholder. The Secretary was required to publish a 
rule, consistent with the purposes of the Act and the need to 
facilitate enforcement thereof, providing for the mileage disclosure, 
the transferor to keep a copy of the power of attorney, and for the 
original power of attorney to be submitted to the State. See Public Law 
100-561 Sec.  401 (adding Section 408(d)(2)(C)), 102 Stat. 2805 (1988). 
In 1990, Congress amended section 408(d)(2)(C) of the Cost Savings Act, 
which had been adopted in 1988. The amendment addressed retention of 
powers of attorneys by states and provided that the rule adopted by the 
Secretary shall not require that a vehicle be titled in the State in 
which the power of attorney was issued. See Public Law 101-641 Sec.  
7(a), 104 Stat. 4654 (1990).\3\
---------------------------------------------------------------------------

    \3\ NHTSA previously reviewed this legislative history in 1991 
when adopting the current regulations governing powers of attorney. 
See Odometer Disclosure Requirements, Final Rule, 56 Fed. Reg. 47681 
(Sept. 20, 1991).
---------------------------------------------------------------------------

    In 1994, in the course of the 1994 recodification of various laws 
pertaining to the Department of Transportation, the Cost Savings Act, 
as amended by TIMA, was repealed. It was reenacted and recodified 
without substantive change. See Public Law 103-272, 108 Stat. 745, 
1048-1056, 1379, 1387 (1994). The statute is now codified at 49 U.S.C. 
32705 et seq. In particular, Section 408(a) of the Cost Savings Act was 
recodified at 49 U.S.C. 32705(a). Sections 408(d) and (e), which were 
added by TIMA (and later amended), were recodified at 49 U.S.C. 
32705(b) and (c). The provisions pertaining to approval of State 
alternate motor vehicle mileage disclosure requirements were recodified 
at 49 U.S.C. 32705(d).

II. Statutory Purposes

    As discussed above, the Cost Savings Act, as amended by TIMA in 
1986, contains a specific provision on approval of State programs. 
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 Costs Savings Act were recodified to 49 U.S.C. 
32705(b) and (c)). Subsection 408(f)(2) of the Costs Savings Act, 
recodified to 49 U.S.C. 32705(d). In light of this provision, we now 
turn to our interpretation of the purposes of these subsections, as 
germane to Virginia's petition.\4\
---------------------------------------------------------------------------

    \4\ Virginia's petition does not address disclosures in leases 
or disclosures by power of attorney. In view of the scope of 
Virginia's petition, Virginia will continue to be subject to current 
federal requirements as to leases and disclosures by power of 
attorney, and we do not address the purposes of the related 
provisions.
---------------------------------------------------------------------------

