[Federal Register Volume 77, Number 119 (Wednesday, June 20, 2012)]
[Rules and Regulations]
[Pages 36935-36946]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14773]
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
49 CFR Part 580
[Docket No. NHTSA-2011-0109; Notice 2]
Petition for Approval of Alternate Odometer Requirements
AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.
ACTION: Notice of final determination.
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SUMMARY: The State of Florida (``Florida'') has petitioned for approval
of alternate odometer requirements. Florida's petition \1\ is granted
as to vehicle transfers involving casual or private sales, and
Florida's petition is denied as to sales involving licensed dealers and
sales of leased vehicles.
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\1\ ``Florida's petition'' or ``petition'' shall refer to
Florida's Petition for Approval of Alternate Odometer Disclosure
Requirements (Dec. 21, 2009) and the Letter from Carl A. Ford,
Director, Florida Division of Motor Vehicles, to O. Kevin Vincent,
Chief Counsel, National Highway Traffic Safety Administration
supplementing Florida's Petition for Approval of Alternate Odometer
Disclosure Requirements (Oct. 5, 2010).
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DATES: Effective date: July 20, 2012.
ADDRESSES: Requests for reconsideration must be submitted in writing to
Administrator, National Highway Traffic Safety Administration, U.S.
Department of Transportation, 1200 New Jersey Avenue SE., Washington,
DC 20590. Requests should refer to the docket and notice number above.
Anyone is able to search the electronic form of all comments
received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review DOT's
complete Privacy Act Statement in the Federal Register published on
April 11, 2000 (65 FR 19477-78) or you may visit http://DocketInfo.dot.gov.
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov or the street
address listed above. Follow the online instructions for accessing the
dockets.
FOR FURTHER INFORMATION CONTACT: Marie Choi, Office of the Chief
Counsel, National Highway Traffic Safety Administration, 1200 New
Jersey Avenue SE., Washington, DC 20590 (Telephone: 202-366-1738) (Fax:
202-366-3820).
SUPPLEMENTARY INFORMATION:
I. Introduction
Federal odometer law, which is largely based on the Motor Vehicle
Information and Cost Savings Act of 1972 (Cost Savings Act) \2\ and
Truth in Mileage Act of 1986, as amended (TIMA),\3\ contains a number
of provisions to limit odometer fraud and ensure that the buyer of a
motor vehicle knows the true mileage of the vehicle. The Cost Savings
Act requires the Secretary of Transportation to promulgate regulations
requiring the transferor (seller) of a motor vehicle to provide a
written statement of the vehicle's mileage registered on the odometer
to the transferee (buyer) in connection with the transfer of ownership.
This written statement is generally referred to as the odometer
disclosure statement. Further, under TIMA, vehicle titles themselves
must have a space for the odometer disclosure statement and states are
prohibited from licensing vehicles unless a valid odometer disclosure
statement on the title is signed and dated by the transferor. Titles
must also be printed by a secure process. With respect to leased
vehicles, TIMA provides that the regulations promulgated by the
Secretary require written mileage disclosures be made by lessees to
lessors upon the lessor's transfer of the ownership of the leased
vehicle. Lessors must also provide written notice to lessees about
odometer disclosure requirements and the penalties for not complying
with them. Federal law also contains document retention requirements
for odometer disclosure statements.
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\2\ Sec. 401-13, Public Law 92-513, 86 Stat. 961-63.
\3\ Sec. 1-3, Public Law 99-579, 100 Stat. 3309.
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TIMA's motor vehicle mileage disclosure requirements apply in a
State unless the State has alternate requirements approved by the
Secretary. The Secretary has delegated administration of the odometer
program to NHTSA. Therefore, a State may petition NHTSA for approval of
such alternate odometer disclosure requirements.
Seeking to implement an electronic vehicle title transfer system,
Florida has petitioned for approval of alternate odometer disclosure
requirements. In 2009, NHTSA reviewed certain requirements for
alternative state programs and approved the Commonwealth of Virginia's
alternate odometer disclosure program. 74 FR 643, Jan. 7, 2009.
Florida's program is similar to Virginia's program in some respects and
broader in scope than Virginia's in others. Like Virginia's program,
the scope of Florida's proposed program does not include transactions
involving an out-of-state party. Unlike Virginia's program, Florida's
proposed program encompasses transactions involving leased vehicles and
odometer disclosures by power of attorney. In addition, Florida's
proposed program would use different mechanisms to document mileage
than Virginia's.
In its initial determination, NHTSA reviewed the statutory
background and set out the agency's tentative view on applicable
statutory factors governing whether to grant a state's petition. NHTSA
initially determined that Florida's petition regarding proposed
alternate disclosure requirements for vehicle transfers involving
casual or private sales satisfied Federal odometer law, and that
Florida's petition regarding sales involving licensed dealers and sales
of leased vehicles did not satisfy Federal odometer law. See 76 FR
48101, Aug. 8, 2011.
[[Page 36936]]
After careful consideration of comments, NHTSA has made a final
determination, which is set forth below.
II. Statutory Background
NHTSA reviewed the statutory background of Federal odometer law in
its consideration and approval of Virginia's petition for alternate
odometer disclosure requirements. See 73 FR 35617 and 74 FR 643. The
statutory background of the Cost Savings Act and TIMA and the purposes
behind TIMA, as they relate to odometer disclosure, other than in the
transfer of leased vehicles and vehicles subject to liens where a power
of attorney is used in the disclosure, are discussed at length in
NHTSA's final determination granting Virginia's petition. 74 FR 647-8.
A brief summary of the statutory background of Federal odometer law and
the purposes of TIMA, including odometer disclosure requirements for
leased vehicles follows.
In 1972, Congress enacted the Cost Savings Act, among other things,
to prohibit tampering with odometers on motor vehicles and to establish
certain safeguards for the protection of buyers with respect to the
sale of motor vehicles having altered or reset odometers. See Sec. 401,
Pub. L. 92-513, 86 Stat. 961-63. The Cost Savings Act required that
under regulations to be published by the Secretary, the transferor of a
motor vehicle provide a written vehicle mileage disclosure to the
transferee. It also prohibited odometer tampering, and provided for
enforcement. See id. Sec. 408.\4\ In general, the purpose for the
disclosure was to assist buyers to know the true mileage of a motor
vehicle.
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\4\ Section 408(a) directed the Secretary to prescribe rules
requiring any transferor to provide written disclosure to the
transferee in connection with the transfer of ownership of a motor
vehicle, including a disclosure of the cumulative mileage registered
on the odometer, and a disclosure that the actual mileage was
unknown if the transferor knew that the odometer reading was
different from the number of miles the vehicle has actually
traveled. In addition, the Secretary was directed to prescribe the
manner in which the information would be disclosed and the manner in
which the information would be retained. Finally, it was a violation
for any transferor to violate any rules under Section 408 or to
knowingly give a false statement to a transferee in making any
disclosure.
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A major shortcoming of the odometer provisions of the Cost Savings
Act was their failure to require that the odometer disclosure statement
be on the vehicle's title. In a number of states, the disclosures were
on separate documents that could be easily altered or discarded and did
not travel with the title. See 74 FR 644. Consequently, the disclosure
statements did not necessarily deter odometer fraud employing altered
documents, discarded titles, and title washing. Id.
Another significant shortcoming involved leased vehicles. The
lessor is considered the transferor of the vehicle in leased vehicle
sales. Titles to leased vehicles are often transferred without the
lessor obtaining possession of the vehicle. Lessors without direct
access to their vehicles had to rely solely on lessees to provide
actual mileage information. However, lessees had no obligation to
provide actual mileage information to lessors upon vehicle transfer.
This environment facilitated roll backs of odometers.
Congress enacted TIMA in 1986 to address the Cost Savings Act's
shortcomings. It amended the Cost Savings Act by adding section 408(d)
to prohibit states from licensing vehicles unless the new owner
(transferee) submitted a title from the seller (transferor) containing
the seller's signed and dated vehicle mileage statement. See Sec. 2,
Pub. L. 99-579, 100 Stat. 3309; 74 FR 644. TIMA also prohibits the
licensing of vehicles for use in any state, unless the title issued to
the transferee is printed using a secure printing process or other
secure process, indicates the vehicle mileage at the time of transfer,
and contains additional space for a subsequent mileage disclosure by
the transferee when it is sold again. Id.
TIMA also added section 408(e) to the Cost Savings Act requiring
that the Secretary issue regulations regarding odometer disclosures for
leased vehicles.\5\ The regulations promulgated by the Secretary were
to require written mileage disclosures by lessees to lessors upon the
lessor's transfer of the ownership of the leased vehicle. The
regulations were to require lessors to provide written notice to
lessees about the odometer disclosure requirements and the penalties
for not complying with them. Also, the regulations were to provide
document retention requirements for odometer disclosure statements:
Lessors had to retain disclosures made by lessees for at least four
years following the date that the lessor transfers that vehicle.\6\ Id.
