Odometer Disclosure Requirements, 16107-16126 [2016-06665]

Agencies

• National Highway Traffic Safety Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 81, Number 58 (Friday, March 25, 2016)]
[Proposed Rules]
[Pages 16107-16126]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-06665]


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

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 580

[Docket No. NHTSA-2016-0037]
RIN 2127-AL39


Odometer Disclosure Requirements

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

ACTION: Notice of Proposed Rulemaking (NPRM).

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

SUMMARY: This notice is being issued pursuant to the Moving Ahead for 
Progress in the 21st Century Act of 2012 requiring NHTSA to prescribe 
regulations permitting States to adopt schemes for electronic odometer 
disclosure statements. To permit States to allow electronic odometer 
disclosures, NHTSA is proposing to amend the existing requirements to 
clarify that most of those requirements apply regardless of the 
technology used for the disclosure. NHTSA is further

[[Page 16108]]

proposing to add a new section containing specific additional 
requirements that would apply only to electronic disclosures to ensure 
the secure creation and maintenance of the electronic records. Through 
this proposal NHTSA seeks to allow odometer disclosures in an 
electronic medium while maintaining and protecting the existing 
system(s) that ensure accurate odometer disclosures and aid law 
enforcement in prosecuting odometer fraud. NHTSA is also proposing to 
extend an existing exemption for vehicles more than 10 years old to 25 
years.

DATES: You should submit comments early enough to ensure that Docket 
Management receives them not later than May 24, 2016.

ADDRESSES: You may submit comments to the docket number identified in 
the heading of this document 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, M-30, U.S. Department of 
Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New 
Jersey Avenue SE., Washington, DC 20590.
     Hand Delivery or Courier: West Building Ground Floor, Room 
W12-140, 1200 New Jersey Avenue SE., between 9 a.m. and 5 p.m. Eastern 
Standard Time, Monday through Friday, except Federal holidays.
     Fax: (202) 493-2251.
    Regardless of how you submit your comments, you should mention the 
docket number of this document.
    You may call the Docket at (202) 366-9324.
    Instructions: For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the Public 
Participation heading of the Supplementary Information section of this 
document. Note that all comments received will be posted without change 
to https://www.regulations.gov, including any personal information 
provided. Please see the Privacy Act discussion below.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (65 FR 19477-78).
    Confidential Information: If you wish to submit any information 
under a claim of confidentiality, you should submit two copies of your 
complete submission, including the information you claim to be 
confidential business information, and one copy with the claimed 
confidential business information deleted from the document, to the 
Chief Counsel, NHTSA, at the address given below 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 follow the procedures set forth in 49 
CFR part 512 and include a cover letter setting forth the information 
specified in our confidential business information regulation. (49 CFR 
part 512.)
    Docket: For access to the docket to read background documents or 
comments received, go to https://www.regulations.gov and follow the 
online instructions for accessing the dockets or go to the street 
address listed above.

FOR FURTHER INFORMATION CONTACT:
    For policy and technical issues: Mr. David Sparks, Director, Office 
of Odometer Fraud, National Highway Traffic Safety Administration, 1200 
New Jersey Avenue SE., Washington, DC 20590. Telephone: (202) 366-5953. 
Email: David.Sparks@dot.gov.
    For legal issues: Ms. Arija Flowers, Trial Attorney, Office of the 
Chief Counsel, National Highway Traffic Safety Administration, 1200 New 
Jersey Avenue SE., Washington, DC 20590. Telephone: (202) 366-5263.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Executive Summary

    This document is being issued pursuant to the Moving Ahead for 
Progress in the 21st Century Act of 2012 (MAP-21, or Pub. L. 112-141), 
which amended Section 32705 of Title 49, United States Code, by adding 
the following subsection:

    (g) ELECTRONIC DISCLOSURES.--Not later than 18 months after the 
date of enactment of the Motor Vehicle and Highway Safety 
Improvement Act of 2012, in carrying out this section, the Secretary 
shall prescribe regulations permitting any written disclosures or 
notices and related matters to be provided electronically.

Sec.  31205, 126 Stat. 761 (2012).

    To permit States to allow electronic odometer disclosures, NHTSA is 
proposing to amend the existing requirements to clarify that most of 
those requirements apply regardless of the technology used for the 
disclosure. NHTSA is further proposing to add a new section containing 
specific additional requirements that would apply only to electronic 
disclosures to ensure the secure creation and maintenance of the 
electronic records. Through this proposal NHTSA seeks to allow odometer 
disclosures in an electronic medium while maintaining and protecting 
the existing system(s) that ensure accurate odometer disclosures and 
aid law enforcement in prosecuting odometer fraud. The new issues 
addressed by the new requirements are electronic signatures, security 
of the hardware in an electronic odometer disclosure system, 
determination of official document, power of attorney and record 
retention. NHTSA is also proposing to modify an existing exemption for 
vehicles more than 10 years old to 25 years.

B. The Cost Savings Act, the Truth in Mileage Act and Subsequent 
Amendments

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

[[Page 16109]]

subjected violators to civil and criminal penalties and provided for 
Federal injunctive relief, State enforcement, and a private right of 
action.
    Despite these protections, there were shortcomings in the odometer 
provisions of the Cost Savings Act. Among others, in some States, the 
odometer disclosure statement was not on the title; instead, it was a 
separate document that could easily be altered or discarded and did not 
travel with the title. Consequently, the separate disclosure statement 
did not effectively provide information to purchasers about the 
vehicle's mileage. In some States, the title was not on tamper-proof 
paper. The problems were compounded by title washing through States 
with ineffective controls. In addition, there were considerable 
misstatements of mileage on vehicles that had formerly been leased 
vehicles, as well as on used vehicles sold at wholesale auctions.
2. The Truth in Mileage Act
    In 1986, Congress enacted the Truth in Mileage Act (TIMA), which 
added provisions to the odometer provisions of the Cost Savings Act. 
See Public Law 99-579, 100 Stat. 3309 (1986). The TIMA amendments 
expanded and strengthened Section 408 of the Cost Savings Act.
    Among other requirements, TIMA precluded the licensing of vehicles, 
the ownership of which was transferred, in any State unless several 
requirements were met by the transferee and transferor. The transferee, 
in submitting an application for a title, is required to provide the 
transferor's (seller's) title, and if that title contains a space for 
the transferor to disclose the vehicle's mileage, that information must 
be included and the statement must be signed and dated by the 
transferor.
    TIMA also precluded the licensing of vehicles, the ownership of 
which was transferred, in any State unless several titling requirements 
were met. Titles must be printed by a secure printing process or other 
secure process. They must indicate the mileage and contain space for 
the transferee to disclose the mileage in a subsequent transfer. As to 
lease vehicles, the Secretary was required to publish rules requiring 
the lessor of vehicles to advise its lessee(s) that the lessee is 
required by law to disclose the vehicle's mileage to the lessor upon 
the lessor's transfer of ownership of the vehicle. In addition, TIMA 
required that auction companies establish and maintain records on 
vehicles sold at the auction, including the name of the most recent 
owner of the vehicle, the name of the buyer, the vehicle identification 
number and the odometer reading on the date the auction took possession 
of the vehicle.
    As amended by TIMA, Section 408(f) (1) of the Cost Savings Act 
provided that its provisions on mileage statements for licensing of 
vehicles (and rules involving leased vehicles) apply in a State, unless 
the State has in effect alternate motor vehicle mileage disclosure 
requirements approved by the Secretary. Section 408(f)(2) stated that 
``[t]he 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.''
3. Amendments Following the Truth in Mileage Act and the 1994 
Recodification of the Cost Savings Act
    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 Sec.  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 Sec.  7(a), 104 Stat. 4654, 4657 (1990).
    In 1994, in the course of the 1994 recodification of various laws 
pertaining to the Department of Transportation, the Cost Savings Act, 
as amended by TIMA, was repealed. It was reenacted and recodified 
without substantive change. See Public Law 103-272, 108 Stat. 745, 
1048-1056, 1379, 1387 (1994). The statute is now codified at 49 U.S.C. 
32705 et seq. In particular, Section 408(a) of the Cost Savings Act was 
recodified at 49 U.S.C. 32705(a). Sections 408(d) and (e), which were 
added by TIMA (and later amended), were recodified at 49 U.S.C. 
32705(b) and (c). The provisions pertaining to approval of State 
alternate motor vehicle mileage disclosure requirements were recodified 
at 49 U.S.C. 32705(d).
4. FAST Act Amendments
    Section 24111 of the Fixing America's Surface Transportation Act of 
2015 (FAST Act, or Public Law 114-94), signed into law on December 4, 
2015, allows States to adopt electronic odometer disclosure systems 
without prior approval of the Secretary (``the Secretary'') of the 
Department of Transportation. Any such system must comply with 
applicable State and Federal laws regarding electronic signatures under 
15 U.S.C. 7001 et seq., meet the requirements of 49 U.S.C. 32705 and 
provide for ``appropriate authentication and security measures,'' 
Public Law 114-94 Sec.  24111. States may only adopt electronic 
odometer systems without prior approval of the Secretary until the 
effective date of the rules proposed in this notice. Id.
    In providing States with the opportunity to implement electronic 
odometer disclosure systems until the effective date of the regulations 
now being proposed, the FAST Act amendments do not alter existing 
statutory odometer disclosure requirements or modify the intent of 
those requirements. Effective odometer disclosure systems are essential 
to protecting consumers from odometer fraud and must reduce or 
eliminate opportunities for such fraud to the greatest practicable 
extent. Federal and State governments have an interest in preventing 
such fraud.
    The agency's proposed regulations, as contained in this notice, as 
well as our prior responses to State petitions for approval of 
alternative disclosure schemes (discussed below) contain guidance on 
the potential strengths and weaknesses of electronic odometer 
disclosure schemes and may serve as a resource for States implementing 
electronic odometer disclosure systems under the FAST Act. NHTSA 
respectfully requests that States adopting electronic odometer 
disclosure schemes under the authority granted by the FAST Act be 
mindful of the persistence and ingenuity of those who would commit 
odometer fraud as well as their propensity to find and exploit 
weaknesses in the disclosure requirements of particular jurisdictions. 
The agency therefore suggests that the issues considered in this notice 
and the accompanying regulatory proposals be carefully considered in 
the formulation of any electronic odometer disclosure system.

C. Overview of NHTSA's Odometer Disclosure Regulations

    The implementing regulations for the odometer provisions of the 
Cost Savings Act, as amended, are found in Part 580 of Title 49 of the 
Code of Federal Regulations (CFR). These regulations establish the 
minimum requirements for odometer disclosure, the form of certain 
documents employed in disclosures, and the security of title documents 
and power of attorney forms. The regulations also set the rules for

[[Page 16110]]

