Petition for Approval of Alternate Odometer Disclosure Requirements, 65485-65492 [2011-27089]

Agencies

• National Highway Traffic Safety Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 76, Number 204 (Friday, October 21, 2011)]
[Proposed Rules]
[Pages 65485-65492]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-27089]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 580

[Docket No. NHTSA-2011-0152; Notice 1]


Petition for Approval of Alternate Odometer Disclosure 
Requirements

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

ACTION: Notice of initial determination.

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SUMMARY: The State of New York has petitioned for approval of alternate 
odometer requirements to certain requirements under Federal odometer 
law. New York's proposed program would apply to vehicles that have been 
transferred to New York motor vehicle dealers. Ultimately, the proposed 
program would generate the issuance of a non-secure paper odometer 
disclosure receipt when a vehicle is transferred from a licensed New 
York dealer to a person other than a licensed New York dealer, such as 
an out-of-state person. In view of the nature of this receipt as an 
odometer disclosure for vehicle titling, NHTSA preliminarily denies New 
York's petition. This notice is not a final agency action.

DATES: Comments are due no later than November 21, 2011.

ADDRESSES: You may submit comments [identified by DOT Docket ID Number 
NHTSA-2011-0152] by any of the following methods:
     Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the online instructions for submitting 
comments.
     Mail: Docket Management Facility: U.S. Department of 
Transportation, 1200 New Jersey Avenue, SE., West Building Ground 
Floor, Room W12-140, Washington, DC 20590-0001.
     Hand Delivery or Courier: West Building Ground Floor, Room 
W12-140, 1200 New Jersey Avenue, SE., between 9 a.m. and 5 p.m. ET, 
Monday through Friday, except Federal holidays.
     Fax: 202-493-2251
    Instructions: For instructions on submitting comments and 
additional information on the rulemaking process, see the heading of 
How Do I Prepare and Submit Comments in this document. Note that all 
comments received will be posted without change to https://www.regulations.gov, including any personal information provided. 
Please see the Privacy Act heading below.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received into any of our dockets by the

[[Page 65486]]

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

FOR FURTHER INFORMATION CONTACT: Otto G. Matheke, III, Office of the 
Chief Counsel, National Highway Traffic Safety Administration, 1200 New 
Jersey Avenue, SE., West Building W41-227, Washington, DC 20590 
(Telephone: 202-366-5253) (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 the Truth 
in Mileage Act of 1986, as amended (TIMA),\2\ contains a number of 
provisions to limit odometer fraud and assure that the buyer of a motor 
vehicle knows the true mileage of the vehicle. The Cost Savings Act 
requires the Secretary of Transportation to promulgate regulations 
requiring the transferor (seller) of a motor vehicle to provide a 
written statement of the vehicle's mileage registered on the odometer 
to the transferee (buyer) in connection with the transfer of ownership. 
This written statement is generally referred to as the odometer 
disclosure statement. Further, under TIMA, vehicle titles themselves 
must have a space for the odometer disclosure statement and States are 
prohibited from licensing a vehicle 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. 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 replace an existing system of paper records for dealer 
inventories, transfers, and sales--including the transfer of titles and 
odometer disclosures--with an electronic system, the State of New York 
has petitioned for approval of alternate odometer disclosure 
requirements. The New York State Department of Motor Vehicles 
(``NYSDMV'') proposes a paperless odometer disclosure program for 
transfers to, between and from licensed New York motor vehicle dealers. 
The initial transfer of the vehicle to a New York dealer would include 
an odometer disclosure on a secure paper title, following the present 
practice. The final transfer of the vehicle from a New York dealer to a 
non-New York dealer would include an odometer disclosure on a two part 
paper receipt. The odometer disclosures would be recorded 
electronically.
    In 2009, NHTSA reviewed certain requirements for alternative state 
programs and approved the Commonwealth of Virginia's alternate odometer 
disclosure program. 74 FR 643, 650 (January 7, 2009). New York's 
program bears some similarities to Virginia's program in scope. Like 
Virginia's program, the scope of New York's proposed program does not 
include transactions involving leased vehicles, or odometer disclosures 
by power of attorney. However, while Virginia's program was limited to 
in-state transfers (Virginia's program required Virginia owners to 
obtain a paper title for out-of-state transfers), New York's program is 
not so limited. Moreover, aspects of New York's proposed system, 
including reassignments between dealers and ultimately from a dealer to 
a non-dealer, were not examined in NHTSA's analysis of Virginia's 
program.