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\5\ Pursuant to Section 408(e), in the case of any leased motor
vehicle, the rules under Section 408(a) were to require written
disclosure regarding mileage to be made by a lessee to a lessor upon
the lessor's transfer of ownership of a leased motor vehicle. Under
these rules, the lessor of a leased motor vehicle would have to
provide written notice to the lessee regarding mileage disclosure
requirements, and the penalties for failing to comply with them. The
lessor would be required to retain the lessee's disclosure with
respect to any motor vehicle for a period of at least 4 years
following the date the lessor transferred that vehicle. If the
lessor transferred ownership of any leased motor vehicle without
obtaining possession of such vehicle, the lessor could, in making
the disclosure required by Section 408(a), indicate on the title the
mileage disclosed by the lessee unless the lessor had reason to
believe that such disclosure by the lessee did not reflect the
actual mileage of the vehicle.
\6\ Regulations implementing TIMA were published on August 5,
1988. 53 FR 29464. Federal regulations require lessors to retain
odometer disclosure statements received from lessees for a period of
five years. 49 CFR 580.8(b).
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TIMA added a provision to the Cost Savings Act allowing states to
have alternate odometer disclosure requirements with the approval of
the Secretary of Transportation. Section 408(f) of the Cost Savings
Act, as amended, states that the odometer disclosure requirements of
subsections (d) and (e)(1) shall apply in a state unless the state has
in effect alternate motor vehicle mileage disclosure requirements
approved by the Secretary. Section 408(f)(2) further states that the
Secretary shall approve alternate motor vehicle mileage disclosure
requirements submitted by a state unless the Secretary determines that
such requirements are not consistent with the purpose of the disclosure
required by subsection (d) or (e), as the case may be.
In 1988, Congress amended section 408(d)(1) of the Cost Savings Act
to permit the use of a secure power of attorney for purposes of
odometer mileage disclosure in circumstances where the title was held
by a lienholder, if allowed by state law. Sec. 401, Pub. L. 100-561,
102 Stat. 2817. Congress required NHTSA to issue a rule ensuring that
disclosures be made on the power of attorney document of the actual
mileage at the time of transfer and that the mileage be restated
exactly by the person exercising power of attorney on the title in the
space therefor. Id. The rule, consistent with the purposes of the Act
and the need to facilitate enforcement thereof, was to prescribe that
the power of attorney form be issued by the state to the transferee
using a secure process, as provided for titles, and provide for
retention of a copy with the original submitted back to the State. Id.
In 1989, NHTSA implemented the 1988 statutory amendments by
promulgating amendments to the odometer disclosure regulations,
providing that a transferor may give a secure power of attorney to a
transferee for the purpose of mileage disclosure in two circumstances--
when the transferor's title is physically held by a lienholder or when
the title is lost. In either instance, use of a power of attorney
document for mileage disclosure is permissible only if otherwise
permitted by state law.\7\
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\7\ Regulations implementing the amendment were published on
August 30, 1989. 54 FR 35879. The regulations addressed numerous
aspects of disclosure by power of attorney, including the form,
certification by the person exercising the power of attorney, and
access of the transferee to prior title and power of attorney
documents.
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[[Page 36937]]
In 1990, Congress again amended section 408(d) of the Cost Savings
Act.\8\ The amendment provided that the rule adopted under the 1988
amendment not require that a vehicle be titled in the state in which
the power of attorney was issued and addressed retention of powers of
attorneys by states. Sec. 7(a), Pub. L. 101-641, 104 Stat. 4654,
4657.\9\
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\8\ Section 7(a) of Public Law 101-641 directed that the third
sentence of subsection (d)(2)(C) be amended. However, there was no
subsection (d)(2)(C) in section 408. The amendment was restated as
amending the third sentence of subsection (d)(1)(C) as the probable
intent of Congress. This amendment is currently codified at 49
U.S.C. 32705(b)(2)(A).
\9\ Regulations implementing this amendment were published on
September 20, 1991. 56 FR 47681.
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In 1994, in the course of the recodification of various laws
pertaining to the Department of Transportation, the Cost Savings Act,
as amended, was repealed, reenacted and recodified without substantive
change. See Pub. L. 103-272, 108 Stat. 745, 1048-1056, 1379, 1387
(1994). The odometer statute is now codified at 49 U.S.C. 32701 et seq.
In particular, Section 408(a) of the Cost Savings Act was recodified at
49 U.S.C. 32705(a). Sections 408(d) and (e), which were added by TIMA
(and later amended), were recodified at 49 U.S.C. 32705(b) and (c). The
provisions pertaining to approval of state alternate motor vehicle
mileage disclosure requirements were recodified at 49 U.S.C. 32705(d).
III. Florida's Program
As stated in NHTSA's initial determination, Florida, which is in
the process of developing an electronic title transfer system (e-
title), has petitioned for approval of alternate odometer disclosure
requirements. 76 FR 48101.\10\ Florida requests approval of alternate
disclosure requirements for transfers of motor vehicles in transactions
between private parties (casual sales), transfers of motor vehicles,
whether subject to a lien \11\ or not subject to a lien, between
private parties and motor vehicle dealers, and transactions involving
leased vehicles.
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\10\ We note that Florida's petition differs markedly from other
petitions for alternate odometer disclosure requirements NHTSA has
received from other states. Florida's proposal relies on tag agents,
rather than an online system, to verify the identity of the
transferor and transferee in casual sales. These tag agents also
verify chain of ownership and odometer disclosure in all transfers
before title can be issued. Identity verification in transactions
other than casual sales (for which identity of the parties is
verified by a tag agent) is left to the parties to the
transaction(s). Florida's proposal encompasses a wide variety of
transactions and relies on paper forms for a number of these
transactions.
\11\ Under Florida law, a lienholder physically possesses the
title to the vehicle. Thus, Florida permits odometer disclosure by
power of attorney when title is held by a lienholder and now
petitions for alternate requirements regarding odometer disclosure
by power of attorney.
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Florida law authorizes the Florida Department of Highway Safety and
Motor Vehicles (``Department'') to accept any application for vehicle
title by electronic means. See Fla. Stat. Ann. Sec. 319.40 (1997).
Florida seeks to amend its statutes to allow the continuation of an
electronic certificate of title in lieu of a paper certificate of title
for transfers of motor vehicles. With electronic titling there would
not be a paper certificate of title on which to disclose the vehicle's
mileage at the time of transfer of ownership.
A. Florida's Existing Electronic Titling System
Florida currently stores its titling and registration information
(including images of all supporting title documentation) in a secure
database referred to as the Florida Real-time Vehicle Information
System, or FRVIS. According to Florida's petition, either a Department
employee or an authorized tag agent at a state-authorized tag office
enters information into this database. Only a Department employee or
tag agent can change FRVIS title information, including owner
information and the odometer disclosure. For title images (scanned,
electronic copies of vehicle title documents), FRVIS stores all
applicable data and stores images of documents that remain in the title
history for the vehicle. Florida law also requires that the Department
retain all documents regarding applications for, and issuance of,
certificates of title--including titles, manufacturers' statements of
origin, applications, and supporting documents submitted with the
application such as odometer statements, VIN verifications, bills of
sale, indicia of ownership, dealer reassignments, photographs, and any
personal identification, affidavits, or documents required by or
submitted to the Department--for a period of at least 10 years. Fla.
Stat. Ann. Sec. 319.23(11). The title resides as an electronic record
in FRVIS; however, secure paper copies of the title can be generated
from FRVIS if needed.
In Florida, lienholders hold the title to the vehicles securing the
loan. Florida began its electronic title and lien (ELT) program in
2001. Under the current process, the Department contracts with vendors
who provide secure electronic interface with Florida's titling system
to participating lienholders. The vendors then contract with financial
institutions who wish to participate in Florida's electronic title and
lien program. The participating lienholders allow their titles to
remain electronic. Electronic liens are satisfied through the secure
electronic interface and the title is retained electronically until a
paper copy is requested.\12\
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\12\ Approximately 24 percent of the more than ten million
vehicle lien records Florida has are electronic. Additionally,
almost 50 percent of all new transactions with liens are maintained
electronically under ELT.
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B. Florida's Proposed e-Odometer Program
Florida's proposed e-Odometer program can be divided into three
transaction types: (1) Casual or private sales; (2) sales involving
licensed motor vehicle dealers (including sales from private owners to
licensed dealers, sales between licensed dealers, and sales from
licensed dealers to private buyers); and (3) sales involving leased
vehicles. The Agency understands that the program, as proposed, applies
only when the transferred vehicle is electronically titled at the time
of transfer of the vehicle.
1. Casual or Private Sales
Currently, a Florida resident wishing to sell his/her vehicle in a
casual or private sale needs to have a paper title. The seller signs
the paper title and discloses the odometer reading to the buyer on the
title. The buyer then signs the paper title verifying the odometer
reading. (The odometer disclosure is made on the title and signed by
the buyer and seller at the time of transfer, in accordance with 49
U.S.C. 32705 and 49 CFR 580.5.) The buyer takes the paper title to a
tag office, which processes the transfer of ownership and prints a new
paper title in the buyer's name, or, if the buyer so elects, creates an
e-title to be held by the Department.\13\ Whether the buyer elects to
maintain the title electronically or in paper form, the tag office
sends the old paper title and any other supporting documentation to the
Department for scanning into FRVIS.
