Petition for Approval of Alternate Odometer Disclosure Requirements, 20965-20974 [2010-8321]

Download as PDF Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules (c) If, in compliance with this clause, the Contractor identifies and promptly reports an organizational conflict of interest that cannot be resolved in a manner acceptable to the Government, the Contracting Officer may terminate this contract for convenience of the Government. (d) Breach. Any nondisclosure or misrepresentation of any relevant facts regarding organizational conflicts of interests will constitute a breach and may result in— (1) Termination of this contract for default; or (2) Exercise of other remedies as may be available under law or regulation. (e) Subcontracts. The Contractor shall include the substance of this clause, including this paragraph (e), in subcontracts where the work includes or may include tasks that may create a potential for an organizational conflict of interest. The terms ‘‘Contractor’’ and ‘‘Contracting Officer’’ shall be appropriately modified to reflect the change in parties and to preserve the Government’s rights. (End of clause.) [FR Doc. 2010–9210 Filed 4–21–10; 8:45 am] BILLING CODE 5001–08–P DEPARTMENT OF TRANSPORTATION National Highway Traffic Safety Administration 49 CFR Part 580 [Docket No. NHTSA–2010–0046; Notice 1] Petition for Approval of Alternate Odometer Disclosure Requirements emcdonald on DSK2BSOYB1PROD with PROPOSALS AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT. ACTION: Initial determination. SUMMARY: The State of Wisconsin has petitioned for approval of alternate odometer requirements to certain requirements under Federal odometer law. NHTSA has initially determined that Wisconsin’s alternate requirements satisfy Federal odometer law, with limited exceptions. Accordingly, NHTSA has preliminarily decided to grant Wisconsin’s petition on condition that before NHTSA makes a final determination, Wisconsin amends its program to meet all the requirements of Federal odometer law or demonstrates that it meets the requirements of Federal law. This document is not a final agency action. DATES: Comments are due no later than May 24, 2010. ADDRESSES: You may submit comments [identified by DOT Docket ID Number NHTSA–2010–0046] by any of the following methods: • Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the VerDate Nov<24>2008 15:00 Apr 21, 2010 Jkt 220001 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. • 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 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: Andrew DiMarsico, 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 2, as amended (TIMA), contains a number of provisions to limit odometer fraud and assure that the purchaser of a motor vehicle knows the true mileage of the vehicle. The Cost Savings Act requires the Secretary of Transportation to promulgate regulations requiring the transferor (seller) of a motor vehicle to provide a written statement of the vehicle’s 1 Public 2 Public PO 00000 Law 92–513, 86 Stat 947, 961 (1972). Law 99–579, 100 Stat. 3309 (1986). Frm 00035 Fmt 4702 Sfmt 4702 20965 mileage registered on the odometer to the transferee (buyer) in connection with the transfer of ownership. This written statement is generally referred to as the odometer disclosure statement. Further, under TIMA, vehicle titles themselves must have a space for the odometer disclosure statement and States are prohibited from licensing vehicles unless a valid odometer disclosure statement on the title is signed and dated by the transferor. Titles must also be printed by a secure printing process or other secure process. 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. 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 Wisconsin has petitioned for approval of alternate odometer disclosure requirements. The Wisconsin Department of Transportation proposes a paperless odometer disclosure program. Last year, 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). Wisconsin’s program is similar to Virginia’s program in some respects and is broader in scope than Virginia’s in others. Like Virginia’s program, transactions involving an outof-State party are not, in general, within the scope of Wisconsin’s program. Wisconsin Pet. p. 2. Unlike Virginia’s program, which did not apply to transactions for leased vehicles, Wisconsin’s proposal implicates provisions of Federal odometer law related to these vehicles. Wisconsin Pet. p. 4. As discussed below, NHTSA’s initial assessment is that the Wisconsin program satisfies the requirements for approval under Federal odometer law, subject to resolution of certain concerns. E:\FR\FM\22APP1.SGM 22APP1 emcdonald on DSK2BSOYB1PROD with PROPOSALS 20966 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 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 to, among other things, prohibit tampering with odometers on motor vehicles and to establish certain safeguards for the protection of purchasers with respect to the sale of motor vehicles having altered or reset odometers. See Public Law 92–513, § 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 Public Law 92–513, § 408, 86 Stat. 947 (1972).3 In general, the purpose for the disclosure was to assist purchasers to know the true mileage of a motor vehicle. A major shortcoming of the odometer provisions of the Cost Savings Act was 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 3 In general, section 408 states that the Secretary shall prescribe rules requiring any transferor of a motor vehicle to provide a written disclosure to the transferee that includes the cumulative mileage on the odometer and if the odometer reading is known to be different than the miles the vehicle has actually traveled, a statement that the actual mileage is unknown. VerDate Nov<24>2008 15:00 Apr 21, 2010 Jkt 220001 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 accurate mileage information. However, lessees had no obligation to provide accurate mileage information to lessors upon vehicle transfer. This environment facilitated roll backs of odometers. Congress enacted TIMA in 1986 to address the Cost Savings Act’s shortcomings. It amended the Cost Savings Act to prohibit States from licensing vehicles 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 required 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. 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 alternate motor vehicle mileage disclosure requirements approved by the Secretary 4 TIMA amended the Cost Savings Act by adding section 408(e) requiring the Secretary to prescribe rules related to leased vehicles to ensure written disclosure of the mileage by the lessee to the lessor upon the lessor’s transfer of ownership of the vehicle. Under these rules, the lessor must provide written notice of the mileage disclosure requirements and the penalties for failure to comply with the rules to the lessee. 5 Federal regulations require lessors to retain odometer disclosure statements received from lessees for a period of five years. 49 CFR 580.8(b). PO 00000 Frm 00036 Fmt 4702 Sfmt 4702 in effect. Section 408(f) 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 in circumstances where the title was held by a lienholder. Public Law 100–561 § 40, 102 Stat. 2805, 2817 (1988). Congress required that the odometer disclosures be made on the power of attorney document at the time of transfer and that the mileage be restated by the person exercising power of attorney on the title. Id. In addition, the power of attorney document was to be issued by means of a secure printing process or other secure process. Id. In 1990, Congress amended section 408(d)(1)(C) of the Cost Savings Act.6 The amendment addressed retention of powers of attorneys by States and provided that the rule adopted by the Secretary not require that a vehicle be titled in the State in which the power of attorney was issued. See Public Law 101–641 § 7(a), 104 Stat. 4654, 4657 (1990). In 1994, in the course of the recodification of various laws pertaining to the Department of Transportation, the Cost Savings Act, as amended, was repealed, reenacted and recodified without substantive change. See Public Law 103–272, 108 Stat. 745, 1048–1056, 1379, 1387 (1994). The odometer statute is now codified at 49 U.S.C. 32701 et seq. In particular, Section 408(a) of the Cost Savings Act was recodified at 49 U.S.C. 32705(a). Sections 408(d) and (e), which were added by TIMA (and later amended), were recodified at 49 U.S.C. 32705(b) and (c). The provisions pertaining to approval of State alternate motor vehicle mileage disclosure requirements were recodified at 49 U.S.C. 32705(d). III. Statutory Purposes As discussed above, the Cost Savings Act, as amended by TIMA in 1986, states that NHTSA ‘‘shall approve alternate motor vehicle mileage disclosure requirements submitted by a State unless the [NHTSA] determines that such requirements are not consistent with the purpose of the 6 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 executed to the third sentence of subsection (d)(1)(C) as the probable intent of Congress. E:\FR\FM\22APP1.SGM 22APP1 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules emcdonald on DSK2BSOYB1PROD with PROPOSALS disclosure required by subsection (d) or (e) as the case may be.’’ (Subsections 408(d), (e) of the Cost Savings Act were recodified to 49 U.S.C. 32705(b) and (c)). In light of this provision, we now turn to our interpretation of the purposes of these subsections, as germane to Wisconsin’s petition. Our Final Determination granting Virginia’s petition for alternate odometer disclosure requirements identified the purposes of TIMA germane to petitions for approval of odometer disclosure requirements that did not include disclosures involving leased vehicles or disclosures by power of attorney.7 74 FR 643, 647–48 (January 7, 2009). A brief summary of the purposes identified in the Virginia Final Determination follows. In addition, because the Wisconsin proposal encompasses transfers of leased vehicles, we identify the purposes of TIMA relevant to odometer disclosures for those vehicles. secure printing process or protected by ‘‘other secure process.’’ 8 Id. 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. 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 purchaser when the vehicle was sold again. This discouraged mileage alterations on titles and limited opportunities for obtaining new titles with lower mileage than the actual mileage. Id. A second purpose of TIMA is to prevent odometer fraud by processes and mechanisms making odometer mileage disclosures on the title a condition of any application for a title, and a requirement for any title issued by a State. 74 FR 647. This provision was intended to eliminate or significantly reduce abuses associated with lack of control of the titling process. Id. Third, TIMA sought to prevent alterations of disclosures on titles and to preclude counterfeit titles through secure processes. 74 FR 648. In furtherance of these purposes, paper titles (incorporating the disclosure statement) must be produced using a 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 proper 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 7 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. VerDate Nov<24>2008 15:00 Apr 21, 2010 Jkt 220001 8 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, § 408(d), recodified at 49 U.S.C. 32705(b). PO 00000 Frm 00037 Fmt 4702 Sfmt 4702 20967 penalties for failing to comply by not providing complete and truthful information. A fourth purpose is to set the ground rules for the lessors, allowing 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. 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 four 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). IV. The Wisconsin Petition Wisconsin, which is in the process of implementing an electronic title transfer system, petitions for approval of alternate odometer disclosure requirements. Wisconsin requests alternate disclosure requirements for transfers of motor vehicles in transactions between private parties (including motor vehicle dealers), transactions involving leased vehicles, transactions between parties involving a lienholder,9 and transactions involving private parties without any lienholder. Recent Wisconsin legislation established that the title, title application, and other specified information maintained by the DMV in its database are the original and controlling title record for a vehicle. See Wis. Stat. Ann. § 342.01(2)(ac) and § 342.09(4) (2009). Wisconsin proposes to create an electronic odometer 9 Under Wisconsin law, a lienholder does not physically possess the title to the vehicle; the title remains with the vehicle owner. Thus, Wisconsin does not permit odometer disclosure by power of attorney when title is held by a lienholder and does not petition for alternate requirements regarding odometer disclosure by power of attorney. Wisconsin does accept a written odometer disclosure by power of attorney from an out-of-State party that registers the vehicle in Wisconsin. E:\FR\FM\22APP1.SGM 22APP1 20968 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules statement (e-Odometer) as the official odometer statement to reside in the Wisconsin Department of Transportation (WisDOT), Department of Motor Vehicles (DMV) database. Under the proposal, a distinct eOdometer system would be created for accepting and maintaining e-Odometer statements as stand-alone electronic records, separate from an electronic title. E–Odometer statements would be linked to, and become part of the title record in the DMV database. The DMV’s titling system would automatically link the e-Odometer records to a vehicle’s title whenever an electronic title transaction occurs and a title transfer could not be completed unless a proper odometer disclosure is made in the eOdometer entry. According to Wisconsin’s petition, if a paper title is needed, DMV would print it on secure paper with the odometer disclosure statement in the proper location and format. emcdonald on DSK2BSOYB1PROD with PROPOSALS A. Overview of Wisconsin’s Electronic Titling System Wisconsin has implemented a titling system that permits individuals, organizations and businesses (collectively, DMV Customers) to process vehicle title transactions electronically through its automated processing partnership system (APPS) program. See Wis. Admin. Code § Trans 1565.01. Under APPS, a vendor 10 approved by the DMV 11 creates a computer system to link or interface DMV customers with the DMV database. The link permits the DMV customer to access to the DMV database and conduct authorized title transactions. In order to become eligible for direct access to the DMV’s database under the vendor system, a DMV customer must enter into an agreement with an approved vendor, obtain DMV approval to process title transactions, and enter into a contract with the DMV. To maintain system security and integrity, employees of DMV customers using the interface would have to submit a signed affidavit to the DMV before accessing the system. Once the DMV customer 10 According to Wisconsin’s petition, a ‘‘vendor’’ is a person, business or organization that contracts with the DMV to provide a host computer system by which agents may obtain access to specified information services. Wis. Admin. Code § Trans 156.02(8). An approved vendor must work with Wisconsin’s DMV to develop an automated interface software application that meets the automated interface specifications prescribed by DMV. Wis. Admin. Code § Trans 156.03(4). 