II. Statutory Background

    As noted above, 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, 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 to, among other 
things, prohibit tampering with odometers on motor vehicles and to 
establish certain safeguards for the protection of buyers with respect 
to the sale of motor vehicles having altered or reset odometers. See 
Public Law 92-513, section 401, 86 Stat. 947, 961-63 (1972). Section 
408 of 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.\3\ In general, 
the purpose for the disclosure was to assist buyers to know the true 
mileage of a motor vehicle. The Act also prohibited odometer tampering 
and provided for enforcement.
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    \3\ Section 408 stated:
    (a) Not later than 90 days after the date of enactment of this 
Act, the Secretary shall prescribe rules requiring any transferor to 
give the following written disclosure to the transferee in 
connection with the transfer of ownership of a motor vehicle:
    (1) Disclosure of the cumulative mileage registered on the 
odometer.
    (2) Disclosure that the actual mileage is unknown, if the 
odometer reading is known to the transferor to be different from the 
number of miles the vehicle has actually traveled.
    Such rules shall prescribe the manner in which information shall 
be disclosed under this section and in which such information shall 
be retained.
    (b) It shall be a violation of this section for any transferor 
to violate any rules under this section or to knowingly give a false 
statement to a transferee in making any disclosure required by such 
rules.
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    A major shortcoming of the odometer provisions of the Cost Savings 
Act was their failure to require that the odometer disclosure statement 
be on the vehicle's title. In a number of States, the disclosures were 
on separate documents that could be easily altered or discarded and did 
not travel with the title. See 74 FR 644. Consequently, the disclosure 
statements did not necessarily deter odometer fraud employing altered 
documents, discarded titles, and title washing. Id.
    Congress enacted TIMA in 1986 to address the Cost Savings Act's 
shortcomings. It amended Section 408 of the Cost Savings Act to add a 
new subsection (d) to prohibit States from licensing vehicles unless 
the new owner (transferee) submitted a title from the seller 
(transferor) containing the seller's signed and dated vehicle mileage 
statement. See Public Law 99-579, 100 Stat. 3309 (1986); 74 FR 644 
(Jan. 7, 2009). Section 408(d) also prohibits the licensing of 
vehicles, for use in any State, unless the title issued to the 
transferee is printed using a secure printing process or other secure 
process, indicates the vehicle mileage at the time of transfer and 
contains additional space for a subsequent mileage disclosure by the 
transferee when it is sold again. Id. TIMA also added subsection 
408(e)(1), which provided for the use of odometer

[[Page 65487]]

disclosure statements when leased vehicles are sold or transferred.
    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 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) as 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 New York'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 
on in-state transfers that did not include disclosures involving dealer 
reassignments, leased vehicles or disclosures by power of attorney.\4\ 
74 FR 643, 647-48 (January 7, 2009). New York's petition encompasses 
vehicle transfers/reassignments to and among licensed New York dealers 
and from licensed dealers to a retail or out-of-state purchaser, but 
does not address transfers involving leased vehicles and disclosures by 
power of attorney. A brief summary of the purposes identified in the 
Virginia Final Determination follows. In addition, we address 
reassignments, which were not addressed in the Virginia petition.
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    \4\ 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 buyer when the vehicle was sold again. This discouraged mileage 
alterations on titles and limited opportunities for obtaining new 
titles with lower mileage than the actual mileage. Id. In addition, an 
aspect of the purpose of assuring that the form of the odometer 
disclosure precludes fraud is that the transfer by a titled owner must 
be on the title and not a reassignment document, but a reassignment 
document subsequently may be used by a transferor in whose name the 
vehicle has not been titled.\5\ To preclude fraud, the reassignment 
document(s) must have an odometer disclosure executed by the transferor 
and transferee, and the reassignment document(s) must be accompanied by 
the title transferring ownership of the vehicle to the dealer, with a 
proper odometer disclosure. The reassignment document is not a 
standalone document.
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    \5\ NHTSA amended 49 CFR 580.5(c) to preclude use of a separate 
reassignment form at the time of the first transfer, by a titled 
owner. See 56 FR 47684-85 (Sep. 20, 1991). Section 580.5 provides 
that in the case of a transferor in whose name the vehicle is 
titled, the transferor shall disclose the mileage on the title, and 
not on a reassignment document.
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    A second purpose of TIMA is to prevent odometer fraud by processes 
and mechanisms making odometer mileage disclosures on the title a 
condition of any application for a title, and a requirement for any 
title issued by a State. 74 FR 647. The same applies to reassignment 
documents; they must contain odometer disclosures and be presented for 
titling. This 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 and reassignment 
documents (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, Sec.  408(d), recodified at 49 U.S.C. 
32705(b); 49 CFR 580.4 which requires that titles and documents used 
to reassign titles shall be issued by the State and printed using a 
secure process.
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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. Proper reassignment documents, when accompanied 
by the title from the initial transferor, similarly create a permanent 
record. 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 New York Petition

    New York, which is in the process of implementing an Electronic 
Vehicle Inventory and Transfer System (System), petitions for approval 
of alternate odometer disclosure requirements. New York requests 
alternate disclosure requirements for transfers of motor vehicles in 
transactions to, from, and among licensed New York dealers.