transactions involving leased vehicles, set recordkeeping requirements 
including those for auctions, and authorize the use of powers of 
attorney in limited circumstances. In addition, Part 580 also contains 
provisions exempting certain classes of vehicles from the disclosure 
regulations and provides a petition process by which a State may obtain 
approval of alternate disclosure requirements. The following paragraphs 
summarize some of the important aspects of the regulations.
    Regulations governing disclosures are codified in 49 CFR 580.5, 
580.7 and 580.13. Section 580.5(c) requires, in connection with the 
transfer of ownership of a motor vehicle, the odometer disclosure by 
the transferor to the transferee on the title. Following the initial 
execution on a title, reassignment documents may be used. As provided 
by the regulations, 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. Section 580.5(c) requires a 
transferor to sign, and to print his/her name on an odometer disclosure 
statement with the following information: (1) The odometer reading at 
the time of transfer (not to include tenths of miles); (2) the date of 
transfer; (3) the transferor's name and current address; (4) the 
transferee's name and current address; and (5) the identity of the 
vehicle, including its make, model, year, body type, and VIN. The 
transferor must also, under Sec.  580.5(e), certify whether the 
odometer reading reflects the vehicle's actual mileage, disclose 
whether the odometer reading reflects mileage in excess of the 
odometers mechanical limit or, if the odometer does not reflect the 
actual mileage, must state that the odometer reading should not be 
relied on. The transferee must sign the statement. Each title, at the 
time it is issued to the transferee, must contain the mileage disclosed 
by the transferor.
    To ensure that vehicles subject to leases of 4 months or more have 
accurate odometer readings executed on titles at the time of transfer, 
Sec.  580.7(a) requires lessors to provide written notice to the lessee 
of the lessee's obligation to disclose the mileage of the leased 
vehicle and the penalties for failure to disclose the information. In 
connection with the transfer of ownership of a leased vehicle, lessees 
are required by Sec.  580.7(b) to provide disclosures comparable to 
those required by Sec. Sec.  580.5(c) and (e), noted above, to the 
lessor along with the date the lessor notified the lessee of disclosure 
requirements. Additionally, the lessor must state the date the lessor 
received the lessee's completed disclosure statement and must also sign 
it. Under Sec.  580.7(d) a lessor transferring ownership of a vehicle 
(without obtaining possession) may indicate the mileage disclosed by 
the lessee on the vehicle's title unless lessor has reason to believe 
the lessee's disclosure is inaccurate.
    If allowed by State law, the transferor may give the transferee a 
power of attorney to execute the mileage disclosure on the title, as 
provided by Sec.  580.13(a) when the title is physically held by a 
lienholder or has been lost and the transferee obtains a duplicate 
title on behalf of a transferor. Sections 580.13(b) and (d) provide 
that the transferor must disclose information identical to that 
required by Sec. Sec.  580.5(c) and (e) on part A of the secure power 
of attorney form. The transferee is required to sign the power of 
attorney form part A and print his/her name. See Sec.  580.13(e). In 
turn, Sec.  580.13(f) requires the transferee, upon receipt of the 
transferor's title, to make on the title exactly the mileage disclosure 
as disclosed by the transferor on the power of attorney.
    After part A of the power of attorney form has been used, part B 
may be executed when a vehicle addressed on part A is resold. Part B of 
the secure power of attorney form, if permitted by State law, allows a 
subsequent transferee to give a power of attorney to his transferor to 
review the title and any reassignment documents for mileage 
discrepancies, and if no discrepancies are found, to acknowledge 
disclosure on the title, while maintaining the integrity of the first 
seller's disclosure. The disclosure required to be made by the 
transferor to the transferee for this transaction on part B of the 
power of attorney form tracks information required to be made by the 
transferor to the transferee on the title when ownership of a vehicle 
is transferred on a title under 49 CFR 580.5. Among other things, the 
power of attorney must contain a space for the transferor to disclose 
the mileage to the transferee and sign and date the form, and a space 
for the transferee to sign and date the form.
    To ensure that disclosures made through a power of attorney are 
accurate, Sec.  580.15 requires the person exercising the power of 
attorney to certify, on part C of the form, that the disclosures made 
on a title or reassignment document on behalf of the original seller 
are identical to those found on part A of the power of attorney. This 
section also requires a certification, when part B is used, that the 
mileage disclosed and acknowledged under part B is greater than the 
mileage disclosed in part A.
    Odometer disclosures may only be made on certain documents. These 
specified documents are a vehicle title (Sec.  580.5(a)), a 
reassignment document when used by transferors other than those in 
whose name the vehicle is titled (Sec. Sec.  580.5(b) and (c)), a 
disclosure statement made by a lessee (Sec.  580.7(b)), and a power of 
attorney when the title is held by a lienholder or is lost (Sec.  
580.13(a)). When the power of attorney authorized by Sec.  580.13(a) is 
used, a further power of attorney authorized by Sec.  580.14(a) may be 
employed to allow a subsequent transferee to approve the seller's 
disclosure, per Sec.  580.16. Both of the aforementioned powers of 
attorney must be on the same form.
    Section 580.4 requires titles, reassignment documents, and the 
power of attorney form described Sec. Sec.  580.13 and 580.14 to be 
protected against counterfeiting and tampering by a secure printing 
process or other secure process. These titles, reassignment documents, 
and powers of attorney must contain a statement referring to Federal 
odometer law and a warning that failure to complete the form or 
providing false information may result in fines or imprisonment 
pursuant to Sec. Sec.  580.5(d), 580.13(c), and 580.14(c). For a leased 
vehicle, the lessor is obligated to provide the lessee with written 
notice of the obligation to make a mileage disclosure and that notice 
must contain the same warnings (Sec.  580.7(a)). Except in the limited 
context of the proper use of the power of attorney forms, no person 
shall sign an odometer disclosure statement as both the transferor and 
transferee in the same transaction (Sec.  580.5(h)).
    Part 580 establishes minimum requirements for record retention, 
which ensures that adequate records exist to create a ``paper trail'' 
sufficient to support detection and prosecution of odometer fraud. 
Section 580.8(a) requires motor vehicle dealers and distributors who 
are required to issue an odometer disclosure to retain copies of each 
odometer statement they issue and receive for five years. Lessors of 
leased vehicles must retain the odometer statement they receive from 
their lessee for five years from the date they transfer ownership of 
the leased vehicle (Sec.  580.8(b)). If a power of attorney authorized 
by Sec. Sec.  580.13 and/or 580.14 has been used, dealers must retain 
copies of the document for five years (Sec.  580.8(c)). Section 580.9 
requires auction companies to retain the name of the most recent owner 
on the date the auction took possession of the motor

[[Page 16111]]

vehicle, the name of the buyer, the vehicle identification number and 
the odometer reading on the date the auction company took possession of 
the motor vehicle for five years from the date of sale. States are 
required, under Sec.  580.13(f) to retain the original copy of the 
power of attorney authorized by Sec.  580.13(a) or (b) and the title 
for a period of three years or a time period equal to the State's 
titling record retention period, whichever is shorter.
    In addition to the recordkeeping requirements, Part 580 also 
requires that subsequent buyers of a vehicle that was transferred to 
their seller through a disclosure made with a Part A power of attorney 
under Sec.  580.13(a) have access to that power of attorney if they 
elect not to use Part B and return to the seller to acknowledge 
disclosure on the title itself (Sec.  580.16).
    Other sections of Part 580 establish a petition process by which 
States may seek assistance in revising their odometer laws (Sec.  
580.10), may seek approval of alternative odometer disclosure schemes 
(Sec.  580.11), and establish exemptions from the disclosure 
requirements of Sec.  580.5 and Sec.  580.7 (Sec.  580.17). The 
exemptions in 580.17 apply to transfers or leases for: (1) Vehicles 
with a Gross Vehicle Weight Rating (GVWR) over 16,000 pounds; (2) 
vehicles that are not self-propelled; (3) vehicles manufactured in a 
model year beginning ten years before January 1 of the calendar year in 
which the transfer occurs; (4) certain vehicles sold by the 
manufacturer to any agency of the United States; and (5) a new vehicle 
prior to its first transfer for purposes other than resale.

D. Previous State Petitions for Approval of Electronic Odometer 
Disclosure Schemes

    The Cost Savings Act, as amended by TIMA in 1986, contains a 
specific provision on approval of State alternative odometer disclosure 
programs. Subsection 408(f)(2) of the Cost Savings Act (now recodified 
at 49 U.S.C. 32705(d)) provides 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. (Subsections 408(d), (e) of the Costs Savings Act were 
recodified to 49 U.S.C. 32705(b) and (c).)
    Six States--Virginia, Wisconsin, Florida, New York, Texas, and 
Arizona--have filed petitions with NHTSA seeking approval of electronic 
alternative odometer programs under 49 U.S.C. 32705(d)). NHTSA has 
approved, in whole or in part, five of these six petitions and has not 
yet taken final action on the sixth and most recent petition. A review 
of these petitions and the agency's responses is instructive regarding 
the various concerns raised by the implementation of electronic 
odometer disclosure systems.
1. Virginia
    In December 2006, the Commonwealth of Virginia petitioned NHTSA to 
approve the Commonwealth's proposed electronic odometer disclosure 
requirements for intrastate transactions involving vehicles not subject 
to a lien. Virginia's proposal contemplated a paperless system where 
users would enter data directly into a State electronic system. To 
authenticate the identity of the participants, Virginia's petition 
stated that a unique personal identification number (PIN) and a unique 
customer number that would both be physically mailed to the individual 
would be used in conjunction with the customer's date of birth (DOB) to 
allow creation of an electronic odometer disclosure statement and 
signature. For dealers, the Virginia proposal stated that each dealer 
would provide the State with a list of employees authorized to make 
disclosures for the dealership. These individuals would be provided 
customer number PINS by mail and would use these identifiers in the 
same fashion as a private individual to verify their identity so they 
could complete transactions. In addition, transactions involving 
dealerships would require that the dealership enter a dealer number to 
complete the transaction.
    Virginia's proposed electronic odometer disclosure would be made in 
the same way a paper disclosure would be made. The transferor would 
fill out the electronic form that contained the same entries and 
warnings as those found on a paper title and then sign it 
electronically. The transferee would then examine the odometer 
disclosure executed by the transferor and either accept it or reject 
it. The disclosure statement would be linked to the electronic title 
and the transferor would be instructed to mail any existing paper title 
to the State for destruction. The proposal also stated that the 
transferee could obtain a paper copy of the title upon request.
    After finding that the Virginia proposal would properly verify the 
identity of users, would provide an equivalent level of security to the 
paper system, and would create an adequate system of records, NHTSA 
granted Virginia's request on January 7, 2009 (74 FR 643).
2. Texas
    Texas filed a petition seeking approval of alternative odometer 
disclosure requirements in June 2008. The State proposal would transfer 
vehicles' titles electronically for in-state transactions between 
residents where there are no security interests in the vehicle. The 
proposal did not encompass leased vehicles, the use of a power of 
attorney, or interstate transactions. Texas's system would eliminate 
paper titles (except as requested) by creating an electronic title and 
require transfers of vehicle title for in-state transactions to be made 
using the internet. The identities of the parties, who would have to be 
Texas residents holding a valid State identification credential, would 
be verified by matching four personal data elements and two forms of 
identification against a State database. Odometer mileage disclosures 
would be made by requiring the seller and buyer to separately log into 
a secure Web site and each enter the odometer mileage. Upon successful 
completion of the transaction, the seller would mail the paper title to 
the State for destruction. The title would remain as an electronic 
record and the transferee could receive a paper title on request.
    NHTSA's initial determination, published on November 18, 2009, 74 
FR 59503, preliminarily granted the Texas petition on the condition 
that Texas amend its program to enable transferees to obtain a paper 
copy of the title that met the requirements of TIMA, require dealers to 
retain a copy of all odometer disclosures that they issue and receive, 
and require disclosure of the brand (the brand states whether the 
odometer reflects the actual mileage, reflects the mileage in excess of 
the designated odometer limit or differs from the actual mileage and is 
not reliable.) Id. at 59506. Following submission of comments by Texas 
clarifying features of its proposal, NHTSA granted the Texas petition 
in a final determination issued on April 22, 2010. 75 FR 20925. The 
final determination noted that the Texas petition and comments 
indicated that the proposed system contained sufficient safeguards and 
record keeping requirements to meet the purposes of TIMA. Further, the 
agency noted that since Texas would require persons with an electronic 
title to submit any paper titles to the State for destruction, the 
proposal would prevent potential mischief caused by duplicate titles. 
Id. at 20929.

[[Page 16112]]

3. Wisconsin
    In September 2009, Wisconsin filed a petition seeking approval of 
an electronic odometer disclosure system limited to intrastate 
transactions involving motor vehicle dealers. Identity verification 
would be based on customers entering a minimum of three personal 
identifiers--name, address, date of birth, product number, Driver 
License/ID number, and a Federal Employer Identification Number or 
partial Social Security Number--in the State system. Once the user is 
verified under this scheme, the user could begin the title transaction. 
As with the earlier petitions, Wisconsin proposed that electronic 
odometer disclosures be linked to, and become part of, the title record 
in the State's database and a title transfer could not be completed 
unless an electronic odometer disclosure had been completed. Also, if a 
paper title is needed, the Wisconsin DMV would print the title on 
secure paper with the odometer disclosure statement in the proper 
location and format under existing rules.
    In April 2010, NHTSA published an Initial Determination proposing 
to approve Wisconsin's program, subject to the resolution of certain 
concerns. 75 FR 20965 (Apr. 22, 2010). In particular, NHTSA raised 
questions about how the Wisconsin program would manage odometer 
disclosures for leased vehicles. In response to NHTSA's concerns, 
Wisconsin submitted comments stating that lessee odometer disclosures 
would be addressed in the future.
    NHTSA published a Final determination approving a revised Wisconsin 
electronic odometer disclosure plan on January 10, 2011. 76 FR 1367. 
The Agency found the Wisconsin proposal to be consistent with the 
odometer disclosure requirements. The verification scheme and form of 
the electronic disclosure provided adequate assurances that the persons 
executing the disclosure were the actual transferor and transferee. 
Thereafter the odometer disclosure statement would reside as an 
electronic record in the Wisconsin database and would be linked to the 
vehicle's title. NHTSA also noted that the electronic title would, 
under Wisconsin law, be the official title and that paper titles would 
be issued only if needed for an interstate transaction or a transfer 
that could not be completed electronically.
4. Florida
    In December 2009, Florida proposed a hybrid electronic disclosure 
system in which the electronic transactions would be performed through 
authorized tag agents. Because the electronic data entries would only 
be made through terminals located at tag agent locations, Florida 
proposed that the required odometer disclosures for certain 
transactions would be made on physical documents that would then be 
delivered to tag agents who would then enter disclosure information 
into the State system. Under Florida's proposal a seller with a vehicle 
having an electronic title wishing to sell the car would visit a tag 
office with the buyer. After providing adequate identification to the 
tag agent, the buyer and seller would sign, in the presence of the tag 
agent, a secure reassignment form transferring ownership and disclosing 
the odometer reading. A title would then be issued in the buyer's name 
and stored electronically, or the buyer could choose to have the title 
printed as a physical document.
    For transactions involving dealers, Florida proposed that a seller 
with e-title would bring the vehicle to a dealership. The seller and 
dealer would complete a secure reassignment form with odometer 
disclosure. When the dealer sold the vehicle to another buyer, the 
dealer and buyer would complete another secure reassignment form with 
odometer disclosure. The dealer would take both of the secure 
reassignment forms to a tag agency. The vehicle title would then be 
transferred to the buyer and the buyer would have the option to obtain 
a paper title or have Florida's Department of Transportation hold the 
title electronically.
    Under Florida's proposal, the lessor of a leased vehicle would hold 
an e-title. When the lease ends, the lessee would bring the vehicle to 
a dealership. The lessee would sign an odometer disclosure statement on 
a secure physical document. The lessor would then sign a secure 
physical power of attorney to the dealer authorizing the dealer to 
execute the odometer disclosure. The dealer would then sign a physical 
secure reassignment form agreeing with the odometer disclosure. When 
the dealer sold the vehicle to another buyer, the dealer would take the 
various physical documents (bill of sale, reassignment document, and 
power of attorney) to the tag agency, where the title would be 
transferred to the buyer. The buyer would then have the option of 
obtaining a new paper title or having the Florida Department of 
Transportation hold the vehicle title electronically.
    NHTSA's final determination granted the Florida petition in part 
and denied it in part. 77 FR 36935 (June 20, 2012). Florida's request 
was granted for electronic transactions involving transfers between 
private parties but was denied for transactions involving dealers and 
leased vehicles. Among other things, NHTSA's final determination 
observed that transactions involving dealers relied on a number of 
odometer disclosures being made on documents other than the title 
itself. This, in the Agency's view, was inconsistent with TIMA's 
command that disclosures be made on the title and not on a separate 
document. Further, the Florida scheme for dealer transactions would 
result in new registrations being issued after submission of a 
disclosure statement made on a physical reassignment document rather 
than on the title itself, thereby violating the requirement that a 
vehicle may only be registered if the new owner submits a title 
containing the odometer disclosure statement. NHTSA denied Florida's 
proposed requirements for leased vehicles on similar grounds. Because 
of the proposed system's reliance on tag agents as the only point of 
data entry, completion of a transaction and execution of the required 
disclosure statements required that the disclosures be made on a number 
of documents, none of which were the actual title. These documents also 
did not meet other content and security requirements. Moreover, the use 
of a power of attorney in an instance where the lessor would have 
access to the title, was viewed by the Agency as inconsistent with the 
narrow set of circumstances under which such a power of attorney could 
be used under TIMA.
5. New York
    The State of New York filed a petition with NHTSA in November 2010, 
seeking approval of alternative odometer disclosure requirements. The 
New York petition sought to convert the State's existing paper process 
for dealer transactions to an electronic process in which an authorized 
dealership user would sign on to the State's planned 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. 
Access to the system itself would occur only at dealerships by specific 
dealer employees whose identity would be verified by State issued 
credentials.
    If that dealer sold a vehicle to another licensed New York dealer, 
the selling dealer would sign on to the proposed electronic system and 
enter current vehicle information, including the current odometer 
reading, as well as seller and purchaser information. The