    A purpose of TIMA was to assure that the form of the odometer 
disclosure precluded odometer fraud. To prevent odometer fraud, which 
was facilitated in some States by disclosure statements that were 
separate from titles, under TIMA the disclosure must be contained on 
the title provided to the transferee and not on a separate document. 
Related to this, the title was required to contain space for the 
disclosures. The Senate Report associated with TIMA noted that Federal 
law had not specified the form in which the odometer reading disclosure 
must be made. See S. Rep. No. 99-47, at 3 (1985), reprinted in 1986 
U.S.C.C.A.N. 5620. In some States, where the disclosure statement was 
on a separate piece of paper from the vehicle's title, the transferor 
could easily alter it or provide a new statement with a different 
mileage. The vehicle could be titled with a lower mileage than in the 
transferor's disclosure in a State that does not require an odometer 
reading on the title. Id. In this regard, in some States there was no 
place for recording the odometer reading on the title when the vehicle 
was sold. Id. at 2. A consequence of these practices was that the new 
title contained no odometer reading and the purchaser/wholesaler could 
then disclose whatever odometer reading it chose. Id.
    Another purpose of TIMA was to prevent odometer fraud by processes 
and mechanisms making the disclosure of an odometer's mileage on the 
title a condition of the application for a title and a requirement for 
the title issued by the State. Prior to TIMA, odometer fraud was 
facilitated by the ability of transferees to apply for titles without 
presenting the transferor's title with the disclosure. To eliminate or 
significantly reduce abuses associated with this lack of controls, TIMA 
required that any vehicle, the ownership of which is transferred, may 
not be licensed unless the application for the title is accompanied by 
the title of such vehicle. Thus, ``in the case of an application for a 
new motor vehicle certificate of title, if the prior owner's title 
certificate contains a space for the disclosure of the mileage, when 
the title certificate is submitted to the State * * *, it shall contain 
a statement, signed and dated by the prior owner, of the mileage 
required to be disclosed by the prior owner.'' See S. Rep. No. 99-47, 
at 2-3 (1985), reprinted in 1986 U.S.C.C.A.N. 5620, 5625-26. See also 
Cost Savings Act, as amended by TIMA, Sec.  408(d), 49 U.S.C. 32705(b).
    TIMA also sought to prevent alterations of disclosures on titles 
and to preclude counterfeit titles through secure processes. In 
furtherance of these purposes, in the context of paper titles, under 
TIMA the title must be set forth by means of a secure printing process. 
It could also be set forth by other secure process that might evolve in 
the future. As noted in the legislative history, because the title 
could be printed through a non-secure process, persons could alter it 
or launder it. See S. Rep. No. 99-47, at 3 (1985), reprinted in 1986 
U.S.C.C.A.N. 5620. The House Report 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), 49 U.S.C. 32705(b).
    Another purpose was to create a record of the mileage on vehicles 
and a paper trail. The underlying purposes of this record and trail was 
to enable consumers to be better informed and provide a mechanism 
through which odometer tampering can be traced and violators 
prosecuted. The creation of a paper trail would improve the enforcement 
process by providing evidence of fraudulent transfers, including by 
consumers and the individuals engaged in such practices. More 
specifically, the paper trail would document transfers and create 
evidence showing the incidence of rollbacks. Under TIMA, as part of the 
paper trail, the title must include a space for the mileage of the 
vehicle. New applications for titles must include a mileage disclosure 
statement signed by the prior owner of the vehicle. There would be a 
permanent record on the vehicle's title at the place where the vehicle 
is titled, usually the State motor vehicle administration. This record 
could be checked by subsequent owners or law enforcement officials, who 
would have a critical snapshot of the vehicle's mileage at every 
transfer, which is the fundamental link in the paper trail for 
enforcement. These provisions were aimed at providing purchasers and 
law

[[Page 35620]]

enforcement with the much-needed tools to combat odometer fraud. The 
House Report associated with TIMA focused on the lack of evidence or 
``paper trail'' showing the incidence of rollbacks as one of the major 
barriers to decreasing odometer fraud. H.R. Rep. No. 99-833, at 18 
(1986). The House Report noted that a purpose of Section 408(d), which 
required the seller to disclose the mileage on the title and titles to 
include the mileage disclosure and a space for recording mileage on the 
next transfer, is to create a permanent record or paper trail for car 
owners and law enforcement and other State officials to track odometer 
fraud. Id. A permanent record on the vehicle's title would be 
maintained at the place where it is titled. Id. Thus, the underlying 
purpose of this record and trail was to enable consumers to be better 
informed and provide a mechanism through which odometer tampering can 
be traced and violators prosecuted. See Cost Savings Act, as amended by 
TIMA, Sec.  408(d), 49 U.S.C. 32705(b).
    Moreover, the general purpose of TIMA was 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. 
The TIMA amendments were directed at resolving shortcomings in the Cost 
Savings Act.

III. Virginia's Petition

    Virginia proposes to allow parties to transfer title through the 
Internet by electronic means and to maintain an electronic record of 
the title in the Virginia Department of Motor Vehicles (VADMV) system. 
The proposal permits the transferee to request a hard copy of the 
title, printed by a secure printed process. While it is not entirely 
clear from Virginia's petition, it appears that the ``title'' will 
reside as an electronic record with the VADMV, but that a hard copy of 
the title will be generated for the transferee, if requested.
    The Virginia petition states that its proposal would permit ``the 
transferor to disclose the odometer mileage to the transferee and the 
transferee to view and acknowledge receipt of the transferor's 
disclosure in connection with the sale of a motor vehicle, as part of a 
secure on-line transaction with the VADMV.'' Under Virginia's proposal, 
to complete a sale of the motor vehicle, the owner of the vehicle 
(transferor) and the purchaser of the vehicle (transferee) would be 
required to perform several steps after they agree upon the sale. 
Included in this process is the creation and use of electronic 
signatures.\5\
---------------------------------------------------------------------------