[[Page 65488]]

A. Overview of Current New York Transfer/Odometer Disclosure System

    As New York stated in its petition, odometer disclosures are made 
on securely printed documents produced by NYSDMV. Each document--the 
Certificate of Title (MV-999), the Retail Certificate of Sale (MV-50) 
(Dealers Reassignment Form), and the Wholesale Certificate of Sale (MV-
50W)--may be used depending on the circumstances of the transfer. In 
order to comply with Federal odometer disclosure requirements, all 
three documents include built-in security features along with an area 
to disclose the odometer reading. They have been designed with unique 
numbers. The MV-999 has space for one odometer disclosure statement and 
is used where title is held by the transferor. If this space has been 
filled by an odometer disclosure statement in a prior transaction, New 
York dealers must use either the MV-50 or MV-50W reassignment document, 
as appropriate, to make the required odometer disclosure statement and 
transfer vehicle title. See 15 NYCRR section 78.10.
    Currently, in New York, dealers are required by NYSDMV to keep a 
paper inventory (Book of Registry) in which dealers record identifying 
information about vehicles they purchase and sell. NYS Vehicle and 
Traffic Law section 415(15); 15 NYCRR section 78.25. When a New York 
dealer sells a vehicle to another New York dealer, the purchasing 
dealer is required to enter the vehicle identifying information 
including the odometer disclosure statement in its Book of Registry. A 
dealer's Book of Registry is subject to review during on-site audits by 
NYSDMV.
    When a New York dealer sells a vehicle to a purchaser, an MV-50/MV-
50W is filled out with the vehicle identifying information, the name 
and address of the dealer, and the name and address of the purchaser. 
The dealer fills in the odometer disclosure statement found on the MV-
50/MV-50W and then both the dealer and purchaser sign the statement. 
Odometer readings are recorded in the selling dealer's Book of 
Registry, a purchasing dealer's Book of Registry (if the purchaser is a 
New York dealer), and the MV-50, all of which are subject to audit by 
NYSDMV. In cases where the purchaser is not another New York dealer, 
the purchaser would take a copy of the MV-50, along with other 
ownership documentation provided by the dealer (e.g. original title, 
prior MV-50/MV-50Ws), and a completed Vehicle Registration/Title 
Application (MV-82) to a NYSDMV office to apply for a new title.

B. New York's Proposed Electronic Vehicle Inventory and Transfer System

1. Accessing the Proposed System
    According to New York's petition, the System will control access to 
MV-50 processing. New York dealerships would access the System to enter 
inventory and record vehicle sales transactions, including making the 
odometer disclosure statements required under TIMA. Dealers will be 
required to join the System when they are due for business license 
renewal. Each licensed New York dealer is required to renew its 
business license every two years.
    To join the System, a dealer first would request access to the 
system from NYSDMV. NYSDMV would register the dealership as a group and 
would designate a System administrator for that dealership (a 
dealership employee chosen by the dealer) to be responsible for 
assigning System accounts to employees (users) within the 
dealership.\7\ The number of users and the level of access for each 
user would be determined and controlled at the administrator's 
discretion. User accounts created by the dealership's administrator 
would be subject to review during onsite audits by NYSDMV and 
Enforcement staff.
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    \7\ Each user would be prompted at first sign-on to the System 
to change his or her password. Every 90 days, the user would need to 
change his or her password. The new password must be different than 
the last three passwords. Passwords will be stored in the System and 
encrypted.
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    Each year, the administrator would be prompted by the System to re-
certify the facility on the System with the NYSDMV. If the 
administrator does not comply with the System recertification prompt, 
dealership access to the System would be turned off, preventing the 
dealership from completing any sales transaction. An entire dealership 
or an individual working at a dealership could be denied access to the 
System any time NYSDMV deemed it necessary. The System would be limited 
to New York dealer transactions, as others except for NYSDMV would not 
have access to it.
2. Using the Proposed System
    Under New York's proposal, when a vehicle is transferred to a 
dealership, the vehicle's identifying information would be entered into 
the System using a standardized template through a user's account. The 
vehicle identification number would be automatically verified by the 
System using the appropriate Vehicle Identification Number Analysis 
(VINA) file. (VINA is a system used to verify and decode information 
contained in vehicle identification numbers.) If the vehicle is sold to 
another New York dealer, the purchasing dealer's System template for 
that vehicle would pre-fill with the vehicle's identification 
information from the System. During sales/transfer transactions, the 
seller would electronically disclose vehicle information including the 
current mileage and would be issued a unique transaction number.
    Because it relies primarily on dealers making entries into the 
system, New York's proposed Electronic Vehicle Inventory and Transfer 
System encompasses only transactions involving dealers: Sales of 
vehicles by non-dealer vehicle owners to dealers, sales of vehicles 
between licensed New York dealers and vehicle sales from licensed New 
York dealers to non-dealers, including retail consumers, out of state 
dealers, vehicle dismantlers, and junk and salvage dealers.
    More specifically, NYSDMV's proposed process for handling vehicle 
transfers to licensed New York dealers would be as follows. When the 
dealer receives a vehicle (whether from a manufacturer, a customer, or 
another dealer), including the vehicle ownership documentation, an 
authorized dealership user would sign on to the System and enter the 
vehicle's identifying information. The vehicle's odometer reading, 
disclosed on the title in the case of a consumer trading in or selling 
a vehicle to the dealer, would be recorded in the system by the dealer.
    If a dealer sells a vehicle to another licensed New York dealer, 
the selling dealer would sign on to the System using its unique sign on 
and password and would access the vehicle's identifying information on 
the System. The selling dealer would enter current vehicle information 
including the current odometer reading and would enter seller and 
purchaser information on the System. The System would then generate a 
transaction number. The purchasing dealer would sign on to the System 
using its unique sign on and password and would access the vehicle's 
identifying information on the System using the transaction number. The 
purchasing dealer would then review the vehicle's identifying 
information, including the odometer disclosure statement made by the 
selling dealer,\8\ and would accept or reject the