[[Page 16113]]

purchasing dealer would subsequently sign on to the system and review 
the vehicle's identifying information, including the odometer 
disclosure statement made by the selling dealer, and either accept or 
reject the transaction. If the purchasing dealer accepted the 
transaction it would be considered complete. The original pre-dealer 
title (still in the prior owner's name) would be surrendered to the 
purchasing dealer at the time of sale. Subsequent transfers between 
licensed New York dealers would be recorded in the same manner. The 
history of the vehicle's identifying information entered into the 
system at each transfer would be maintained 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, out-of-state 
buyer or other non-New York dealer purchaser, the selling dealer would 
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. 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 the 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, while 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.
    NHTSA's initial determination denied the New York petition because 
it used a non-secure receipt for odometer disclosure in transfers 
between New York dealers and out-of-state buyers and was therefore 
inconsistent with Federal odometer law. 76 FR 65487, 65491 (Oct. 21, 
2011). New York subsequently amended its proposal by replacing the non-
secure document with a secure State issued paper, New York State MV-50 
(Retail Certificate of Sale) form. The result of this change was that a 
consumer purchasing a vehicle from a dealer would then receive the 
original title and odometer statement executed by the owner who sold 
the vehicle to the dealer and the secure MV-50 form with an odometer 
disclosure. In addition, the mileage disclosed at the time of the sale 
to the dealer and the mileage disclosed at the time the dealer sold the 
vehicle to the subsequent retail purchaser would be recorded in New 
York's system and available for viewing through a web portal.
    The Agency's final determination, 77 FR 50381 (Aug. 12, 2012), 
granted the New York petition as amended. NHTSA found that the 
employment of the secure State issued and numbered MV-50 form, in 
conjunction with the odometer disclosure on the original seller's title 
and the recording of these disclosures in New York's electronic system, 
met the purposes of TIMA.
6. Arizona
    In December 2011, Arizona filed a petition with NHTSA seeking 
approval of alternative odometer disclosure requirements. The Arizona 
proposal was limited to transactions involving licensed Arizona dealers 
and did not encompass interstate transactions. Under this proposal, 
dealers would electronically scan and upload documents to the State. 
Dealers would scan documents using a specified format and resolution, 
encrypt the scanned images and transmit the images to a secure system 
using account codes, user/group profiles, and passwords. The State 
would retain electronic files in a document management system, and 
dealers would be required to retain hard copies of the documents. The 
disclosures would not be made on a title but on a form described as a 
Secure Odometer Disclosure. This form would be completed and signed by 
hand and submitted to Arizona along with other documents after being 
scanned. The petition appears to propose that the title would not be 
among the documents submitted to Arizona, and it may be that this 
procedure would be followed if the seller's title is an electronic 
title. If the dealer sells the vehicle, that dealer would again scan 
and electronically submit a Secure Odometer Disclosure, but not the 
title, to Arizona after selling the vehicle. The dealer would retain 
the original Secure Odometer Disclosure forms for the retention periods 
specified by Federal and Arizona law.
    In instances where a dealer sought to sell a vehicle that had been 
purchased from an owner with a paper title, Arizona also proposed that 
the vehicle would be resold by a dealer using the paper title from the 
transferor. It appears, based on this description and the requirements 
of Arizona law that a dealer's name shall be recorded on a title 
certificate as transferee or purchaser and that a title include space 
for dealer reassignment information, that the dealer would make an 
odometer disclosure on the paper title at the time it resells the 
vehicle. However, the petition also specifies that if the dealer 
applies for a new title in the name of the vehicle purchaser, the 
dealer and purchaser would complete a Secure Odometer Disclosure form. 
The dealer would then scan and electronically submit a title 
application, the paper title, the Secure Odometer Disclosure form, and 
supporting documents to Arizona. The dealer would retain the original 
documents (including the original paper title) for the retention 
periods specified by Federal and Arizona law. According to the 
petition, a new title would be sent to the buyer if there is no lien on 
the vehicle. If there is a lien, both the lien and the title would be 
maintained as electronic records by the Arizona Department of 
Transportation.
    NHTSA issued an initial determination denying the Arizona petition 
on August 20, 2012. 77 FR 50071. In this initial determination, the 
Agency stated that the Arizona petition did not meet 49 CFR 580.11(b), 
which establishes the requirements for alternative disclosure 
requirement petitions. The petition did not, in NHTSA's view, set forth 
the motor vehicle disclosure requirements in effect in the State or 
adequately demonstrate that the proposal was consistent with the 
purposes of the Motor Vehicle Information and Cost Savings Act. In 
regard to the latter, the agency found that making disclosures on 
documents other than the title, the proposed use of non-secure forms, 
the failure to address record keeping requirements, and the potential 
for alterations posed by the use of scanned documents were all 
inconsistent with the purposes of TIMA.
7. Ongoing Concerns Regarding Electronic Odometer Disclosures in Light 
of Previous State Petitions
    NHTSA's experience in processing State petitions for alternative 
electronic odometer disclosure schemes illustrates a number of concerns 
that remain relevant for the purposes of this rulemaking. First and 
foremost, any electronic odometer disclosure system must be conceived 
with a full appreciation of the importance of following the command 
found in TIMA that odometer disclosures must be made on the title 
itself, or the electronic equivalent of that title, and not, except for 
a very limited number of exceptions, on any other document. In 
particular, an electronic odometer disclosure system should minimize or 
eliminate odometer disclosures made on physical documents instead of 
promoting the use of such documents as some proposals

[[Page 16114]]

examined by NHTSA have done. Similarly, an electronic odometer 
disclosure system may not rely on a method of transmitting secure paper 
documents if that method does not preserve the security features now 
present in physical titles, reassignments, and powers of attorney. A 
low resolution scan of such a document is not secure and such a scan 
may not reveal forgeries or alterations.
    In addition, as addressed below, any electronic odometer disclosure 
system must provide adequate means for verifying the identity of 
transferors and transferees. In the absence of such verification, 
unauthorized and inaccurate disclosures could easily be entered into 
State systems by imposters, defeating the purposes of the Cost Savings 
Act and enhancements established in TIMA and the subsequent amendments. 
Electronic title and odometer disclosure systems must also foreclose 
the possibility that a seemingly valid physical paper title and an 
electronic title may co-exist. The presence of two such ``valid'' 
titles invites fraud and creates opportunities for confusion and 
deception. While States are under no obligation to implement electronic 
odometer disclosure systems that accommodate transactions involving 
leased vehicles, any system that proposes to do so must employ measures 
that meet the existing regulatory requirements without employing 
physical forms such as a power of attorney that are not authorized 
under agency regulations. Finally, all electronic odometer disclosure 
systems must be designed not to impede interstate vehicle sales while 
providing consumers with protection against odometer fraud. Unless and 
until electronic odometer disclosure is implemented in all States, 
Territories, and the District of Columbia, secure paper titles or their 
equivalent will be needed for the purposes of making odometer 
disclosures in interstate transactions.

II. e-Manifest

    In developing this proposal, NHTSA reviewed the experience of the 
Environmental Protection Agency (EPA) during the development of its 
requirements for electronic manifests for hazardous waste. See 79 FR 
7517 (Feb. 7, 2014). While the authority EPA was operating under is 
different from NHTSA's current authority, and the existing system 
differed from the current odometer disclosure system, NHTSA believes 
there are lessons to be learned from EPA's experience transitioning 
from a paper to electronic environment.
    The EPA proposal envisioned the agency setting minimum standards 
for an e-manifest system and various private entities stepping forward 
to develop and make available such systems. The ``EPA proposed 
standards in 3 distinct areas: (1) Standard electronic data exchange 
formats for the manifest; (2) electronic signature methods that could 
be used to execute manifest signatures electronically; and (3) standard 
system security controls and work flow procedures to ensure the 
reliable and consistent processing of manifest data by electronic 
manifest systems, as well as to ensure the availability and integrity 
of manifest data submitted through the electronic systems.'' \1\ 
Commenters expressed concern that this proposal could lead to numerous 
inconsistent approaches to e-manifest, a particular problem for 
companies with large numbers of inter-state transactions. Others 
criticized the rigor of the standards proposed which set a higher bar 
than existed for paper documents. Still others noted that such detailed 
requirements could frustrate technology in an area which was constantly 
changing.
---------------------------------------------------------------------------

    \1\ 79 FR 7517, 7519 (Feb. 7, 2014).
---------------------------------------------------------------------------

    The EPA's ultimate solution was to develop a centralized system 
controlled by the EPA and funded by user fees. This option is not 
available to NHTSA for odometer disclosures. Nevertheless, we are 
mindful of the comments EPA received. Vehicle transactions cross State 
boundaries and the need for various State systems to interact must be 
considered. Further, both traditional paper-based and electronic 
systems are likely to exist in neighboring States for some time and 
must facilitate interstate transactions while providing protection 
against odometer fraud. The MAP-21 mandate to permit electronic 
odometer disclosures could be frustrated by requirements that set an 
unnecessarily higher bar than currently exists for paper documents. 
However, NHTSA believes that achieving the objectives of the statute--
to ensure that consumers receive valid representations of the actual 
vehicle mileage at the time of transfer and to detect, prevent, and aid 
in prosecuting odometer fraud--some aspects of the specific disclosure 
requirements may need to differ for traditional and electronic systems. 
It is also neither helpful to the public nor wise to create rules that 
NHTSA must regularly amend to adapt to technological changes. 
Accordingly, NHTSA has been, and remains, aware of these lessons in 
developing this proposal.

III. Current Proposal

A. Purpose of Odometer Disclosure Requirements

    The overall purpose of the odometer disclosure provisions of the 
Cost Savings Act, as amended, is to protect consumers by assuring that 
they receive valid representations of a vehicle's actual mileage at the 
time of transfer. An additional purpose is to create a system of 
records and a ``paper trail'' to facilitate detection and prosecution 
of odometer fraud. The statutory scheme and the current regulations 
adopted by NHTSA aim to achieve these overall purposes.
    In developing the current proposal for electronic odometer 
disclosures pursuant to MAP-21, NHTSA desires a regulation that 
continues to achieve these purposes without imposing overly burdensome 
requirements that are not necessary to achieve these purposes in an 
electronic environment. That is, electronic disclosures must be made 
accurately by the actual parties to the transaction to protect 
consumers and provide assurances that a transferee receives a valid 
representation of a vehicle's actual mileage at the time of transfer. 
In addition, electronic disclosure schemes must have retention 
requirements to create a secure and reliable electronic trail to 
facilitate detection and prosecution of odometer fraud. Unique issues 
the agency considered were the ability of different State electronic 
systems to share data, and the security of that information sharing, as 
well as the ability to issue secure paper documents for use in States 
which do not choose to adopt electronic disclosure requirements.
    An additional issue considered by the agency was the possibility 
that, if NHTSA were to adopt only minimum requirements necessary to 
achieve the above stated purposes, States that voluntarily chose to 
permit electronic odometer disclosures could do so in ways which could 
eventually create enough variation to hinder on-going efforts among the 
States to develop a national system for electronic titling of motor 
vehicles. However, NHTSA determined that its authority under MAP-21 was 
intended only to facilitate the change to electronic odometer 
disclosures, not to impose additional requirements for odometer 
disclosures. NHTSA requests comments, however, on whether it should go 
further than proposed in this notice in order to prevent, or limit, 
variation among the various State systems.

