Petition for Approval of Alternate Odometer Disclosure Requirements, 1367-1375 [2011-148]

Agencies

• National Highway Traffic Safety Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 76, Number 6 (Monday, January 10, 2011)]
[Rules and Regulations]
[Pages 1367-1375]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-148]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 580

[Docket No. NHTSA-2010-0046; Notice 2]


Petition for Approval of Alternate Odometer Disclosure 
Requirements

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

ACTION: Final Determination.

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SUMMARY: The State of Wisconsin has petitioned for approval of 
alternate requirements to certain requirements under Federal odometer 
law. NHTSA is issuing this final determination granting Wisconsin's 
petition as it pertains to vehicle transfers. This determination does 
not include vehicles covered by a lease agreement.

DATES: Effective Date: February 9, 2011.
    Docket: For access to the docket to read background documents or 
comments received, go to https://www.regulations.gov or the street 
address listed above. Follow the online instructions for accessing the 
dockets. Anyone is able to search the electronic form of all comments 
received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (65 FR 19477-78) or you may visit https://DocketInfo.dot.gov.

FOR FURTHER INFORMATION CONTACT: David Case, Office of the Chief 
Counsel, National Highway Traffic Safety Administration, 1200 New 
Jersey Avenue, SE., Washington, DC 20590 (Telephone: 202-366-2239) 
(Fax: 202-366-3820).

SUPPLEMENTARY INFORMATION:

I. Introduction

    Federal odometer law, which is largely based on the Motor Vehicle

[[Page 1368]]

Information and Cost Savings Act (Cost Savings Act) \1\ and the Truth 
in Mileage Act of 1986 \2\, as amended (TIMA), contains a number of 
provisions to limit odometer fraud and assure that the purchaser of a 
motor vehicle knows the true mileage of the vehicle. The Cost Savings 
Act requires the Secretary of Transportation to promulgate regulations 
requiring the transferor (seller) of a motor vehicle to provide a 
written statement of the vehicle's mileage registered on the odometer 
to the transferee (buyer) in connection with the transfer of ownership. 
This written statement is generally referred to as the odometer 
disclosure statement. Further, under TIMA, vehicle titles themselves 
must have a space for the odometer disclosure statement, and States are 
prohibited from licensing vehicles unless a valid odometer disclosure 
statement on the title is signed and dated by the transferor. Titles 
must also be printed by a secure printing process or other secure 
process. TIMA also contains specific disclosure provisions on transfers 
of leased vehicles. Federal law also contains document retention 
requirements for motor vehicle dealers and lessors.
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    \1\ Public Law 92-513, 86 Stat. 947, 961 (1972).
    \2\ Public Law 99-579, 100 Stat. 3309 (1986).
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    TIMA's motor vehicle mileage disclosure requirements apply in a 
State unless the State has alternative requirements approved by the 
Secretary. The Secretary has delegated administration of the odometer 
program to NHTSA. A State may petition NHTSA for approval of such 
alternate odometer disclosure requirements.
    The State of Wisconsin has petitioned NHTSA for approval of 
alternate odometer disclosure requirements under TIMA. The Wisconsin 
Department of Transportation (WisDOT) proposes a paperless electronic 
title transfer scheme, described more fully in section IV, similar to 
the Commonwealth of Virginia's alternate odometer disclosure program, 
approved by NHTSA on January 2, 2009. 74 FR 643, 650 (January 7, 2009). 
Wisconsin's program will not apply to, or in lieu, of the provisions of 
Federal odometer law related to, transactions involving at least one 
out-of-State party.\3\
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    \3\ It also does not apply to disclosures by power of attorney 
where the title is held by a lien holder because, in Wisconsin, 
lienholders do not hold the vehicle title.
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    With limited exceptions, NHTSA initially determined that 
Wisconsin's proposal satisfied Federal odometer law, and proposed 
granting Wisconsin's petition on the condition that it amend its 
program or demonstrate that it meets the requirements of Federal law. 
See 75 FR 20965 (April 22, 2010). To gain final approval, Wisconsin was 
required to demonstrate that its program conforms to Federal odometer 
law disclosure requirements specifying that an odometer disclosure 
statement, including the brand, be made at the time of transfer when 
the seller is unavailable.\4\ NHTSA's Initial Determination also asked 
Wisconsin to address aspects of its e-Odometer program relating to 
transfer of leased vehicles. As addressed below, Wisconsin will submit 
a separate petition regarding transfer of leased vehicles. After 
careful consideration of comments, and the entire record, NHTSA is 
granting Wisconsin's petition for title transfers other than those 
involving a lease agreement. NHTSA's analysis is set forth below in 
Section VI.
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    \4\ See Section 408 of the Cost Savings Act, recodified at 49 
U.S.C. 32705, and 49 CFR 580.5(c).
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II. Statutory Background