11 In order to become an approved vendor, an entity must submit an application with certain information to DMV, submit an approved implementation plan, work with DMV to meet the automated interface specifications prescribed by DMV and execute a contract with DMV. VerDate Nov<24>2008 15:00 Apr 21, 2010 Jkt 220001 complies with these requirements, the DMV customer would be able to perform authorized title transactions directly within DMV’s system. Currently, Wisconsin requires motor vehicle dealers to electronically process title transactions for vehicles that they sell. See Wis. Stat. Ann. § 342.16(1)a and (am) (2009); Wis. Admin. Code § Trans 141.01. Motor vehicle dealers can perform electronic titling transactions through APPS or through an Internet-based interface with DMV, known as e-MV11. In order to process title transactions using the e-MV11, a DMV customer must apply to the DMV by submitting an application setting forth the name, address and contact of the entity and providing the names and access authority of employees performing title transactions. After setting up the required security protocols, the DMV customer can enter the appropriate title transaction.12 Also, under Wisconsin’s electronic titling program, motor vehicle dealers are required to maintain and keep their title transactions records, including odometer disclosure statements, for five years. See Wis. Admin. Code § Trans 141.08(2). According to Wisconsin’s petition, the electronic titling program will be expanded to include other persons, businesses and organizations. These businesses and organizations, such as lienholders or auction companies, would conduct electronic title transactions through APPS. Individuals conducting private sales of unencumbered vehicles would eventually have the ability to perform title transfer and odometer disclosure through an Internet-based application called e-MVPublic. B. Wisconsin’s E-Odometer Program Wisconsin asserts that e-Odometer entries would provide a virtual replacement of existing secure paper 12 According to Wisconsin’s petition, authorized transactions for amending an electronic odometer record are or will be: 1. Dealer sales to private buyers, including purchases and trade-ins from private buyers; 2. Dealer reassignments to other dealers; 3. Consignor statement when consigning a vehicle for sale; 4. Dealer or auction purchase of out-of-State vehicle and subsequent sale of vehicle with Wisconsin title (Wisconsin could produce a secure paper title for use by the other State.); 5. DMV odometer corrections on title; 6. Involuntary liens from towing/storage, landlord, or mechanic; 7. Repossessions; 8. Private sales where title is processed by DMV agent or financial institution; 9. Lessee to lessor statement upon relinquishing a leased vehicle; and 10. Private sales using e-MVpublic. PO 00000 Frm 00038 Fmt 4702 Sfmt 4702 odometer disclosure statements for vehicle transactions. Under Wisconsin’s proposal, the e-Odometer system would be a unique electronic application within Wisconsin’s electronic title transfer system. Although the eOdometer entry would be a stand-alone secure electronic record, it would be safely and securely electronically linked to the electronic title record of the vehicle by the vehicle identification number (VIN) and become part of the vehicle title. Title transfer could not occur unless the transferor and transferee, or other authorized persons, such as dealer employees, perform the required disclosure and acceptance through the e-Odometer system. Once the odometer disclosure and acceptance is completed, the statement is stored in the e-Odometer system and linked to the electronic title record by the VIN. The petition states that the following information that will be stored in the secure e-Odometer record: 1. VIN; 2. Description of the vehicle by make, model, model year and body type; 3. Odometer reading and date of the reading; 4. The Brand (actual, not actual or exceeds limits of odometer); 5. Name, address of person disclosing odometer reading (must match the transferor); 6. Name, address of person accepting odometer reading (must match the transferee); and 7. Statement reference to Federal law requirement and potential penalties. Some of the e-Odometer information, and other vehicle information, will be available to DMV personnel through a DMV vehicle inquiry function, while limited information will be available to the public through a public inquiry function. The information available to DMV personnel includes: 1. Vehicle description; 2. Title owner information; 3. Brands, if any; 4. Most current odometer reading, status and date recorded; 5. Odometer reading, status and record date history; 6. Lien information; and 7. Owner in possession of the vehicle. The publicly available information includes: 1. Vehicle description; 2. Most current odometer reading, status and date recorded; 3. Brands, if any; and 4. Lien information. Wisconsin’s petition states that amendments or creation of e-Odometer records would only be possible when titles are transferred in the course of authorized transactions by authorized persons. E:\FR\FM\22APP1.SGM 22APP1 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules C. Wisconsin E-Odometer Implementation Schedule Wisconsin proposes to implement its e-Odometer program in three phases. Because motor vehicle dealers are already required to complete title transactions electronically, Wisconsin intends to begin the e-Odometer program with these dealers. See Wis. Stat. Ann. § 342.16(1)a and (am) (2009); Wis. Admin. Code § Trans 141.01. The second phase would implement eOdometer in title transfers involving lienholders, motor vehicle auctions, vehicle repossessions, and leases. The proposal’s final phase would implement e-Odometer in transfers of unencumbered motor vehicles between private individuals. Phase two and three are still under development and Wisconsin has not provided an estimated implementation schedule. According to the petition, as eOdometer is phased in, Wisconsin will still issue odometer disclosures on secure printed titles. emcdonald on DSK2BSOYB1PROD with PROPOSALS 1. Phase One: E-Odometer in Dealer Transactions Wisconsin’s petition states eOdometer will apply first to motor vehicle transfers through motor vehicle dealers. During this phase, eligible title transactions include reassignments among dealers, consignments and retail sales. In order to complete a transaction, there must be an odometer disclosure and acceptance of the odometer statement. The odometer disclosure and acceptance will be permitted between the following persons: (1) Authorized dealer personnel and an individual buyer; (2) an individual seller trading in a vehicle and authorized dealer personnel; (3) authorized dealer personnel in the case of dealer reassignments; and (4) an individual vehicle owner and an authorized person on behalf of a consignee in the case of vehicle consignment. According to Wisconsin, the identities of all persons involved will be verified and authenticated through DMV’s processes. Under Wisconsin’s proposal, dealer title transfer transactions would be completed through an APPS’s vendor interface application or the e-MV11 Internet-based application. During these title transfer transactions, e-Odometer forms will be imported into the transaction and completed by the authorized persons. VerDate Nov<24>2008 15:00 Apr 21, 2010 Jkt 220001 2. Phase 2: E-Odometer in Title Transactions Between Private Parties Involving Lienholders and Other Commercial Entities Wisconsin’s petition states that the second phase would incorporate eOdometer procedures into title transfers in a number of circumstances including between private parties when there is a lien on the vehicle. These title transactions would be processed by the financial institution holding the lien. During this phase, e-Odometer would be available to the financial institution through the APPS application or an application WisDot develops for these lenders. Because lienholders do not possess titles under Wisconsin law, a satisfied lienholder would access eOdometer to electronically release the lien to allow production of a clear title. To facilitate this process, e-Odometer forms would be available to buyers and sellers through an Internet application allowing completion of the required odometer disclosures and acceptances. During this second phase, Wisconsin also proposes to incorporate use of the e-Odometer system into title transfers involving motor vehicle auctions, involuntary vehicle transfers (i.e. involuntary liens and repossessions), corrections to odometer information on titles, leased vehicles and other transactions involving secure odometer statements. 3. Phase 3: E-Odometer in Private Sales The last phase of Wisconsin’s program would incorporate e-Odometer entries into private sales of unencumbered vehicles. The title transfer would be conducted through an on-line application called eMVPublic.13 For private transfers of motor vehicles, odometer disclosure and acceptance would be accomplished by the seller and buyer through eMVPublic once their identities are verified by DMV processes. D. Identity Verification Under Wisconsin E-Odometer Wisconsin’s petition describes two verification processes whose operation differs depending on whether the user is a DMV partner or regular customer (such as a dealer or financial institution) or an intermittent user. For a DMV partner or regular customer, the first step is being approved by DMV to access its database. As part of the 13 For individuals without Internet access, Wisconsin is considering providing access to eMVPublic at its DMV service centers. At a minimum, Wisconsin states that public libraries offer public access to computers and the Internet, which would enable individuals without Internet to use e-Odometer. PO 00000 Frm 00039 Fmt 4702 Sfmt 4702 20969 approval process, the entity must provide the legal business name and address of the location of the business. After approval, identity verification procedures would require these users to enter into an agreement with the DMV that includes security procedures— including establishing an account and secure logon ID. The users are identified and authenticated through a unique ‘‘user ID’’ and password that are traced to a particular person on the account. The verification process would be managed by vendors. The Wisconsin APPS program requires approved vendors to design precise electronic security and audit trail procedures into its interface, which DMV would then verify. This interface requires three administrative steps to identify, authenticate and authorize users of the DMV’s database. First, vendors must create an audit journal to identify the individual responsible for each transaction. Vendors assign each user a ‘‘user ID’’ that can be traced to the individual user. Next, to authenticate the user, a password known only to the user that is associated with the ‘‘user ID’’ is entered before a transaction is allowed. If an individual user is not authorized by the vendor for the type of transaction requested, the system will immediately terminate the transaction. Last, vendors must authorize the user to access the appropriate information. In addition to the identification protocols, vendors must create and maintain access logs that can be used for auditing and recording keeping, which include, among other things, a history of each customer transaction. Under Wisconsin’s proposal, DMV partners and regular customers must submit the identity of each employee who will conduct title transactions and specify each employee’s authority to perform transactions in DMV’s database. Each employee must submit a signed affidavit acknowledging security procedures and safeguards prior to obtaining authorization from the DMV to conduct title transfer transactions. DMV must confirm each user’s authorization before the user can process title transactions. For individuals who are not DMV partners or regular customers, Wisconsin would require individuals to establish an electronic signature that can uniquely identify the person. Identity verification begins with the customer entering a minimum of three personal identifiers for the correct customer record in the DMV database. Personal identifiers include name, address, date of birth, product number, Driver License/ID number, a Federal Employer Identification Number, or E:\FR\FM\22APP1.SGM 22APP1 20970 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules partial Social Security Number (possibly the last four or five digits).14 After the user inputs the personal identifiers into the system, the system will check DMV customer records and verify that the user is the correct individual or business and will authorize the customer to update the odometer statement. Once the user is verified, the user can begin the title transaction. emcdonald on DSK2BSOYB1PROD with PROPOSALS E. Odometer Disclosure Under Wisconsin E-Odometer Wisconsin’s petition states that two parties must engage in an authorized eOdometer transaction to effectuate the odometer disclosure. In order to conduct the e-Odometer disclosure, each party will access the DMV database by providing information to satisfy the identity verification requirements of the system and the VIN of the vehicle. Under Wisconsin’s proposal, a transferor must disclose the odometer reading and brand (actual/not actual/ exceeding odometer limits) and the transferee must accept the odometer reading to allow the transaction to go forward.15 The e-Odometer transaction will remain in a pending status between the transferor and transferee until each party completes the required actions, e.g., disclosure by the seller and acceptance by the buyer. Once both actions have been accomplished, the eOdometer record will be secured within DMV’s database and become part of the electronic title through the VIN. To clarify the e-Odometer procedure, Wisconsin provides an exemplar title 14 Wisconsin prohibits nonresidents from applying for a Wisconsin title, except in certain limited exceptions. See Wis. Admin. Code § Trans 154.13(2). A nonresident who is eligible to apply for a Wisconsin title will not be considered a DMV partner or regular customer. These nonresidents will be subject to the e-Odometer requirements as long as the vehicle is titled and transferred within Wisconsin. 