[[Page 16115]]

B. Odometer Disclosure Requirements

    As noted earlier, NHTSA believes that meeting the objectives of the 
statute will require some variation in the requirements for traditional 
and electronic systems. To achieve this, NHTSA is proposing to 
restructure the requirements to accommodate both ``physical'' and 
``electronic'' documents. Therefore we are proposing to amend 580.1 to 
add the option of electronic disclosures; 580.3 to add new definitions 
and amend existing definitions to accommodate physical and electronic 
filings; 580.4 to clarify separate requirements for the security of 
physical disclosures and electronic disclosures; 580.5 to clarify 
methods of disclosure for physical and electronic systems; 580.7 to add 
provisions allowing for the option of electronic disclosures for leased 
motor vehicles; 580.8 to include electronic copies among the forms of 
disclosures that must be retained and general requirements for that 
retention; 580.10 to update the address for NHTSA; 580.11 to add the 
newly created 580.6 to the sections a State may seek exemption from via 
petition for alternative disclosure requirements and update the address 
for NHTSA; 580.13 and 580.14 to revise the provisions relating to the 
use of a power of attorney to address the potential that transferors 
from an electronic title State wishing to convey a vehicle to a 
transferee in a physical title State may not have an opportunity to 
obtain a State issued secure physical title before transferring 
ownership of the vehicle and to correct a typographical error that 
would bring the disclosure requirements into conformity with the 
disclosure requirements under 580.5 and 580.7; 580.15 to add language 
clarifying that power of attorney certification is limited to physical 
document disclosures; and 580.17 to extend the disclosure exemption 
from ten years to twenty-five years and provide an updated example. 
NHTSA is proposing to strike the regulatory text in section 580.12 as 
the provision is obsolete and to reserve the section. Finally, NHTSA is 
proposing to create a new section 580.6 (previously reserved) which 
would contain unique requirements for electronic odometer disclosures.
1. Definitions
    The most basic proposed change NHTSA is making is to add new 
definitions for the terms ``Electronic Document,'' ``Physical 
Document,'' and ``Sign or Signature,'' which are necessary to provide 
clarity in the requirements for each, taking into account the different 
security concerns and practical challenges that arise under the 
different disclosure systems. NHTSA requests comments on whether the 
following new definitions are appropriate and properly identify the 
items and actions intended.
    a. Electronic Document. NHTSA proposes to add ``Electronic 
Document'' to the defined terms in part 580.3. This addition is 
necessary to provide clarity for the requirements and procedures 
applicable to these documents, as opposed to documents in paper format. 
NHTSA proposes to define ``Electronic Document'' to mean ``a title, 
reassignment document or power of attorney that is maintained in 
electronic form by a state, territory or possession that meets all the 
requirements of this part.''
    b. Physical Document. NHTSA proposes to add ``Physical Document'' 
to the defined terms in part 580.3. This addition is necessary to 
provide clarity for the requirements and procedures applicable to these 
documents, as opposed to documents in electronic format. NHTSA proposes 
to define ``Physical Document'' to mean ``a title, reassignment 
document or power of attorney printed on paper that meets all the 
requirements of this part.''
    c. Sign or Signature. NHTSA proposes to add definitions for ``Sign 
or Signature'' applicable to physical document disclosures and to 
electronic document disclosures to the terms defined in part 580.3. 
This addition is necessary to clarify the actions and requirements that 
qualify as a signature or the signing of a document in the different 
contexts of physical and electronic disclosures. Further, electronic 
records of contractual agreements are capable of verification through 
methods other than written words, and may include sounds, other 
symbols, or processes. See 15 U.S.C. 7006(5) (providing a definition of 
``electronic signature''). NHTSA proposes to define ``Sign or 
Signature'' as meaning ``[f]or a paper odometer disclosure, a person's 
name, or a mark representing it, as hand written personally'' and 
``[f]or an electronic odometer disclosure, an electronic sound, symbol, 
or process using an authentication system equivalent to or greater than 
Level 3 as described in National Institute of Standards and Technology 
(NIST) Special Publication 800-63-2, Electronic Authentication 
Guideline, which identifies a specific individual.''
2. Identity of Parties to a Motor Vehicle Transfer and Security of 
Signatures
    One issue NHTSA considered was the electronic equivalent of the 
existing requirements for physical signatures on odometer disclosures 
and how to securely authenticate an electronic signature. This is 
particularly important because in an electronic environment documents 
may be ``signed'' remotely. To address this issue, NHTSA reviewed the 
guidance in the National Institute of Standards and Technology (NIST) 
Special Publication 800-63-2, Electronic Authentication Guideline. The 
publication defines four levels of assurance, Levels 1 to 4, in terms 
of the consequences of authentication errors and misuse of credentials, 
with Level 1 being the lowest assurance level, and Level 4 as the 
highest. Based on the level, different levels of authentication are 
recommended to help ensure the security of the information. NHTSA also 
reviewed a December 16, 2003 memorandum from the Director of the Office 
of Management and Budget (OMB) to the Heads of all Federal Departments 
and Agencies.\2\ This memorandum guidance was issued by OMB under the 
Government Paperwork Elimination Act of 1998, 44 U.S.C. 3504 in light 
of the NIST publication. Attachment A to this memorandum supplements 
OMB Circular A-130, Management of Federal Information Resources, 
Appendix II, Implementation of the Government Paperwork Elimination Act 
(GPEA). While both the NIST publication and the OMB memorandum are 
directed towards Federal Departments and Agencies, NHTSA believes they 
provide good guidance in this instance also.
---------------------------------------------------------------------------

    \2\ OMB Memorandum M-04-04, 12/16/03, https://www.whitehouse.gov/sites/default/files/omb/assets/omb/memoranda/fy04/m04-04.pdf.
---------------------------------------------------------------------------

    NHTSA is aware that the American Association of Motor Vehicle 
Administrators (AAMVA) published a report from its Electronic Odometer 
Task Force in December 2014 (E-Odometer Task Force Report).\3\ In this 
report AAMVA recommends that States implement an electronic signature 
verification system that complies with at least NIST Level 2, however 
it also notes that some of the identification discussed would comply 
with NIST Level 3. As discussed below, NHTSA has made a preliminary 
determination that at least NIST Level 3 verification should be 
required, both to prevent the potential harm of fraudulent disclosures 
and to aid in their prosecution.
---------------------------------------------------------------------------

    \3\ https://www.aamva.org/e-Odometer-Task-Force/.
---------------------------------------------------------------------------

    Attachment A to the OMB memorandum sets out six potential

[[Page 16116]]

impact categories, and then, depending on whether the impact is low, 
moderate, or high, assigns a NIST assurance level. The Attachment does 
not provide specific guidance for how to assign an overall assurance 
level if potential impact categories fall in different levels. The 
impact categories are:
     Inconvenience, distress or damage to standing or 
reputation.
     Financial loss or agency liability.
     Harm to agency programs or public interests.
     Unauthorized release of sensitive information.
     Personal Safety.
     Civil or criminal violations.
    In reviewing these impact categories, NHTSA notes a definite 
potential for financial loss. The purpose of odometer fraud is to 
induce consumers to pay more for a used vehicle than they would if they 
knew the accurate mileage. For an individual consumer, it is important 
that the value of the vehicle reasonably match the price agreed to, and 
paid, based upon the information available to the consumer and provided 
by the seller. In addition, odometer fraud is often committed by the 
same individual(s) or entities multiple times, resulting in high dollar 
amounts of damages. State electronic title and odometer disclosure 
systems will also contain sensitive personal information that could be 
subject to unauthorized release if the system were not sufficiently 
secure. Last, odometer fraud is a criminal offense that victimizes 
innocent consumers. NHTSA and other enforcement agencies use odometer 
disclosure documents to prove these criminal violations.
    Therefore, after reviewing this document, NHTSA has made a 
preliminary decision that a high level of assurance in the accuracy of 
the identity of the person making an odometer disclosure is necessary, 
and therefore the appropriate level of security for odometer 
disclosures is Level 3 according to the NIST guidelines. NHTSA is 
therefore proposing that any State which allows electronic odometer 
disclosures require security protocols at this level or higher. Under 
the NIST guidelines (https://nvlpubs.nist.gov/nistpubs/SpecialPublications/NIST.SP.800-63-2.pdf), a Level 3 system must have 
certain minimum attributes. These attributes include verification of 
the name associated with the user, issuance of a credential to the user 
through a separate channel such as postal mail, text message or 
telephone call directed at an address or number confirmed through 
examination of different independent databases and use of that 
credential to gain access to the Level 3 system. For example, a person 
wishing to make odometer disclosures electronically without having to 
appear in person at a State motor vehicle agency would need to have a 
valid Government ID number and a financial institution or utility 
account number that could be confirmed through examining records 
containing those numbers. The State entity providing the e-title and 
odometer disclosure service would then check the information provided 
by the individual and confirm that the name, date of birth, and other 
personal information in the examined records are consistent and 
sufficient to identify a unique individual. The State entity would then 
issue a credential by postal mail or some other means that would direct 
the credential to the proper person. The issued credential would then 
be employed by the user to obtain access to the electronic odometer and 
title system. As outlined in the NIST guidelines, other methods may be 
employed to attain Level 3 authentication but the important principle, 
in NHTSA's view, is that Level 3 requires multi-factor identification 
of an individual applicant who, once their identity has been verified, 
is provided with a unique credential in order to access the system.
    NHTSA is therefore proposing that the requirement for Level 3 
authentication be incorporated in the definition of ``signature'' for 
electronic disclosures. However, this also will require the use of 
computers by all parties for all transfers in electronic title States. 
NHTSA requests comments on the appropriate NIST level and if specific 
identification verification(s) should be required, and further requests 
comments on how such a system should be implemented, including whether 
dealers should be required to provide secure computing services to 
transferors and transferees and what security measures should be 
mandatory for such services.
    Next, NHTSA is proposing to require that each ``signature'' in an 
electronic environment apply only to a single individual, not to an 
organization. For example, if a dealership wished to allow multiple 
employees to execute odometer disclosures on behalf of the dealership, 
each employee would be required to have and maintain a distinct access 
identity or code to the electronic odometer system so that the actual 
individual making the disclosure, not just the dealership, is 
identified by the ``signature.'' The dealer or entity on whose behalf 
the individual is making the disclosure must also be identified in the 
transaction and the dealer(s) and entity on whose behalf the individual 
works must be recorded as part of the individual's distinct access 
identity or code.
    NHTSA also considered the existing requirements that various 
parties provide copies of documents as part of the odometer disclosure 
process, and what would qualify as an equivalent in an electronic 
environment. For example, section 580.5(f) requires the transferee to 
return a copy of the odometer disclosure document to the transferor 
after it is signed. Under the current system, the transferee may apply 
for a new title for the vehicle, and generally, a State will not title 
a vehicle without an odometer disclosure statement that contains the 
signatures of both the transferor and the transferee. However, the 
State does not usually verify that a copy of the document was returned 
to the transferor or that the transferor retained it. For this reason, 
NHTSA is concerned about imposing any requirement in the electronic 
environment that would be more restrictive than these current 
requirements. NHTSA therefore proposes to specify only that the 
requirement to provide a document is satisfied by electronically 
transmitting the document, provided that the State allows the parties 
to the transaction access to the completed disclosure statements.
    As discussed previously, one purpose of the signature requirement 
is to aid in the prosecution of odometer fraud. For this reason, NHTSA 
proposes requiring an electronic ``signature'' to identify an 
individual, not a business, for example. NHTSA requests comment on 
whether any other requirements are necessary to ensure that 
investigators can back trace an electronic ``signature'' to identify 
the individual and/or computer used in the electronic equivalent of a 
``paper trail.'' Conversely, if an odometer disclosure is altered, do 
the proposed system requirements develop an adequate ``paper trail'' to 
lead investigators to the IP address or computer used to alter the 
disclosure, and if not, what additional system requirements are 
necessary?
3. Security of Title Documents
    Currently, Sec.  580.4 requires that titles, which are necessarily 
all physical documents except in the five jurisdictions with approved 
petitions for electronic systems pursuant to 49 U.S.C. 32705(d), be 
printed using a secure printing or other secure process. Further, 
currently any power of attorney forms and all documents used to 
reassign title must be issued by the State and be created using a 
secure process. It is central to the integrity and efficacy of the 
motor vehicle titling systems and