    NHTSA reviewed the statutory background of Federal odometer law in 
its consideration and approval of Virginia's petition for alternate 
odometer disclosure requirements. See 73 FR 35617 (June 24, 2008) and 
74 FR 643 (January 7, 2009). The statutory background of the Cost 
Savings Act and TIMA, and the purposes behind TIMA, are discussed at 
length in NHTSA's Final Determination granting Virginia's petition. 74 
FR 643, 647-48. A brief summary of the statutory background of Federal 
odometer law and the purposes of TIMA follows.
    In 1972, Congress enacted the Cost Savings Act, among other things, 
to prohibit tampering of odometers on motor vehicles and to establish 
certain safeguards for the protection of purchasers with respect to the 
sale of motor vehicles having altered or reset odometers. See Public 
Law 92-513, section 401, 86 Stat. 947, 961-63 (1972). The Cost Savings 
Act required that, under regulations to be published by the Secretary, 
the transferor of a motor vehicle provide a written vehicle mileage 
disclosure to the transferee, prohibited odometer tampering and 
provided for enforcement. See Id. at section 408, 86 Stat. at 947. 
Section 408 states that the Secretary shall prescribe rules requiring 
any transferor of a motor vehicle to provide a written disclosure to 
the transferee that includes the cumulative mileage on the odometer and 
if the odometer reading is known to be different than the miles the 
vehicle has actually traveled, a statement that the actual mileage is 
unknown. In general, the purpose for the disclosure was to assist 
purchasers to know the true mileage of a motor vehicle.
    A major shortcoming of the odometer provisions of the Cost Savings 
Act was that they did not require that the odometer disclosure 
statement be on the title. In a number of States, they were on separate 
documents that could be altered easily or discarded and did not travel 
with the title. See 74 FR 644. Consequently, the disclosure statements 
did not necessarily deter odometer fraud employing altered documents, 
discarded titles, and title washing. Id.
    Congress enacted TIMA in 1986 to address the Cost Savings Act's 
shortcomings. It amended the Cost Savings Act to prohibit States from 
licensing vehicles after transfers of ownership unless the new owner 
(transferee) submitted a title from the seller (transferor) containing 
the seller's signed and dated statement of the vehicle's mileage, as 
previously required by the Cost Savings Act. See Public Law 99-579, 100 
Stat. 3309 (1986); 74 FR 644 (Jan. 7, 2009). TIMA also prohibits the 
licensing of vehicles for use in any State unless the title issued to 
the transferee is printed using a secure printing process or other 
secure process, indicates the vehicle mileage at the time of transfer, 
and contains additional space for a subsequent mileage disclosure by 
the transferee when it is sold again. Id. Other provisions created 
similar safeguards for leased vehicles.
    TIMA added a provision to the Cost Savings Act that, with the 
approval of the Secretary of Transportation, allows States to have 
alternate requirements to those required under TIMA respecting the 
disclosure of mileage. It amended Section 408 of the Cost Savings Act 
to add a new subsection (f), which provided that the requirements of 
subsections (d) and (e)(1) respecting the disclosure of motor vehicle 
mileage when motor vehicles are transferred or leased shall apply in a 
State unless the State has in effect alternate motor vehicle mileage 
disclosure requirements approved by the Secretary. Subsection (f) 
provided further that the Secretary shall approve alternate motor 
vehicle mileage disclosure requirements submitted by a State unless the 
Secretary determines that such requirements are not consistent with the 
purpose of the disclosure required by subsection (d) or (e), as the 
case may be.
    In 1988, Congress amended section 408(d) of the Cost Savings Act to 
permit the use of a secure power of attorney in circumstances where the 
title was held by a lienholder. The Secretary was required to publish a 
rule to implement the provision. See Public Law 100-561

[[Page 1369]]

section 40, 102 Stat. 2805, 2817 (1988), which added Section 
408(d)(2)(C). In 1990, Congress amended section 408(d)(2)(C) of the 
Cost Savings Act. The amendment addressed retention of powers of 
attorneys by States and provided that the rule adopted by the Secretary 
not require that a vehicle be titled in the State in which the power of 
attorney was issued. See Public Law 101-641 section 7(a), 104 Stat. 
4654, 4657 (1990).
    In 1994, in the course of the recodification of various laws 
pertaining to the Department of Transportation, the Cost Savings Act, 
as amended, was repealed, reenacted, and recodified without substantive 
change. See Public Law 103-272, 108 Stat. 745, 1048-1056, 1379, 1387 
(1994). The odometer statute is now codified at 49 U.S.C. 32701 et seq. 
In particular, Section 408(a) of the Cost Savings Act was recodified at 
49 U.S.C. 32705(a). Sections 408(d) and (e), which were added by TIMA 
(and later amended), were recodified at 49 U.S.C. 32705(b) and (c). The 
provisions pertaining to approval of State alternate motor vehicle 
mileage disclosure requirements were recodified at 49 U.S.C. 32705(d).