15 Wisconsin states that there are a limited number of exceptions under Wisconsin law and eOdometer to the requirement for two parties to engage in a transaction to update a title. One exception is involuntary transfer of the vehicle through repossession by a financial institution in which the title is issued to the financial institution. This exception is permissible under Federal odometer law because repossession is not a transfer of ownership and does not require an odometer disclosure statement. See 49 CFR 580.3. Another exception is when the seller is not available. If the seller is not available, the DMV database permits the transferee to state the odometer reading with a brand of ‘‘not actual.’’ If the transferor becomes available to make the disclosure, DMV would change the recorded status to ‘‘actual.’’ This exception does not conform to Federal odometer law, which requires an odometer disclosure statement, including the brand, at the time of transfer of ownership. 49 U.S.C. 32705(a)(1); 49 CFR 580.5(a). Federal odometer law does not permit subsequent alterations to the brand as contemplated by Wisconsin. NHTSA believes that permitting such an exception could create a loophole that would be abused. VerDate Nov<24>2008 15:00 Apr 21, 2010 Jkt 220001 transaction involving a dealer trade-in. In a vehicle trade-in transaction, the customer (transferor) must bring the paper title to the dealer (transferee) at the time of the transferor. After entering all the required data in the Wisconsin electronic title system and initiating the e-Odometer process, the dealer would then destroy the paper title.16 Under the e-Odometer process, the customer discloses the odometer reading (and brand) and the dealer accepts the odometer reading. The vehicle’s odometer reading is then stored in the DMV database and linked virtually to the vehicle’s title through the VIN. Upon later sale of the trade-in vehicle, the dealer (as the transferor) must disclose the odometer reading (and brand) and the vehicle buyer (as the transferee) must accept the odometer reading. The dealer and buyer will access e-Odometer at the time of the sale to complete the disclosure and acceptance of the odometer statement, which upon acceptance by the buyer secures the odometer statement in the DMV’s database. After the sale of the vehicle is completed, the dealer completes title processing in APPS or eMV11 by titling the vehicle in the consumer’s name, verifying that secure odometer disclosure has been completed. After titling is complete, the updated e-Odometer entry becomes part of the title record. For in-State transactions, a paper title is issued only upon request. F. Wisconsin’s Position on Meeting the Purposes of TIMA Wisconsin contends that its eOdometer program meets the purposes of TIMA, as described by NHTSA in its Final Determination on the Commonwealth of Virginia’s petition for alternate odometer disclosure requirements. See 74 FR 643, 647–48 (January 7, 2009). Wisconsin’s petition states that eOdometer is part of the vehicle’s title. Under e-Odometer, the VIN links the odometer statement to the title record. The system automatically imports eOdometer into the title transfer transaction process conducted by the transferor and transferee. A title transaction cannot occur, unless the odometer disclosure statement is made and accepted. The e-Odometer information is then secured, stored, and becomes visible through the vehicle’s electronic title record. 16 According to Wisconsin, the dealer’s failure to destroy the title subjects the dealer to civil penalties and other sanctions, such as license suspension or removal. PO 00000 Frm 00040 Fmt 4702 Sfmt 4702 According to the petition, other system requirements provide a significant level of security for the eOdometer system. First, title transfer cannot occur unless the authorized persons update e-Odometer entries. Second, only those persons authorized to make title transfer transactions (e.g. authorized dealer personnel or authenticated private owners) are able to make e-Odometer statements. Third, odometer disclosure under the eOdometer system is only permitted when a title is transferred.17 If a title is required to be printed on a secure title paper, the DMV system will automatically include the odometer disclosure information on the printed title. If a title on secure title paper is used in a vehicle transfer, the odometer information shown on the secure paper title will be entered into the e-Odometer electronic record during the title transfer transaction process and the paper title will be destroyed. Wisconsin’s petition also states that odometer disclosure is a required data input for application for a title and a required output on the title. According to the petition, the odometer disclosure and acceptance is a required input to an electronic title transaction, whether performed through APPS or e-MV11. Although APPS permits odometer disclosure and acceptance at different times, e-Odometer secures the disclosure and acceptance and stores it electronically until the odometer disclosure is imported during title processing. Wisconsin’s petition asserts that eOdometer provides an equivalent level of security against altering, tampering, and counterfeiting as the odometer statement on a secure paper title. According to Wisconsin, the eOdometer statement is secured in the DMV database, as soon as the transferor electronically discloses and the transferee accepts the odometer reading. After the transferee accepts the odometer disclosure, e-Odometer stores that mileage disclosure, the date, the names and addresses of the transferor and transferee, and will not allow any changes to that entry. Finally, Wisconsin’s petition contends that the authentication and verification of the transferor’s and transferee’s electronic signatures are readily detectable and reliably traced to the particular individual. Wisconsin states that the DMV has established extensive security procedures for vendors who process vehicle transactions on behalf of DMV and 17 As noted above, there are some exceptions under Wisconsin law. E:\FR\FM\22APP1.SGM 22APP1 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules regularly interact with DMV, and for individuals and intermittent business customers who wish to make entries in DMV records. Wisconsin’s security procedures are governed under Wisconsin statutes, administrative rules, contracts, DMV policy and procedure, and electronic security protocols. DMV Partners and regular business customers will access the e-Odometer system through secure applications that are already in use for vehicle title transactions. Individuals and intermittent business customers will access the e-Odometer system through a secure Internet application. Both applications require information, such as electronic signatures, that can authenticate and verify the users’ identity. IV. 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 the Wisconsin alternative. We now provide our initial assessment whether Wisconsin’s proposal satisfies TIMA’s purposes as relevant to its petition.18 emcdonald on DSK2BSOYB1PROD with PROPOSALS A. Wisconsin’s Proposal in Light of TIMA’s Purposes Regarding Vehicle Transfers Other Than Those Involving a Lease Agreement One purpose is to assure that the form of the odometer disclosure precludes odometer fraud. In this regard, NHTSA has initially determined that Wisconsin’s proposed alternate disclosure requirements satisfy this purpose. Under Wisconsin’s proposal, a required part of the data to be entered in the transfer of title is the vehicle’s odometer reading. The reading is disclosed by the transferor and accepted by the transferee. Thereafter the odometer disclosure statement will reside as an electronic record within the DMV database that will be linked to the vehicle’s title, also an electronic record, by the VIN. Thus, the odometer disclosure is a required element pertaining to and part of the title record in the DMV database. If a hard copy of the title is needed, Wisconsin can generate a title with the odometer disclosure statement on the title using a secure printing process. Wisconsin’s 18 Wisconsin 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). VerDate Nov<24>2008 15:00 Apr 21, 2010 Jkt 220001 proposed system would, therefore, have the odometer disclosure as part of the vehicle title as required by TIMA. As to TIMA’s requirement that the title contain a space for the transferor to disclose the vehicle’s mileage, NHTSA believes the proposed Wisconsin electronic title and odometer system would provide an electronic equivalent to these requirements for use in a subsequent sale of the vehicle. The agency expects that hard copies of electronic titles will continue to provide a separate space for owners to execute a proper odometer disclosure in keeping with TIMA and current practice.19 Another purpose of TIMA is to prevent odometer fraud by processes and mechanisms making the disclosure of an odometer mileage on the title a condition for the application for a title and a requirement for the title issued by the State. With one exception, NHTSA has initially determined that Wisconsin’s proposed process satisfies this purpose. Wisconsin’s proposed online title transfer process requires disclosure and acceptance of odometer information before the transaction can be completed. If the transaction is successful, DMV’s system will create or amend an electronic title and store the linked electronic odometer statement. A new title will not be issued without entry of the odometer disclosure and acceptance of it. The exception concerns Wisconsin’s proposal to permit the alteration of the brand on an electronic odometer statement when the seller of the vehicle is unavailable at the time of the transfer of ownership. According to Wisconsin’s petition, if the seller is not available, the DMV database permits the transferee to state the odometer reading with a brand of ‘‘not actual.’’ If the transferor becomes available to make the disclosure and does so, DMV would change the recorded status to ‘‘actual.’’ As noted above, such a subsequent change to the title does not conform to Federal odometer law, which requires an odometer disclosure statement, including the brand, to be made at the time of transfer. 49 U.S.C. 32705(a)(1); 49 CFR 580.5(a). The requirement to state the actual mileage and brand at the time of transfer is 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).20 Accordingly, we 19 Wisconsin notes that paper titles will be produced for title transfer transactions that involve out-of-State parties, such as a vehicle sale to an outof State dealer or retail purchaser, an auction sale to an out-of-State dealer or a retail consumer in Wisconsin that requests a paper title. 20 The requirement to provide a brand at the time of vehicle transfer is based upon section 408(a) of PO 00000 Frm 00041 Fmt 4702 Sfmt 4702 20971 have decided to grant Wisconsin’s petition on the condition that Wisconsin conforms its program to the requirements of Federal odometer law or fully explains how exceptions, such as the one for the unavailable seller, complies with the law and its purposes. 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 Wisconsin’s alternate disclosure requirements appear to be as secure as current paper titles. As we understand Wisconsin’s proposal, the odometer statement is disclosed by the transferor and accepted by the transferee, and thereafter the DMV database system stores an electronic version of the odometer statement. Assuming that the e-Odometer database is maintained with appropriate levels of security, electronic recording of odometer readings and disclosures would be maintained in a way in which alteration is unlikely. The odometer reading, which would be linked to the electronic title record by the VIN, cannot be altered except when it is updated during the title transfer process by authorized users. On subsequent title transfers, the transferor and transferee would have to complete the odometer disclosure and acceptance for the transaction to be completed. When fully implemented, all subsequent title transfers will be performed through the APPS or e-MV11, or other secure on-line process. Each time an on-line title transfer occurs, the DMV database system stores the electronic version of the odometer statement. The DMV will issue a paper title only when necessary, e.g., title transfer transactions that involve out-ofState parties. Since the title and odometer statement remain in electronic form under State care and custody, the likelihood of an individual altering, tampering or counterfeiting the title or odometer statement is significantly decreased. These electronic records would be maintained in a secure environment and any unauthorized access would be detected by the system. Moreover, under Wisconsin law, the electronic title record is the official and controlling title. If a conflict exists between the electronic title and a paper title, the paper title is void. Another purpose of TIMA is to create a record of the mileage on vehicles and a paper trail. The underlying purposes of this record trail are to enable consumers to be better informed and provide a mechanism through which the Cost Savings Act as amended, recodified at 49 U.S.C. 32705(a). E:\FR\FM\22APP1.SGM 22APP1 20972 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules emcdonald on DSK2BSOYB1PROD with PROPOSALS odometer tampering can be traced and violators prosecuted. In NHTSA’s preliminary view, the proposed Wisconsin’s electronic title transfer system will create a scheme of records, equivalent to the current ‘‘paper trail,’’ that assists law enforcement in identifying and prosecuting odometer fraud. Under the Wisconsin proposal, creation of a paper trail starts with the requirement for certain DMV customers to process title transactions through the APPS program. Under APPS, a DMV customer must sign a written agreement with DMV that includes security procedures, an account and a secure logon ID. DMV customers also must provide DMV with the names of the individuals authorized to conduct transactions in APPS. These individuals are issued a secure logon ID and password that can be traced by DMV to their transactions. In addition, APPS vendors must create security protocols that include an audit journal that can identify each person responsible for each title transaction. Vendors must also provide DMV with a daily report detailing all security violations. Furthermore, Wisconsin requires motor vehicle dealers to retain copies of electronic titles for motor vehicles owned and offered for sale and odometer statements received and given for a period of 5 years.21 For individuals not using APPS, the identity verification procedures require the establishment of electronic signatures of the parties. Due to the system’s procedures for validating and authenticating the electronic signature of each individual through DMV’s database, the electronic signatures of the transferor and transferee are reliable, readily detectable and can easily be linked to particular individuals.22 Because the electronic signature consists of data elements such as the name, address, date of birth, product number, driver license or identification card number, Federal Employer Identification Number, or the last four or five digits of the individual’s Social Security number, Wisconsin’s eOdometer system can validate and 21 Wisconsin indicates that its e-Odometer system will permit motor vehicle dealers the ability to retain copies of all odometer disclosure statements received or given by the dealers. 