[[Page 65489]]

transaction. If the purchasing dealer accepts the transaction it would 
be considered complete. The original pre-dealer ownership document 
(still in the prior owner's name) would be surrendered to the 
purchasing dealer at the time of sale.
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    \8\ The System automatically checks the odometer disclosure 
statement entered by the seller against the odometer disclosure 
statement previously recorded on the System for that vehicle. If the 
odometer reading entered by the seller is lower than what was 
previously recorded, the transaction would not be processed without 
a proper notation explaining the odometer discrepancy. According to 
the NYSDMV, this notation can be either ``true mileage unknown'' or 
``exceeds mechanical limits'', as indicated in a check-box in the 
System. This notation would remain in the vehicle's history through 
all subsequent transactions.
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    If, during the purchasing dealer user's review of the vehicle's 
identifying information on the System, the user did not agree with all 
of the information, the user could reject the transaction. Subsequent 
transfers between licensed New York dealers would be recorded in the 
same manner. It is the Agency's understanding that the entire history 
of the vehicle's identifying information entered into the System at 
each transfer would be maintained indefinitely on the System.
    Under the New York proposal, when a vehicle owned by a New York 
dealer is sold to a retail purchaser, salvage dealer, auction house, 
out-of-state buyer or other non-New York dealer purchaser, an 
authorized user at the selling dealer would sign on to the System and 
access the vehicle information on the System. The selling dealer would 
enter current vehicle information including the current odometer 
reading, and would enter seller and purchaser information on the 
System. A two-part sales receipt/odometer statement would be created on 
the System. The purchaser would then review the information, including 
the odometer statement, on a draft receipt displayed on the computer 
screen. If the purchaser agrees with the odometer statement and other 
information, the authorized dealer representative would save the data 
in the system and then print a two-part sales receipt. Both parties 
would then sign the odometer disclosure statement printed on each of 
the two parts of the receipt. The dealer would retain the dealer part 
of the receipt for its files. The purchaser would be given the 
purchaser's copy of the receipt along with the original title acquired 
by the dealer when it purchased the vehicle.
    If the purchaser does not agree with any of the information 
displayed on the dealer's computer screen,\9\ the purchaser could 
reject the transaction. In that case, the dealer would have to cancel 
the transaction in the System and resubmit using the correct 
information.
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    \9\ As with transfers between licensed New York dealers 
described above, the System automatically checks the odometer 
disclosure statement entered by the seller against the odometer 
disclosure statement previously recorded on the System for that 
vehicle. If the odometer reading entered by the seller is lower than 
what was previously recorded, the transaction would be cancelled.
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    New York's petition further states that during vehicle registration 
by a New York purchaser, NYSDMV office staff would review the vehicle's 
data and odometer disclosure on New York's system and compare it to the 
paper ownership documents and the purchaser's copy of the 
aforementioned two-part receipt. This would verify the mileage reported 
on the paper documents. If a vehicle had gone in and out of New York 
State multiple times, New York's petition states that the proposed 
system would show the New York State history for the vehicle, which 
would help to identify gaps in mileage and ownership.