    \5\ The term ``electronic signature'' means an electronic sound, 
symbol or process, attached to or logically associated with a 
contract or other record and executed or adopted by a person with 
the intent to sign the record. 15 U.S.C. 7006(5) (2004).
---------------------------------------------------------------------------

    Under Virginia's petition, an electronic signature would be created 
during the process of transferring the title. According to VADMV, the 
customer number, unique personal identification number (PIN) and date 
of birth (DOB) of the customer will be used in combination to create 
the electronic signature for each transferor and transferee. Thus, as a 
threshold matter, the process for transferring title would require both 
the transferor and the transferee to obtain a PIN from the VADMV.\6\
---------------------------------------------------------------------------

    \6\ According to Virginia, the process whereby a customer 
obtains a PIN is currently in place, as a PIN already provides a 
secure and confidential Internet access to VADMV services and is 
required in order to conduct a number of on-line transactions. In 
order to obtain a PIN, a customer must provide his or her unique 
customer number and date of birth and certify, under penalty of 
perjury, that the customer number and DOB submitted in the PIN 
request belong to the customer requesting the PIN. Within three (3) 
business days of the customer's request, the VADMV mails a randomly 
generated 4-digit PIN to the customer by first class mail, and the 
assigned PIN is encrypted on the customer's VADMV record. In order 
to conduct a transaction on VADMV's Internet Web site, the customer 
is prompted to enter the VADMV assigned PIN and the Web site will 
prompt the customer to personalize his/her PIN for added security.
---------------------------------------------------------------------------

    The online transaction begins when the transferor logs on to the 
VADMV's Web site using his/her customer number, date of birth and PIN 
to verify the transferor's identity. These also would be used to create 
the electronic signature of the transferor. The transferor would then 
select the ``vehicle transfer of ownership'' transaction and either 
choose the vehicle from a displayed list of eligible vehicles or enter 
the vehicle's VIN. The transfer would then enter the vehicle sales 
price, the odometer reading and brand (Actual, Not Actual or Exceeds). 
After entering this data, the VADMV system will provide the transferor 
with a unique transaction number. The transferor must provide the 
unique transaction number to the transferee to complete the 
transaction. The VADMV system will also prompt the transferor to mail 
the existing vehicle title to the VADMV for destruction.\7\
---------------------------------------------------------------------------

    \7\ According to the Virginia petition, if the transferor fails 
to return the existing vehicle title to the VADMV, the title is 
invalidated in the VADMV system and would be unable to transfer 
title in Virginia.
---------------------------------------------------------------------------

    The transaction would remain in ``pending'' status with VADMV until 
the transferee logs on to complete the transfer of ownership 
transaction. Meanwhile, the VADMV system would automatically check the 
odometer reading entered by the transferor against the odometer reading 
on the VADMV system. If the odometer reading entered by the transferor 
is lower, the transaction will be immediately rejected and referred to 
the VADMV Law Enforcement Services Division for an investigation.
    The transferee would then log on to VADMV's Web site, using his/her 
customer number, DOB and PIN (this would be the transferee's electronic 
signature). The transferee would select the pending vehicle transfer of 
ownership transaction, and he/she would enter the unique transaction 
number that was provided by the transferor. The transferee would be 
required to enter the correct transaction number in order to obtain 
access to the pending transaction. Once such access is obtained, the 
transferee would verify the sales price, odometer reading and brand 
that were entered by the transferor. The transaction would process if 
all the data entered by the transferor is verified and acknowledged as 
correct by the transferee. Ownership of the vehicle would transfer to 
the transferee and an electronic title record would be established by 
VADMV. The VADMV would then maintain the electronic title and would 
issue a paper title upon the request of the transferee.
    If the transferee does not agree with the information entered by 
the transferor, then the VADMV system will reject the transaction. The 
transferor will have the opportunity to correct the sales price, 
odometer reading and brand for the rejected transaction. The transferee 
would then re-verify the information to ensure the accuracy. A second 
discrepancy would result in cancellation of the electronic transaction.
    Virginia's petition asserts that its proposed alternate odometer 
disclosure is consistent with federal odometer law, but it did not 
address the purposes of TIMA. As advanced by VADMV, Virginia's 
alternative ensures that a fraudulent odometer disclosure can readily 
be detected and reliably traced to a particular individual by providing 
a means for the VADMV to validate and authenticate the electronic 
signatures of both parties. This verification is done through the 
generation of the customer number and unique PIN that are provided to 
customers of the VADMV. Virginia states that this unique electronic 
signature can be quickly and reliably traced to a particular 
individual.