22 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). VerDate Nov<24>2008 15:00 Apr 21, 2010 Jkt 220001 authenticate individual electronic signatures. This authentication process also allows Wisconsin to trace the individuals involved in the transaction. This capacity maintains the purposes of creating a paper trail since the Wisconsin system will have a history of each vehicle’s title transfer and odometer disclosure. These electronic records will create the electronic equivalent to a paper based system that will be readily available to law enforcement. Whether Wisconsin’s program conforms to TIMA’s overall purpose is discussed in subpart C below. B. Wisconsin’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 odometer mileage at the time the lessor transfers ownership. The agency has initially determined that the Wisconsin alternate disclosure requirements satisfy this purpose. As we understand Wisconsin’s proposal, the State proposes to require vehicle lessees to submit the electronic odometer statement to their lessors when relinquishing the leased vehicle. The lessee’s odometer statement will be stored in the DMV database and linked to the leased vehicle by the VIN. Once stored in the DMV database, the odometer statement is secured and recorded and made available to the lessor. On subsequent transfer of the vehicle by the lessor, the odometer disclosure statement from the lessee would be available in the e-Odometer system for acceptance by the subsequent transferee. The subsequent transferee would have to accept the odometer disclosure reading in the e-Odometer entry before the transaction could be completed and for title to transfer. 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. As discussed above, the lessee would provide it via the DMV data base. A related purpose is to assure that lessees are formally notified of their odometer disclosure obligations to the lessor and the penalties for failing to comply by not providing complete and truthful information. As described in the Petition, Wisconsin’s alternate disclosure requirements do not address this purpose. However, we note that Wisconsin’s leased vehicle odometer disclosure regulations parallel 49 U.S.C. 32705(c)(2) and 49 CFR 580.7 by requiring that lessors notify lessees of their odometer disclosure obligations. PO 00000 Frm 00042 Fmt 4702 Sfmt 4702 See Wis. Admin. Code Trans 154.7 (2009). Lessors may meet this notification requirement without using the electronic system proposed by Wisconsin. The lessors’ obligations should be clearly stated. A fourth purpose is to set the ground rules for the lessors, allowing 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. We have initially determined that Wisconsin’s proposal meets this purpose. As noted previously, a lessee will make the required odometer disclosure to the lessor in e-Odometer upon relinquishing the leased vehicle. The lessor may use this statement in a subsequent title transfer, 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 must brand the title accordingly. We believe that Wisconsin must provide for this branding information—that the lessor has reason to believe that the disclosure by the lessee does not reflect the actual mileage of the vehicle—in its proposed system. A fifth purpose of TIMA’s leased vehicle provisions is to create records and a paper trail. The paper trail includes the written, dated and signed odometer disclosure statement by the lessee. The agency has initially determined that the Wisconsin alternate disclosure requirements satisfy this purpose. Under Wisconsin’s proposal, as we understand it, both the lessee and the lessor are required to make the odometer disclosure electronically in eOdometer.23 The lessee will make the odometer disclosure in e-Odometer, which will be stored in the DMV database and linked to the leased vehicle by the VIN. The lessor will have to accept it to complete the transaction. On subsequent transfer of the vehicle by the lessor, the lessor can use the lessee’s odometer disclosure statement, which is available in the e-Odometer system, to certify the actual mileage of the leased vehicle. The subsequent transferee would have to accept the odometer disclosure reading in the e-Odometer entry before the transaction could be completed and for title to transfer. It would then be stored. Wisconsin’s electronic odometer disclosure system would create a scheme of records 23 As we understand Wisconsin’s program, a nonresident lessee who titles a vehicle in a different State, but leases the vehicle from a Wisconsin lessor, is outside the scope of the e-Odometer system. In such a scenario, the nonresident lessee is required to provide a written odometer disclosure statement to the lessor. E:\FR\FM\22APP1.SGM 22APP1 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules equivalent to the current ‘‘paper trail’’ now assisting consumers in reviewing mileages on used vehicles and law enforcement in identifying and prosecuting odometer fraud. A copy of the odometer disclosure statement could be retained by the lessor.24 With the use of the APPS system to identify parties to the odometer disclosure and the use of electronic signatures to identify individuals not in the APPS system, the Wisconsin DMV will have the capacity to trace a particular lessee who makes a fraudulent odometer disclosure during the lessor/lessee transaction. The overall purpose of TIMA’s leased vehicle provisions is to ensure that vehicles subject to long-term leases have adequate odometer disclosure statements executed on titles at the time of transfer. The agency has initially determined that Wisconsin’s proposal meets TIMA’s overall requirement. Upon the termination of the lease, a lessee will be required to make an odometer disclosure statement in eOdometer. This electronic disclosure is equivalent to a paper odometer disclosure statement and provides the same assurances. The lessee’s odometer statement will be secured and stored in Wisconsin’s DMV database. Because the odometer statement is electronically stored in a secure environment, the statement, unlike a paper version, cannot be altered, changed or lost, further enhancing the validity of the statement. In addition, with the identity verification of the e-Odometer system, the lessee can be traced to the odometer statement for a particular vehicle. Last, upon transfer of the vehicle by the lessor, the transferee has the opportunity to review the odometer statement in the DMV’s database and accept it (or reject it) prior to the transfer of the vehicle’s title. emcdonald on DSK2BSOYB1PROD with PROPOSALS C. Wisconsin’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 24 We note that, unlike retention requirements for motor vehicle dealers, Wisconsin’s petition does not address whether lessors are required to retain copies of odometer disclosure made through eOdometer that they issue and receive. We have concluded that lessors will continue to be subject to the retention requirements as set forth in 49 CFR 580.8(b), which requires lessors to retain a copy of odometer disclosure statements that they issue and receive for five years. We note that Wisconsin’s odometer disclosure regulations require lessors to retain a copy of odometer disclosure statements for five years. See Wis. Admin. Code § Trans 15412(2). We have tentatively concluded that Wisconsin must create a mechanism for lessors to retain odometer disclosure statements from lessees in order for lessors to comply with TIMA. VerDate Nov<24>2008 15:00 Apr 21, 2010 Jkt 220001 transfer. Here, Wisconsin’s proposed alternate disclosure requirements include characteristics that would assure that representations of a vehicle’s actual mileage would be as valid as those found in current paper title transfers. Identity authentication, maintenance in a secure electronic environment and transferee verification of the mileage data reported by the transferor all help to ensure valid disclosures. In addition, by providing rapid access to records of past transfers and by maintaining audit logs of each and every title transfer transaction, the scheme proposed by Wisconsin could potentially provide a superior deterrent to odometer fraud. Furthermore, Wisconsin’s proposal offers the public the opportunity to view the most recent odometer reading and date of that reading through an Internet application. A prospective purchaser can access the public e-Odometer information to assess a vehicle’s true value by comparing the vehicle’s current odometer reading to the electronic record stored with the DMV. V. NHTSA’s Initial Determination For the foregoing reasons, NHTSA preliminarily grants Wisconsin’s petition regarding proposed alternate disclosure requirements with respect to vehicle transfers, subject to resolution of certain issues. As noted above, an issue is how the proposed Wisconsin system would manage disclosure when the seller is unavailable. Second, as explained above, we have tentatively concluded that Wisconsin will need to amend its program to permit lessors to retain each odometer disclosure statement they give and receive. The Agency also asks that Wisconsin clarify the system’s ability to allow lessors to place a different brand on the disclosure statement in those instances where the lessor believes, or has reason to believe, that the statement provided by the lessee is inaccurate. During the comment period, we expect Wisconsin to submit additional information demonstrating how its program satisfies these concerns or that its program has been amended to satisfy these concerns. 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 Wisconsin’s petition, it would likely reserve the right to rescind that grant in the event that future information indicates that, in operation, Wisconsin’s alternate disclosure requirements do not satisfy applicable standards. PO 00000 Frm 00043 Fmt 4702 Sfmt 4702 20973 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 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 E:\FR\FM\22APP1.SGM 22APP1 20974 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Proposed Rules 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: April 7, 2010. O. Kevin Vincent, Chief Counsel. [FR Doc. 2010–8321 Filed 4–21–10; 8:45 am] emcdonald on DSK2BSOYB1PROD with PROPOSALS BILLING CODE 4910–59–P VerDate Nov<24>2008 15:00 Apr 21, 2010 Jkt 220001 Wildlife Office, 1387 S. Vinnell Way, Room 368, Boise, ID 83709. We will Fish and Wildlife Service accept any new information, materials, comments, or questions concerning this 50 CFR Part 17 finding at any time at this address. FOR FURTHER INFORMATION CONTACT: [FWS–R1–ES–2009–0043; MO 92210–0–0008 Acting State Supervisor, Idaho Fish and B2] Wildlife Office (see ADDRESSES); by Endangered and Threatened Wildlife telephone at 208–378–5243; and by and Plants; 12-Month Finding on a facsimile at 208–378–5262. Persons who Petition To List the Mountain Whitefish use a telecommunications device for the in the Big Lost River, Idaho, as deaf (TDD) may call the Federal Endangered or Threatened; Correction Information Relay Service (FIRS) at 800–877–8339. AGENCY: Fish and Wildlife Service, SUPPLEMENTARY INFORMATION: Interior. Our announcement of a 12-month ACTION: Notice of 12-month petition finding on a petition to list the finding; correction. mountain whitefish (Prosopium SUMMARY: We, the U.S. Fish and williamsoni) in the Big Lost River, Wildlife Service (Service), announced in Idaho, under the Act (16 U.S.C. 1531 et our 12-month finding on a petition to seq.) published in the Federal Register list the mountain whitefish (Prosopium on April 6, 2010 (75 FR 17352), with williamsoni) in the Big Lost River, minor errors we now correct in this Idaho, under the Endangered Species document. Act of 1973, as amended (Act), that In the published notice, Figure 1 is listing was not warranted. Our finding mentioned two-thirds the way down the published in the Federal Register on first column of page 17353, but the April 6, 2010, but two figures were figure itself is omitted. Under the header omitted from the document. We now Species Distribution and Habitat, the provide those two figures. figure should be inserted at the end of the first paragraph. ADDRESSES: Our finding is available on In the published notice, Figure 2 is the Internet at http://www.fws.gov/ mentioned two-thirds the way down the idaho, and also at http:// second column of page 17353, but the www.regulations.gov at Docket No. figure itself is omitted. Under the header FWS–R1–ES–2009–0043. Supporting documentation we used in preparing the Distribution and Habitat Within the Big Lost River Basin, the figure should be finding is available for public inserted at the end of the paragraph. inspection, by appointment, during Both figures are provided below. normal business hours at the U.S. Fish and Wildlife Service, Idaho Fish and BILLING CODE 4310–55–P DEPARTMENT OF THE INTERIOR PO 00000 Frm 00044 Fmt 4702 Sfmt 4702 E:\FR\FM\22APP1.SGM 22APP1