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\13\ The buyer can request a paper title from the tag agent and
pay a $10 fee, or request a paper title online and pay a $2.50 fee.
The fee is intended to encourage buyers to maintain vehicle title
electronically. This fee applies to any paper title request under
Florida's current system and under the State's proposed program.
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Under Florida's proposed e-title program,\14\ if a seller of a
vehicle has an
[[Page 36938]]
electronic title and wants to transfer that title, the seller and buyer
would visit an authorized tag office together. 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 is then issued
in the buyer's name and is stored electronically, or the buyer may
choose to have a paper title issued. The secure reassignment form and
copies of the identification are scanned into the title record in
FRVIS.\15\ Florida maintains that these would travel with the title.
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\14\ Florida's proposed program does not apply in a casual
vehicle sale by a seller holding a paper title, only those with e-
title. A seller holding a paper title must follow the current
procedures to transfer the vehicle--the buyer and seller sign and
make the required odometer disclosure on the back of the paper
title. The buyer then can bring the signed title containing the
required odometer disclosure statement to an authorized tag agent
and elect at that time to have the title maintained by the State
electronically. If the buyer elects e-title and later sells the
vehicle in a casual sale, he can do so by following the procedures
for transferring e-title.
\15\ The Agency understands that the electronic documents are
linked to the vehicle title history by title number and VIN.
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2. Sales Involving Licensed Motor Vehicle Dealers
a. Retail Sales of Vehicles With an e-Title But Not Subject to a Lien
Under Florida's current scheme, when a licensed motor vehicle
dealer is involved, the process for transferring a title to an e-titled
vehicle not subject to a lien is as follows. The seller with e-title
brings the vehicle to a dealership. The seller and dealer complete a
secure power of attorney with odometer disclosure. The dealer obtains a
paper title from a tag agency or online from the Department. The dealer
transfers the odometer disclosure information from the secure power of
attorney to the title and signs the title as buyer and seller. When the
dealer sells the vehicle to another buyer, the dealer and buyer
complete the reassignment on the paper title with an odometer
disclosure. The dealer takes both the secure power of attorney and the
paper title to a tag agency. The title is then transferred to the buyer
and a receipt is provided. The buyer has the option of obtaining a new
paper title or having the Department hold the title electronically. The
secure power of attorney and paper title are scanned and stored with
title history in FRVIS. We note that this process does not comply with
federal law, because it uses secure power of attorney in a manner not
authorized by Federal regulations. 49 CFR 580.13.
Under Florida's proposed program, a seller with e-title would bring
the vehicle to a dealership. The seller and dealer complete a secure
reassignment form with odometer disclosure. When the dealer sells the
vehicle to another buyer, the dealer and buyer complete another secure
reassignment form with odometer disclosure. The dealer takes both of
the secure reassignment forms to a tag agency. The vehicle title is
then transferred to the buyer and a receipt is provided. The buyer has
the option to obtain a paper title or have the Department hold the
title electronically. The secure reassignment forms are scanned and
stored with the vehicle title history in FRVIS.
b. Sales of Vehicles With e-Title Subject to a Lien (e-Lien in Florida)
Currently, when a licensed motor vehicle dealer is involved, the
process for transferring an e-titled vehicle subject to an e-lien is as
follows: A seller with e-title/e-lien brings the vehicle to a
dealership. The seller and dealer complete a secure power of attorney
with odometer disclosure. The dealer pays off the lien and the
lienholder electronically releases the lien via a secure electronic
interface with the Department (ELT). The dealer then obtains the paper
title from a tag agency or online from the Department. The dealer
transfers the odometer information from the secure power of attorney to
the title and signs the title as buyer and seller. When the dealer
sells the vehicle to another buyer, the dealer and buyer complete the
reassignment on the title with odometer disclosure. The dealer takes
both the secure power of attorney and the paper title to the tag
agency. The vehicle title is transferred to the buyer and a receipt is
provided. The buyer has the option of obtaining a new paper title or
having the Department hold the title electronically. The secure power
of attorney and old paper title are scanned and stored with title
history in FRVIS.
Under Florida's proposed program, a seller with e-title would bring
the vehicle to a dealership. The seller and dealer complete a secure
reassignment form with an odometer disclosure. The dealer pays off the
lien and the lienholder electronically releases the lien via secure
electronic interface with the Department (ELT). When the dealer sells
the vehicle to another buyer, the dealer and buyer complete another
secure reassignment form with an odometer disclosure. The dealer then
takes both secure reassignment forms to a tag agency, where the title
is transferred to the buyer and a receipt is provided. The buyer has
the option of obtaining a paper title or having the Department hold the
title electronically. The secure reassignment forms are scanned and
stored with the vehicle title history in FRVIS.
c. Dealer Reassignments
Florida currently does not allow for an e-title in the dealer
reassignment process. A dealer must obtain a paper title in order to
resell the vehicle. Once there is a paper title, the dealer uses the
current paper process. The dealer uses the back of the title to
document reassignments, including odometer disclosure. Once this form
is full (Florida allows for three reassignments on the title), the
dealer will use a secure title reassignment supplement (HSMV 82994)
which includes the required odometer disclosures. When a vehicle is
ultimately sold to a customer, the paper title and all secure title
reassignment supplements are provided to the tag agency, and forwarded
to the Department for scanning and storing in the title record.
Under Florida's proposed system, the dealer would use a secure
reassignment supplement instead of having to obtain a paper title. Any
subsequent reassignments would also use the secure reassignment
supplement. When the vehicle is ultimately sold to a retail customer,
all secure reassignment supplements would be provided to the tag agency
for verification of the chain of ownership and verification of the
odometer disclosure. All documents would be forwarded to the Department
for scanning and storing in FRVIS.
3. Sales Involving Leased Vehicles
In the case of leased vehicles, the lessor typically retains
ownership of the vehicle, but does not possess it. The lessor, as a
transferor, must comply with the federal odometer disclosure
requirements when it subsequently transfers title of a leased vehicle.
As noted by Florida, Federal laws require written mileage disclosures
to be made by lessees to lessors upon the lessor's transfer of the
ownership of the leased vehicle.
Florida's current process for transferring leased vehicles is as
follows. The lessor holds the vehicle's paper title. When the lease
ends (for example, in a trade-in or buyout situation), the lessee
brings the vehicle to a dealership. The lessee signs an Odometer
Disclosure Statement. The lessor transfers the odometer reading to the
title. The lessor signs title over to the dealer (or other party) along
with the Odometer Disclosure Statement. When the dealer sells the
vehicle to a buyer, the dealer and buyer complete the reassignment on
the paper title with the odometer disclosure. The documents are then
sent to an authorized tag agency, where the title is transferred to the
buyer and a receipt is provided. The
[[Page 36939]]
buyer has the option of obtaining a new paper title or having the
Department hold the title electronically. The old paper title and
supporting documentation are scanned and stored with the vehicle title
history in FRVIS.
Under Florida's proposal, the lessor holds an e-title. When the
lease ends, the lessee would bring the vehicle to a dealership. The
lessee signs an odometer disclosure statement. The lessor then signs a
secure power of attorney to the dealer which includes the odometer
disclosure. The dealer signs a secure reassignment form agreeing with
the odometer disclosure. When the dealer sells the vehicle to another
buyer, the dealer takes the documents (bill of sale, reassignment
document, and power of attorney) to the tag agency, where the title is
transferred to the buyer and a receipt is provided. The buyer has the
option of obtaining a new paper title or having the Department hold the
vehicle title electronically. All documents are sent to Department and
scanned into the vehicle title history in FRVIS.
C. Florida e-Odometer Implementation Schedule
Florida proposes implementing its electronic title or ``e-title''
system in three phases. Under the first phase, which Florida states is
complete, participating lienholders are allowed, but not required, to
have their titles and liens held electronically by the Department. This
option allows lienholders to avoid maintaining paper lien portfolios.
The Department and the lienholders encourage owners who satisfy their
liens to continue to maintain the title electronically.
Under the second phase of the e-title project, dealers would be
allowed to buy and sell e-title vehicles and take e-title vehicles in
on trade without acquiring a paper title. It is the Agency's
understanding that the program will extend to leased vehicles,
including end-of-lease vehicles coming back to the dealer and vehicles
being traded in prior to the end of the lease. Lessors will give the
dealer power of attorney to disclose the vehicle mileage, as indicated
by the lessee on an odometer disclosure statement, on a secure
reassignment form, which will then be used to transfer title from the
lessor to a subsequent purchaser. This process will obviate the need
for the dealer to obtain a paper title.
The third phase of the project would extend e-title capability to
private or casual sales. Under the proposal, the seller (transferor)
and buyer (transferee) will have two options for completing a motor
vehicle sale. Currently, the vehicle's title is either held physically
by the vehicle owner or the vehicle is titled electronically. If the
vehicle is titled electronically, the owner now must acquire a secure
paper copy of the title prior to transferring the vehicle. The
transferor makes the required odometer disclosure on the title and both
parties sign the title, effectuating transfer of the vehicle. Under
Florida's proposed program, if the vehicle has an e-title, the
transferor would not be required to obtain a paper title to transfer
it. The transferor and transferee will have the option of going to a
tag agent or tax collector's office and, after providing adequate
identification to the agent, executing a secure reassignment form to
transfer title from the transferor to the transferee without the need
to first acquire a paper title.\16\
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\16\ The secure reassignment form contains an odometer
disclosure statement that is required to transfer the vehicle title.