[[Page 35621]]

    Second, Virginia states that the electronic odometer disclosure 
provided by the transferor will be available to the transferee at the 
time ownership of the vehicle is transferred. During the transfer-of-
ownership transaction, the transferee would view the odometer reading 
and brand information that was supplied by the transferor, thereby 
ensuring that the transferee is aware of the vehicle's mileage as well 
as any problem with the odometer that was disclosed by the transferor.
    Third, VADVM asserts that its proposal provides a level of security 
equivalent to that of a disclosure on a secure title document. 
According to Virginia, the unique electronic signatures (customer 
number, PIN and DOB) utilized by each party to the transaction in 
addition to the unique transaction number generated by the VADMV ensure 
secure access to the on-line transaction and a reliable means of 
verifying the identities and electronic signatures of each individual. 
In addition, Virginia notes added security in its proposal because the 
information from the transferor and transferee must match exactly. If a 
discrepancy exists that is not corrected, the transaction would 
automatically be rejected and transfer of ownership would not take 
place. Virginia states that the same process would be used in dealer 
transactions with additional safeguards.\8\ The additional safeguards 
will include a requirement that a dealership notify the VADMV of 
employees authorized to do titling activities for the dealership. This 
authorization will be stored by the VADMV on-line system. When the 
employee logs onto the VADMV on-line system, he or she will also be 
requested to enter the dealer number that is assigned by the VADMV and 
the employee's logon information. If the VADMV does not show an 
authorization by the dealership, the employee will not be eligible to 
continue with the transaction for that dealership.
---------------------------------------------------------------------------

    \8\ Dealers will continue to be subject to the dealer retention 
requirements as set forth in 49 CFR Sec.  580.8(a), which requires 
dealers and distributors to retain a copy of odometer disclosure 
statements that they issue and receive for five years. These 
requirements are not based upon the TIMA amendments that added 
Section 408(d) to the Cost Savings Act.
---------------------------------------------------------------------------

    Virginia refers to an April 25, 2003 letter by former NHTSA Chief 
Counsel, Jacqueline Glassman, stating that an electronic signature in 
the lessee-to-lessor context satisfies the requirement for a written 
disclosure under 49 CFR 580.7(b).\9\ Virginia contends that the written 
disclosure requirements under 49 CFR 580.7(b) are no different than 
those under 49 CFR 580.5(c). It also maintains that the electronic 
record and signature aspects of its proposal comport with the 
Electronic Signatures in Global and National Commerce Act (E-Sign), 15 
U.S.C. 7001 et seq., and Virginia's Uniform Electronic Transactions Act 
(UETA), Va. Code 46.2-629. Last, Virginia notes that it does not have 
regulations in effect that address odometer mileage disclosure 
requirements. Current state law permits the creation of electronic 
certificates of title, but requires a paper certificate of title for 
all transfers of vehicle ownership. Va. Code 46.2-603. If its proposal 
were approved, VADMV would seek legislation to amend Section 46.2-603 
to implement the alternate odometer disclosure requirements.
---------------------------------------------------------------------------

    \9\ 49 CFR 580.7, Disclosure of odometer information for leased 
motor vehicles, governs lessee-to-lessor disclosures.
---------------------------------------------------------------------------