[[Page 16117]]

odometer disclosure laws that the authenticity and security of title 
documents, at a minimum, be maintained at their current levels in 
moving to electronic disclosure and titling systems. Currently, 
investigators are able to examine physical documents and observe 
indicators of tampering. Unlike paper documents, however, alterations 
to electronic documents are much more difficult to detect from a visual 
inspection. Further, while electronic documents and transactions 
provide opportunity to enhance security, as with physical documents, 
these systems are still susceptible to manipulation and attacks.
    The proposed changes and additions to Sec.  580.4 seek to clarify 
that the existing requirements apply to physical documents, moving the 
language to a new paragraph (a), and set forth requirements for 
electronic documents, in a new paragraph (b), to ensure comparable 
levels of security and authenticity in electronic documents as exist 
currently for paper documents. Such requirements are necessary to 
protect both the financial interests of motor vehicle owner's and 
potential buyers, as well as to aid law enforcement in preventing, 
detecting, and prosecuting odometer fraud. NHTSA seeks comments as to 
whether the proposed changes and additions to Sec.  580.4 appropriately 
match the security and authenticity requirement for electronic 
documents to the existing requirements, which apply to paper documents.
a. Electronic Odometer Disclosure System Security
    As discussed previously, Sec.  580.4 requires the title, power of 
attorney or reassignment documents used for odometer disclosures to 
have certain security safety features to inhibit altering the 
disclosure and to aid in the detection of alterations.
    NHTSA contemplated proposing specific minimum requirements for 
system security, but has preliminarily determined that it would be 
counter-productive, and thus inappropriate, to do so. NHTSA based this 
decision on the knowledge that the rulemaking process is typically 
slow, while developments in technology are fast and frequent. While 
proactive changes to enhance cyber security are constantly evolving and 
improving, cyber-attacks and efforts to undermine the security of 
electronic data systems are also changing rapidly and frequently. The 
rulemaking process would not be able to keep pace with these 
technological changes and it is foreseeable that, if NHTSA imposed 
specific system requirements, the specific requirements could become 
obsolete, yet remain the requirements while a new rulemaking is 
undertaken. Alternatively, to the extent that rulemaking by NHTSA would 
be able to keep up with the dynamic technological landscape, such 
constant revisions to the regulations would result in an ever-changing 
set of specific requirements for States to adhere to.
    Further, the potential risks to property interests and commerce 
presented by insecure vehicle titling and odometer disclosure systems 
are obvious, since it is critical that the owners, buyers, and sellers 
of motor vehicles have certainty in their ownership status and avoid 
being defrauded in the fundamental details about the vehicle they own 
or are buying.
    By NHTSA's adoption of more general minimum requirements, any State 
that choses to adopt an electronic disclosure system will be able to 
select the specific system requirements it believes are most 
appropriate, while ensuring information security for motor vehicle 
owners, buyers, and law enforcement.
    While NHTSA's expectation is that any State implementing an 
electronic disclosure system would take these various risks into 
account and establish appropriate safeguards, NHTSA nonetheless 
requests comments on whether it should establish minimum specific 
security requirements in this rulemaking and, if so, what requirements 
would be appropriate. NHTSA requests comment on whether requirements 
should be included for the hardware used in an electronic odometer 
system to protect the system from threats which could disrupt the 
electronic records, either from natural or manmade sources and, if so, 
what requirements should be included in a final rule. For example, the 
Federal Information Security Management Act (FISMA) defines a framework 
to protect Federal government information systems from such threats. 
Should NHTSA, for example, require any computer or server attached to 
an electronic odometer system comply with FISMA?
4. Odometer Disclosures
    NHTSA considered the issue of what odometer information disclosures 
and procedures should be required for paper and electronic disclosures, 
and what appropriate modifications can and should be made for 
electronic disclosures. In an effort to track the electronic disclosure 
requirements to the existing requirements, NHTSA makes the following 
proposals regarding the odometer disclosures and procedures.
    In Sec.  580.5 paragraph (a), NHTSA proposes to add the phrase 
``whether a physical or electronic document'' to make clear that the 
disclosure requirements specified in Sec.  580.5 apply to all titles 
issued. The requirements currently apply to all title transfers and, as 
a practical matter, this results in no change in the disclosure 
requirements whether made on a physical document or electronically.
    Paragraph Sec.  580.5(c) sets forth certain specific disclosures 
that must be made as part of a transaction transferring title of a 
vehicle, including that the odometer disclosure must be made on the 
title, or on a document being used to reassign the title. As currently 
written, this requirement necessarily implies the ability to affix 
information onto a document. To clarify this requirement, NHTSA 
proposes to add language specifying ``physical document'' in instances 
of paper title transfers and ``electronic form incorporated into the 
electronic title'' for instances of electronic title transfers. The 
requirement for making electronic disclosures on an electronic form 
incorporated into the electronic title means that paper disclosures 
would become the rare exception when electronic disclosure and titling 
is available. Further, the electronic systems would need to be designed 
to contain or otherwise embed the electronic odometer disclosure in the 
electronic title. Finally, for electronic transfers where the 
transferor is the individual in whose name the vehicle is titled, 
reassignment documents would not be necessary. NHTSA seeks comments on 
the proposal that disclosures be made on an electronic form 
incorporated into the electronic title.
    NHTSA also considered the issue of how to provide the warnings 
currently contained in Sec.  580.5(d) to parties conducting electronic 
transfers. NHTSA proposes to extend these existing requirements to 
electronic transfers by amending Sec.  580.5(d), specifying that in 
instances of electronic transfer, the required information must be 
displayed on the screen, and acknowledged as understood by that party, 
before any signature can be applied to the transaction. This proposed 
requirement is intended to ensure that the information is provided in a 
size and location that is clearly viewable and readable to individuals 
making electronic transfers, and that transferors do not 
unintentionally bypass this information without having an opportunity 
to review it. NHTSA envisions that the acknowledgement would typically 
be a box for the party

[[Page 16118]]

to click acknowledging having seen and understood the information, not 
unlike the boxes often seen on Web sites and computer programs today 
acknowledging service limits or contractual rights prior to gaining 
access to content or services.
    NHTSA considered the existing requirements of Sec.  580.5(f), that 
a transferee print his or her name on the disclosure and return a copy 
to the transferor and believes that the requirement on a transferee to 
``print'' their name is inappropriate for electronic transfers, but 
that any electronic system should be able to provide some record of the 
disclosure for the transferor and transferee. NHTSA proposes to not 
extend the printed name requirement to electronic disclosures because 
the purpose of the printed name is to provide hand writing exemplars 
for use in fraud investigations and prosecutions. However, at present, 
NHTSA is not aware of electronic systems that capture handwriting with 
the level of clarity and precision that exists when applying hand-
writing to paper. As a result, unlike physical handwriting exemplars, 
NHTSA does not currently believe that electronic handwriting exemplars 
would provide the intended investigatory and prosecution tools to law 
enforcement. The requirement that the transferee print his or her name 
on the disclosure therefore need not be extended to electronic 
disclosures. In contrast, it remains important for both parties to the 
transaction to have access to a record showing the disclosure that was 
made, and it is appropriate to extend the current requirement that the 
transferee provide a copy of the disclosure to the transferor to 
electronic transfers.
    In an electronic disclosure jurisdiction, the parties would not 
have physical control of the disclosure documents and the 
responsibility to provide copies of the disclosure must fall to the 
operator(s) of the disclosure system. Thus, NHTSA proposes to amend 
Sec.  580.5(f) to require that jurisdictions with electronic disclosure 
systems provide a way for the transferor and transferee to obtain 
copies, in the form of some detailed record, of the disclosure. These 
records not only provide assurance to the parties of what information 
was relied upon in the transaction, but could also aid law enforcement 
in investigations and prosecutions. NHTSA requests comments on the 
proposal to not extend the printed name requirement to electronic 
disclosures, including technologies that provide comparable electronic 
hand-writing exemplars as paper document exemplars, and on the proposal 
to require that any electronic system be capable of providing the 
transferor and transferee with a copy or record of the disclosure made.
    NHTSA has considered how to handle odometer disclosure for a 
vehicle that has not been titled or for which the title does not 
contain a space for the information required. Under the existing paper 
disclosure systems, in such instances the parties execute the odometer 
disclosure as a separate paper document. This system would not make 
sense in an electronic disclosure system since the first time a title 
was obtained for any given vehicle the odometer disclosure would be 
incorporated into that electronic title at the time of creation and no 
electronic title system would be created that did not provide space for 
the required information. The option relating to insufficient space on 
the title is a holdover from when odometer disclosures were first 
required on the title and jurisdictions needed time to bring titles 
into conformity with the new regulation. That concern is not applicable 
here since electronic disclosure systems will be designed and 
implemented using the requirements established in this rule. Similarly, 
no special provision is needed for providing the information in the 
first instance of titling in an electronic disclosure jurisdiction, 
since any electronic system will include the execution of an electronic 
disclosure that is incorporated into the electronic title upon 
creation. NHTSA thus proposes to amend Sec.  580.5(g) to add language 
clarifying that the existing regulation allowing for disclosure on a 
separate document for first title and instances where the title does 
not contain space for the disclosure is limited to transactions 
conducted using physical documents while disclosures for first title 
issuance in an electronic disclosure system must be made in the 
electronic system. NHTSA requests comments on the proposal to limit the 
current separate document disclosures for first title issuance and when 
the title does not contain sufficient space for the disclosure 
requirements to paper title jurisdictions, and requiring disclosures 
for first title issuance to be conducted within the electronic title 
system in electronic disclosure jurisdictions.
5. Requirements for Electronic Transactions
    NHTSA has considered the differences between disclosures made on 
physical documents and those made on electronic documents and 
preliminarily determined that additional requirements are necessary to 
ensure the accuracy and authenticity of electronic disclosures. NHTSA 
has also considered the complications that could arise, including 
competing claims of vehicle ownership, if both paper and electronic 
titles co-exist as an official form of title issued within a 
jurisdiction. To address these issues, NHTSA is proposing to add a new 
Sec.  580.6 (previously reserved), to provide requirements that apply 
only to electronic transactions.
a. Document Integrity
    First, NHTSA proposes to add Sec.  580.6(a)(1), requiring that any 
electronic record be retained in a format that cannot be altered and, 
further, that indicates any attempts to alter it. This proposed 
requirement adds as an explicit condition for electronic disclosures an 
implicit reality of disclosures on physical documents. Disclosures on 
physical documents provide some method for detection of alterations or 
attempts to alter the document. While techniques for altering the 
physical documents evolve over time, they nonetheless leave an 
indicator, however hard to detect, of that alteration or attempt. 
Electronic documents thus present a different challenge since many 
documents are easily altered, and some of the techniques used can be 
difficult to trace. A system that prevents alteration is critical for 
consumer confidence in the disclosure system and information relating 
to the alteration of disclosure documents is critical to the 
enforcement of the odometer disclosure laws and in preventing odometer 
fraud. NHTSA requests comments on this proposed additional requirement 
for electronic disclosures and what, if any, more specific requirements 
would be appropriate to ensure that electronic records are not altered 
and indicate any attempts to alter them.
b. Individual Identity Assigned to all Unique Electronic Signatures
    Currently, each person signs their own name to a physical document 
when completing an odometer disclosure and is uniquely identified as an 
individual. Or at least that is presumed for non-fraudulent 
transactions. Similarly, in an electronic disclosure system, each 
individual person will need to be uniquely identified by their own 
unique electronic signature. This is necessary to protect the financial 
interests of vehicle owners and purchasers, providing certainty that 
the vehicle title remains with the lawful owner and that odometer 
disclosures are made by the appropriate individuals, who can be 
located, if needed.

[[Page 16119]]

    As a practical matter, this is particularly necessary for 
transactions involving individuals who complete portions of disclosures 
on behalf of others, like an employer. For example, when a vehicle 
owner seeks to trade in a car at a car dealership in an electronic 
disclosure jurisdiction the parties would no longer need to provide 
power of attorney and reassignment documents for the dealer to use in 
selling the vehicle at a later date, but instead would simply transfer 
title from the vehicle owner to the car dealer and make the odometer 
disclosure on the electronic form which is incorporated into the title. 
This will require an individual at a car dealership to enter 
information into the electronic disclosure system on behalf of the 
business or entity on whose behalf that individual is operating.
    NHTSA has considered the importance of maintaining confidence that 
the parties are who they claim to be for ownership and law enforcement 
purposes. NHTSA has also considered challenges created in fraud 
investigation and prosecution if both the individual and business, or 
entity, are not identified by the code or signature associated with an 
individual acting in this capacity to input data into the system. 
Accordingly, NHTSA is proposing to add Sec.  580.6(a)(2) requiring that 
any electronic signature identify an individual and, further, that if 
the individual is acting in a business capacity or otherwise on behalf 
of any other individual or entity, that the business or entity also be 
identified as part of that unique electronic signature. NHTSA requests 
comments on this proposal.
c. Availability of Documentation in Electronic Disclosure Systems
    The physical document disclosure system currently established in 
Sec.  580 generally requires in various places that individuals be 
provided with specific documentation. However, in an electronic system, 
in many cases there will not be any document to provide, and instead, 
information can be made available to the parties via the electronic 
system. Moreover, part of the rationale for using an electronic 
disclosure and titling system is to reduce the amount of paper being 
used. It would defeat one of the purposes of electronic disclosure to 
require the printing and delivery of documentation at various stages. 
It could also add unnecessary complications to the electronic delivery 
of documentation if specific electronic delivery mechanisms were 
required. Having considered this factors, NHTSA proposes to add Sec.  
580.6(a)(3), providing that any requirement in the regulations to 
disclose, issue, execute, return, notify, or otherwise provide 
information to another person is satisfied when a copy of the 
electronic disclosure or statement is electronically transmitted or 
otherwise electronically accessible to the party required to receive 
the disclosure. NHTSA requests comments on the usefulness of this 
proposal.
d. Physical Documents Used in Making Electronic Disclosures
    The continued use of physical documents to accomplish transfer of 
title or odometer disclosure in an electronic disclosure jurisdiction 
is strongly discouraged, as each different document presents a new 
opportunity for fraudulent activity to occur. However, to the extent 
that the continued use of physical documents is necessary in an 
electronic system, any physical documents used must comply with all 
requirements of this part. NHTSA thus proposes the new Sec.  
580.6(a)(7) to require that any physical documents used to make 
electronic disclosures comply with the existing applicable 
requirements.
e. Co-Existing Physical and Electronic Disclosures and Titles
    NHTSA considered the issue of which title and/or odometer 
disclosure is, and should be, the official document in certain 
situations. In a written environment it is possible to determine which 
document has an original signature and, therefore, to distinguish 
original (or official) documents from copies. This method of 
determining the original/official document is not available when the 
original document was created electronically. In addition, when a print 
copy is made of an electronic odometer disclosure, what should be done 
to specify whether the print document is now the official document or 
the electronic document remains the official document? This issue could 
arise when a vehicle titled with an electronic odometer disclosure is 
moved to a State which either does not participate in electronic 
odometer disclosures or which has an electronic odometer system that 
cannot communicate directly with the system in the State in which the 
vehicle is currently titled. It could also occur if a vehicle owner in 
an electronic disclosure State would like a paper copy of a title and/
or odometer disclosure for record-keeping purposes.
    First, NHTSA is proposing that once an odometer disclosure is 
incorporated in the electronic title, the electronic title containing 
the disclosure is the official record of ownership and mileage. The 
electronic disclosure does not continue as a record separate from the 
electronic title as that would be contrary to TIMA and would provide 
additional opportunity for fraud. If an electronic title (containing an 
odometer disclosure) must be converted to a paper document as the 
official document, NHTSA is proposing additional requirements. First, 
only a State or State-authorized entity can create the new official 
document. Second, the paper document must be set forth by means of a 
secure printing method as a physical, paper document. As a practical 
matter, this may present certain logistical challenges, particularly 
for individuals in an electronic title State who seek to buy a new car, 
and trade-in their old car, in another State. This issue is discussed 
at greater length below regarding Power of Attorney, and NHTSA requests 
comments on how this logistical challenge can be avoided or mitigated. 
Third, the electronic record must be altered to clearly indicate that 
an official paper document has been issued, to whom, and the date of 
issuance.
    Second, NHTSA is proposing to allow States to authorize the 
issuance of some type of record of ownership document that would 
contain the information on a title and/or odometer disclosure but would 
not replace the official document. This document could be used for 
persons who would like a paper copy but would not like the official 
document to be converted to a paper document. In the proposed Sec.  
580.6(a)(5) jurisdictions with electronic title and odometer disclosure 
systems would be allowed to provide vehicle owners with a paper record 
of ownership including the odometer disclosure information so long as 
the document clearly indicates that it is not an official title or 
odometer disclosure for that vehicle. NHTSA requests comments on the 
benefits and drawbacks of such a record and whether the option of 
obtaining such a document should be required under the regulations.
    Finally, in reverse situations where a vehicle titled in a State 
that does not participate in an electronic odometer system is moved to 
a State with an electronic odometer system, NHTSA is proposing a new 
Sec.  580.6(a)(4) to require that the prior title and odometer 
disclosure be copied electronically for retention by the electronic 
system State and that the paper document(s) be destroyed at the time 
they are converted to electronic documents. NHTSA further proposes that 
the electronic copy of the physical document be retained for a minimum 
of five years, in an order that