C. New York's Position on Meeting the Purposes of TIMA

    New York contends that its proposed 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. The Petition identified the purposes of TIMA and the 
State's position that its proposed program satisfied each purpose.
    One purpose is to assure that the form of the odometer disclosure 
precludes odometer fraud. As noted by New York based on NHTSA's 
Virginia program approval notice, the disclosure must be contained on 
the title provided to the transferee and not on a separate document. 
New York states that its proposal satisfies this purpose because the 
odometer disclosure will remain on the back of the New York Certificate 
of Title (MV-999) and will be added to the Electronic Vehicle Inventory 
and Transfer System. Other transactions, currently recorded on paper 
reassignment documents (MV-50 or MV50W), will be recorded in the 
proposed electronic system. For dealer to dealer transactions that 
presently use a paper reassignment document, dealers would make 
disclosures directly into the Electronic Vehicle Inventory and Transfer 
System after both buyer and seller agree electronically that the 
information, including the odometer disclosure, is correct. For 
transactions where a dealer transfers a vehicle to a consumer or other 
buyers who are not New York dealers, the odometer disclosure would, 
with the buyer's assent, be entered into the System. The electronic 
disclosure would also be recorded on a two-part receipt generated by 
the System and printed by the dealer. Both buyer and seller would sign 
this paper disclosure and each would retain one part of the two part 
form. This paper receipt would then be presented when the buyer wishes 
to register the vehicle and checked against the electronic record by 
New York DMV personnel.
    A second purpose is to prevent odometer fraud by processes and 
mechanisms making the disclosure of an odometer's mileage on the title 
a condition of the application for a title and a requirement for the 
title issued by the State. New York contends that its proposal 
satisfies this purpose by requiring odometer disclosures to remain on 
the back of the New York DMV Certificate of Title, requiring electronic 
odometer disclosures for subsequent reassignments at the time of 
transfer and requiring that non-dealer purchasers be issued a receipt 
documenting the electronic disclosure made at the time of purchase. 
Because these documents will be required when a purchaser applies for a 
title and NYSDMV will verify the odometer reading through a review of 
both the Electronic Vehicle Inventory and Transfer System and the 
documents before issuing a title, New York contends that its proposal 
meets this TIMA purpose.
    A third purpose is to prevent alterations of disclosures on titles 
and to preclude counterfeit titles through secure processes. New York 
states that its proposal satisfies the purpose because the paper title 
(MV-999) will continue to be produced through a secure printing 
process. Further, the paper reassignment documents (MV-50 or MV50W) 
used in transfers between licensed New York dealers will be replaced 
with the secure Electronic Vehicle Inventory and Transfer System that 
will prevent odometer tampering and allow individuals and NYSDMV to 
trace a more definitive mileage history. According to New York, the 
proposed electronic odometer disclosure scheme would also meet this 
purpose in sales from dealers to consumers and other non-dealer buyers. 
In that case, the odometer disclosure would be made electronically on 
the secure System and on a two-part receipt generated by that system. 
New York contends that the security of the Electronic Vehicle Inventory 
and Transfer System that will prevent odometer tampering and allow 
individuals and NYSDMV to trace a more definitive mileage history.
    A fourth purpose is to create a record of the mileage on vehicles 
and a paper

[[Page 65490]]

trail. New York contends its proposal satisfies this purpose because 
the odometer disclosure statement from the consumer to the New York 
dealer will remain on the back of the MV-999 and will be added to the 
Electronic Vehicle Inventory and Transfer System by the purchasing 
dealer. Disclosures made at the time of dealer to dealer transfers and 
when dealers sell to consumers and other non-New York dealer buyers 
will also be entered into the New York System. As a result, dealers 
will be able to check, and NYSDMV will be able to monitor, odometer 
history through the System and fraud will be reduced. Subsequent 
purchasers, both dealers and consumers alike, will be able to check, 
and NYSDMV will be able to monitor, odometer history through the 
System.
    A fifth purpose is to protect consumers by assuring that they 
received valid representations of the vehicle's actual mileage at the 
time of transfer based on odometer disclosures. New York states that 
its proposal satisfies this purpose because dealers will be able to use 
the Electronic Vehicle Inventory and Transfer System to verify the 
odometer history of the vehicle, and NYSDMV will be able to monitor 
odometer history.\10\ Similarly, New York states that consumers will be 
able to check odometer history through a Web-based application and 
thereby evaluate the accuracy of the odometer readings for vehicles 
they wish to buy.
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    \10\ According to New York's petition, the proposed System has 
no effect on the current practice in transfers from consumers to 
dealers--the odometer disclosure statement from the consumer to the 
dealer will continue to be made on the back of the MV-999.
---------------------------------------------------------------------------

IV. Analysis

    Under TIMA, 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 New York alternative. We now 
provide our initial assessment whether New York's proposal satisfies 
TIMA's purposes as relevant to its Petition.\11\
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    \11\ New York 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. New York's Proposal and the Specific Purposes of TIMA