IV. Analysis

    As discussed above, the standard is 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.'' The purposes are discussed above, as 
is the Virginia program. We now provide our initial assessment whether 
Virginia's proposal satisfies TIMA's purposes as relevant to its 
petition.\10\
---------------------------------------------------------------------------

    \10\ This initial determination does not address odometer 
requirements that are not based on Section 408(d) of the Cost 
Savings Act, as codified at 49 U.S.C. 32705(b). Virginia will 
continue to be subject to all federal requirements that are not 
based on Section 408(d).
---------------------------------------------------------------------------

    A purpose is to assure that the form of the odometer disclosure 
precludes odometer fraud. In this regard, NHTSA has initially 
determined that Virginia's proposed alternate disclosure requirements 
satisfy this purpose. Under Virginia's proposal, it appears that the 
``title'' will reside as an electronic record with the VADMV, but that 
a hard copy of the title will be generated for the transferee, if 
requested. Virginia's proposed system will, therefore, continue to have 
the odometer disclosure on the virtual ``title'' itself, as required by 
TIMA, and not as a separate document. As to TIMA's requirement that the 
title contain a space for the transferor to disclose the vehicle's 
mileage, NHTSA does not believe the electronic transaction Virginia has 
outlined implicates the space requirement. NHTSA, however, assumes that 
if a hard copy of the title is requested, Virginia will continue to 
provide a separate space on the hard copy title, in keeping with TIMA 
and current practice.
    Another purpose of TIMA was to prevent odometer fraud by processes 
and mechanisms making the disclosure of an odometer's mileage on the 
title a condition of the application for a title and a requirement for 
the title issued by the State. In this regard, NHTSA has initially 
determined that Virginia's proposed process satisfies this purpose. 
During the proposed on-line process for retitling, the disclosure of 
odometer information occurs during the transfer of ownership and a 
title is required by Virginia's proposal to complete the transaction. 
During the on-line transaction, the transferor is instructed to mail 
the existing title to the VADMV for destruction.\11\ If the transaction 
is successful, the VADMV will retain an electronic title, which 
includes a record of the transaction and the odometer disclosure 
information.
---------------------------------------------------------------------------

    \11\ If the transferor does not return the existing title to 
VADMV, the existing title will be invalid once the vehicle transfers 
to the transferee.
---------------------------------------------------------------------------

    Another purpose of TIMA is to prevent alterations to disclosures on 
titles and to preclude counterfeit titles, through secure processes. 
NHTSA has initially determined in this matter that Virginia's alternate 
disclosure requirements appear to provide equivalent security against 
alterations, tampering or counterfeit titles to a paper title printed 
through a secure process, if not even more security. Electronic 
recordation of the odometer reading decreases the likelihood of any 
subsequent odometer disclosure being altered by erasures or other 
methods. As we understand Virginia's proposal, once the transaction is 
completed, VADMV stores an electronic version of the title until the 
transferee requests it. The transferee may never request the title, 
even if there is a subsequent transfer. Under this system, all 
subsequent transfers may be performed through the on-line process. Each 
time an on-line transfer occurs, the VADMV stores the electronic 
version of the title, and issues a paper title only upon request. If 
the title remains in electronic form, the likelihood of an individual 
altering, tampering or counterfeiting the title is decreased 
significantly. Moreover, the electronic recordation can detect an 
attempted alteration or fraudulent disclosure almost immediately. If a 
transferee requests a paper title, the VADMV will issue a paper title, 
printed through a secure process, with the requisite odometer 
information on the title.
    Another purpose of TIMA is to create a record of the mileage on 
vehicles and