III. Statutory Purposes

    As discussed above, the Cost Savings Act, as amended by TIMA in 
1986, states that NHTSA ``shall approve alternate motor vehicle mileage 
disclosure requirements submitted by a State unless the [NHTSA] 
determines that such requirements are not consistent with the purpose 
of the disclosure required by subsection (d) or (e) as the case may 
be.'' (Subsections 408(d), (e) of the Cost Savings Act were recodified 
to 49 U.S.C. 32705(b) and (c)). In light of this provision, we now turn 
to our interpretation of the purposes of these subsections as germane 
to Wisconsin's petition.
    Our Final Determination granting Virginia's petition for alternate 
odometer disclosure requirements identified the purposes of TIMA 
germane to petitions for approval of odometer disclosure requirements 
that did not include disclosures involving leased vehicles or 
disclosures by power of attorney.\5\ 74 FR 643, 647-48 (January 7, 
2009). A brief summary of the purposes identified in the Virginia Final 
Determination follows. In the Initial Determination of Wisconsin's 
petition, the Agency identified the purposes of TIMA relevant to 
odometer disclosures for transfer of leased vehicles. 75 FR 20972-73. 
Since, as explained below, Wisconsin has indicated that it will submit 
a separate petition regarding transfer of leased vehicles, the purposes 
of TIMA relevant to leased vehicles are not discussed here.
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    \5\ Since Virginia's program did not cover disclosures involving 
leased vehicles or disclosures by power of attorney, the purposes of 
Sections 408(d)(2)(C) and 408(e) of the Cost Savings Act, as 
amended, were not germane and were not addressed in the notice 
approving the Virginia program. See 74 FR 647 n. 12.
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    One purpose of TIMA is to assure that the form of the odometer 
disclosure precludes odometer fraud. 74 FR 647. To prevent odometer 
fraud facilitated by disclosure statements that were separate from 
titles, TIMA required mileage disclosures to be on a secure vehicle 
title instead of a separate document. These titles also had to contain 
space for the seller's attested mileage disclosure and a new disclosure 
by the purchaser when the vehicle was sold again. This discouraged 
mileage alterations on titles and limited opportunities for obtaining 
new titles with lower mileage than the actual mileage. Id.
    A second purpose of TIMA is to prevent odometer fraud by processes 
and mechanisms making odometer mileage disclosures on the title a 
condition of any application for a title and a requirement for any 
title issued by a State. 74 FR 647. This provision was intended to 
eliminate or significantly reduce abuses associated with lack of 
control of the titling process. Id.
    Third, TIMA sought to prevent alterations of disclosures on titles 
and to preclude counterfeit titles through secure processes. 74 FR 648. 
In furtherance of these purposes, paper titles (incorporating the 
disclosure statement) must be produced using a secure printing process 
or protected by ``other secure process.'' \6\ Id.
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    \6\ Congress intended to encourage new technologies by including 
the language ``other secure process.'' The House Report accompanying 
TIMA noted that `` `other secure process' is intended to describe 
means other than printing which could securely provide for the 
storage and transmittal of title and mileage information.'' H.R. 
Rep. No. 99-833, at 33 (1986). ``In adopting this language, the 
Committee intends to encourage new technologies which will provide 
increased levels of security for titles.'' Id. See also Cost Savings 
Act, as amended by TIMA, section 408(d), recodified at 49 U.S.C. 
32705(b).
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    A fourth purpose is to create a record of vehicle mileage and a 
paper trail. 74 FR 648. The underlying purposes of this record and 
paper trail were to better inform consumers and provide mechanisms for 
tracing odometer tampering and prosecuting violators. TIMA's 
requirement that new applications for titles include signed mileage 
disclosure statements on the titles from the prior owners creates a 
permanent record that is easily checked by subsequent owners or law 
enforcement officials. This record provides critical snapshots of 
vehicle mileage at every transfer, which are the fundamental links of 
this paper trail.
    Finally, the general purpose of TIMA is to protect consumers by 
assuring that they receive valid representations of the vehicle's 
actual mileage at the time of transfer based on odometer disclosures. 
74 FR 648.

IV. The Wisconsin Program

    As explained in NHTSA's Initial Determination, Wisconsin petitions 
for approval of alternate odometer disclosure requirements. 75 FR 
20965, 20967 (Apr. 22, 2010). Wisconsin requests alternate disclosure 
requirements for motor vehicle private party (including motor vehicle 
dealers) transfers, including transactions involving a lienholder.\7\ 
Wisconsin's petition included a request for alternate odometer 
disclosure requirements for transactions involving leased vehicles but, 
as explained below, Wisconsin states that it will submit a separate 
petition addressing electronic odometer disclosure for leased vehicle 
transfers.
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    \7\ Under Wisconsin law, a lienholder does not physically 
possess the title to the vehicle; the title remains with the vehicle 
owner. Thus, Wisconsin does not permit odometer disclosure by power 
of attorney when title is held by a lienholder and does not petition 
for alternate requirements regarding odometer disclosure by power of 
attorney. Wisconsin does accept a written odometer disclosure by 
power of attorney from an out-of-state party that registers the 
vehicle in Wisconsin.
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    Recent Wisconsin legislation establishes that the title, title 
application, and other specified information maintained by the DMV in 
its database are the original and controlling title records for a 
vehicle. See Wis. Stat. Ann. Sec.  342.01(2)(ac) and Sec.  342.09(4) 
(2009). Wisconsin proposes creating an electronic odometer statement 
(e-Odometer) residing in the WisDOT Department of Motor Vehicles (DMV) 
database as the official odometer statement. Under the proposal, a 
distinct e-Odometer system will be created to accept and maintain e-
Odometer statements as stand-alone electronic records, separate from an 
electronic title. E-Odometer statements will be linked to, and become 
part of the title record in the DMV database. The DMV's titling system 
will automatically link the e-Odometer statements to a vehicle's title 
whenever an electronic title transaction occurs, and a title transfer 
could not be completed unless proper odometer disclosure is entered in 
the e-Odometer record. According to Wisconsin's petition, if a paper 
title is needed, the DMV will print it on secure paper with the 
odometer disclosure