Agencies

[Federal Register Volume 75, Number 77 (Thursday, April 22, 2010)]
[Proposed Rules]
[Pages 20965-20974]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-8321]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 580

[Docket No. NHTSA-2010-0046; Notice 1]


Petition for Approval of Alternate Odometer Disclosure 
Requirements

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

ACTION: Initial determination.

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SUMMARY: The State of Wisconsin has petitioned for approval of 
alternate odometer requirements to certain requirements under Federal 
odometer law. NHTSA has initially determined that Wisconsin's alternate 
requirements satisfy Federal odometer law, with limited exceptions. 
Accordingly, NHTSA has preliminarily decided to grant Wisconsin's 
petition on condition that before NHTSA makes a final determination, 
Wisconsin amends its program to meet all the requirements of Federal 
odometer law or demonstrates that it meets the requirements of Federal 
law. This document is not a final agency action.

DATES: Comments are due no later than May 24, 2010.

ADDRESSES: You may submit comments [identified by DOT Docket ID Number 
NHTSA-2010-0046] 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. ET, 
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 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: Andrew DiMarsico, 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 \2\, as amended (TIMA), contains a number of 
provisions to limit odometer fraud and assure that the purchaser of a 
motor vehicle knows the true mileage of the vehicle. The Cost Savings 
Act requires the Secretary of Transportation to promulgate regulations 
requiring the transferor (seller) of a motor vehicle to provide a 
written statement of the vehicle's mileage registered on the odometer 
to the transferee (buyer) in connection with the transfer of ownership. 
This written statement is generally referred to as the odometer 
disclosure statement. Further, under TIMA, vehicle titles themselves 
must have a space for the odometer disclosure statement and States are 
prohibited from licensing vehicles unless a valid odometer disclosure 
statement on the title is signed and dated by the transferor. Titles 
must also be printed by a secure printing process or other secure 
process. 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 Wisconsin has petitioned for approval of alternate 
odometer disclosure requirements. The Wisconsin Department of 
Transportation proposes a paperless odometer disclosure program. Last 
year, 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). Wisconsin's 
program is similar to Virginia's program in some respects and is 
broader in scope than Virginia's in others. Like Virginia's program, 
transactions involving an out-of-State party are not, in general, 
within the scope of Wisconsin's program. Wisconsin Pet. p. 2. Unlike 
Virginia's program, which did not apply to transactions for leased 
vehicles, Wisconsin's proposal implicates provisions of Federal 
odometer law related to these vehicles. Wisconsin Pet. p. 4.
    As discussed below, NHTSA's initial assessment is that the 
Wisconsin program satisfies the requirements for approval under Federal 
odometer law, subject to resolution of certain concerns.

[[Page 20966]]

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 to, among other 
things, prohibit tampering with odometers on motor vehicles and to 
establish certain safeguards for the protection of purchasers with 
respect to the sale of motor vehicles having altered or reset 
odometers. See Public Law 92-513, 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 Public Law 92-513, 
Sec.  408, 86 Stat. 947 (1972).\3\ In general, the purpose for the 
disclosure was to assist purchasers to know the true mileage of a motor 
vehicle.
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    \3\ In general, section 408 states that the Secretary shall 
prescribe rules requiring any transferor of a motor vehicle to 
provide a written disclosure to the transferee that includes the 
cumulative mileage on the odometer and if the odometer reading is 
known to be different than the miles the vehicle has actually 
traveled, a statement that the actual mileage is unknown.
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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 
accurate mileage information. However, lessees had no obligation to 
provide accurate mileage information to lessors upon vehicle transfer. 
This environment facilitated roll backs of odometers.
    Congress enacted TIMA in 1986 to address the Cost Savings Act's 
shortcomings. It amended the Cost Savings Act to prohibit States from 
licensing vehicles 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 required 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 by adding section 408(e) 
requiring the Secretary to prescribe rules related to leased 
vehicles to ensure written disclosure of the mileage by the lessee 
to the lessor upon the lessor's transfer of ownership of the 
vehicle. Under these rules, the lessor must provide written notice 
of the mileage disclosure requirements and the penalties for failure 
to comply with the rules to the lessee.
    \5\ 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 alternate motor 
vehicle mileage disclosure requirements approved by the Secretary in 
effect. Section 408(f) 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 in circumstances where 
the title was held by a lienholder. Public Law 100-561 Sec.  40, 102 
Stat. 2805, 2817 (1988). Congress required that the odometer 
disclosures be made on the power of attorney document at the time of 
transfer and that the mileage be restated by the person exercising 
power of attorney on the title. Id. In addition, the power of attorney 
document was to be issued by means of a secure printing process or 
other secure process. Id.
    In 1990, Congress amended section 408(d)(1)(C) of the Cost Savings 
Act.\6\ The amendment addressed retention of powers of attorneys by 
States and provided that the rule adopted by the Secretary not require 
that a vehicle be titled in the State in which the power of attorney 
was issued. See Public Law 101-641 Sec.  7(a), 104 Stat. 4654, 4657 
(1990).
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    \6\ 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 executed to 
the third sentence of subsection (d)(1)(C) as the probable intent of 
Congress.
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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

[[Page 20967]]

disclosure required by subsection (d) or (e) as the case may be.'' 
(Subsections 408(d), (e) of the Cost Savings Act were recodified to 49 
U.S.C. 32705(b) and (c)). In light of this provision, we now turn to 
our interpretation of the purposes of these subsections, as germane to 
Wisconsin's petition.
    Our Final Determination granting Virginia's petition for alternate 
odometer disclosure requirements identified the purposes of TIMA 
germane to petitions for approval of odometer disclosure requirements 
that did not include disclosures involving leased vehicles or 
disclosures by power of attorney.\7\ 74 FR 643, 647-48 (January 7, 
2009). A brief summary of the purposes identified in the Virginia Final 
Determination follows. In addition, because the Wisconsin proposal 
encompasses transfers of leased vehicles, we identify the purposes of 
TIMA relevant to odometer disclosures for those vehicles.
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    \7\ 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 purchaser when the vehicle was sold again. This discouraged 
mileage alterations on titles and limited opportunities for obtaining 
new titles with lower mileage than the actual mileage. Id.
    A second purpose of TIMA is to prevent odometer fraud by processes 
and mechanisms making odometer mileage disclosures on the title a 
condition of any application for a title, and a requirement for any 
title issued by a State. 74 FR 647. This provision was intended to 
eliminate or significantly reduce abuses associated with lack of 
control of the titling process. Id.
    Third, TIMA sought to prevent alterations of disclosures on titles 
and to preclude counterfeit titles through secure processes. 74 FR 648. 
In furtherance of these purposes, paper titles (incorporating the 
disclosure statement) must be produced using a secure printing process 
or protected by ``other secure process.'' \8\ Id.
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    \8\ 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 proper 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, 
allowing 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.
    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 
four 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).