[[Page 35622]]

a paper trail. NHTSA has initially determined in this matter that 
Virginia's alternate disclosure requirements provides for a system that 
creates an equivalent to a ``paper trail'' that assists law enforcement 
in identifying and prosecuting odometer fraud. The paper trail starts 
with the establishment of the electronic signatures of the parties. The 
electronic signatures of the transferor and transferee are readily 
detectable and can be reliably traced to the particular individual due 
to the system's means for validating and authenticating the electronic 
signature of each individual. VADMV can validate and authenticate an 
individual electronic signature because the electronic signature 
consists of the individual's unique customer number, DOB and PIN. In 
order to obtain a unique customer number, VADMV must have an 
individual's address on file. In order to obtain a PIN, the individual 
must also certify, under penalty of perjury, that the customer number 
and DOB submitted in the PIN request belong to the customer requesting 
the PIN. The customer number and PIN are required to log on to the 
VADMV system. Based upon the information provided by each individual to 
the transaction, the VADMV can trace the PIN to the assigned 
individual. The ability to identify the individuals to the transaction 
through the electronic signature \12\ maintains the purposes behind the 
creation of a paper trail since the VADMV will have a history of each 
transfer of the vehicle and can discover incidences of rollbacks. After 
the transaction is completed, the title is electronically recorded and 
stored by the VADMV. It includes the mileage of the vehicle at the 
transfer. These electronic records will create the electronic 
equivalent to a paper based system and are accessible to law 
enforcement officials.
---------------------------------------------------------------------------

    \12\ Electronic signatures are generally valid under applicable 
law. Congress recognized the growing importance of electronic 
signatures in interstate commerce when it enacted the Electronic 
Signatures in Global and National Commerce Act (E-Sign). See Public 
Law 106-229, 114 Stat. 464 (2000). E-Sign established a general rule 
of validity for electronic records and electronic signatures. 15 
U.S.C. 7001. It also encourages the use of electronic signatures in 
commerce, both in private transactions and transactions involving 
the Federal government. 15 U.S.C. 7031(a).
---------------------------------------------------------------------------

    Moreover, the overall purpose of TIMA 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. 
Here, Virginia's alternate disclosure requirements include several 
prerequisites that make it unlikely that the representations of a 
vehicle's actual mileage by the transferor to the transferee would be 
of lesser validity than representations made through a vehicle transfer 
by paper title and potentially deter odometer fraud better than a paper 
title. These prerequisites include the verification of the individuals 
to the transfer transaction through the issuance of a PIN number from 
VADMV. Virginia's alternate disclosure requirements also include 
procedures to assure that a transferee verifies the odometer disclosure 
made by the transferor. In addition, the verification of the odometer 
reading provides indication of potential fraud to the transferee should 
the transferor attempt to enter a different mileage into the system 
than the mileage the transferee observed on the vehicle when the 
agreement to purchase was made.\13\
---------------------------------------------------------------------------

    \13\ Further protection is provided by the VADMV system itself. 
The system automatically cross references the odometer reading 
entered by the transferor against the odometer reading on the VADMV 
system. If the odometer reading entered by the transferor is lower 
than the mileage recorded in the VADMV system, the VADMV system will 
immediately reject the transaction and refer the individual to the 
VADMV Law Enforcement Services Division for investigation.
---------------------------------------------------------------------------

V. NHTSA'S Initial Determination

    For the foregoing reasons, NHTSA preliminarily grants Virginia's 
proposed alternate disclosure requirements. This is not a final agency 
action. NHTSA invites public comments within the scope of this notice. 
Should NHTSA decide to issue a final grant of this petition, it will 
likely reserve the right to rescind that grant in the event that 
information acquired after that grant were to indicate that, in 
operation, Virginia's alternate requirements do not satisfy applicable 
standards.

Request for Comments

How Do I Prepare and Submit Comments?
    Your comments must be written and in English. To ensure that your 
comments are filed correctly in the Docket, please include the docket 
number of this document in your comments.
    Your comments must not be more than 15 pages long (see 49 CFR 
553.21). We established this limit to encourage you to write your 
primary comments in a concise fashion. However, you may attach 
necessary additional documents to your comments. There is no limit on 
the length of the attachments.
    Please submit two copies of your comments, including the 
attachments, to Docket Management at the address given under ADDRESSES.
    You may also submit your comments to the docket electronically by 
logging onto the Dockets Management System Webbsite at https://
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 https://

[[Page 35623]]

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: June 11, 2008.
Stephen P. Wood,
Assistant Chief Counsel for Vehicle Safety, Standards and 
Harmonization.
[FR Doc. E8-13592 Filed 6-23-08; 8:45 am]
BILLING CODE 4910-59-P