[[Page 1370]]

statement in the proper location and format.
    Wisconsin's original petition encompassed transfers of leased 
vehicles. In the Initial Determination, NHTSA raised questions about 
this aspect of Wisconsin's program. In its comments on that 
Determination, Wisconsin stated that lessee odometer disclosure would 
be addressed in the second implementation phase, and that the State 
would consult with NHTSA. Wisconsin asked that NHTSA approve its 
petition with the understanding that Wisconsin would consult with NHTSA 
to satisfy all requirements. If NHTSA is unable to approve the State's 
petition with that provision, the State requested approval of the 
petition except for the lessor/lessee transaction process. The State 
would expect to file a separate petition for approval of the lessor/
lessee transaction in the future. NHTSA cannot approve a petition or 
part of a petition on the basis of future consultations. As a result, 
NHTSA is unable to grant Wisconsin's petition as it pertains to 
transfers of vehicles involving a lease agreement. This is without 
prejudice for Wisconsin to develop e-Odometer provisions for the 
transfer of leased vehicles in a future phase of its implementation 
plan and to petition NHTSA for approval of electronic leased vehicle 
odometer disclosure in the future. We will not discuss Wisconsin's 
proposal for leased vehicles below.

A. Overview of Wisconsin's Electronic Titling System

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

B. Wisconsin's e-Odometer Program

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

[[Page 1371]]

    7. Owner in possession of the vehicle.
    The publicly available information includes:
    1. Vehicle description;
    2. Most current odometer reading, status and date recorded;
    3. Brands, if any; and
    4. Lien information.
    Wisconsin's petition states that creation of or amendments to e-
Odometer records will be possible only when titles are transferred in 
the course of authorized transactions by authorized persons.

C. Wisconsin e-Odometer Implementation Schedule

    Wisconsin plans to implement its e-Odometer program in three 
phases. Because motor vehicle dealers are already required to complete 
title transactions electronically, Wisconsin intends to begin the e-
Odometer program with these dealers. See Wis. Stat. Ann. Sec.  
342.16(1)(a) and (am) (2009); Wis. Admin. Code Sec.  Trans 141.01. The 
second phase will implement e-Odometer in title transfers involving 
lienholders, motor vehicle auctions, and vehicle repossessions. The 
final phase will implement e-Odometer in transfers of unencumbered 
motor vehicles between private individuals. Phase two and three are 
still under development and Wisconsin has not provided an estimated 
implementation schedule. According to the petition, during phase-in, 
some odometer disclosure transactions will be electronic but some will 
continue to be on the secure paper title and secure paper odometer 
statement.
1. Phase One: e-Odometer in Dealer Transactions
    Wisconsin's petition states e-Odometer will apply first to motor 
vehicle transfers through motor vehicle dealers. During this phase, 
eligible title transactions include reassignments among dealers, 
consignments, and retail sales. In order to complete a transaction, 
there must be an odometer disclosure and acceptance of the odometer 
statement. The odometer disclosure and acceptance will be permitted 
between the following persons: (1) Authorized dealer personnel and an 
individual buyer; (2) an individual seller trading in a vehicle and 
authorized dealer personnel; (3) authorized dealer personnel in the 
case of dealer reassignments; and (4) an individual vehicle owner and 
an authorized person on behalf of a consignee in the case of vehicle 
consignment. According to Wisconsin, the identities of all persons 
involved will be verified and authenticated through the DMV's 
processes.
    Under Wisconsin's plan, dealer title transfer transactions will be 
completed through an APPS's vendor interface application or the e-MV11 
Internet-based application. During these title transfer transactions, 
e-Odometer forms will be imported into the transaction and completed by 
the authorized persons.
2. Phase 2: e-Odometer in Title Transactions between Private Parties 
Involving Lienholders and Other Commercial Entities
    Wisconsin's petition states that the second phase will incorporate 
e-Odometer procedures into title transfers in a number of 
circumstances, including between private parties when there is a lien 
on the vehicle. These title transactions will be processed by the 
financial institution holding the lien. During this phase, e-Odometer 
will be available to the financial institution through the APPS 
application or an application WisDOT develops for these lenders. 
Because lienholders do not possess titles under Wisconsin law, a 
satisfied lienholder will access e-Odometer to electronically release 
the lien to allow production of a clear title. To facilitate this 
process, e-Odometer forms will be available to buyers and sellers 
through an Internet application allowing completion of the required 
odometer disclosures and acceptances.
    During this second phase, Wisconsin also plans to incorporate use 
of the e-Odometer system into title transfers involving motor vehicle 
auctions, involuntary vehicle transfers (i.e. involuntary liens and 
repossessions), corrections to odometer information on titles, and 
other transactions involving secure odometer statements.
3. Phase 3: e-Odometer in Private Sales
    The last phase of Wisconsin's program will incorporate e-Odometer 
entries into private sales of unencumbered vehicles. The title transfer 
will be conducted through an on-line application called e-MVPublic.\11\ 
For private transfers of motor vehicles, odometer disclosure and 
acceptance will be accomplished by the seller and buyer through e-
MVPublic once their identities are verified by DMV processes.
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    \11\ For individuals without Internet access, Wisconsin is 
considering providing access to e-MVPublic at its DMV service 
centers. At a minimum, Wisconsin states that public libraries offer 
public access to computers and the Internet, which will enable 
individuals without Internet to use e-Odometer.
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D. Identity Verification Under Wisconsin e-Odometer

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

[[Page 1372]]