IV. The Wisconsin Petition

    Wisconsin, which is in the process of implementing an electronic 
title transfer system, petitions for approval of alternate odometer 
disclosure requirements. Wisconsin requests alternate disclosure 
requirements for transfers of motor vehicles in transactions between 
private parties (including motor vehicle dealers), transactions 
involving leased vehicles, transactions between parties involving a 
lienholder,\9\ and transactions involving private parties without any 
lienholder.
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    \9\ Under Wisconsin law, a lienholder does not physically 
possess the title to the vehicle; the title remains with the vehicle 
owner. Thus, Wisconsin does not permit odometer disclosure by power 
of attorney when title is held by a lienholder and does not petition 
for alternate requirements regarding odometer disclosure by power of 
attorney. Wisconsin does accept a written odometer disclosure by 
power of attorney from an out-of-State party that registers the 
vehicle in Wisconsin.
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    Recent Wisconsin legislation established that the title, title 
application, and other specified information maintained by the DMV in 
its database are the original and controlling title record for a 
vehicle. See Wis. Stat. Ann. Sec.  342.01(2)(ac) and Sec.  342.09(4) 
(2009). Wisconsin proposes to create an electronic odometer

[[Page 20968]]

statement (e-Odometer) as the official odometer statement to reside in 
the Wisconsin Department of Transportation (WisDOT), Department of 
Motor Vehicles (DMV) database. Under the proposal, a distinct e-
Odometer system would be created for accepting and maintaining e-
Odometer statements as stand-alone electronic records, separate from an 
electronic title. E-Odometer statements would be linked to, and become 
part of the title record in the DMV database. The DMV's titling system 
would automatically link the e-Odometer records to a vehicle's title 
whenever an electronic title transaction occurs and a title transfer 
could not be completed unless a proper odometer disclosure is made in 
the e-Odometer entry. According to Wisconsin's petition, if a paper 
title is needed, DMV would print it on secure paper with the odometer 
disclosure statement in the proper location and format.

A. Overview of Wisconsin's Electronic Titling System

    Wisconsin has implemented a titling system that permits 
individuals, organizations and businesses (collectively, DMV Customers) 
to process vehicle title transactions electronically through its 
automated processing partnership system (APPS) program. See Wis. Admin. 
Code Sec.  Trans 1565.01. Under APPS, a vendor \10\ approved by the DMV 
\11\ creates a computer system to link or interface DMV customers with 
the DMV database. The link permits the DMV customer to access to the 
DMV database and conduct authorized title transactions.
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    \10\ According to Wisconsin's petition, a ``vendor'' is a 
person, business or organization that contracts with the DMV to 
provide a host computer system by which agents may obtain access to 
specified information services. Wis. Admin. Code Sec.  Trans 
156.02(8). An approved vendor must work with Wisconsin's DMV to 
develop an automated interface software application that meets the 
automated interface specifications prescribed by DMV. Wis. Admin. 
Code Sec.  Trans 156.03(4).
    \11\ In order to become an approved vendor, an entity must 
submit an application with certain information to DMV, submit an 
approved implementation plan, work with DMV to meet the automated 
interface specifications prescribed by DMV and execute a contract 
with DMV.
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    In order to become eligible for direct access to the DMV's database 
under the vendor system, a DMV customer must enter into an agreement 
with an approved vendor, obtain DMV approval to process title 
transactions, and enter into a contract with the DMV. To maintain 
system security and integrity, employees of DMV customers using the 
interface would have to submit a signed affidavit to the DMV before 
accessing the system. Once the DMV customer complies with these 
requirements, the DMV customer would be able to perform authorized 
title transactions directly within DMV's system.
    Currently, Wisconsin requires motor vehicle dealers to 
electronically process title transactions for vehicles that they sell. 
See Wis. Stat. Ann. Sec.  342.16(1)a and (am) (2009); Wis. Admin. Code 
Sec.  Trans 141.01. Motor vehicle dealers can perform electronic 
titling transactions through APPS or through an Internet-based 
interface with DMV, known as e-MV11. In order to process title 
transactions using the e-MV11, a DMV customer must apply to the DMV by 
submitting an application setting forth the name, address and contact 
of the entity and providing the names and access authority of employees 
performing title transactions. After setting up the required security 
protocols, the DMV customer can enter the appropriate title 
transaction.\12\ Also, under Wisconsin's electronic titling program, 
motor vehicle dealers are required to maintain and keep their title 
transactions records, including odometer disclosure statements, for 
five years. See Wis. Admin. Code Sec.  Trans 141.08(2).
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    \12\ According to Wisconsin's petition, authorized transactions 
for amending an electronic odometer record are or will be:
    1. Dealer sales to private buyers, including purchases and 
trade-ins from private buyers;
    2. Dealer reassignments to other dealers;
    3. Consignor statement when consigning a vehicle for sale;
    4. Dealer or auction purchase of out-of-State vehicle and 
subsequent sale of vehicle with Wisconsin title (Wisconsin could 
produce a secure paper title for use by the other State.);
    5. DMV odometer corrections on title;
    6. Involuntary liens from towing/storage, landlord, or mechanic;
    7. Repossessions;
    8. Private sales where title is processed by DMV agent or 
financial institution;
    9. Lessee to lessor statement upon relinquishing a leased 
vehicle; and
    10. Private sales using e-MVpublic.
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    According to Wisconsin's petition, the electronic titling program 
will be expanded to include other persons, businesses and 
organizations. These businesses and organizations, such as lienholders 
or auction companies, would conduct electronic title transactions 
through APPS. Individuals conducting private sales of unencumbered 
vehicles would eventually have the ability to perform title transfer 
and odometer disclosure through an Internet-based application called e-
MVPublic.

B. Wisconsin's E-Odometer Program

    Wisconsin asserts that e-Odometer entries would provide a virtual 
replacement of existing secure paper odometer disclosure statements for 
vehicle transactions. Under Wisconsin's proposal, the e-Odometer system 
would be a unique electronic application within Wisconsin's electronic 
title transfer system. Although the e-Odometer entry would be a stand-
alone secure electronic record, it would be safely and securely 
electronically linked to the electronic title record of the vehicle by 
the vehicle identification number (VIN) and become part of the vehicle 
title. Title transfer could not occur unless the transferor and 
transferee, or other authorized persons, such as dealer employees, 
perform the required disclosure and acceptance through the e-Odometer 
system. Once the odometer disclosure and acceptance is completed, the 
statement is stored in the e-Odometer system and linked to the 
electronic title record by the VIN.
    The petition states that the following information that will be 
stored in the secure e-Odometer record:
    1. VIN;
    2. Description of the vehicle by make, model, model year and body 
type;
    3. Odometer reading and date of the reading;
    4. The Brand (actual, not actual or exceeds limits of odometer);
    5. Name, address of person disclosing odometer reading (must match 
the transferor);
    6. Name, address of person accepting odometer reading (must match 
the transferee); and
    7. Statement reference to Federal law requirement and potential 
penalties.
    Some of the e-Odometer information, and other vehicle information, 
will be available to DMV personnel through a DMV vehicle inquiry 
function, while limited information will be available to the public 
through a public inquiry function. The information available to DMV 
personnel includes:
    1. Vehicle description;
    2. Title owner information;
    3. Brands, if any;
    4. Most current odometer reading, status and date recorded;
    5. Odometer reading, status and record date history;
    6. Lien information; and
    7. Owner in possession of the vehicle.
    The publicly available information includes:
    1. Vehicle description;
    2. Most current odometer reading, status and date recorded;
    3. Brands, if any; and
    4. Lien information.
    Wisconsin's petition states that amendments or creation of e-
Odometer records would only be possible when titles are transferred in 
the course of authorized transactions by authorized persons.

[[Page 20969]]

C. Wisconsin E-Odometer Implementation Schedule

    Wisconsin proposes to implement its e-Odometer program in three 
phases. Because motor vehicle dealers are already required to complete 
title transactions electronically, Wisconsin intends to begin the e-
Odometer program with these dealers. See Wis. Stat. Ann. Sec.  
342.16(1)a and (am) (2009); Wis. Admin. Code Sec.  Trans 141.01. The 
second phase would implement e-Odometer in title transfers involving 
lienholders, motor vehicle auctions, vehicle repossessions, and leases. 
The proposal's final phase would implement e-Odometer in transfers of 
unencumbered motor vehicles between private individuals. Phase two and 
three are still under development and Wisconsin has not provided an 
estimated implementation schedule. According to the petition, as e-
Odometer is phased in, Wisconsin will still issue odometer disclosures 
on secure printed titles.
1. Phase One: E-Odometer in Dealer Transactions
    Wisconsin's petition states e-Odometer will apply first to motor 
vehicle transfers through motor vehicle dealers. During this phase, 
eligible title transactions include reassignments among dealers, 
consignments and retail sales. In order to complete a transaction, 
there must be an odometer disclosure and acceptance of the odometer 
statement. The odometer disclosure and acceptance will be permitted 
between the following persons: (1) Authorized dealer personnel and an 
individual buyer; (2) an individual seller trading in a vehicle and 
authorized dealer personnel; (3) authorized dealer personnel in the 
case of dealer reassignments; and (4) an individual vehicle owner and 
an authorized person on behalf of a consignee in the case of vehicle 
consignment. According to Wisconsin, the identities of all persons 
involved will be verified and authenticated through DMV's processes.
    Under Wisconsin's proposal, dealer title transfer transactions 
would be completed through an APPS's vendor interface application or 
the e-MV11 Internet-based application. During these title transfer 
transactions, e-Odometer forms will be imported into the transaction 
and completed by the authorized persons.
2. Phase 2: E-Odometer in Title Transactions Between Private Parties 
Involving Lienholders and Other Commercial Entities
    Wisconsin's petition states that the second phase would incorporate 
e-Odometer procedures into title transfers in a number of circumstances 
including between private parties when there is a lien on the vehicle. 
These title transactions would be processed by the financial 
institution holding the lien. During this phase, e-Odometer would be 
available to the financial institution through the APPS application or 
an application WisDot develops for these lenders. Because lienholders 
do not possess titles under Wisconsin law, a satisfied lienholder would 
access e-Odometer to electronically release the lien to allow 
production of a clear title. To facilitate this process, e-Odometer 
forms would be available to buyers and sellers through an Internet 
application allowing completion of the required odometer disclosures 
and acceptances.
    During this second phase, Wisconsin also proposes to incorporate 
use of the e-Odometer system into title transfers involving motor 
vehicle auctions, involuntary vehicle transfers (i.e. involuntary liens 
and repossessions), corrections to odometer information on titles, 
leased vehicles and other transactions involving secure odometer 
statements.
3. Phase 3: E-Odometer in Private Sales
    The last phase of Wisconsin's program would incorporate e-Odometer 
entries into private sales of unencumbered vehicles. The title transfer 
would be conducted through an on-line application called e-
MVPublic.\13\ For private transfers of motor vehicles, odometer 
disclosure and acceptance would be accomplished by the seller and buyer 
through e-MVPublic once their identities are verified by DMV processes.
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    \13\ For individuals without Internet access, Wisconsin is 
considering providing access to e-MVPublic at its DMV service 
centers. At a minimum, Wisconsin states that public libraries offer 
public access to computers and the Internet, which would enable 
individuals without Internet to use e-Odometer.
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D. Identity Verification Under Wisconsin E-Odometer