Sellers would accurately disclose vehicle mileage in the presence of
both the buyer as well as a tag agent. The tag agent will verify
that the buyer agrees to the mileage being disclosed and will
require proper identification from both the buyer and the seller.
(Currently, a vehicle owner with an e-title who wants to transfer or
sell the vehicle must acquire a paper title from the State to
process the transaction.)
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D. Florida's Position on Meeting the Purposes of TIMA
As noted in in NHTSA's initial determination, Florida submitted
that its proposed e-Odometer program met the purposes of TIMA. 76 FR
48110. The petition, as supplemented on October 5, 2010, identified the
purposes of TIMA as amended and the State's assessment on how its
proposed program would comply with each purpose.
1. Vehicle Transfers in the Absence of a Lease Agreement
a. Casual or Private Sales
In its petition, Florida referred to NHTSA's prior final
determinations granting petitions for alternate odometer disclosure
requirements, cited the purposes of TIMA as amended as articulated by
NHTSA,\17\ and acknowledged that those purposes applied to its own
petition. As recognized by Florida, one purpose of the disclosure
required by TIMA is to ensure that the form of the odometer disclosure
precludes odometer fraud. Florida asserted that the proposed secure
reassignment form would have the same security features currently
included on paper title and would travel with the title record in
FRVIS, and that both parties would be present together in a tag agency
with identification in order to process the title transfer, which would
include execution of the odometer disclosure statement on the secure
reassignment form.
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\17\ Any statements which refer to ``the purposes of TIMA'' or
``a ``purpose of TIMA'' should be interpreted to refer to ``the
purpose of the disclosure required by subsection (d) or (e), as the
case may be,'' as stated in Section 408 of the Cost Savings Act, as
amended by TIMA.
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A second purpose of TIMA, as stated by Florida, is to prevent
odometer fraud by processes and mechanisms making the disclosure of an
odometer's mileage on the title both a condition of the application for
a title and a requirement for title issuance by a State. Florida stated
that under its proposal, odometer disclosure would remain a required
data input for application of a title and a required output on the
title. By having both parties present with required identification,
Florida stated the process would be more secure than the current
process, which allows the owner to sign the title over to the buyer who
then produces the document when obtaining title without the seller
present.
A third purpose, cited by Florida, is to prevent alterations of
disclosures on title and to preclude counterfeit titles through secure
processes. Florida stated in its petition that, with both parties
present at a tag agency with identification, this process would prevent
alterations and preclude counterfeit titles. If changes are necessary,
a new secure document is signed by both parties present in front of an
authorized tag agent.
A fourth purpose, acknowledged by Florida, is to create a record of
the mileage on vehicles and a paper trail. Florida stated that under
its proposal, the secure document, whether a secure reassignment form
or secure paper title, signed by both the buyer and seller would be
scanned and stored as evidence of the agreement by both the buyer and
seller of the odometer reading. This would create a permanent record
easily checked by subsequent owners or law enforcement officials.
Florida noted that a fifth purpose is to protect consumers by
ensuring that they receive valid representations of the vehicle's
actual mileage at the time of transfer based on odometer disclosures.
Under its proposal, Florida stated this purpose would be served,
because consumers (buyers) would be present with sellers at the time
the title is transferred (currently this is not usually the case).
b. Sales Involving Licensed Dealers (With and Without a Lien)
In its petition (as supplemented), Florida cited the statutory
purposes of TIMA as amended, stated in NHTSA's prior final
determinations granting petitions for alternate odometer disclosure
requirements, and applied
[[Page 36940]]
those purposes to its own petition. As recognized by Florida, one
purpose of TIMA as amended is to ensure that the form of the odometer
disclosure precludes odometer fraud. Florida stated its proposal would
meet this purpose because the secure reassignment form would have the
same security features currently included on paper title. The dealer
would use secure reassignment forms, which would travel with the title,
which the dealer would sign with the previous owner and with the new
buyer.
A second purpose, as stated by Florida, is to prevent odometer
fraud by processes and mechanisms making the disclosure of an
odometer's mileage on the title a condition of the application for a
title and a requirement for the title issued by the State. Florida
stated that the e-title process requires disclosure of an odometer's
mileage on a secure document. The secure reassignment forms would have
the same security features currently included on a paper title and
would travel with the title record.
A third purpose listed by Florida is to prevent alterations of
disclosures on a title and to preclude counterfeit titles through
secure processes. Florida stated that a title would not be issued to a
buyer if the chain of ownership could not be established. The
submission of all secure reassignment forms would establish the chain
of ownership. Odometer disclosures would be part of those forms.
A fourth purpose acknowledged by Florida is to create a record of
the mileage on vehicles and a paper trail. Florida noted that the
secure reassignment document signed by the previous owner, the dealer,
and the buyer would be scanned and stored as evidence of the agreement
by both the buyer and seller of the odometer reading.
Florida noted that a fifth purpose is to protect consumers by
ensuring that they receive valid representations of the vehicle's
actual mileage at the time of transfer based on odometer disclosures.
According to Florida, the secure reassignment forms would allow for
valid representation of the odometer mileage during both transactions
(the original owner to dealer transaction and the subsequent dealer to
buyer transaction).
2. Transfers Involving Leased Vehicles
Florida recognized, with regard to leased vehicles that one purpose
of TIMA as amended is to ensure that lessors have the vehicle's actual
odometer mileage at the time of transfer. Florida stated that the only
change proposed by its e-title proposal from the current process is
that, instead of signing an actual paper title, the lessor would sign a
power of attorney and disclose the odometer reading as provided to it
by the lessee. This power of attorney would then transfer this odometer
information to the dealer to sell the vehicle.
A second purpose as stated by Florida is to ensure that lessees
provide lessors with an odometer disclosure statement. Florida stated
that its proposed e-title process would not affect this requirement.
A third purpose listed by Florida is to ensure that lessees are
formally notified of their odometer disclosure obligations and the
penalties for failing to comply by not providing complete and truthful
information. Florida stated that its proposed e-title process would not
affect this requirement.
A fourth purpose acknowledged by Florida is to set rules for
accurate disclosure by lessors, directing them to indicate on the title
the mileage provided by the lessee, unless the lessor has reason to
believe that the disclosure by the lessee does not reflect the actual
mileage of the vehicle. Florida stated that its proposal would satisfy
this purpose by allowing the lessor to indicate the mileage on a secure
reassignment form that would travel with the title.
Florida noted that a fifth purpose is to create records and a paper
trail, including the written, dated and signed odometer disclosure
statement by the lessee. Florida stated that its proposal would not
change this requirement. The title would remain in electronic form;
however, the secure reassignment form with the lessor's odometer
disclosure, the power of attorney form and bill of sale would all be
scanned into the title history. The Department's database would store
these documents with the title.
IV. NHTSA's Initial Determination
In its initial determination, NHTSA restated the statutory purposes
of the disclosure required by TIMA as amended. 76 FR 48103-48107. NHTSA
then discussed Florida's petition (Id. at 48107-48111) and analyzed
whether it was consistent with the statutory purposes (Id. at 48111-
48115). NHTSA preliminarily granted Florida's petition for proposed
alternate disclosure requirements as to vehicle transfers involving
casual or private sales, and preliminarily denied the petition as to
sales involving licensed dealers and leased vehicles. Id. at 48115.
NHTSA explained that Florida's proposal as to sales involving
licensed dealers was problematic because of Florida's proposed use of
reassignment forms instead of a title as the document on which odometer
mileage would be disclosed. Id. at 48112-48113. Disclosing mileage on a
reassignment form rather than title is inconsistent with the statutory
purposes of (a) Ensuring that the form of disclosure precludes odometer
fraud; (b) preventing odometer fraud by processes and mechanisms making
odometer mileage disclosures on the title a condition for the
application for a title, and a requirement for the title issued by a
State; (c) creating a record of vehicle mileage and a paper trail; and
(d) protecting consumers by ensuring that they receive valid odometer
disclosures representing a vehicle's actual mileage at the time of
transfer. Id. at 48112-48113; 48115. Florida's proposal to have
odometer mileage disclosed on a reassignment form rather than title
disposes of a critical aspect of TIMA (namely, mileage disclosures on
title) intended to provide a mechanism to trace and prosecute odometer
tampering, and to prevent odometer fraud. Id. at 48112-48113.