Wisconsin will require individuals to establish an electronic signature 
that can uniquely identify the person. Identity verification begins 
with the customer entering a minimum of three personal identifiers for 
the correct customer record in the DMV database. Personal identifiers 
include name, address, date of birth, product number, Driver License/ID 
number, and a Federal Employer Identification Number or partial Social 
Security Number (possibly the last four or five digits).\12\ After the 
user inputs the personal identifiers into the system, the system will 
check DMV customer records and verify that the user is the correct 
individual or business, and will authorize the customer to update the 
odometer statement. Once the user is verified, the user can begin the 
title transaction.
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    \12\ Wisconsin prohibits nonresidents from applying for a 
Wisconsin title, except in certain limited exceptions. See Wis. 
Admin. Code Sec.  Trans 154.13(2). A nonresident who is eligible to 
apply for a Wisconsin title will not be considered a DMV partner or 
regular customer. These nonresidents will be subject to the e-
Odometer requirements as long as the vehicle is titled and 
transferred within Wisconsin.
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E. Odometer Disclosure Under Wisconsin e-Odometer

    Wisconsin's petition states that two parties must engage in an 
authorized e-Odometer transaction to effectuate the odometer 
disclosure. In order to conduct the e-Odometer disclosure, each party 
will access the DMV database by providing information to satisfy the 
identity verification requirements of the system and the VIN of the 
vehicle. Under Wisconsin's proposal, a transferor must disclose the 
odometer reading and brand (actual/not actual/exceeding odometer 
limits) and the transferee must accept the odometer reading to allow 
the transaction to go forward.\13\ The e-Odometer transaction will 
remain in a pending status between the transferor and transferee until 
each party completes the required actions, e.g., disclosure by the 
seller and acceptance by the buyer. Once both actions have been 
accomplished, the e-Odometer record will be secured within DMV's 
database and become part of the electronic title through the VIN.
---------------------------------------------------------------------------

    \13\ Wisconsin states that there are a limited number of 
exceptions under Wisconsin law and e-Odometer to the requirement for 
two parties to engage in a transaction to update a title. One 
exception is involuntary transfer of the vehicle through 
repossession by a financial institution in which the title is issued 
to the financial institution. This exception is permissible under 
Federal odometer law because repossession is not a transfer of 
ownership and does not require an odometer disclosure statement. See 
49 CFR 580.3. Another exception is when the seller is not available. 
If the seller is not available, the DMV database permits the 
transferee to state the odometer reading with a brand of ``not 
actual.'' If the transferor becomes available to make the 
disclosure, DMV will change the recorded status to ``actual.'' This 
exception does not conform to Federal odometer law, which requires 
an odometer disclosure statement, including the brand, at the time 
of transfer of ownership. 49 U.S.C. 32705(a)(1); 49 CFR 580.5(a). 
Federal odometer law does not permit subsequent alterations to the 
brand as contemplated by Wisconsin. NHTSA believes that permitting 
such an exception could create a loophole that will be abused.
---------------------------------------------------------------------------

    To clarify the e-Odometer procedure, Wisconsin provides an exemplar 
title transaction involving a dealer trade-in. In a vehicle trade-in 
transaction, the customer (transferor) must bring the paper title to 
the dealer (transferee) at the time of the transfer. After entering all 
the required data in the Wisconsin electronic title system and 
initiating the e-Odometer process, the dealer will then destroy the 
paper title.\14\ Under the e-Odometer process, the customer discloses 
the odometer reading (and brand) and the dealer accepts the odometer 
reading. The vehicle's odometer reading is then stored in the DMV 
database and linked virtually to the vehicle's title through the VIN. 
Upon later sale of the trade-in vehicle, the dealer (as the transferor) 
must disclose the odometer reading (and brand) and the vehicle buyer 
(as the transferee) must accept the odometer reading. The dealer and 
buyer will access e-Odometer at the time of the sale to complete the 
disclosure and acceptance of the odometer statement, which upon 
acceptance by the buyer secures the odometer statement in the DMV's 
database. After the sale of the vehicle is completed, the dealer 
completes title processing in APPS or e-MV11 by titling the vehicle in 
the consumer's name, verifying that secure odometer disclosure has been 
completed. After titling is complete, the updated e-Odometer entry 
becomes part of the title record. For in-State transactions, a paper 
title is issued only upon request.
---------------------------------------------------------------------------

    \14\ According to Wisconsin, the dealer's failure to destroy the 
title subjects the dealer to civil penalties and other sanctions, 
such as license suspension or removal.
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F. Wisconsin's Position on Meeting the Purposes of TIMA

    Wisconsin has maintained that its e-Odometer program meets the 
purposes of TIMA, as described by NHTSA in its Final Determination on 
the Commonwealth of Virginia's petition for alternate odometer 
disclosure requirements. See 74 FR 643, 647-48 (January 7, 2009).
    Wisconsin's petition states that e-Odometer is part of the 
vehicle's title. Under e-Odometer, the VIN links the odometer statement 
to the title record. The system automatically imports e-Odometer into 
the title transfer transaction process conducted by the transferor and 
transferee. A title transaction cannot occur unless the odometer 
disclosure statement is made and accepted. The e-Odometer information 
is then secured, stored, and becomes visible through the vehicle's 
electronic title record.
    According to the petition, other system requirements provide a 
significant level of security for the e-Odometer system. First, title 
transfer cannot occur unless the authorized persons update e-Odometer 
entries. Second, only those persons authorized to make title transfer 
transactions (e.g., authorized dealer personnel or authenticated 
private owners) are able to make e-Odometer statements. Third, odometer 
disclosure under the e-Odometer system is only permitted when a title 
is transferred.\15\ If a title is required to be printed on a secure 
title paper, the DMV system will automatically include the odometer 
disclosure information on the printed title. If a title on secure title 
paper is used in a vehicle transfer, the odometer information shown on 
the secure paper title will be entered into the e-Odometer electronic 
record during the title transfer transaction process and the paper 
title will be destroyed.
---------------------------------------------------------------------------