    Wisconsin's petition describes two verification processes whose 
operation differs depending on whether the user is a DMV partner or 
regular customer (such as a dealer or financial institution) or an 
intermittent user. For a DMV partner or regular customer, the first 
step is being approved by DMV to access its database. As part of the 
approval process, the entity must provide the legal business name and 
address of the location of the business. After approval, identity 
verification procedures would require these users to enter into an 
agreement with the DMV that includes security procedures--including 
establishing an account and secure logon ID. The users are identified 
and authenticated through a unique ``user ID'' and password that are 
traced to a particular person on the account.
    The verification process would be managed by vendors. The Wisconsin 
APPS program requires approved vendors to design precise electronic 
security and audit trail procedures into its interface, which DMV would 
then verify. This interface requires three administrative steps to 
identify, authenticate and authorize users of the DMV's database. 
First, vendors must create an audit journal to identify the individual 
responsible for each transaction. Vendors assign each user a ``user 
ID'' that can be traced to the individual user. Next, to authenticate 
the user, a password known only to the user that is associated with the 
``user ID'' is entered before a transaction is allowed. If an 
individual user is not authorized by the vendor for the type of 
transaction requested, the system will immediately terminate the 
transaction. Last, vendors must authorize the user to access the 
appropriate information. In addition to the identification protocols, 
vendors must create and maintain access logs that can be used for 
auditing and recording keeping, which include, among other things, a 
history of each customer transaction.
    Under Wisconsin's proposal, DMV partners and regular customers must 
submit the identity of each employee who will conduct title 
transactions and specify each employee's authority to perform 
transactions in DMV's database. Each employee must submit a signed 
affidavit acknowledging security procedures and safeguards prior to 
obtaining authorization from the DMV to conduct title transfer 
transactions. DMV must confirm each user's authorization before the 
user can process title transactions.
    For individuals who are not DMV partners or regular customers, 
Wisconsin would require individuals to establish an electronic 
signature that can uniquely identify the person. Identity verification 
begins with the customer entering a minimum of three personal 
identifiers for the correct customer record in the DMV database. 
Personal identifiers include name, address, date of birth, product 
number, Driver License/ID number, a Federal Employer Identification 
Number, or

[[Page 20970]]

partial Social Security Number (possibly the last four or five 
digits).\14\ After the user inputs the personal identifiers into the 
system, the system will check DMV customer records and verify that the 
user is the correct individual or business and will authorize the 
customer to update the odometer statement. Once the user is verified, 
the user can begin the title transaction.
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    \14\ Wisconsin prohibits nonresidents from applying for a 
Wisconsin title, except in certain limited exceptions. See Wis. 
Admin. Code Sec.  Trans 154.13(2). A nonresident who is eligible to 
apply for a Wisconsin title will not be considered a DMV partner or 
regular customer. These nonresidents will be subject to the e-
Odometer requirements as long as the vehicle is titled and 
transferred within Wisconsin.
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E. Odometer Disclosure Under Wisconsin E-Odometer

    Wisconsin's petition states that two parties must engage in an 
authorized e-Odometer transaction to effectuate the odometer 
disclosure. In order to conduct the e-Odometer disclosure, each party 
will access the DMV database by providing information to satisfy the 
identity verification requirements of the system and the VIN of the 
vehicle. Under Wisconsin's proposal, a transferor must disclose the 
odometer reading and brand (actual/not actual/exceeding odometer 
limits) and the transferee must accept the odometer reading to allow 
the transaction to go forward.\15\ The e-Odometer transaction will 
remain in a pending status between the transferor and transferee until 
each party completes the required actions, e.g., disclosure by the 
seller and acceptance by the buyer. Once both actions have been 
accomplished, the e-Odometer record will be secured within DMV's 
database and become part of the electronic title through the VIN.
---------------------------------------------------------------------------

    \15\ Wisconsin states that there are a limited number of 
exceptions under Wisconsin law and e-Odometer to the requirement for 
two parties to engage in a transaction to update a title. One 
exception is involuntary transfer of the vehicle through 
repossession by a financial institution in which the title is issued 
to the financial institution. This exception is permissible under 
Federal odometer law because repossession is not a transfer of 
ownership and does not require an odometer disclosure statement. See 
49 CFR 580.3. Another exception is when the seller is not available. 
If the seller is not available, the DMV database permits the 
transferee to state the odometer reading with a brand of ``not 
actual.'' If the transferor becomes available to make the 
disclosure, DMV would change the recorded status to ``actual.'' This 
exception does not conform to Federal odometer law, which requires 
an odometer disclosure statement, including the brand, at the time 
of transfer of ownership. 49 U.S.C. 32705(a)(1); 49 CFR 580.5(a). 
Federal odometer law does not permit subsequent alterations to the 
brand as contemplated by Wisconsin. NHTSA believes that permitting 
such an exception could create a loophole that would be abused.
---------------------------------------------------------------------------

    To clarify the e-Odometer procedure, Wisconsin provides an exemplar 
title transaction involving a dealer trade-in. In a vehicle trade-in 
transaction, the customer (transferor) must bring the paper title to 
the dealer (transferee) at the time of the transferor. After entering 
all the required data in the Wisconsin electronic title system and 
initiating the e-Odometer process, the dealer would then destroy the 
paper title.\16\ Under the e-Odometer process, the customer discloses 
the odometer reading (and brand) and the dealer accepts the odometer 
reading. The vehicle's odometer reading is then stored in the DMV 
database and linked virtually to the vehicle's title through the VIN. 
Upon later sale of the trade-in vehicle, the dealer (as the transferor) 
must disclose the odometer reading (and brand) and the vehicle buyer 
(as the transferee) must accept the odometer reading. The dealer and 
buyer will access e-Odometer at the time of the sale to complete the 
disclosure and acceptance of the odometer statement, which upon 
acceptance by the buyer secures the odometer statement in the DMV's 
database. After the sale of the vehicle is completed, the dealer 
completes title processing in APPS or e-MV11 by titling the vehicle in 
the consumer's name, verifying that secure odometer disclosure has been 
completed. After titling is complete, the updated e-Odometer entry 
becomes part of the title record. For in-State transactions, a paper 
title is issued only upon request.
---------------------------------------------------------------------------

    \16\ According to Wisconsin, the dealer's failure to destroy the 
title subjects the dealer to civil penalties and other sanctions, 
such as license suspension or removal.
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F. Wisconsin's Position on Meeting the Purposes of TIMA

    Wisconsin contends that its e-Odometer program meets the purposes 
of TIMA, as described by NHTSA in its Final Determination on the 
Commonwealth of Virginia's petition for alternate odometer disclosure 
requirements. See 74 FR 643, 647-48 (January 7, 2009).
    Wisconsin's petition states that e-Odometer is part of the 
vehicle's title. Under e-Odometer, the VIN links the odometer statement 
to the title record. The system automatically imports e-Odometer into 
the title transfer transaction process conducted by the transferor and 
transferee. A title transaction cannot occur, unless the odometer 
disclosure statement is made and accepted. The e-Odometer information 
is then secured, stored, and becomes visible through the vehicle's 
electronic title record.
    According to the petition, other system requirements provide a 
significant level of security for the e-Odometer system. First, title 
transfer cannot occur unless the authorized persons update e-Odometer 
entries. Second, only those persons authorized to make title transfer 
transactions (e.g. authorized dealer personnel or authenticated private 
owners) are able to make e-Odometer statements. Third, odometer 
disclosure under the e-Odometer system is only permitted when a title 
is transferred.\17\ If a title is required to be printed on a secure 
title paper, the DMV system will automatically include the odometer 
disclosure information on the printed title. If a title on secure title 
paper is used in a vehicle transfer, the odometer information shown on 
the secure paper title will be entered into the e-Odometer electronic 
record during the title transfer transaction process and the paper 
title will be destroyed.
---------------------------------------------------------------------------

    \17\ As noted above, there are some exceptions under Wisconsin 
law.
---------------------------------------------------------------------------

    Wisconsin's petition also states that odometer disclosure is a 
required data input for application for a title and a required output 
on the title. According to the petition, the odometer disclosure and 
acceptance is a required input to an electronic title transaction, 
whether performed through APPS or e-MV11. Although APPS permits 
odometer disclosure and acceptance at different times, e-Odometer 
secures the disclosure and acceptance and stores it electronically 
until the odometer disclosure is imported during title processing.
    Wisconsin's petition asserts that e-Odometer provides an equivalent 
level of security against altering, tampering, and counterfeiting as 
the odometer statement on a secure paper title. According to Wisconsin, 
the e-Odometer statement is secured in the DMV database, as soon as the 
transferor electronically discloses and the transferee accepts the 
odometer reading. After the transferee accepts the odometer disclosure, 
e-Odometer stores that mileage disclosure, the date, the names and 
addresses of the transferor and transferee, and will not allow any 
changes to that entry.
    Finally, Wisconsin's petition contends that the authentication and 
verification of the transferor's and transferee's electronic signatures 
are readily detectable and reliably traced to the particular 
individual. Wisconsin states that the DMV has established extensive 
security procedures for vendors who process vehicle transactions on 
behalf of DMV and

[[Page 20971]]

regularly interact with DMV, and for individuals and intermittent 
business customers who wish to make entries in DMV records. Wisconsin's 
security procedures are governed under Wisconsin statutes, 
administrative rules, contracts, DMV policy and procedure, and 
electronic security protocols. DMV Partners and regular business 
customers will access the e-Odometer system through secure applications 
that are already in use for vehicle title transactions. Individuals and 
intermittent business customers will access the e-Odometer system 
through a secure Internet application. Both applications require 
information, such as electronic signatures, that can authenticate and 
verify the users' identity.