    One purpose is to assure that the form of the odometer disclosure 
precludes odometer fraud. When title is held by the transferor, the 
disclosure must be contained on the title provided to the transferee 
and not on a separate document. In the case of a transferor of a 
vehicle in whose name the vehicle is not titled (e.g., the transferor 
of the vehicle is the transferee on the title) the odometer disclosure 
statement may be made on a secure reassignment document if the title 
does not have sufficient space for recording the additional disclosure.
    NHTSA has initially determined that New York's proposed alternate 
disclosure requirements satisfy this purpose. Under New York's 
proposal, when an owner transfers ownership of a vehicle to a dealer, 
the odometer disclosure statement would be on the paper title. The 
dealer would input the vehicle's identifying information and odometer 
disclosure into the Electronic Vehicle Inventory and Transfer System. 
The odometer disclosure, including the names of the transferor and 
transferee, would be required. Thereafter the odometer disclosure 
statement will reside as an electronic record within the System that 
will be linked to the vehicle by the vehicle's VIN.
    If a dealer transfers a vehicle to another licensed New York 
dealer, the selling dealer would sign on to the System using its unique 
sign on and password and would access the vehicle's identifying 
information on the System. The selling dealer would enter current 
vehicle information including the current odometer reading and would 
enter seller and purchaser information on the System. The System would 
then generate a transaction number. The purchasing dealer would use the 
transaction number to access the vehicle's information on the System, 
review the information, including the selling dealer's odometer 
disclosure statement, and accept or reject the transaction. If the 
transaction is accepted, the sale is completed and the odometer 
disclosure is recorded in the System. In essence, this is an electronic 
reassignment from one licensed dealer to another licensed dealer, using 
a transaction based approach in a secure computer system in which both 
the selling dealer and purchasing dealer sign off on the odometer 
disclosure.
    When the vehicle is sold from a licensed New York dealer to a 
person or entity other than a licensed New York dealer, the dealer/
seller enters the purchaser's identifying information and the odometer 
disclosure statement into the System. If the buyer agrees that the 
odometer disclosure in the System is accurate, the System creates a two 
part receipt that is signed by the selling dealer and purchaser. The 
paper title and one part of the receipt must be presented to a State 
motor vehicle titling and registration agency when the purchaser 
applies to title and register the vehicle.
    NHTSA's initial determination is that the New York proposal meets 
the TIMA purpose of assuring that the form of the odometer disclosure 
precludes odometer fraud. We note that New York's proposal involves a 
proper odometer disclosure on the title itself when the seller is the 
person in whose name the vehicle is titled. Following transfer of a 
vehicle to a New York dealer, when the vehicle is not re-titled in the 
name of the dealer, the proposed New York system would provide for 
odometer disclosures to be made electronically in a secure electronic 
system with sign offs by the seller and buyer instead of on the paper 
reassignment documents currently being used. In addition, the paper 
title with an odometer disclosure would be transferred to the 
transferee/purchasing dealer. This is comparable to paper reassignments 
employing a paper State title and paper State reassignment form. 
Ultimately, for sales from New York dealers to consumers and other non-
dealer buyers, the odometer disclosure would be recorded in the State's 
electronic system and on a two-part receipt signed by both buyer and 
seller. The receipt--a form of paper reassignment document--
memorializes the electronic disclosure. This would accompany the 
initial title with an odometer disclosure.
    A second purpose of TIMA is to prevent odometer fraud by processes 
and mechanisms making the disclosure of an odometer mileage on the 
title both a condition for the application for a title and a 
requirement for the title issued by the State. NHTSA has initially 
determined that New York's proposed process satisfies this purpose. New 
York's proposed transfer process requires disclosure of odometer 
information on the paper title, at first sale from a titled owner to a 
New York licensed dealer, and electronically within the System in 
transfers between New York licensed dealers before the transaction can 
be completed. In addition, in sales from New York licensed dealers to 
non-dealer purchasers, the purchaser must present the prior paper title 
from the initial sale to the first dealer and the receipt of purchase 
with a mileage disclosure from the last dealer when applying for a 
vehicle title and registration. New York's proposal requires that the 
vehicle title from the initial owner in the process to the first 
dealer--with the odometer disclosure--be provided to the person 
purchasing the vehicle from