    \15\ 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 a level of 
security against altering, tampering, and counterfeiting equivalent to 
the odometer statement on a secure paper title. According to Wisconsin, 
the e-Odometer statement is secured in the DMV database as soon as the 
transferor electronically discloses and the transferee accepts the 
odometer reading. After the transferee accepts the odometer disclosure, 
e-Odometer stores that mileage disclosure, the date, and the names and 
addresses of the

[[Page 1373]]

transferor and transferee, and will not allow any changes to that 
entry.
    Finally, Wisconsin's petition contends that the authentication and 
verification of the transferor's and transferee's electronic signatures 
are readily detectable and reliably traced to the particular 
individual. Wisconsin states that the DMV has established extensive 
security procedures for vendors who process vehicle transactions on 
behalf of the DMV and regularly interact with the DMV, and for 
individuals and intermittent business customers who wish to make 
entries in DMV records. Wisconsin's security procedures are governed 
under Wisconsin statutes, administrative rules, contracts, DMV policy 
and procedure, and electronic security protocols. DMV Partners and 
regular business customers will access the e-Odometer system through 
secure applications that are already in use for vehicle title 
transactions. Individuals and intermittent business customers will 
access the e-Odometer system through a secure Internet application. 
Both applications require information, such as electronic signatures, 
that can authenticate and verify the users' identity.

V. Summary of Public Comments

    NHTSA received comments from two entities: (1) WisDOT; and (2) the 
American Automotive Leasing Association (AALA). The AALA comments are 
discussed in section VI below.
    WisDOT's comments responded to NHTSA requirements in the Agency's 
Initial Determination that Wisconsin (1) conform its program to the 
requirements of Federal odometer law by not permitting the alteration 
of the brand on an electronic odometer statement when the seller of the 
vehicle is unavailable at the time of the transfer, or fully explains 
how this exception complies with the law and its purposes; (2) permit 
lessors to retain each odometer disclosure statement they give and 
receive; and (3) clarify the system's ability to allow lessors to place 
a different brand on the disclosure statement in those instances where 
the lessor believes, or has reason to believe, that the statement 
provided by the lessee is inaccurate. WisDOT submitted comments 
indicating that it will manage e-odometer disclosure when a seller is 
unavailable by requiring the buyer to give the odometer reading with a 
brand of ``not actual,'' and specifying that the ``not actual'' brand 
cannot be changed, even if the seller appears later.
    While Wisconsin will seek approval of alternate odometer disclosure 
requirements for leased vehicle transfers at a later date, its comments 
addressed NHTSA's concerns about these transfers. Wisconsin indicated 
that it will create a mandatory system for lessors to retain all 
odometer statements they receive for the five-year period required by 
Federal regulations, 49 CFR 580.8(b). Wisconsin also indicated that it 
will build e-Odometer to facilitate odometer statements by lessors if 
the lessor believes, or has reason to believe, that the lessee's 
disclosure does not reflect the actual mileage of the vehicle.

VI. NHTSA's Final Determination

    In this part, NHTSA considers the Wisconsin program in light of the 
purposes of the disclosure required by subsection (d) of section 408 of 
the Cost Savings Act.\16\ We also respond to comments.
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    \16\ Since Wisconsin's program does not cover disclosures by 
power of attorney or transfers involving leased vehicles, the 
purposes of sections 408(d)(1)(c) and (e) of the Cost Savings Act as 
amended by TIMA are not germane. Thus, Wisconsin continues to be 
subject to all Federal requirements that are not based on sections 
408(d)(1)(A), (B), and (2).
---------------------------------------------------------------------------

    Under the Cost Savings Act, as amended by TIMA, the standard is 
that NHTSA ``shall'' approve alternate motor vehicle mileage disclosure 
requirements submitted by a State unless NHTSA determines that such 
requirements are not consistent with the purpose of the disclosure 
required by subsection (d) or (e) as the case may be. The purposes are 
discussed above, as is the Wisconsin alternate program.
    As explained above, one purpose of the disclosures under section 
408(d) and (e) of the Cost Savings Act is to assure that the form of 
the odometer disclosure precludes odometer fraud. NHTSA has determined 
that Wisconsin's alternate electronic odometer disclosure requirements 
satisfy this purpose. Under Wisconsin's program, the vehicle's odometer 
reading must be entered in the course of the title transfer transaction 
for transfer of title to occur. The reading is disclosed by the 
transferor and, if valid, accepted by the transferee. Thereafter the 
odometer disclosure statement will reside as an electronic record in 
the DMV database and will be linked to the vehicle's title by the VIN. 
This electronic odometer disclosure is a required element of the 
transfer and part of the title record in the DMV database. If a hard 
copy of the title is needed, Wisconsin generates a title with the 
odometer disclosure statement on the title using a secure printing 
process. Wisconsin's system will, therefore, have the odometer 
disclosure as part of the vehicle title as required by TIMA. Also, 
Wisconsin's electronic title and odometer system provides an electronic 
equivalent to TIMA's requirement that the title contain a space for the 
transferor to disclose the vehicle's mileage. For conventional paper 
transactions in Wisconsin, hard copies of electronic titles will 
continue to provide a separate space for owners to execute a proper 
odometer disclosure in keeping with TIMA and current practice.\17\
---------------------------------------------------------------------------