NHTSA also explained that Florida's proposal involving use of
powers of attorney in sales of leased vehicles (among other things) was
problematic in light of the purposes of TIMA as amended in 1988. Id. at
48113-48115. One purpose of the amendments to TIMA on powers of
attorney was to provide a limited exception to a rule prohibiting a
person from signing an odometer disclosure statement as both the
transferor and transferee in the same transaction. The rule was
intended to preclude situations, rife with potential fraud, where the
same person signed as the reporter and verifier of the odometer
reading. A consequence was that powers of attorney could be used to
make mileage disclosures. Id. at 48114. This presented problems when
vehicles that were subject to a lien were traded-in, because the seller
did not have the title (the lienholder had the title or controlled it)
upon which to make the odometer disclosure. TIMA was amended to permit
power of attorney to be used in a limited situation--where a vehicle's
title was unavailable because it was ``physically held by a
lienholder.'' Sec. 401, Pub. L. 100-561, 102 Stat. 2817. When it
enacted regulations governing powers of attorney, NHTSA considered
whether power of attorney could be used to disclose mileage in
situations where title was unavailable because it was lost, as
indicated in the
[[Page 36941]]
legislative history,\18\ and decided affirmatively.
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\18\ 49 CFR 580.13; 134 Cong. Rec. 30088 (1988). House
Representative John Dingell of Michigan stated, ``* * * I want to
observe that some have suggested that the amendment also cover lost
titles * * * the present law allows the National Highway Traffic
Safety Administration to, by rule, deal with this problem before
next February.''
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Although a lessor would have the title, Florida proposes allowing
power of attorney to be used as part of a disclosure process involving
a number of steps and transfers, requiring the use of at least three
separate documents, instead of the title, to disclose odometer
mileage.\19\ 76 FR 48109. Florida's proposal makes use of multiple
forms, which can be lost or fraudulently replaced before being scanned
into FRVIS. Id. As stated in the initial determination, Florida's
proposal was not consistent with the purposes of the disclosure
required by TIMA, as amended. Id. at 48113-48115. NHTSA stated that
Florida's proposal was inconsistent with the purpose of preventing
alterations on odometer disclosures by powers of attorney and
precluding counterfeit powers of attorney through secure processes and
protecting consumers by ensuring that they receive valid
representations of a vehicle's actual mileage at a time of transfer. 76
FR 48114-48115. NHTSA explained that Florida's proposed alternate
disclosure requirements for sales of leased vehicles were also
inconsistent with the statutory purposes relevant to leased vehicles to
(a) ensure that lessees are formally notified of their odometer
disclosure obligations and the penalties for failing to comply by not
providing complete and truthful information on the disclosure to the
lessor; (b) set ground rules for the lessors, providing for lessors to
indicate the mileage provided by the lessee on the title, unless the
lessor has reason to believe that the disclosure by the lessee does not
reflect the actual mileage of the vehicle; and (c) create records and a
paper trail. Id. at 48112-48115.
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\19\ A lessee would disclose mileage on an unspecified
``Odometer Disclosure Statement'' (presumably given to the lessor),
then the lessor would sign a secure power of attorney to a dealer
including odometer disclosure, and then the dealer would sign a
secure reassignment document agreeing with the odometer disclosure.
76 FR 48113-48114.
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V. Summary of Public Comments
NHTSA received two comments. The first was from the Florida
Division of Motorist Services (Florida).\20\ In general, Florida
comments that federal laws should be reviewed and amended to allow for
further variances in processes and mechanisms through which vehicles
are titled. The second comment was from the National Auto Auction
Association (NAAA).\21\ NAAA generally remarks that Florida's proposed
alternate disclosure requirements are no less secure than Florida's
current odometer disclosure requirements.
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\20\ Letter from Sandra C. Lambert, Director, Florida Division
of Motorist Services, to O. Kevin Vincent, Chief Counsel, National
Highway Traffic Safety Administration (``Florida's Comment'') (Sept.
7, 2011).
\21\ Letter from Bertha M. Phelps, Legislative and Government
Relations Committee, National Auto Auction Association, to O. Kevin
Vincent, Chief Counsel, National Highway Traffic Safety
Administration (``NAAA's Comment'') (Sept. 7, 2011).
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A. Florida's Comment
Florida seeks to employ new electronic technology. Florida
recognizes that its proposal varied significantly from previous
petitions. Unlike the other States that have petitioned NHTSA, Florida
requested variances from Federal requirements with regard to dealer and
lease transactions. Florida states that the ``intent of Federal
odometer laws is to ensure the buyer of a motor vehicle knows the true
mileage of the vehicle'' and that ``[w]hile the intent of the federal
laws remains necessary, the processes and mechanisms by which motor
vehicles are sold continue to change with new technology.'' It adds
that federal laws regarding odometer disclosure have not been amended
in years and that when these laws were enacted, many States did not
have electronic alternatives to titling. Florida recommends that
``federal laws be reviewed and amended to allow for further variances
to enable states to use new systems and technology to enhance titling
processes in their state.'' Finally, Florida contends in a sweeping
manner that ``its alternative requirements are consistent with the
purpose of the disclosure and should be granted in their entirety.''
Florida agrees with NHTSA's initial determination to approve
Florida's proposal for casual or private sales.
With regard to its petition on sales involving licensed dealers
without a lien, Florida requests use of secure reassignment forms in
lieu of paper titles. Florida then requests a ``variance in a case
where there is no lien on the vehicle and title is held
electronically.'' Florida comments on NHTSA's initial determination,
which states, ``if, however, the transfer from the titled seller to a
dealer was on a title, NHTSA's initial decision would be that Florida's
proposal insofar as it concerns subsequent transfers of the vehicle
among licensed Florida dealers meets the purposes of TIMA.'' 76 FR
48112 n. 48. Florida responds, ``our petition is to allow Florida to
enhance its electronic titling initiative by not requiring an owner to
convert an electronic title to paper to transfer the vehicle. By
requiring a paper title in all instances, we would not need to seek a
petition for variance from the odometer requirements.'' Florida
suggests that ``electronic title be looked at similarly to one that is
held by a lienholder, which federal law currently allows the use of
secure power of attorney to disclose the odometer reading.'' Florida
requests that NHTSA reconsider its position and allow Florida to use a
secure reassignment form for the initial transfer from the seller to
the dealer when there is an electronic title, and contends that the
intent of the disclosure requirements would be met.
Florida observes that previous petitions by other States for
approval of odometer disclosure requirements did not involve a review
of disclosure requirements for leased vehicles. Florida also recognizes
that federal laws allow the use of powers of attorney to disclose
odometer readings only where the owner does not have the title: when
the title is held by a lienholder, or when title is lost. Florida
contends that a lessor acts in a similar manner to a lienholder in an
e-title scenario in Florida, because in both instances, the person with
the title is not the person who physically has possession of the
vehicle. Florida's proposal seeks to avoid the current procedure in
Florida of requiring a lessor to go to a tag agent and have the e-title
printed before delivering a vehicle to the dealer. Florida proposes
that a lessor disclose the odometer reading on a secure power of
attorney, avoiding the step of printing an e-title to paper. Florida
requests that NHTSA reconsider its position, and allow Florida to use a
power of attorney in leased vehicle transactions.
B. The National Auto Auction Association's Comment
NAAA represents hundreds of auto auctions. NAAA supports electronic
titling, which is a state function. NAAA fully supports Florida's
petition, stating that ``electronic titling is the wave of the future,
and odometer disclosure laws must change to keep pace with electronic
titling laws.'' NAAA asserts that ``the burden [is] on NHTSA to find
that the proposed alternate disclosure requirements do not comply with
the law.'' NAAA recognizes that NHTSA raises legitimate concerns
regarding the use of secure reassignment forms and powers of attorney
that do not accompany the paper title document itself. However, NAAA
believes that
[[Page 36942]]
Florida has a very strong argument in that it would make no sense to
require the printing of a paper title because the paper title would be
less secure than the electronically stored title.
For dealer sales, NAAA recognizes the concern that Florida would
provide for the issuance of a new title based only on reassignment
forms. NAAA points out that Florida's proposal is no less secure than
Florida's current procedures. In its comment, NAAA did not dispute that
in some respects Florida's current practice does not comport with
Federal odometer statutes, and associated regulations. See 76 FR 48115.
NAAA states that reassignment forms have always been considered an
extension of and part of the title itself, and having the paper title
accompany the reassignment form would make it no less likely for fraud
to occur. Further, NAAA asserts that criminals can discard and create
another secure reassignment form just as easily as they can with paper
title, and that criminals can alter titles to match reassignment forms.
Second, as to lease sales, NAAA states that NHTSA points out,
correctly, that under current law, powers of attorney can be used only
when the transferor's title is physically held by a lienholder or the
title is lost. NAAA argues that NHTSA's position of strict construction
of the law appears not to comply with the Congressional mandate that
NHTSA approve alternate disclosure requirements unless NHTSA determines
they are not consistent with TIMA's disclosure requirements. NAAA
states that if the power of attorney can be used when a title is in the
physical possession of a lienholder or lost, powers of attorney should
be allowed when titles are securely in the possession of a state
titling agency as a result of being held intact in a secure electronic
environment, inaccessible to criminals who might want to alter it.
In conclusion, NAAA states that it ``in no way thinks NHTSA has
acted arbitrarily.'' NAAA further states that as the motor vehicle
industry moves to electronic titling as a norm, states have the
opportunity to create odometer disclosure systems more effective and
secure than those currently in place. NAAA believes that NHTSA should
approve such systems. NAAA states that it in all honesty, could argue
either NHTSA's position or Florida's position in a debate and that it
hopes that NHTSA obtains specific Congressional authority for
rulemaking to accommodate electronic titling procedures.