[[Page 65491]]

the last dealer in the dealer chain. This original title--with an 
odometer disclosure--along with the buyer's part of the proposed two-
part paper receipt and mileage disclosure must both be presented to 
state titling officials in order for the buyer to obtain a new title.
    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 New York's alternate disclosure 
requirements do not satisfy this purpose. When a vehicle is first 
transferred to a dealer, the transfer and required odometer disclosure 
statement are made using the vehicle's secure paper title document (MV-
999). Subsequent transfers between licensed New York dealers are 
processed electronically--the selling dealer submits the vehicle's 
identifying information into the System, including the odometer 
disclosure statement; the purchasing dealer then verifies the 
information on the System, including the odometer disclosure statement 
made by the selling dealer, and either accepts or rejects the 
transaction electronically.
    Under New York's proposal, upon final retail sale of a vehicle to a 
consumer or other non-New York dealer entity, the odometer disclosure 
statement would be made electronically and on a two part paper receipt, 
one part of which is given to the new owner to use in obtaining a 
title. More particularly, the selling dealer would access the 
Electronic Vehicle Inventory and Transfer System and enter the odometer 
disclosure and the dealer's and buyer's information into the system. If 
the odometer reading entered is not lower than a prior entry, a two-
part odometer statement and receipt would be then be created 
electronically. The purchaser would review the information on the 
receipt prior to the receipt being printed and verify the odometer 
disclosure statement on the receipt. If the purchaser accepts the 
information, then the two-part sales receipt would be printed and both 
parties would sign the odometer disclosure statement printed on each 
part of the receipt. The dealer would retain the dealer part of the 
receipt for its files and the purchaser would be given the purchaser 
part of the receipt along with the original ownership document.
    New York's petition does not state that the receipt form would be 
generated by a secure process, and in any event does not describe any 
such processes. NHTSA cannot assume that the reassignment document 
would be produced using secure processes. The agency's preliminary 
conclusion is that New York's use of a non-secure paper receipt and 
disclosure form does not satisfy the TIMA purpose of preventing 
alterations of disclosures on titles and precluding counterfeit titles 
through secure processes.
    When, following New York dealer to New York dealer sale(s), a 
vehicle is purchased by an out-of-state buyer, the non-secure receipt 
form proposed by New York would be used as a reassignment document 
outside of New York. This non-secure document therefore would be used 
to satisfy part of the titling requirements for the vehicle in the 
State where it would be titled and registered. This non-secure document 
could be easily altered or counterfeited and used in those 
jurisdictions outside New York. The result is that the odometer 
disclosure statement printed by the last New York dealer as part of the 
sale to a non-New York dealer would not be made by secure processes, 
and thus would not be not in conformance with a TIMA purpose. We 
appreciate that the proposed New York system would allow other state 
motor vehicle agencies to check the electronic disclosure information 
maintained on New York's electronic system, or that the non-dealer 
purchaser may be able to obtain a New York title. In our view, as 
explained further below, this does not rectify the shortcoming in New 
York's proposed program.
    Another purpose of TIMA is to create a record of the mileage on 
vehicles and a paper trail. The underlying purposes of this record and 
paper trail are to enable consumers to be better informed and provide a 
mechanism through which odometer tampering can be traced and violators 
prosecuted. Under New York's proposal, creation of a paper trail starts 
with the requirement that the initial transfer to a dealer is processed 
on the vehicle's secure paper title, including the odometer disclosure 
statement. Each subsequent dealer-to-dealer transfer is processed 
electronically, with the selling dealer inputting the vehicle's 
identifying information into the System, and the purchasing dealer 
verifying and certifying this information to complete the transfer. 
Under New York's proposed program, the most recent vehicle odometer 
disclosure will be available for public view via an online application. 
A dealer selling a vehicle to a non-dealer would record the odometer 
statement in the System at the time of sale. A selling dealer must also 
transfer the paper title obtained from the first seller to the 
purchasing dealer or retail and/or out of state buyer.
    For ultimate sales to New Yorkers, the final retail purchaser would 
be required to present paperwork (including the title containing an 
executed odometer disclosure statement used to transfer title of the 
vehicle from the initial owner to a New York dealer and, if 
appropriate, one copy of the receipt generated by the System when the 
dealer transferred the vehicle to the purchaser) to the NYSDMV when 
applying to register and title the vehicle in the purchaser's name. The 
NYSDMV would use this paperwork in conjunction with the vehicle's 
identifying information available on the System to verify the trail of 
ownership and odometer disclosure statements for the vehicle through 
the final retail sale. The paper title used to transfer the vehicle to 
the dealer would be retained by the NYSDMV in a file associated with 
the vehicle VIN for at least ten years, and it would be available to 
dealers and NYSDMV and Enforcement staff. The System will maintain the 
vehicle identifying information, including odometer disclosure, 
indefinitely. The NYSDMV could track the odometer disclosure statements 
through the System. The System would not allow a transfer to be 
completed in which the disclosed odometer reading is lower than a prior 
odometer disclosure statement. In addition, New York's petition states 
that it will not issue a title to the buyer unless the disclosures on 
the foregoing paper documents match those found in the System.
    In those cases in which a New York dealer sells a vehicle to a 
person who would title and register it out-of-state, the buyer would be 
provided with the title used to transfer it initially to a dealer and 
one part of the two-part receipt. As noted above, the receipt, which is 
not specified to be on secure paper, is a vulnerability. A substitute 
document could readily be created.
    In NHTSA's preliminary view, the New York's proposed program would 
create a scheme of records equivalent to the current ``paper trail'' 
that assists law enforcement in identifying and prosecuting odometer 
fraud, except where the vehicle ultimately is titled in a state other 
than New York. In those instances, it is less effective than the 
current system that employs a Paper MV 50 Retail Certificate of Sale 
(Dealers Reassignment form), which is on secure paper with a control 
number, and the dealer has a copy. The resolution of whether New York's 
proposed program satisfies the purpose of creating a paper trail factor 
turns on the security of the final reassignment document used to obtain 
a title. At this juncture, it does not satisfy this purpose.