[[Page 16120]]

permits systematic retrieval, and in a format that cannot be altered 
and that indicates any attempts to alter it. The five year retention 
requirement proposed in this paragraph matches the retention period of 
similar documentation held by dealers and distributors of motor 
vehicles and auction companies. Finally, NHTSA is also proposing that 
any paper documents scanned or copied electronically for storage in an 
electronic system be converted through a process providing a minimum 
resolution of 600 dots per inch (dpi) to ensure the preservation of 
security features during the conversion process.
    NHTSA requests comments on what standards should be used for 
scanning and maintaining the documents including whether the scan must 
be in color, be made at a minimum resolution (and if so, what required 
minimum resolution should be), or preserve the security features of the 
original to ensure that fraud or alteration could be detected, should 
it occur.

C. Leased Vehicles

    Section 580.7 deals with the disclosure obligations and 
requirements for leased vehicles. NHTSA is not aware of any reason why 
electronic disclosures could not be made for leased vehicles, though 
lessors wishing to utilize such a system for communications between 
themselves and lessees would need to develop an electronic system 
complying with the technological requirements established in Sec.  
580.4(b) of this part unless the jurisdiction where the leased vehicle 
is titled provides such a system. These requirements are necessary as 
security and authenticity of disclosure information is fundamental to 
all types of disclosures within the odometer disclosure system. 
Otherwise, disclosures regarding leased vehicles would continue on 
physical documents. As with all other electronic disclosures, it is 
appropriate and necessary that individuals making the disclosure be 
provided with the notice of Federal law and possible penalties for 
providing false information. The substantive disclosures would not 
change for electronic disclosure except that, as with all other 
electronic disclosures, the person making the disclosure need not 
provide their ``printed name'' for the reasons previously discussed.
    Having considered the issues involved in lessor-lessee 
communications regarding odometer disclosure statements, NHTSA proposes 
to add language to Sec.  580.7(a) specifying that legal notices given 
on paper odometer disclosure documents must be provided to, and 
acknowledged by, an individual making an electronic disclosure; add 
language to Sec.  580.7(b) clarifying that a printed name need not be 
provided for electronic disclosures; and add a new Sec.  580.7(e) 
requiring any electronic system maintained by a lessor for the purpose 
of complying with this section meet the requirements set forth in 
proposed Sec.  580.4(b) or this part. NHTSA requests comments as to 
whether electronic disclosures of leased vehicles should be a required 
part of the electronic system established by a jurisdiction or are best 
left to individual companies/lessors to establish and whether the 
current proposal would sufficiently aid law enforcement in detecting 
altered documents.

D. Record Retention

    Sections 580.8 and 580.9 include requirements for odometer 
disclosure record retention by motor vehicle dealers and distributors 
and by auction companies, respectively. Section 580.8(a) specifies that 
dealers and distributors must retain a ``Photostat, carbon copy or 
other facsimile copy of each odometer mileage statement which they 
issue and receive.'' An electronic odometer disclosure system that does 
not allow for dealers and distributors to maintain records in 
electronic format would undermine the purpose for moving to such a 
system. NHTSA is therefore proposing to amend this requirement to 
include electronic copies or electronic documents as an acceptable form 
of record.
    Under both sections, records must be stored for five years in a 
manner and method so they are accessible to NHTSA investigators and 
other law enforcement personnel. The records must also be stored so 
they are difficult or impossible to modify. As previously discussed, 
unlike paper documents, alterations to electronic documents are much 
more difficult to detect from a visual inspection. Therefore, NHTSA is 
proposing to add a specific requirement in a new Sec.  580.8(d) and in 
Sec.  580.9 that electronic records kept by motor vehicle dealers and 
distributors and by auction companies must be stored in a format that 
cannot be altered and which indicates any attempts to alter the 
document, consistent with the standards set forth in proposed Sec.  
580.4(b). NHTSA requests comment on whether this requirement would be 
sufficient to allow law enforcement to detect altered documents.

E. Power of Attorney

    NHTSA is proposing to modify the power of attorney provisions. A 
power of attorney generally should not be needed for transfers and 
disclosures within jurisdictions using electronic systems since there 
will not be a ``lost'' title, as the State system will hold the title 
record with the odometer disclosure, and any lienholder will not 
physically hold the title since the title will be on file in the 
State's electronic system. However, NHTSA proposes to amend Sec.  
580.13(a) and (b), to allow an individual with a vehicle titled in an 
electronic title State to use a power of attorney to sell a vehicle in 
a paper title State. In this way, the electronic title with the 
required odometer disclosure is equivalent to a lost title or a title 
held by a lienholder. Without this additional permitted use of power of 
attorney, the seller from an electronic title State cannot trade-in his 
old car and buy a new car in a paper title State unless the seller 
first remembers, and plans ahead, to obtain a printed title from the 
electronic title State before going car shopping. For example, assume 
Mr. Smith lives in an e-title State but goes to a paper title State to 
trade-in his old car and buy a new car. He must either get his paper 
title first or there must be some means for him to make his odometer 
disclosure without a title. Electronic title States will not likely be 
in a position to provide secure paper titles on demand. This means Mr. 
Smith cannot buy a new car unless he gets his electronic title printed 
as a physical title first. The agency believes this is unlikely to 
happen in many, if not most, instances.
    While the use of power of attorney provides an additional step in 
the transfer process, and thus another opportunity for fraud to occur, 
the agency believes as a practical matter that there must be some other 
way for a vehicle owner from an electronic title State to sell the 
vehicle in a paper title State without first obtaining a converted 
official paper title from the electronic title State. However, power of 
attorney laws vary from State to State, so even with this modification 
there may still be States that retain paper title systems where 
vehicles registered in electronic title States could not be sold 
without the converted official paper title. NHTSA requests comments on 
the benefits and drawbacks of this proposal as well as other ideas to 
address this challenge while maintaining adequate safeguards of 
accurate disclosures and a paper-trail.
    NHTSA also proposes to add the word ``physical'' in multiple places 
in Sec.  580.13(f), Sec.  580.14(a), (e), and (f), and in Sec.  
580.15(a). In Sec.  580.13(f) this is necessary to make clear that the 
title being referenced at the two specified points is a physical title 
and not an electronic title, unlike the other references to ``title'' 
within paragraph

[[Page 16121]]

(f), which apply to either a physical or electronic title depending on 
in which format the transferor's title is currently held. The word 
``physical'' is needed to clarify three documents in Sec.  580.14(a) 
that must be physical documents for the purposes of using reassignment 
documents and power of attorney since these documents will only be 
utilized in transactions outside of electronic disclosure systems. 
Similarly, the word ``physical'' is also needed in Sec.  580.14(e) and 
(f) to make clear that power of attorney forms would be physical 
documents, since power of attorney would not be needed or utilized in 
electronic title and disclosure jurisdictions. Finally, the addition of 
the word ``physical'' is necessary in six instances in Sec.  580.15(a) 
to clarify that the disclosures made and documents reviewed involved 
physical documents, since the use of power of attorney, and related 
documents, would not be necessary to accomplish transfers within 
electronic title and disclosure jurisdictions.
    NHTSA requests comments on whether power of attorney would be 
necessary in an electronic odometer system for intra-state transfers. 
Second, NHTSA notes that the requirements in section 580.13 permitting 
disclosures by power of attorney assume that the power of attorney 
document itself is a physical document. Therefore, NHTSA requests 
comments on whether odometer disclosure by power of attorney would be 
made on other than a paper document, i.e. electronically, in these 
situations and, if so, explanation of how that would work. Further, 
NHTSA has concerns that the validity of power of attorney may vary from 
State to State and the possible implications of that variability in 
interstate transactions and requests comment on this issue.
    NHTSA proposes to correct a typographical error that appears in 
both Sec.  580.13(b)(5) and Sec.  580.14(b)(5) by adding a comma 
between ``model year,'' which would bring the disclosure requirements 
for power of attorney forms into conformity with standard transfer 
disclosures and leased vehicle disclosures. This typographical error in 
the regulation creates inconsistency within the reporting scheme. 
Accordingly, NTHSA proposes to change ``model year'' to ``model, year'' 
in these two reporting provisions.

F. Exemptions

    Section 580.17(3) currently exempts any vehicle which is more than 
10 years old from the odometer disclosure requirements. The average age 
of the United States vehicle fleet has been trending upward and 
recently reached 11.5 years.\4\ Because of this, NHTSA is proposing to 
raise this exemption to 25 years. NHTSA also requests comments on 
whether this exemption should be eliminated.
---------------------------------------------------------------------------

    \4\ Average age of U.S. fleet hits record 11.5 years, IHS says, 
Autonews.com (July 29, 2015), https://www.autonews.com/article/20150729/RETAIL/150729861/average-age-of-u.s.-fleet-hits-record-11.5-years-ihs-says (last visited March 14, 2016).
---------------------------------------------------------------------------

G. Miscellaneous Amendments

    The agency is no longer located at the address currently provided 
in Sec.  580.10. Accordingly, NHTSA is proposing to amend Sec.  
580.10(b)(2) to provide the correct address for applications for 
assistance to, which is the Office of Chief Counsel, National Highway 
Traffic Safety Administration, 1200 New Jersey Avenue SE., W41-326, 
Washington, DC 20590.
    Section 580.11 provides States with procedures by which to petition 
NHTSA for approval of disclosure requirements differing from those 
required by 49 CFR part 580, specifically Sec.  580.5, Sec.  580.7, and 
Sec.  580.13(f). NHTSA is proposing to amend Sec.  580.11(a) to add the 
new Sec.  580.6 to the sections for which a State may petition the 
agency to utilize different disclosure requirements and to add Sec.  
580.6 to the explanation of the effect of a grant or denial of a 
petition contained in Sec.  580.11(c). NTHSA requests comments on 
whether a State should be permitted to use alternative disclosure 
requirements to those proposed in Sec.  580.6.
    Section 580.11 also provides the prior address for the agency, and 
NHTSA is proposing to amend Sec.  580.11(b)(2) to provide the current 
address, which is the Office of Chief Counsel, National Highway Traffic 
Safety Administration, 1200 New Jersey Avenue SE., W41-326, Washington, 
DC 20590.
    The petition provided for in Sec.  580.12, allowing a State to seek 
an extension of time beyond the April 29, 1989 deadline to bring its 
laws into conformity with the requirements of Part 580, was due to the 
agency by February 28, 1989. These dates having long ago passed and 
States having brought applicable laws into compliance, the provisions 
within Sec.  580.12 are now obsolete. Accordingly, NHTSA proposes to 
strike the regulatory text of Sec.  580.12 and replace it with 
``[Remove and Reserve]'' to reserve the section.

IV. Public Participation

How do I prepare and submit comments?

    Your comments must be written and in English. To ensure that your 
comments are correctly filed in the Docket, please include the docket 
number of this document in your comments.
    Your comments must not be more than 15 pages long. (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 
supporting documents to your comments. There is no limit on the length 
of the attachments.
    Comments may be submitted to the docket electronically by logging 
onto the Docket Management System Web site at https://www.regulations.gov. Follow the online instructions for submitting 
comments.
    You may also submit two copies of your comments, including the 
attachments, to Docket Management at the address given above under 
ADDRESSES.
    Please note that pursuant to the Data Quality Act, in order for 
substantive data to be relied upon and used by the agency, it must meet 
the information quality standards set forth in the OMB and DOT Data 
Quality Act guidelines. Accordingly, we encourage you to consult the 
guidelines in preparing your comments. OMB's guidelines may be accessed 
at: https://www.whitehouse.gov/omb/fedreg/reproducible.html. DOT's 
guidelines may be accessed at: https://www.bts.gov/programs/statistical_policy_and_research/data_quality_guidelines.