VI. Statutory Purposes
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, which
were amended by TIMA and subsequently amended, were recodified to 49
U.S.C. 32705(b) and (c)). In light of this provision, an important
question is what are the purpose(s) of the disclosure required by
section 408(d), and (e) of the Cost Savings Act as amended. We now
discuss the purposes of TIMA as amended, as germane to Florida's
petition.
In its petition, as supplemented on October 5, 2010, Florida
restated and applied the purposes of TIMA as previously articulated by
NHTSA. NHTSA's initial determination set forth the purpose(s) of the
disclosure required by section 408(d) of the Cost Savings Act as
amended. 76 FR 48104-48107. NHTSA also provided a full opportunity for
comment. NHTSA received two comments: one from Florida, and one from
NAAA.
A. Consideration of Florida's and NAAA's Comments
Neither Florida's nor NAAA's comments dispute the relevant Cost
Savings Act purposes set forth in the initial determination. However,
Florida asserts in its comment that the processes and mechanisms by
which motor vehicles are sold continue to change with new technology
and that federal laws should be reviewed and amended to allow for
further variances to enable states to use new systems and technology to
enhance titling processes in their state. NAAA comments that the burden
is on NHTSA to find that the proposed alternate disclosure requirements
do not comply with the law. NAAA also urges NHTSA to consider that
Florida's proposal is more secure than its current system. These
aspects of Florida's and NAAA's comments are addressed below.
1. Florida's Position on the Statutory Purposes
In its supplement to its petition, Florida referred to and applied
the purposes of TIMA as previously articulated by NHTSA. Florida has
not renounced this acceptance of NHTSA's articulation of TIMA's
purposes. In its comment on the agency's initial determination, Florida
does not challenge NHTSA's analysis of statutory purposes of TIMA as
amended, but it requests a variance to accommodate changes in
technology. Florida's comments state generally that federal laws should
be reviewed and amended to allow for variances in processes and
mechanisms through which vehicles are titled. This is not within
NHTSA's authority. NHTSA cannot grant a variance because the statute
does not provide for variances.
2. NAAA's Position on the Statutory Purposes
NAAA's comments also do not directly challenge NHTSA's analysis of
statutory purposes in the initial determination. Rather, NAAA appears
to suggest that NHTSA should compare Florida's proposed odometer
disclosure system to its current system rather than determining if the
proposal is consistent with the applicable statutory purposes.
First, NAAA asserts that Florida's proposal as to sales by licensed
motor vehicle dealers and transfers involving leased vehicles should be
adopted because it is more secure than Florida's current titling
system. However, this general standard is not articulated in TIMA or
any of the subsequent amendments. NHTSA's authority to approve
alternate vehicle mileage disclosure requirements is based on
consistency with the purpose of the disclosure required by
subsection[s] [of section 408] as the case may be. Whether or not
Florida's current program is less secure than its proposed program, to
approve Florida's program for alternate vehicle mileage disclosure
requirements, NHTSA must evaluate the program in the framework of the
purposes of TIMA as amended (recodified to 49 U.S.C. 32705(b), (c)).
NAAA then comments that ``the burden [is] on NHTSA to find that
proposed alternate disclosure requirements do not comply with the
law.'' NHTSA's burden is to examine the Florida proposal in light of
the purposes of TIMA as amended.
B. Adoption of the Statutory Purposes Set Forth in the Initial
Determination
After careful consideration of the comments, as part of the
agency's final determination, we adopt the purposes stated in our
initial determination of Florida's petition. 76 FR 48103-48107.
[[Page 36943]]
1. TIMA's Purposes Regarding Vehicle Transfers in the Absence of a
Lease Agreement
As to vehicle transfers in the absence of a lease agreement, the
statutory purposes of the disclosure required by TIMA and its
amendments are in short \22\ as follows: (1) To ensure that the form of
the odometer disclosure precludes odometer fraud; (2) to prevent
odometer fraud by processes and mechanisms making odometer mileage
disclosures on the title a condition of any application for a title,
and a requirement for any title issued by a State; (3) to prevent
alterations of disclosures on titles and to preclude counterfeit titles
through secure processes; (4) to create a record of vehicle mileage and
a paper trail; and (5) to protect consumers by ensuring that they
receive valid representations of the vehicle's actual mileage at the
time of transfer based on odometer disclosures. 76 FR 48104.
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\22\ See 76 FR 48104.
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2. TIMA's Purposes Relevant to Leased Vehicles
As to leased vehicle transfers, the statutory purposes are: (1) To
ensure that lessors have the vehicle's actual odometer mileage at the
time of transfer; (2) to ensure that lessees provide lessors with an
odometer disclosure statement; (3) to ensure that lessees are formally
notified of their odometer disclosure obligations and the penalties for
failing to comply by not providing complete and truthful information;
(4) to set the ground rules for the lessors, providing for lessors to
indicate the mileage provided by the lessee on the title, unless the
lessor has reason to believe that the disclosure by the lessee does not
reflect the actual mileage of the vehicle; (5) to create records and a
paper trail; and (6) to ensure that there are valid representations of
the vehicle's actual mileage at the time of transfer. 76 FR 48104.
3. The Purposes of TIMA as Amended Relevant to Power of Attorney
The statutory purposes of the disclosure required by TIMA and its
amendments regarding power of attorney are: (1) To provide limited
exception(s) to a rule prohibiting a person from signing an odometer
disclosure statement as both the transferor and transferee in the same
transaction, which had the effect of prohibiting the use of powers of
attorney for purposes of recording mileage on titles of motor vehicles;
(2) to ensure that the form of the power of attorney document issued by
a State precludes odometer fraud; (3) to set ground rules for
transferors and transferees, providing that both parties provide all of
the information and signatures required in parts A, and as applicable
B, and C of the secure power of attorney form; (4) to prevent odometer
fraud by establishing processes, mechanisms and conditions calculated
to result in the disclosure of the actual mileage on the title; (5) to
prevent alterations on odometer disclosures by powers of attorney and
to preclude counterfeit powers of attorney through secure processes;
(6) to create a record of the mileage on vehicles and a paper trail;
and (7) to protect consumers by ensuring that they receive valid
representations of a vehicle's actual mileage at a time of transfer.
See 76 FR 48104-48107.
VII. NHTSA's Final Determination
Section 408(f)(2) of the Cost Savings Act sets forth the legal
standard for approval of state alternate vehicle mileage disclosure
requirements: 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) of section 408, as the
case may be. In this section, NHTSA will consider Florida's program in
light of the purposes of the disclosure required by subsection (d) of
section 408, and address Florida's and NAAA's comments.
A. Casual or Private Sales
NHTSA preliminarily granted Florida's petition regarding proposed
alternate disclosure requirements for vehicle transfers involving
casual or private sales. 76 FR 48111-48112. Both Florida and NAAA
supported this initial determination. NHTSA grants Florida's proposed
alternate disclosure requirements for vehicle transfers involving
casual or private sales.\23\
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\23\ NHTSA's rationale is summarized below. For a full
statement, see 76 FR 48111-48112.
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Florida's proposed alternate disclosure requirements as to casual
or private sales meet the purposes of the disclosure required by TIMA
and its amendments. Under Florida's program there would be an e-
title.\24\
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\24\ Florida notes that paper titles will still be necessary for
title transactions involving at least one out of state party. For
instance, if a vehicle enters Florida with an out of state title,
Florida cannot recognize another state's e-title. The buyer will
need to obtain a signed paper title from the seller. Conversely, if
an owner sells a Florida titled vehicle to someone who will title it
in another state, the owner will need to obtain the paper title to
allow the buyer to obtain a title in the other state.
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First, Florida's program for casual or private sales ensures that
the form of the odometer disclosure precludes odometer fraud. A
required part of the date to be entered in the transfer of title would
be the vehicle's odometer reading. Florida's program requires the buyer
and seller to visit a tag office together, provide identification to a
tag agent, and sign a single document referred to as a secure
reassignment form \25\ before the tag agent transferring ownership and
disclosing the odometer reading. This document is stored on Florida's
electronic database and linked to the vehicle's title through title
number and VIN.
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\25\ We note that Florida's use of the term ``secure
reassignment form'' in this situation appears to be a misnomer. The
transfer of title in casual or private sales is not a reassignment
as there is no prior assignment. The document is more accurately
described as a secure State title transfer form for use when a
vehicle has e-title and the title cannot be physically signed. We
noted this in the initial determination and Florida did not dispute
our characterization.
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Second, the processes and mechanisms noted above make the
disclosure of odometer mileage on one document, an information entry
form, before a tag agent a condition of the application for a title and
a requirement for title issuance.
Third, this portion of the Florida proposal employed secure
processes that prevent alterations of disclosures on titles and
preclude counterfeit titles. Specifically, odometer mileage is
disclosed initially on secure paper (either on the paper title itself
or on a secure form which complies with 49 CFR 580.4) in the presence
of a tag agent.
Fourth, Florida's proposal would create a record of the mileage on
vehicles and a paper trail. Namely, Florida requires both the buyer and
seller to sign a secure document in the presence of a tag agent
disclosing odometer mileage. Then, Florida has all documents scanned
and stored in FRVIS. This creates a paper trail that can be easily
checked by subsequent purchasers or law enforcement officials.