    \17\ Wisconsin notes that paper titles will be produced for 
title transfer transactions that involve out-of-state parties, such 
as a vehicle sale to an out-of-state dealer or retail purchaser, an 
auction sale to an out-of-state dealer or a retail consumer in 
Wisconsin that requests a paper title.
---------------------------------------------------------------------------

    Another purpose of TIMA is to prevent odometer fraud by processes 
and mechanisms making the disclosure of an odometer mileage on the 
title a condition for the application for a title and a requirement for 
the title issued by the State. NHTSA has determined that Wisconsin's 
title transfer process satisfies this purpose by requiring disclosure 
and acceptance of odometer information before the transaction can be 
completed. If the transaction is successful, the DMV's system will 
create or amend an electronic title and store the linked electronic 
odometer statement. A new title will not be issued without entry and 
acceptance of the odometer disclosure. Our Initial Determination raised 
a question about alteration of the brand. Wisconsin indicated in its 
petition that, if the seller is not available at the time of transfer 
of ownership, the DMV database permits the transferee to state the 
odometer reading with a brand of ``not actual.'' If the transferor 
later becomes available to make the disclosure and does so, DMV would 
change the recorded status to ``actual.'' In the Initial Determination, 
NHTSA stated that a change to the title subsequent to transfer of the 
vehicle does not conform to Federal odometer law, which requires an 
odometer disclosure statement, including the brand, to be made at the 
time of transfer. 75 FR 20965, 20971 (April 22, 2010) (citing 49 U.S.C. 
32705(a)(1); 49 CFR 580.5(a)). Wisconsin's comments to our Initial 
Determination indicate that Wisconsin's program will not permit a post-
transfer change of the brand. Wisconsin allows the buyer to give the 
odometer reading a brand of ``not actual'' where not properly completed 
by the seller, and this brand cannot be changed, even if the seller 
appears later. The Agency notes that a transferor and/or transferee 
cannot incorporate a ``not actual'' brand to the odometer disclosure 
statement as a matter of course or convenience, but only if the mileage

[[Page 1374]]

indicated on the odometer and on the odometer disclosure statement is 
inaccurate. 49 U.S.C. 32705(a)(3); 49 CFR 580.5(e)(3). 49 U.S.C. 
32705(a)(3).
    Another purpose of TIMA is to prevent alterations of disclosures on 
titles and to preclude counterfeit titles through secure processes. The 
agency has determined that Wisconsin's electronic disclosure 
requirements are as secure as current paper titles. Wisconsin's 
electronic odometer statement is disclosed by the transferor and 
accepted by the transferee, and thereafter stored in a secure DMV 
database system. When the State maintains the e-Odometer database with 
appropriate levels of security, electronic recording of odometer 
readings and disclosures will be maintained in a way in which 
alteration is unlikely. The odometer reading, which will be linked to 
the electronic title record by the VIN, cannot be altered except when 
it is updated during the title transfer process by authorized users. On 
subsequent title transfers, the transferor and transferee will have to 
complete the odometer disclosure and acceptance for the transaction to 
be completed.
    When fully implemented, all subsequent title transfers will be 
performed through the APPS or e-MV11, or other secure on-line process. 
Each time an on-line title transfer occurs, the DMV database system 
stores the electronic version of the odometer statement. The DMV will 
issue a paper title only when necessary, e.g., title transfer 
transactions that involve out-of-State parties. Since the title and 
odometer statement remain in electronic form under State care and 
custody, the likelihood of an individual altering, tampering or 
counterfeiting the title or odometer statement is significantly 
decreased. These electronic records will be maintained in a secure 
environment and any unauthorized access will be detected by the system. 
Moreover, under Wisconsin law, the electronic title record is the 
official and controlling title. If a conflict exists between the 
electronic title and a paper title, the paper title is void.
    Another purpose of TIMA is to create a record of the mileage on 
vehicles and a paper trail. The underlying purposes of this record 
trail are to enable consumers to be better informed and provide a 
mechanism through which odometer tampering can be traced and violators 
prosecuted. In NHTSA's view, the proposed Wisconsin's electronic title 
transfer system will create a scheme of records, equivalent to the 
current ``paper trail,'' that assists law enforcement in identifying 
and prosecuting odometer fraud. Under the Wisconsin program, creation 
of a paper trail starts with the requirement for certain DMV customers 
to process title transactions through the APPS program. Under APPS, a 
DMV customer must sign a written agreement with the DMV that includes 
security procedures, an account, and a secure logon ID. DMV customers 
also must provide the DMV with the names of the individuals authorized 
to conduct transactions in APPS. These individuals are issued a secure 
logon ID and password that can be traced by the DMV to their 
transactions. In addition, APPS vendors must create security protocols 
that include an audit journal that can identify each person responsible 
for each title transaction. Vendors must also provide the DMV with a 
daily report detailing all security violations. Furthermore, Wisconsin 
requires motor vehicle dealers to retain copies of electronic titles 
for motor vehicles owned and offered for sale and odometer statements 
received and given for a period of 5 years.\18\
---------------------------------------------------------------------------