IV. 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 the Wisconsin 
alternative. We now provide our initial assessment whether Wisconsin's 
proposal satisfies TIMA's purposes as relevant to its petition.\18\
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    \18\ Wisconsin 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. Wisconsin's Proposal in Light of TIMA's Purposes Regarding Vehicle 
Transfers Other Than Those Involving a Lease Agreement

    One purpose is to assure that the form of the odometer disclosure 
precludes odometer fraud. In this regard, NHTSA has initially 
determined that Wisconsin's proposed alternate disclosure requirements 
satisfy this purpose. Under Wisconsin's proposal, a required part of 
the data to be entered in the transfer of title is the vehicle's 
odometer reading. The reading is disclosed by the transferor and 
accepted by the transferee. Thereafter the odometer disclosure 
statement will reside as an electronic record within the DMV database 
that will be linked to the vehicle's title, also an electronic record, 
by the VIN. Thus, the odometer disclosure is a required element 
pertaining to and part of the title record in the DMV database. If a 
hard copy of the title is needed, Wisconsin can generate a title with 
the odometer disclosure statement on the title using a secure printing 
process. Wisconsin's proposed system would, therefore, have the 
odometer disclosure as part of the vehicle title as required by TIMA. 
As to TIMA's requirement that the title contain a space for the 
transferor to disclose the vehicle's mileage, NHTSA believes the 
proposed Wisconsin electronic title and odometer system would provide 
an electronic equivalent to these requirements for use in a subsequent 
sale of the vehicle. The agency expects that hard copies of electronic 
titles will continue to provide a separate space for owners to execute 
a proper odometer disclosure in keeping with TIMA and current 
practice.\19\
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    \19\ Wisconsin notes that paper titles will be produced for 
title transfer transactions that involve out-of-State parties, such 
as a vehicle sale to an out-of State dealer or retail purchaser, an 
auction sale to an out-of-State dealer or a retail consumer in 
Wisconsin that requests a paper title.
---------------------------------------------------------------------------

    Another purpose of TIMA is to prevent odometer fraud by processes 
and mechanisms making the disclosure of an odometer mileage on the 
title a condition for the application for a title and a requirement for 
the title issued by the State. With one exception, NHTSA has initially 
determined that Wisconsin's proposed process satisfies this purpose. 
Wisconsin's proposed on-line title transfer process requires disclosure 
and acceptance of odometer information before the transaction can be 
completed. If the transaction is successful, DMV's system will create 
or amend an electronic title and store the linked electronic odometer 
statement. A new title will not be issued without entry of the odometer 
disclosure and acceptance of it.
    The exception concerns Wisconsin's proposal to permit the 
alteration of the brand on an electronic odometer statement when the 
seller of the vehicle is unavailable at the time of the transfer of 
ownership. According to Wisconsin's petition, if the seller is not 
available, the DMV database permits the transferee to state the 
odometer reading with a brand of ``not actual.'' If the transferor 
becomes available to make the disclosure and does so, DMV would change 
the recorded status to ``actual.'' As noted above, such a subsequent 
change to the title does not conform to Federal odometer law, which 
requires an odometer disclosure statement, including the brand, to be 
made at the time of transfer. 49 U.S.C. 32705(a)(1); 49 CFR 580.5(a). 
The requirement to state the actual mileage and brand at the time of 
transfer is 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).\20\ Accordingly, 
we have decided to grant Wisconsin's petition on the condition that 
Wisconsin conforms its program to the requirements of Federal odometer 
law or fully explains how exceptions, such as the one for the 
unavailable seller, complies with the law and its purposes.
---------------------------------------------------------------------------

    \20\ The requirement to provide a brand at the time of vehicle 
transfer is based upon section 408(a) of the Cost Savings Act as 
amended, recodified at 49 U.S.C. 32705(a).
---------------------------------------------------------------------------

    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 Wisconsin's alternate disclosure 
requirements appear to be as secure as current paper titles. As we 
understand Wisconsin's proposal, the odometer statement is disclosed by 
the transferor and accepted by the transferee, and thereafter the DMV 
database system stores an electronic version of the odometer statement. 
Assuming that the e-Odometer database is maintained with appropriate 
levels of security, electronic recording of odometer readings and 
disclosures would be maintained in a way in which alteration is 
unlikely. The odometer reading, which would be linked to the electronic 
title record by the VIN, cannot be altered except when it is updated 
during the title transfer process by authorized users. On subsequent 
title transfers, the transferor and transferee would have to complete 
the odometer disclosure and acceptance for the transaction to be 
completed.
    When fully implemented, all subsequent title transfers will be 
performed through the APPS or e-MV11, or other secure on-line process. 
Each time an on-line title transfer occurs, the DMV database system 
stores the electronic version of the odometer statement. The DMV will 
issue a paper title only when necessary, e.g., title transfer 
transactions that involve out-of-State parties. Since the title and 
odometer statement remain in electronic form under State care and 
custody, the likelihood of an individual altering, tampering or 
counterfeiting the title or odometer statement is significantly 
decreased. These electronic records would be maintained in a secure 
environment and any unauthorized access would be detected by the 
system. Moreover, under Wisconsin law, the electronic title record is 
the official and controlling title. If a conflict exists between the 
electronic title and a paper title, the paper title is void.
    Another purpose of TIMA is to create a record of the mileage on 
vehicles and a paper trail. The underlying purposes of this record 
trail are to enable consumers to be better informed and provide a 
mechanism through which

[[Page 20972]]

odometer tampering can be traced and violators prosecuted. In NHTSA's 
preliminary view, the proposed Wisconsin's electronic title transfer 
system will create a scheme of records, equivalent to the current 
``paper trail,'' that assists law enforcement in identifying and 
prosecuting odometer fraud. Under the Wisconsin proposal, creation of a 
paper trail starts with the requirement for certain DMV customers to 
process title transactions through the APPS program. Under APPS, a DMV 
customer must sign a written agreement with DMV that includes security 
procedures, an account and a secure logon ID. DMV customers also must 
provide DMV with the names of the individuals authorized to conduct 
transactions in APPS. These individuals are issued a secure logon ID 
and password that can be traced by DMV to their transactions. In 
addition, APPS vendors must create security protocols that include an 
audit journal that can identify each person responsible for each title 
transaction. Vendors must also provide DMV with a daily report 
detailing all security violations. Furthermore, Wisconsin requires 
motor vehicle dealers to retain copies of electronic titles for motor 
vehicles owned and offered for sale and odometer statements received 
and given for a period of 5 years.\21\
---------------------------------------------------------------------------

    \21\ Wisconsin indicates that its e-Odometer system will permit 
motor vehicle dealers the ability to retain copies of all odometer 
disclosure statements received or given by the dealers.
---------------------------------------------------------------------------

    For individuals not using APPS, the identity verification 
procedures require the establishment of electronic signatures of the 
parties. Due to the system's procedures for validating and 
authenticating the electronic signature of each individual through 
DMV's database, the electronic signatures of the transferor and 
transferee are reliable, readily detectable and can easily be linked to 
particular individuals.\22\ Because the electronic signature consists 
of data elements such as the name, address, date of birth, product 
number, driver license or identification card number, Federal Employer 
Identification Number, or the last four or five digits of the 
individual's Social Security number, Wisconsin's e-Odometer system can 
validate and authenticate individual electronic signatures. This 
authentication process also allows Wisconsin to trace the individuals 
involved in the transaction. This capacity maintains the purposes of 
creating a paper trail since the Wisconsin system will have a history 
of each vehicle's title transfer and odometer disclosure. These 
electronic records will create the electronic equivalent to a paper 
based system that will be readily available to law enforcement.
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    \22\ 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).
---------------------------------------------------------------------------

    Whether Wisconsin's program conforms to TIMA's overall purpose is 
discussed in subpart C below.

B. Wisconsin'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 odometer mileage at the time the lessor 
transfers ownership. The agency has initially determined that the 
Wisconsin alternate disclosure requirements satisfy this purpose. As we 
understand Wisconsin's proposal, the State proposes to require vehicle 
lessees to submit the electronic odometer statement to their lessors 
when relinquishing the leased vehicle. The lessee's odometer statement 
will be stored in the DMV database and linked to the leased vehicle by 
the VIN. Once stored in the DMV database, the odometer statement is 
secured and recorded and made available to the lessor. On subsequent 
transfer of the vehicle by the lessor, the odometer disclosure 
statement from the lessee would be available in the e-Odometer system 
for acceptance by the subsequent transferee. The subsequent transferee 
would have to accept the odometer disclosure reading in the e-Odometer 
entry before the transaction could be completed and for title to 
transfer.
    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. As discussed above, the 
lessee would provide it via the DMV data base.
    A related purpose is to assure that lessees are formally notified 
of their odometer disclosure obligations to the lessor and the 
penalties for failing to comply by not providing complete and truthful 
information. As described in the Petition, Wisconsin's alternate 
disclosure requirements do not address this purpose. However, we note 
that Wisconsin's leased vehicle odometer disclosure regulations 
parallel 49 U.S.C. 32705(c)(2) and 49 CFR 580.7 by requiring that 
lessors notify lessees of their odometer disclosure obligations. See 
Wis. Admin. Code Trans 154.7 (2009). Lessors may meet this notification 
requirement without using the electronic system proposed by Wisconsin. 
The lessors' obligations should be clearly stated.
    A fourth purpose is to set the ground rules for the lessors, 
allowing 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. We have 
initially determined that Wisconsin's proposal meets this purpose. As 
noted previously, a lessee will make the required odometer disclosure 
to the lessor in e-Odometer upon relinquishing the leased vehicle. The 
lessor may use this statement in a subsequent title transfer, 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 must 
brand the title accordingly. We believe that Wisconsin must provide for 
this branding information--that the lessor has reason to believe that 
the disclosure by the lessee does not reflect the actual mileage of the 
vehicle--in its proposed system.
    A fifth purpose of TIMA's leased vehicle provisions is to create 
records and a paper trail. The paper trail includes the written, dated 
and signed odometer disclosure statement by the lessee. The agency has 
initially determined that the Wisconsin alternate disclosure 
requirements satisfy this purpose. Under Wisconsin's proposal, as we 
understand it, both the lessee and the lessor are required to make the 
odometer disclosure electronically in e-Odometer.\23\ The lessee will 
make the odometer disclosure in e-Odometer, which will be stored in the 
DMV database and linked to the leased vehicle by the VIN. The lessor 
will have to accept it to complete the transaction. On subsequent 
transfer of the vehicle by the lessor, the lessor can use the lessee's 
odometer disclosure statement, which is available in the e-Odometer 
system, to certify the actual mileage of the leased vehicle. The 
subsequent transferee would have to accept the odometer disclosure 
reading in the e-Odometer entry before the transaction could be 
completed and for title to transfer. It would then be stored. 
Wisconsin's electronic odometer disclosure system would create a scheme 
of records

[[Page 20973]]

equivalent to the current ``paper trail'' now assisting consumers in 
reviewing mileages on used vehicles and law enforcement in identifying 
and prosecuting odometer fraud. A copy of the odometer disclosure 
statement could be retained by the lessor.\24\ With the use of the APPS 
system to identify parties to the odometer disclosure and the use of 
electronic signatures to identify individuals not in the APPS system, 
the Wisconsin DMV will have the capacity to trace a particular lessee 
who makes a fraudulent odometer disclosure during the lessor/lessee 
transaction.
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    \23\ As we understand Wisconsin's program, a nonresident lessee 
who titles a vehicle in a different State, but leases the vehicle 
from a Wisconsin lessor, is outside the scope of the e-Odometer 
system. In such a scenario, the nonresident lessee is required to 
provide a written odometer disclosure statement to the lessor.
    \24\ We note that, unlike retention requirements for motor 
vehicle dealers, Wisconsin's petition does not address whether 
lessors are required to retain copies of odometer disclosure made 
through e-Odometer that they issue and receive. We hav