Finally, Florida's program is consistent with the overall purpose
of the disclosure required by TIMA and its amendments--to protect
consumers by ensuring that they receive valid odometer disclosures
representing a vehicle's actual mileage at the time of transfer.
B. Sales Involving Licensed Motor Vehicle Dealers
NHTSA preliminarily denied Florida's petition regarding proposed
alternate disclosure requirements for sales involving licensed dealers.
See 76
[[Page 36944]]
FR 48112-48113. Both Florida and NAAA asserted in their comments that
Florida's proposal as to dealer sales is consistent with the purposes
of the disclosure required by TIMA and its amendments. However, other
than seeking a variance and asserting that Florida's proposal is just
as secure, if not more secure than its current system (see Section VI),
neither Florida nor NAAA provided any explanation as to how Florida's
program is consistent with the purposes of the disclosure required by
TIMA, beyond what had previously been provided by Florida in its
petition, as supplemented.
One purpose of TIMA is to ensure that the form of the odometer
disclosure precludes odometer fraud. To prevent odometer fraud
facilitated by disclosure statements that were separate from titles,
TIMA required mileage disclosures to be on a secure vehicle title,
containing space for the seller's attested mileage disclosure and a new
disclosure by the buyer when the vehicle was sold again, instead of a
separate document. The form of disclosure in Florida's proposal for
retail vehicle sales to dealers of vehicles without or with a lien does
not satisfy this purpose. In instances when a private seller sells a
vehicle to a dealer, Florida proposes that the seller and dealer
complete what Florida calls a secure reassignment form to make the
odometer disclosure. Florida states that the reassignment forms will
travel with the title. But from a TIMA perspective, when there is a
transfer involving a transferor in whose name the vehicle is titled,
the transferor must disclose the mileage on a title, and not on a
separate reassignment document such as one that is supposed to travel
with the title.\26\ Florida's proposed program is not consistent with a
purpose of the disclosure required by TIMA pertaining to the form of
the disclosure.
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\26\ Virginia, Texas, and Wisconsin sought to allow dealers to
use electronic titling systems. 74 FR 646; 75 FR 20928; 76 FR 1371.
NHTSA approved the petitions of Virginia, Texas, and Wisconsin for
approval of alternate odometer mileage disclosure requirements.
However, these states did not use reassignment forms in the manner
proposed by Florida. Instead, these states provided for direct
electronic recordation of an odometer reading in the e-title system
by a transferor. 74 FR 649; 75 FR 20929; 76 FR 1374. Virginia,
Texas, and Wisconsin also required the identity of all individuals
accessing the e-title system to be validated and authenticated, and
used unique electronic signatures to verify the identities of
individuals who accessed the e-title system. 74 FR 646; 75 FR 20929;
76 FR 1374.
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A second purpose of TIMA is to prevent odometer fraud by processes
and mechanisms making odometer mileage disclosure on the title a
condition for the application for a title and a requirement for the
title issued by the State. As explained above, a major shortcoming of
the odometer provisions of the Cost Savings Act prior to TIMA was the
absence of a requirement that the odometer disclosure statement be on
the vehicle's title that, following the sale of the vehicle, was
presented to the State for retitling. Florida's proposed alternate
disclosure requirements for vehicles transferred from a private owner
to a licensed dealer do not satisfy this purpose. If the initial sale
transaction to the dealer were corrected, Florida's proposed alternate
disclosure requirements for subsequent vehicle transfers between
licensed dealers would satisfy this purpose. Florida's proposal for
sales to dealers provides for disclosure and acceptance of odometer
information on a secure reassignment form; not on a title. Following
the ultimate resale of a vehicle to a consumer by a dealer (possibly
not the same dealer that took the vehicle as a trade-in), that dealer
would take secure reassignment forms to the tag agency for titling.
Florida does not propose making the disclosure of odometer mileage on
the title in the initial transaction involving a transferor in whose
name the vehicle is titled a condition for the application for a title
and a requirement for the title issued by the State. Florida would
provide for issuance of a new title based on secure reassignment forms.
Such a form can be easily discarded and another secure reassignment
form bearing an inaccurate odometer disclosure could be created by an
unscrupulous dealer somewhere in the chain of transfers. In order for
the proposed program to be consistent with a purpose of TIMA, in the
first transfer of title of a vehicle from a private seller to a dealer
Florida may not provide for a mileage disclosure on a secure
reassignment form.
A third purpose of TIMA is to prevent alterations of disclosures on
titles and to preclude counterfeit titles through secure processes. In
view of the shortcomings of Florida's proposed program regarding the
use of secure reassignment forms instead of titles in sales between
private parties and dealers discussed above, NHTSA stated in its
initial determination that it was inappropriate to reach a conclusion
regarding the security aspects of those forms in that context. 76 FR
48112. Florida did not provide any additional information on secure
processes in its comment. Therefore, NHTSA declines to reach a
conclusion on this issue.
A fourth purpose of TIMA is to create a record of the mileage on
vehicles and a paper trail. The underlying purposes of this record and
paper trail are to inform consumers and provide a mechanism to trace
and prosecute odometer tampering. Florida's proposed alternative scheme
would not, in one critical respect, create a scheme of records
equivalent to the current ``paper trail'' used for identifying and
prosecuting odometer fraud. Florida proposes widespread use of secure
reassignment forms in transfers from private parties to dealers. In
particular, Florida proposes that, instead of a title, a reassignment
form would be used to create the record of the mileage on the odometer
in the case of a transferor in whose name the vehicle is titled. In
these circumstances, use of reassignment documents would not create the
records and paper trail consistent with the purposes of TIMA.
The remainder of Florida's proposal on sales involving licensed
motor vehicle dealers would otherwise meet the record creation purposes
of TIMA. Regardless of whether the buyer requests a paper title or
surrenders the title to the Department to maintain electronically, the
Department would retain an electronic copy of the prior titles
(including the prior odometer disclosure statements) and any supporting
documentation, including secure reassignment forms and powers of
attorney. The Department would scan these documents and store them in
FRVIS with the vehicle's electronic title history. For title images,
FRVIS would store all applicable data and images of documents that
would remain in the title history for the vehicle. Furthermore, Florida
requires that all documents used to issue a title be retained for a
period of at least ten (10) years. These electronic records would
create the electronic equivalent of a paper based system that would be
readily available to law enforcement. Additionally, the vehicle mileage
would be available for public view via an online motor vehicle check
available to Florida customers.
TIMA's overall purpose is to protect consumers by ensuring that
they receive valid odometer disclosures representing a vehicle's actual
mileage at the time of transfer. Because Florida's proposed program
relies on reassignment documents, which change hands before being
scanned into FRVIS, and cannot be authenticated by the tag agent, it
does not satisfy this purpose.
After careful consideration of the comments, the Agency concludes
that Florida's proposed program on sales involving licensed motor
vehicle dealers does not meet the purposes of the disclosure required
by TIMA and its amendments.
[[Page 36945]]
C. Sales Involving Leased Vehicles
NHTSA's initial determination preliminarily denied Florida's
petition regarding proposed alternate disclosure requirements for sales
of leased vehicles. In their comments, Florida and NAAA asserted that
Florida's proposal as to the sale of leased vehicles was consistent
with the purposes of the disclosure required by TIMA and its
amendments. But neither Florida nor NAAA provided support as to how or
why Florida's proposal was consistent with the statutory purposes
beyond what was stated in Florida's petition as supplemented.
Analysis of Florida's proposed alternate vehicle mileage disclosure
requirements for sales involving leased vehicles involves consideration
of the purposes of the disclosure required by the leased vehicle
provisions of TIMA and its amendments, as well as power of attorney
provisions of TIMA and its amendments.\27\
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\27\ The Virginia and Texas petitions for approval of alternate
odometer mileage disclosure requirements did not cover leased
vehicle sales. 74 FR 643; 75 FR 20925. The Wisconsin petition for
approval of alternate odometer mileage disclosure requirements
discussed an incomplete plan for transactions involving leased
vehicles which was still under development, but NHTSA did not
approve Wisconsin's plan insofar as it concerned leased vehicles, as
Wisconsin indicated that it would submit a separate petition
addressing leased vehicle transfers. 76 FR 1374. In addition,
because the Virginia, Texas, and Wisconsin petitions did not propose
expanding the use of power of attorney or even involve the use of
power of attorney, NHTSA did not address the statutory purposes of
the power of attorney provisions in its final determinations for
those states. 74 FR 643; 75 FR 20925; 76 FR 1367.
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1. Florida's Proposal in Relation to the Purposes of the Disclosure
Required by the Leased Vehicle Provisions of TIMA and Its Amendments
One purpose of TIMA's leased vehicle provisions is to ensure that
the lessor has the vehicle's actual odometer mileage when it transfers
ownership. Florida's proposal satisfies this purpose. In our initial
determination, we stated our understanding, which Florida did not
dispute in its comments, that under the state's proposal, lessees will
be required to sign an odometer disclosure statement that will be
provided to the lessor. We adhere to that understanding. 76 FR 48113.