[[Page 65492]]

B. New York's Proposal in Light of TIMA's Overall Purpose

    TIMA's overall purpose is to protect consumers by assuring that 
they receive valid odometer disclosures representing a vehicle's actual 
mileage at the time of transfer. Here, except for the portions of the 
proposed program relating to the security of the odometer disclosure 
statement made on the two-part receipt in a vehicle sale from a 
licensed New York dealer to an out of state buyer, New York'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 and 
reassignments.
    Other than the portions related to the security of the odometer 
disclosure statement made at the sale of a vehicle from a licensed New 
York dealer to an out of state buyer, New York's proposal likely will 
provide more protection for consumers than the current procedures. 
Transfers of vehicles between licensed New York dealers, including the 
required odometer disclosure statements, would be processed and the 
records maintained electronically in the System. Transfer records would 
be maintained on the System. The paper title used for the initial 
transfer to a licensed New York dealer would follow the vehicle and 
would be required when applying for registration and titling of the 
vehicle in the final purchaser's (not a licensed New York dealer) name. 
Potential buyers can examine the most recent odometer disclosure 
statement online before purchasing the vehicle. In-state consumers are 
at least as protected under New York's proposed program as they are 
under the current system.

V. NHTSA Initial Determination

    For the foregoing reasons, NHTSA preliminarily denies New York's 
Petition regarding proposed alternate disclosure requirements. During 
the comment period, New York may submit additional information 
demonstrating how its program satisfies the concerns identified above 
or may amend its program 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 New York's Petition, in whole or in part, it would likely 
reserve the right to rescind that grant in the event that future 
information indicates that, in operation, New York's alternate 
disclosure requirements do not satisfy applicable standards.

Request for Comments

How do I prepare and submit comments?
    Your comments must be written and in English. To ensure that your 
comments are filed correctly in the Docket, please include the docket 
number of this document in your comments.
    Your comments must not be more than 15 pages long (see 49 CFR 
553.21). We established this limit to encourage you to write your 
primary comments in a concise fashion. However, you may attach 
necessary additional documents to your comments. There is no limit on 
the length of the attachments.
    Please submit two copies of your comments, including the 
attachments, to Docket Management at the address given under ADDRESSES.
    You may also submit your comments to the docket electronically by 
logging onto the Dockets Management System Web site at https://dms.dot.gov. Click on ``Help & Information,'' or ``Help/Info'' to 
obtain instructions for filing the document electronically.
How can I be sure that my comments were received?
    If you wish Docket Management to notify you upon its receipt of 
your comments, enclose a self-addressed, stamped postcard in the 
envelope containing your comments. Upon receiving your comments, Docket 
Management will return the postcard by mail.
How do I submit confidential business information?
    If you wish to submit any information under a claim of 
confidentiality, you should submit three copies of your complete 
submission, including the information you claim to be confidential 
business information, to the Chief Counsel, NHTSA, at the address given 
above under FOR FURTHER INFORMATION CONTACT. In addition, you should 
submit two copies, from which you have deleted the claimed confidential 
business information, to Docket Management at the address given above 
under ADDRESSES. When you send a comment containing information claimed 
to be confidential business information, you should include a cover 
letter setting forth the information specified in our confidential 
business information regulation (49 CFR Part 512).
Will the Agency consider late comments?
    We will consider all comments that Docket Management receives 
before the close of business on the comment closing date indicated 
above under DATES. To the extent possible, we also will consider 
comments that Docket Management receives after that date. If Docket 
Management receives a comment too late for us to consider it in 
developing the final rule, we will consider that comment as an informal 
suggestion for future rulemaking action.
How can I read the comments submitted by other people?
    You may read the comments received by Docket Management at the 
address given under ADDRESSES. The hours of the Docket are indicated 
above in the same location.
    You also may see the comments on the Internet. To read the comments 
on the Internet, go to https://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: October 14, 2011.
O. Kevin Vincent,
Chief Counsel.
[FR Doc. 2011-27089 Filed 10-20-11; 8:45 am]
BILLING CODE 4910-59-P