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

[[Page 16122]]

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 will also consider 
comments that Docket Management receives after that date. If Docket 
Management receives a comment too late for us to consider in developing 
a final rule (assuming that one is issued), 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 above under ADDRESSES. The hours of the Docket are 
indicated above in the same location. You may also see the comments on 
the Internet. To read the comments on the Internet, go to https://www.regulations.gov. Follow the online instructions for accessing the 
dockets.
    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.

V. Regulatory Notices and Analyses

A. Executive Orders 12866 and 13563 and DOT Regulatory Policies and 
Procedures

    Executive Order 12866, Executive Order 13563, and the Department of 
Transportation's regulatory policies require this agency to make 
determinations as to whether a regulatory action is ``significant'' and 
therefore subject to OMB review and the requirements of the 
aforementioned Executive Orders. Executive Order 12866 defines a 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or Tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    We have considered the potential impact of this proposal under 
Executive Order 12866, Executive Order 13563, and the Department of 
Transportation's regulatory policies and procedures, and have 
determined that it is not significant. This proposal amends existing 
requirements to allow States a new alternative means of complying with 
those requirements. It does not impose any new regulatory burdens. 
Therefore, this document was not reviewed by the Office of Management 
and Budget under E.O. 12866 and E.O. 13563.

B. National Environmental Policy Act

    We have reviewed this rule for the purposes of the National 
Environmental Policy Act and determined that it would not have a 
significant impact on the quality of the human environment.

C. Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq., 
as amended by the Small Business Regulatory Enforcement Fairness Act 
(SBREFA) of 1996), whenever an agency is required to publish a notice 
of proposed rulemaking or final rule, it must prepare and make 
available for public comment a regulatory flexibility analysis that 
describes the effect of the rule on small entities (i.e., small 
businesses, small organizations, and small governmental jurisdictions). 
The Small Business Administration's regulations at 13 CFR part 121 
define a small business, in part, as a business entity ``which operates 
primarily within the United States.'' 13 CFR 121.105(a). No regulatory 
flexibility analysis is required if the head of an agency certifies the 
proposal would not have a significant economic impact on a substantial 
number of small entities. SBREFA amended the Regulatory Flexibility Act 
to require Federal agencies to provide a statement of the factual basis 
for certifying that a proposal would not have a significant economic 
impact on a substantial number of small entities.
    In compliance with the Regulatory Flexibility Act, NHTSA has 
evaluated the effects of this proposed rule on small entities. The head 
of the agency has certified that the proposed rule would not have a 
significant economic impact on a substantial number of small entities. 
This proposal is only allowing States the option of an alternative 
means of complying with an existing requirement and therefore would not 
impose any new impact on any small entities.

D. Executive Order 13132 (Federalism)

    NHTSA has examined today's NPRM pursuant to Executive Order 13132 
(64 FR 43255, August 10, 1999). Executive Order 13132 requires agencies 
to determine the federalism implications of a proposed rule. The agency 
has determined that the proposed rule does not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment. The proposed rule merely adds another option to the way 
States are allowed to process and issue existing odometer disclosure 
requirements, and does not alter the effect on the States of existing 
statutory or regulatory requirements.

E. Executive Order 12988 (Civil Justice Reform)

    When promulgating a regulation, Executive Order 12988 specifically 
requires that the agency must make every reasonable effort to ensure 
that the regulation, as appropriate: (1) Specifies in clear language 
the preemptive effect; (2) specifies in clear language the effect on 
existing Federal law or regulation, including all provisions repealed, 
circumscribed, displaced, impaired, or modified; (3) provides a clear 
legal standard for affected conduct rather than a general standard, 
while promoting simplification and burden reduction; (4) specifies in 
clear language the retroactive effect; (5) specifies whether 
administrative proceedings are to be required before parties may file 
suit in court; (6) explicitly or implicitly defines key terms; and (7) 
addresses other important issues affecting clarity and general 
draftsmanship of regulations.
    Pursuant to this Order, NHTSA notes as follows. The preemptive 
effect of this proposal is discussed above in connection with Executive 
Order 13132. NHTSA has also considered whether this rulemaking would 
have any retroactive effect. This proposed rule does not have any 
retroactive effect. NHTSA notes further that there is no requirement 
that individuals submit a petition for reconsideration or pursue other 
administrative proceeding before they may file suit in court.

F. Executive Order 13609: Promoting International Regulatory 
Cooperation

    The policy statement in section 1 of Executive Order 13609 
provides, in part:
    The regulatory approaches taken by foreign governments may differ 
from those taken by U.S. regulatory agencies to address similar issues. 
In some cases,

[[Page 16123]]

the differences between the regulatory approaches of U.S. agencies and 
those of their foreign counterparts might not be necessary and might 
impair the ability of American businesses to export and compete 
internationally. In meeting shared challenges involving health, safety, 
labor, security, environmental, and other issues, international 
regulatory cooperation can identify approaches that are at least as 
protective as those that are or would be adopted in the absence of such 
cooperation. International regulatory cooperation can also reduce, 
eliminate, or prevent unnecessary differences in regulatory 
requirements.
    NHTSA requests public comment on whether (a) ``regulatory 
approaches taken by foreign governments'' concerning the subject matter 
of this rulemaking, and (b) the above policy statement, have any 
implications for this rulemaking.

G. National Technology Transfer and Advancement Act

    Under the National Technology Transfer and Advancement Act of 1995 
(NTTAA) (Pub. L. 104-113), all Federal agencies and departments shall 
use technical standards that are developed or adopted by voluntary 
consensus standards bodies, using such technical standards as a means 
to carry out policy objectives or activities determined by the agencies 
and departments, except when use of such a voluntary consensus standard 
would be inconsistent with the law or otherwise impractical. Voluntary 
consensus standards are technical standards (e.g., materials 
specifications, test methods, sampling procedures, and business 
practices) that are developed or adopted by voluntary consensus 
standards bodies, such as the SAE International. The NTTAA directs 
NHTSA to provide Congress, through OMB, explanations when the agency 
decides not to use available and applicable voluntary consensus 
standards. NHTSA is proposing to reference the standards provided in 
NIST Special Publication 800-63-2, Electronic Authentication Guideline, 
to determine the appropriate level of security to authenticate 
electronic signatures.

H. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 requires agencies to 
prepare a written assessment of the costs, benefits and other effects 
of proposed or final rules that include a Federal mandate likely to 
result in the expenditure by State, local or tribal governments, in the 
aggregate, or by the private sector, of more than $100 million annually 
(adjusted for inflation with base year of 1995). In 2011 dollars, this 
threshold is $139 million.\5\
---------------------------------------------------------------------------

    \5\ Adjusting this amount by the implicit gross domestic product 
price deflator for the year 2011 results in $139 million (113.361/
81.606 = 1.39).
---------------------------------------------------------------------------

    This proposed rule would not result in the expenditure by State, 
local, or tribal governments, in the aggregate, or more than $139 
million annually, and would not result in the expenditure of that 
magnitude by the private sector.

I. Paperwork Reduction Act

    Under the procedures established by the Paperwork Reduction Act of 
1995 (PRA), a person is not required to respond to a collection of 
information by a Federal agency unless the collection displays a valid 
OMB control number. Today's NPRM does not propose any new information 
collection requirements, it merely allows States to provide an 
alternative means of collecting information they already collect.

J. Plain Language

    Executive Order 12866 requires each agency to write all rules in 
plain language. Application of the principles of plain language 
includes consideration of the following questions:
     Have we organized the material to suit the public's needs?
     Are the requirements in the rule clearly stated?
     Does the rule contain technical language or jargon that 
isn't clear?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the rule easier to understand?
     Would more (but shorter) sections be better?
     Could we improve clarity by adding tables, lists, or 
diagrams?
     What else could we do to make the rule easier to 
understand?
    If you have any responses to these questions, please include them 
in your comments on this proposal.

K. Regulation Identifier Number (RIN)

    The Department of Transportation assigns a regulation identifier 
number (RIN) to each regulatory action listed in the Unified Agenda of 
Federal Regulations. The Regulatory Information Service Center 
publishes the Unified Agenda in April and October of each year. You may 
use the RIN contained in the heading at the beginning of this document 
to find this action in the Unified Agenda.

L. Privacy Act

    Anyone is able to search the electronic form of all comments 
received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an organization, business, labor union, etc.). You may review DOT's 
complete Privacy Act statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit 
https://www.dot.gov/privacy.html.

List of Subjects in 49 CFR Part 580

    Consumer protection, Motor vehicles, Reporting and recordkeeping 
requirements.

    For the reasons discussed in the preamble, NHTSA proposes to amend 
49 CFR part 580 as follows:

PART 580--ODOMETER DISCLOSURE REQUIREMENTS

0
1. Revise the authority citation to read as follows:

    Authority:  49 U.S.C. 32705; Pub. L. 112-141; delegation of 
authority at 49 CFR 1.95.

0
2. Revise Sec.  580.1 to read as follows:


Sec.  580.1  Scope.

    This part prescribes rules requiring transferors and lessees of 
motor vehicles to make electronic or written disclosure to transferees 
and lessors respectively, concerning the odometer mileage and its 
accuracy as directed by sections 408 (a) and (e) of the Motor Vehicle 
Information and Cost Savings Act as amended, 15 U.S.C. 1988 (a) and 
(e). In addition, this part prescribes the rules requiring the 
retention of odometer disclosure statements by motor vehicle dealers, 
distributors and lessors and the retention of certain other information 
by auction companies as directed by sections 408(g) and 414 of the 
Motor Vehicle Information and Cost Savings Act as amended, 15 U.S.C. 
1990(d) and 1988(g).
0
3. Amend Sec.  580.3 by adding in alphabetical order, definitions for 
``Electronic Document'', ``Physical Document'' and ``Sign or 
Signature'' to read as follows:


Sec.  580.3  Definitions.

* * * * *
    Electronic Document means a title, reassignment document or power 
of attorney that is maintained in electronic form by a state, territory 
or possession that meets all the requirements of this part.
* * * * *
    Physical Document means a title, reassignment document or power of 
attorney printed on paper that meets all the requirements of this part.
* * * * *

[[Page 16124]]

    Sign or Signature means either:
    (a) For a paper odometer disclosure, a person's name, or a mark 
representing it, as hand written personally.
    (b) For an electronic odometer disclosure, an electronic sound, 
symbol, or process using an authentication system equivalent to or 
greater than Level 3 as described in National Institute of Standards 
and Technology (NIST) Special Publication 800-63-2, Electronic 
Authentication Guideline, which identifies a specific individual.
* * * * *
0
4. Revise Sec.  580.4 to read as follows:


Sec.  580.4  Security of title documents and power of attorney forms.

    (a) Each physical title shall be set forth by means of a secure 
printing process or other secure process. In addition, physical power 
of attorney forms issued pursuant to Sec. Sec.  580.13 and 580.14 and 
physical documents which are used to reassign the title shall be issued 
by the State and shall be set forth by a secure process.
    (b) Each electronic title shall be maintained in a secure 
environment so it is protected from unauthorized modification, 
alteration or disclosure. In addition, electronic power of attorney 
forms maintained and made available pursuant to Sec. Sec.  580.13 and 
580.14 and electronic documents which are used to reassign the title 
shall maintained by the State in a secure environment so that it is 
protected from unauthorized modification, alteration and disclosure. 
Any system employed to create, store and maintain the aforementioned 
electronic documents shall record the dates and times when the 
electronic document is created, the odometer disclosures contained 
within are signed and when the documents are accessed, including the 
date and time any attempt is made to alter or modify the electronic 
document and any alterations or modifications made.
0
5. Amend Sec.  580.5 by revising paragraphs (a), (c), (d), (f), and (g) 
to read as follows:


Sec.  580.5  Disclosure of odometer information.

    (a) Each title, whether a physical or electronic document, at the 
time it is issued or made available to the transferee, must contain the 
mileage disclosed by the transferor when ownership of the vehicle was 
transferred and contain a space for the information required to be 
disclosed under paragraphs (c), (d), (e) and (f) of this section at the 
time of future transfer.
* * * * *
    (c) In connection with the transfer of ownership of a motor vehicle 
using a physical document, each transferor shall disclose the mileage 
to the transferee on the physical title or, except as noted below, on 
the physical document being used to reassign the title. In connection 
with the transfer of ownership of a motor vehicle using an electronic 
document, each transferor shall disclose the mileage to the transferee 
on an electronic form incorporated into the electronic title. In the 
case of a transferor in whose name the vehicle is titled, the 
transferor shall disclose the mileage on an electronic form 
incorporated into the electronic title or on the physical title, and 
not on a reassignment documents. This disclosure must be signed by the 
transferor and if made on a physical title, must contain the 
transferor's printed name. In connection with the transfer of ownership 
of a motor vehicle in which more than one person is a transferor, only 
one transferor need sign the disclosure. In addition to the signature 
of the transferor, the disclosure must contain the following 
information:
* * * * *
    (d) In addition to the information provided under paragraph (c) of 
this section, the statement shall refer to the Federal law and shall 
state that failure to complete or providing false information may 
result in fines and/or imprisonment. Reference may also be made to 
applicable State law. If the transaction at issue is electronic, the 
information specified in this paragraph shall be displayed, and 
acknowledged as understood by the party, prior to the execution of any 
electronic signatures.
* * * * *
    (f) The transferee shall sign the disclosure statement, and in the 
case of a disclosure made on a physical title, shall print his name, 
and return a copy to his transferor. If the disclosure is incorporated 
into an electronic title, the electronic system shall provide a means 
for making copies of the disclosure statement available to the 
transferee and transferor.
    (g) In jurisdictions employing paper title and odometer disclosure 
schemes, if the vehicle has not been titled or if the physical title 
does not contain a space for the information required, the written 
disclosure shall be executed as a separate physical document. In 
jurisdictions maintaining electronic title and odometer disclosure 
systems, the system shall provide a means for making the disclosure 
electronically and incorporating this disclosure into the electronic 
title when the title is created.
* * * * *
0
6. Revise Sec.  580.6 to read as follows:


Sec.  580.6  Requirements for Electronic Transactions.