A second purpose of TIMA's leased vehicle provisions is to ensure
that the lessee provides the lessor with an odometer disclosure
statement regarding the mileage of the vehicle at the time of transfer.
Florida's proposal satisfies this purpose. As discussed above, the
lessee would provide this via an odometer disclosure statement to the
lessor when surrendering the leased vehicle to the dealer, and the
dealer would provide this statement to the buyer.
A third purpose is to ensure that lessees are formally notified of
their odometer disclosure obligations and the penalties for failing to
comply by not providing complete and truthful information. Florida's
proposal does not satisfy this purpose. We note that Florida did not
address this purpose in its petition other than a statement that the e-
title process does not change the current requirement. We recognize
that Fla. Stat. Ann. Sec. 319.225(4) requires lessors to conform to
Federal disclosure regulations under 49 CFR 580.7. In addition, Fla.
Stat. Ann. Sec. 319.225(9) provides that State statutes regarding
vehicle transfer and reassignment forms and odometer disclosure
statements be construed to conform to 49 CFR Part 580. According to
Florida, the requirement that the lessee provide the lessor with an
odometer disclosure statement when the lessee surrenders the vehicle
typically is part of the lease agreement, which provides notice of the
requirement and the penalties for failing to comply. But this is not a
formal requirement. Underlying the adoption of the leased vehicles
provisions of TIMA was significant concern about considerable
understatements of mileage on leased vehicles that were turned in and
resold. And in its comments on the initial determination, Florida did
not suggest that it was a formal requirement. Reliance on what is
typically in a lease is not sufficient to ensure that lessees are
formally notified of their odometer disclosure obligations and the
penalties for failing to comply by not providing complete and truthful
information.
A fourth purpose of TIMA's disclosure requirements is to set the
ground rules for the lessors, providing for lessors to indicate the
mileage provided by the lessee on the title, unless the lessor has
reason to believe that the disclosure by the lessee does not reflect
the actual mileage of the vehicle. Florida's proposal does not satisfy
this purpose. Under Florida's proposal, a lessee would make an odometer
disclosure by executing an odometer disclosure statement upon
relinquishing the leased vehicle. The lessor would transfer the
odometer disclosure from the lessee's statement to a power of attorney
unless the lessor had reason to believe that the lessee's statement did
not reflect the vehicle's actual mileage, in which case the lessor
would be required to indicate on the title ``true mileage unknown'' or
words to that effect. As Florida and NAAA acknowledged, odometer
disclosure using a power of attorney is permissible only in the limited
circumstances when the transferor's title is physically held by a
lienholder at the time of the transfer, or when title has been lost.
This stems from the 1988 amendments to TIMA. These circumstances do not
include lessors giving power of attorney to dealers for purposes of
odometer disclosure. Under Florida's proposal, the vehicle title is not
unavailable to the lessor.
A fifth purpose of TIMA's leased vehicle provisions is to create
records and a paper trail. The paper trail includes the signed odometer
disclosure statement by the lessee. Florida's proposed alternate
disclosure requirements do not satisfy this purpose. Florida's proposed
program for leased vehicle transactions would not create a scheme of
records equivalent to the current ``paper trail'' now assisting
consumers and law enforcement. The lessee would sign an odometer
disclosure statement when surrendering the vehicle, but the lessor
would not be required to sign this document. Instead, the lessor would
execute a power of attorney form. Also, under TIMA as implemented,
dealers and lessors are required to retain all odometer disclosure
statements that they issue and receive. However, Florida's proposed
program does not specify that the dealer and lessor are required to
maintain a copy of the lessee's odometer disclosure statement, and does
not provide an alternative mechanism such as a provision that the
statement will be forwarded to either a tag agent for mileage
verification or the Department for scanning and maintaining as part of
the vehicle's title history. Florida did not correct this in its
comments. Florida's proposal as to the sale of leased vehicles does not
satisfy the purposes of TIMA, because it does not require dealers and
lessors to retain odometer disclosure statements from lessees.
The overall purpose of TIMA's leased vehicle provisions is to
ensure that vehicles subject to leases have adequate odometer
disclosure statements executed on titles at the time of transfer.
Florida's proposed program does not meet TIMA's overall purpose. Under
Florida's proposal, upon the termination of a lease, a lessee would
sign an odometer disclosure statement. But Florida would not have the
lessor sign this document. Instead, the lessor would sign a separate
power of attorney document. The lessor's granting a power of attorney
to a dealer for purposes of odometer disclosure allows the same person
to sign an odometer disclosure for both parties. This creates an
opportunity for fraud, and Congress did
[[Page 36946]]
not extend the use of power of attorney to this circumstance. Further,
Florida's proposal \28\ does not require the odometer disclosure
statement made by the lessee to be co-signed by the lessor, to be
submitted with title documents, or to be retained by any party. In the
Agency's view, this is an important link in the chain of odometer
disclosure for a leased vehicle to ensure valid odometer disclosures.
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\28\ Florida's proposal provides for odometer disclosure in
transfers of leased vehicles to be made on a secure reassignment
form. Lessors (transferors) are titled owners in Florida. But as
explained above, in the case of a transferor in whose name the
vehicle is titled, the transferor must disclose the mileage on the
title, and not on a reassignment document. Florida's proposal runs
counter to this requirement. The dealer takes the documents (bill of
sale, reassignment document, and power of attorney) to the tag
agency. Then, the documents are sent to the Department and scanned
into the title history.
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2. Florida's Proposal in Relation to the Purposes of the Disclosure
Required by the Power of Attorney Provisions of TIMA and Its Amendments
The first purpose of the power of attorney provision in TIMA as
amended was to provide limited exception(s) to a rule prohibiting a
person from signing an odometer disclosure statement as both the
transferor and transferee in the same transaction, which had the effect
of prohibiting the use of powers of attorney for purposes of recording
mileage on titles of motor vehicles. Florida's proposal does not fit
within the confines of the exceptions identified by Congress and NHTSA
and does not meet this purpose of TIMA as amended. Under Florida's
proposed program, a lessor (not a lienholder) would execute a power of
attorney. No lienholder would be involved nor is there a requirement
that the title be lost. More importantly, overall purposes of TIMA as
amended are not preserved by Florida's proposed expansion of power of
attorney usage. Florida seeks to use power of attorney as part of a
mileage disclosure process which would use at least three separate
documents to disclose mileage: an Odometer Disclosure Statement by a
lessee (the form of which is unspecified), a power of attorney form,
and a secure reassignment form. Florida has presented no measure of
control over these documents, which can be fraudulently replaced prior
to recordation in Florida's e-title system.
In the initial determination, NHTSA did not make a determination as
to whether Florida's proposal met the second, third, fourth, and sixth
purposes of the discourse required by TIMA. 76 FR 48114-48115.
Florida's comments did not provide any additional justification as to
how its program was consistent with these purposes of TIMA.
Accordingly, NHTSA declines to make a final determination as to whether
Florida's proposal meets these purposes.
The fifth purpose is to prevent alterations of odometer disclosures
by powers of attorney and to preclude counterfeit powers of attorney
through secure processes. Florida's proposal does not satisfy this
purpose. Under NHTSA's regulations, power of attorney forms shall be
issued by the State and shall be set forth by a secure process. 49 CFR
580.13(a). Under Florida's proposal, the power of attorney document
used by the lessor would not be State-issued and would not be secure.
As noted above, TIMA was written in part to prevent alterations of
disclosures on titles and preclude counterfeit titles by requiring
secure processes. In furtherance of these purposes, paper titles must
be produced using a secure printing process or there must be some
``other secure process.'' Allowing lessors to transfer title and make
the required disclosure through a non-secure power of attorney is
inconsistent with the purpose of the odometer disclosure requirements.
Accordingly, Florida's proposed program does not meet this purpose. A
power of attorney form--and any document used to reassign a vehicle
title--must be issued by the State and produced by a secure process.
Finally, the overall purpose of the disclosure required by TIMA is
to protect consumers by ensuring that they receive valid
representations of a vehicle's actual mileage at a time of transfer.
Florida's proposal is not consistent with this purpose.
Upon careful consideration of the comments, NHTSA adopts the
analysis set forth in its initial determination, and denies Florida's
proposed alternate disclosure requirements for transfers involving
leased vehicles.
D. Conclusion
For the foregoing reasons, and upon review of the entire record,
NHTSA hereby issues a final determination granting Florida's petition
for requirements that apply in lieu of the federal requirements adopted
under section 408(d) of the Cost Savings Act as to vehicle transfers
involving casual or private sales, and denies Florida's petition as to
sales involving licensed motor vehicle dealers and leased vehicles.
Other requirements of the Cost Savings Act continue to apply in
Florida. NHTSA reserves the right to rescind this partial grant in the
event that information acquired after this grant indicates that, in
operation, Florida's alternate requirements do not satisfy one or more
applicable requirements.
Authority: 49 U.S.C. 32705; delegation of authority at 49 CFR
1.50, 501.2, and 501.8.
Issued on: June 12, 2012.
David L. Strickland,
Administrator.
[FR Doc. 2012-14773 Filed 6-19-12; 8:45 am]
BILLING CODE 4910-59-P