    \18\ Wisconsin indicates that its e-Odometer system will permit 
motor vehicle dealers the ability to retain copies of all odometer 
disclosure statements received or given by the dealers.
---------------------------------------------------------------------------

    For individuals not using APPS, the identity verification 
procedures require the establishment of electronic signatures of the 
parties. Due to the system's procedures for validating and 
authenticating the electronic signature of each individual through 
DMV's database, the electronic signatures of the transferor and 
transferee are reliable, readily detectable and can easily be linked to 
particular individuals.\19\ Because the electronic signature consists 
of data elements such as the name, address, date of birth, product 
number, driver license or identification card number, and a Federal 
Employer Identification Number or the last four or five digits of the 
individual's Social Security number, Wisconsin's e-Odometer system can 
validate and authenticate individual electronic signatures. This 
authentication process also allows Wisconsin to trace the individuals 
involved in the transaction. This capacity maintains the purposes of 
creating a paper trail since the Wisconsin system will have a history 
of each vehicle's title transfer and odometer disclosure. These 
electronic records will create the electronic equivalent to a paper 
based system that will be readily available to law enforcement.
---------------------------------------------------------------------------

    \19\ Electronic signatures are generally valid under applicable 
law. Congress recognized the growing importance of electronic 
signatures in interstate commerce when it enacted the Electronic 
Signatures in Global and National Commerce Act (E-Sign). See Public 
Law 106-229, 114 Stat. 464 (2000). E-Sign established a general rule 
of validity for electronic records and electronic signatures. 15 
U.S.C. 7001. It also encourages the use of electronic signatures in 
commerce, both in private transactions and transactions involving 
the Federal government. 15 U.S.C. 7031(a).
---------------------------------------------------------------------------

    TIMA's overall purpose is to protect consumers by assuring that 
they receive valid odometer disclosures representing a vehicle's actual 
mileage at the time of transfer. Here, the alternate disclosure 
requirements of Wisconsin's program include characteristics that will 
assure that representations of a vehicle's actual mileage will be as 
valid as those found in current paper title transfers. Identity 
authentication, maintenance in a secure electronic environment, and 
transferee verification of the mileage data reported by the transferor 
all help to ensure valid disclosures. In addition, by providing rapid 
access to records of past transfers and by maintaining audit logs of 
each and every title transfer transaction, the Wisconsin program could 
potentially provide a superior deterrent to odometer fraud. 
Furthermore, Wisconsin's program offers the public the opportunity to 
view the most recent odometer reading and date of that reading through 
an Internet application. A prospective purchaser can access the public 
e-Odometer information to assess a vehicle's true value by comparing 
the vehicle's current odometer reading to the electronic record stored 
with the DMV.
    As discussed above, NHTSA has not approved Wisconsin's plan insofar 
as it concerns leased vehicles. That program is under development. We 
recognize that while, in general, the AALA supported the Wisconsin 
petition, in its comments to the Initial Determination the AALA raised 
several concerns. The organization stated that Wisconsin's program 
should address interstate transactions. The AALA's comments also 
contended that requiring lessors to retain lessee odometer statements 
is unnecessary since these statements will be retained in Wisconsin's 
e-Odometer system. The AALA further contended that lessees should be 
allowed to fill out odometer statements electronically and that the 
Secretary should make clear that this practice is allowed. In the 
AALA's view, lessors should also be able to electronically submit their 
own odometer value when a lessee does not submit an odometer statement 
and the lessor is confident that it can provide a valid odometer 
reading. The AALA also requested that Wisconsin's system allow lessors 
to issue odometer statements that will be verified by purchasers to 
account for any miles accrued during the resale process. The 
organization added that lessors should be allowed to issue disclosure 
statements where

[[Page 1375]]

multiple or amended statements are needed to ensure accurate reporting 
when leased vehicles are purchased by lessees or a lessee's employee 
but no third-party reseller is involved. Finally, the AALA stated that 
Wisconsin's proposal should state clearly that the lessee odometer 
disclosure statement may be provided by the driver. Since this notice 
does not resolve the leased vehicle part of Wisconsin's program, we are 
not addressing AALA's comments. If Wisconsin resubmits a petition 
regarding leased vehicles, the AALA will have an opportunity to comment 
on it.
    For the foregoing reasons, and upon review of the entire record, 
NHTSA hereby issues a final determination granting Wisconsin's petition 
for requirements that apply in lieu of the Federal requirements adopted 
under section 408(d) of the Cost Savings Act, other than the portions 
of the petition addressing transfer of leased vehicles, which Wisconsin 
indicates in its comments will be addressed in a separate petition. 
Other requirements of the Cost Savings Act continue to apply in 
Wisconsin. NHTSA reserves the right to rescind this determination in 
the event that future information indicates that the operation of 
Wisconsin's alternative disclosure system does not satisfy one or more 
applicable requirements.

    Issued on: January 4, 2011.
David L. Strickland,
Administrator.
[FR Doc. 2011-148 Filed 1-7-11; 8:45 am]
BILLING CODE 4910-59-P