    (a) Additional Requirements for Electronic Odometer Disclosures
    (1) Any electronic record shall be retained in a format which 
cannot be altered, and which indicates any attempts to alter it.
    (2) Any signature shall identify an individual, and not solely the 
organization the person represents or is employed by. If the individual 
executing the electronic signature is acting in a business capacity or 
otherwise on behalf of another individual or entity, the business or 
other individual or entity shall also be identified when the signature 
is made.
    (3) Any requirement in these regulations to disclose, issue, 
execute, return, notify or otherwise provide information to another 
person is satisfied when a copy of the electronic disclosure or 
statement is electronically transmitted or otherwise electronically 
accessible to the party required to receive the disclosure.
    (4) Upon creation of an electronic title to replace an existing 
physical title, an electronic copy of the physical title shall be 
created and retained, for not less than five years, by the State 
issuing the electronic title and the physical title shall be destroyed 
immediately following the successful creation of the electronic record. 
The electronic copy of the paper record shall be retained
    (i) in a format which cannot be altered, and which indicates any 
attempts to alter it; and
    (ii) in an order that permits systematic retrieval.
    (5) A State allowing electronic odometer disclosures may provide 
for a paper record of ownership which includes the odometer disclosure 
information, provided the document clearly indicates it is not an 
official title, nor official odometer disclosure, for the vehicle.
    (6) States maintaining an electronic title and odometer disclosure 
system shall retain the capacity to issue physical titles meeting all 
the requirements of this part. Once a physical title is created by a 
State with an electronic title and odometer disclosure statement 
system, the electronic record must indicate that a physical title has 
been issued and the electronic title and disclosure statement have been 
superseded by the physical title as the official title. The State 
electronic title and odometer disclosure

[[Page 16125]]

system shall record the date on which the physical title was issued and 
record the identity of the recipient of the physical title as well as 
the owner(s) named on the physical title.
    (7) Any physical documents employed by transferors and transferees 
to make electronic odometer disclosures shall comply with all 
requirements of this part.
    (8) Any conversion of physical documents to electronic documents 
employed to comply with any of the requirements of this part must 
maintain and preserve the security features incorporated in the 
physical document so that any alterations or modifications to the 
physical document can be detected in the physical document's electronic 
counterpart. Scanning of physical documents must be made in color at a 
resolution of not less than 600 dots per inch (dpi).
0
7. Amend Sec.  580.7 by revising paragraphs (a) and (b), and add 
paragraph (e), to read as follows:


Sec.  580.7  Disclosure of odometer information for leased motor 
vehicles.

    (a) Before executing any transfer of ownership document, each 
lessor of a leased motor vehicle shall notify the lessee in writing on 
a physical document or within an electronic document stating that the 
lessee is required to provide a written disclosure to the lessor 
regarding the mileage. This notice shall contain a reference to the 
Federal law and shall state that failure to complete or providing false 
information may result in fines and/or imprisonment. Reference may also 
be made to applicable State law. If the transaction at issue is 
electronic, the information specified in this paragraph shall be 
displayed, and acknowledged as understood by the party, prior to the 
execution of any electronic signatures.
    (b) In connection with the transfer of ownership of the leased 
motor vehicle, the lessee shall furnish to the lessor a written 
statement regarding the mileage of the vehicle. This statement must be 
signed by the lessee. If executed using a physical document, this 
statement, in addition to the information required by paragraph (a) of 
this section, shall contain the information in paragraphs 1 through 9 
as set forth below. If executed using an electronic document, this 
statement, in addition to the information required by paragraph (a) of 
this section, shall contain the name of the person making the 
disclosure and the information contained in paragraphs 2 through 9 as 
set forth below.
    (1) The printed name of the person making the disclosure;
    (2) The current odometer reading (not to include tenths of miles);
    (3) The date of the statement;
    (4) The lessee's name and current address;
    (5) The lessor's name and current address;
    (6) The identity of the vehicle, including its make, model, year, 
and body type, and its vehicle identification number;
    (7) The date that the lessor notified the lessee of disclosure 
requirements;
    (8) The date that the completed disclosure statement was received 
by the lessor; and
    (9) The signature of the lessor if executed using a physical 
document or the electronic signature of the lessor if statement is made 
electronically.
* * * * *
    (e) Any electronic system maintained by a lessor for the purpose of 
complying with the requirements of this section shall meet the 
requirements of Sec.  580.4(b) of this part.
0
8. Amend Sec.  580.8 by revising paragraph (a) and to add paragraph (d) 
to read as follows:


Sec.  580.8  Odometer disclosure statement retention.

    (a) Dealers and distributors of motor vehicles who are required by 
this part to execute an odometer disclosure statement shall retain for 
five years a photostat, carbon, other facsimile copy or electronic copy 
or document of each odometer mileage statement which they issue and 
receive. They shall retain all odometer disclosure statements at their 
primary place of business in an order that is appropriate to business 
requirements and that permits systematic retrieval.
* * * * *
    (d) Any electronic record shall be retained in a format which 
cannot be altered, and which indicates any attempts to alter it.
0
9. Amend Sec.  580.9 by revising the introductory text to read as 
follows:


Sec.  580.9  Odometer record retention for auction companies.

    Each auction company shall establish and retain in physical 
document form, or electronic document form that complies with the 
requirement of Sec.  580.4(b), at its primary place of business in an 
order that is appropriate to business requirements and that permits 
systematic retrieval, for five years following the date of sale of each 
motor vehicle, the following records:
* * * * *
0
10. Amend Sec.  580.10 by revising paragraph (b)(2) as follows:


Sec.  580.10  Application for assistance.

* * * * *
    (b) * * *
    (2) Be submitted to the Office of Chief Counsel, National Highway 
Traffic Safety Administration, 1200 New Jersey Avenue SE., W41-326, 
Washington, DC 20590;
* * * * *
0
11. Amend Sec.  580.11 by revising paragraphs (a), (b)(2), and (c) to 
read as follows:


Sec.  580.11  Petition for approval of alternate disclosure 
requirements.

    (a) A State may petition NHTSA for approval of disclosure 
requirements which differ from the disclosure requirements of Sec.  
580.5, Sec.  580.6, Sec.  580.7, or Sec.  580.13(f) of this part.
    (b) * * *
    (2) Be submitted to the Office of Chief Counsel, National Highway 
Traffic Safety Administration, 1200 New Jersey Avenue SE., W41-326, 
Washington, DC 20590;
* * * * *
    (c) Notice of the petition and an initial determination pending a 
30-day comment period will be published in the Federal Register. Notice 
of final grant or denial of a petition for approval of alternate motor 
vehicle disclosure requirements will be published in the Federal 
Register. The effect of the grant of a petition is to relieve a State 
from responsibility to conform the State disclosure requirements with 
Sec.  580.5, Sec.  580.6, Sec.  580.7, or Sec.  580.13(f), as 
applicable, for as long as the approved alternate disclosure 
requirements remain in effect in that State. The effect of a denial is 
to require a State to conform to the requirements of Sec.  580.5, Sec.  
580.6, Sec.  580.7, or Sec.  580.13(f), as applicable, of this part 
until such time as the NHTSA approves any alternate motor vehicle 
disclosure requirements.
0
12. Remove and reserve Sec.  580.12.


Sec.  580.12  [Removed and Reserved]

0
13. Amend Sec.  580.13 by revising paragraphs (a), (b), and (f) to read 
as follows:


Sec.  580.13  Disclosure of odometer information by power of attorney.

    (a) If the transferor's title is physically held by a lienholder, 
if the transferor's title exists in electronic form and the transferee 
is located in a State that does not create or maintain electronic 
titles, or if the transferor to whom the title was issued by the State 
has lost his title and the transferee obtains a duplicate title on 
behalf of the transferor, and if otherwise permitted by State law, the 
transferor may give a power of attorney to his transferee for the 
purpose of

[[Page 16126]]

mileage disclosure. The power of attorney shall be on a form issued by 
the State to the transferee that is set forth by means of a secure 
printing process or other secure process, and shall contain, in part A, 
a space for the information required to be disclosed under paragraphs 
(b), (c), (d), and (e) of this section. If a State permits the use of a 
power of attorney in the situation described in Sec.  580.14(a), the 
form must also contain, in part B, a space for the information required 
to be disclosed under Sec.  580.14, and, in part C, a space for the 
certification required to be made under Sec.  580.15.
    (b) In connection with the transfer of ownership of a motor 
vehicle, each transferor to whom a title was issued by the State whose 
title is physically held by a lienholder, whose title exists in 
electronic form and the transferee is located in a State that does not 
create or maintain electronic titles or whose title has been lost, and 
who elects to give his transferee a power of attorney for the purpose 
of mileage disclosure, must appoint the transferee his attorney-in-fact 
for the purpose of mileage disclosure and disclose the mileage on the 
power of attorney form issued by the State. This written disclosure 
must be signed by the transferor, including the printed name, and 
contain the following information:
    (1) The odometer reading at the time of transfer (not to include 
tenths of miles);
    (2) The date of transfer;
    (3) The transferor's name and current address;
    (4) The transferee's name and current address; and
    (5) The identity of the vehicle, including its make, model, year, 
body type and vehicle identification number.
* * * * *
    (f) Upon receipt of the transferor's title, the transferee shall 
complete the space for mileage disclosure on the title exactly as the 
mileage was disclosed by the transferor on the power of attorney form. 
The transferee shall submit the original power of attorney form to the 
State that issued it, with a copy of the transferor's physical title or 
with the actual physical title when the transferee submits a new title 
application at the same time. The State shall retain the power of 
attorney form and title for three years or a period equal to the State 
titling record retention period, whichever is shorter. If the mileage 
disclosed on the power of attorney form is lower than the mileage 
appearing on the title, the power of attorney is void and the dealer 
shall not complete the mileage disclosure on the title.
0
14. Amend Sec.  580.14 by revising paragraphs (a), (b), (e), and (f) to 
read as follows:


Sec.  580.14  Power of attorney to review title documents and 
acknowledge disclosure.

    (a) In circumstances where part A of a secure power of attorney 
form has been used pursuant to Sec.  580.13 of this part, and if 
otherwise permitted by State law, a transferee may give a power of 
attorney to his transferor to review the physical title and any 
physical reassignment documents for mileage discrepancies, and if no 
discrepancies are found, to acknowledge disclosure on the physical 
title. The power of attorney shall be on part B of the form referred to 
in Sec.  580.13(a), which shall contain a space for the information 
required to be disclosed under paragraphs (b), (c), (d), and (e) of 
this section and, in part C, a space for the certification required to 
be made under Sec.  580.15.
    (b) The power of attorney must include a mileage disclosure from 
the transferor to the transferee and must be signed by the transferor, 
including the printed name, and contain the following information:
    (1) The odometer reading at the time of transfer (not to include 
tenths of miles);
    (2) The date of transfer;
    (3) The transferor's name and current address;
    (4) The transferee's name and current address; and
    (5) The identity of the vehicle, including its make, model, year, 
body type and vehicle identification number.
* * * * *
    (e) The transferee shall sign the physical power of attorney form, 
and print his name.
    (f) The transferor shall give a copy of the physical power of 
attorney form to his transferee.
0
15. Amend Sec.  580.15 by revising paragraph (a) to read as follows:


Sec.  580.15  Certification by person exercising powers of attorney.

    (a) A person who exercises a power of attorney under both 
Sec. Sec.  580.13 and 580.14 must complete a certification that he has 
disclosed on the physical title document the mileage as it was provided 
to him on the physical power of attorney form, and that upon 
examination of the physical title and any physical reassignment 
documents, the mileage disclosure he has made on the physical title 
pursuant to the power of attorney is greater than that previously 
stated on the physical title and reassignment documents. This 
certification shall be under part C of the same form as the powers of 
attorney executed under Sec. Sec.  580.13 and 580.14 and shall include:
* * * * *
0
16. Amend Sec.  580.17 by revising paragraph (a)(3) and example to 
paragraph (a)(3) to read as follows:


Sec.  580.17  Exemptions.

* * * * *
    (a) * * *
    (3) A vehicle that was manufactured in a model year beginning at 
least twenty five years before January 1 of the calendar year in which 
the transfer occurs; or
    Example to paragraph (a)(3): For vehicle transfers occurring during 
calendar year 2016, model year 1991 or older vehicles are exempt.
* * * * *

    Issued in Washington, DC, on March 18, 2016. Under authority 
delegated in 49 CFR part 1.95
Mark R. Rosekind,
Administrator.
[FR Doc. 2016-06665 Filed 3-24-16; 8:45 am]
 BILLING CODE 4910-59-P