[Congressional Record Volume 144, Number 151 (Wednesday, October 21, 1998)]
[Senate]
[Pages S12842-S12843]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   THE NATIONAL SALVAGE MOTOR VEHICLE CONSUMER PROTECTION ACT OF 1998

  Mr. LOTT. Mr. President, I am very disappointed that there was an 
objection to the final passage of the National Salvage Motor Vehicle 
Act of 1998. This bipartisan consumer measure would have combated the 
growing and costly fraud of selling rebuilt salvage vehicles as 
undamaged used cars. This small, but important package would have saved 
consumers and automobile dealers more than $4 billion annually and 
would have kept millions of structurally unsafe vehicles off America's 
roads and highways.
  As my colleagues are aware, the practice of selling salvage vehicles 
without disclosing their damage history has become a serious national 
problem--aided by titling requirements that vary from state to state. A 
significant number of our colleagues in this chamber recognized that 
the status quo simply is not working. Something needed to be done to 
protect used car buyers and automobile dealers all across America from 
title washing. This Congress took action to quell this anti-consumer 
plague that has preyed on unsuspecting victims for far too long. 
Unfortunately, the Administration killed this much needed consumer 
protection measure.
  Mr. President, the House of Representatives, under the stewardship of 
Chairman Tom Bliley of the House Commerce Committee, and Congressman 
Rick White, the author of the House companion bill, passed most of the 
Senate's legislation on October 10 with bipartisan support. The House 
wisely chose to exclude a federal overlay system in addition to 
existing state branding procedures. This duplicative approach was 
strongly opposed by the American Association of Motor Vehicle 
Administrators which represents the very people who would administer 
the provisions of any auto salvage legislation.
  Removing the proposed federal overlay was not taken lightly. The 
House took a serious look at a recent letter from the AAMVA which 
strongly objected to the concept of dual federal and state branding 
systems. Based on its analysis, the House concluded that the proposed 
federal overlay scheme would have created greater consumer confusion 
instead of achieving the legislation's intended purpose of enhancing 
information disclosure. At this time Mr. President, I ask unanimous 
consent to have printed in the Record the October 5, 1998 letter from 
the American Association of Motor Vehicle Administrators to House 
Commerce Committee Chairman Tom Bliley.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                           American Association of


                                 Motor Vehicle Administrators,

                                   Arlington, VA, October 5, 1998.
     Hon. Tom Bliley,
     Chairman, House Commerce Committee, Rayburn House Office 
         Building, Washington, DC.
       Dear Chairman Bliley: On October 2, the Senate passed Bill 
     852, the National Motor Vehicle Safety, Anti-Theft, Title 
     Reform, and Consumer Protection Act of 1997. Senate 852 
     incorporates the Levin amendment, which specifies a federal 
     overlay of salvage terms and procedures. Under the federal 
     overlay approach, a state which chooses to adopt the federal 
     standards is free to also retain its current, inconsistent 
     definitions and procedures with respect to salvage vehicles.
       We understand that the bill will now be considered by the 
     House/Senate Conference Committee. We believe that the 
     federal overlay approach is unacceptable for three reasons:
       1. It undercuts the important objective of uniformity in 
     the handling of salvage vehicles;
       2. Since participation in the federal standards is entirely 
     voluntary for the states, the federal overlay approach serves 
     no useful purpose, while undercutting the important goals of 
     the bill; and
       3. It creates an unworkable system.
       Therefore, we request that the federal overlay system be 
     stricken from the final bill so that the bill can achieve the 
     important objectives which Congress, motor vehicle 
     administrators, law enforcement, dealers and others have long 
     worked toward. Even without the Levin amendment, Senate 852 
     already contains substantial compromises that address the 
     concerns of proponents of the Levin amendment.
       Specifically, the federal overlay approach creates problems 
     including:


                           lack of uniformity

       The federal overlay approach completely destroys the 
     primary goal of the legislation: to move toward uniformity of 
     definitions and procedures with respect to salvage vehicles. 
     Such uniformity was the most fundamental of the 
     recommendations of the Motor Vehicle Titling, Registration 
     and Salvage Advisory Committee. In making this 
     recommendation, the Advisory Committee was, in part, 
     addressing Congress' mandate in the Anti Car Theft Act of 
     1992, which directed the Advisory Committee to ``include an 
     examination of the extent to which the absence of uniformity 
     and integration of State laws regulating vehicle titling and 
     registration and salvage of used vehicles allows enterprising 
     criminals to find the weakest link to `wash' the stolen 
     character of the vehicle.''
       During the advisory committee's deliberations, it was 
     estimated that there were approximately 65 different words 
     and symbols used in the states to designate salvage and other 
     damaged vehicles, a jumble of terms creating problems for 
     motor vehicle administrators, law enforcement and the 
     consumers they both serve. Rather than moving us toward 
     uniformity, the federal overlay approach raises the specter 
     of actually adding to these 65 terms and symbols.


                            lack of benefit

       The federal overlay approach is particularly disturbing in 
     that, given constitutional constraints, participation in the 
     federal standards is voluntary for the states. Since there is 
     no mandate on the states and since a state has to voluntarily 
     adopt the federal standards in order to be affected by them, 
     it is especially troubling that Congress would set up a 
     system in which a state would have two inconsistent programs 
     in place.


                           practical concerns

       In our view, the federal overlay poses an unworkable and 
     unrealistic result. Some examples of these problems are as 
     follows:
       1. Because the federal definition and the state definition 
     would not be the same, a vehicle could meet the federal 
     definition but not the state definition, or could meet the 
     state definition and not the federal definition. In such a 
     common circumstance, what is the consumer to understand from 
     a title which tells him or her ``this vehicle is federal 
     salvage but not state salvage'' or ``this vehicle is not 
     federal salvage but is state salvage''?
       2. If a vehicle is both federal salvage and state salvage, 
     which procedures are to apply? These procedures include 
     application, reporting timeframes, inspection, disclosures, 
     branding, etc. and will, in almost all cases, be different 
     under the federal standards than under the state standards.

[[Page S12843]]

       3. If a vehicle is a ``flood vehicle'' under the federal 
     standards, but is a ``salvage vehicle'' under the state 
     standards (a very common result), do the flood procedures or 
     the salvage procedures apply?
       4. If an insurance company leaves a vehicle which meets 
     both the federal salvage standard and the state salvage 
     standard with the owner, which owner-retained procedure is to 
     be followed?
       5. Under the federal standard, a nonrepairable vehicle 
     certificate is to be limited to two transfers. Most state 
     laws do not contain a similar limitation. Does the federal 
     standard or the state standard apply?
       6. Under Senate 852, it is a crime not to apply for a 
     federal salvage title. Under state laws, it is a crime not to 
     apply for a state salvage title. How does an applicant avoid 
     committing a crime if a vehicle is both a federal salvage 
     vehicle and a state salvage vehicle?


                         Administrative burden

       State departments of motor vehicles would be tasked with 
     implementing many provisions of Senate 852 as amended. They 
     would need to interpret this complex law and apply it 
     consistently. Responsibilities would include determining the 
     proper designations for state and/or federal branded 
     vehicles, re-titling the vehicles, explaining the dual 
     designations to citizens, etc.
       The burden of interpreting and maintaining two sets of 
     standards could discourage states from even attempting to 
     implement the federal provisions. For the states that do 
     attempt to implement, it will cause a ripple effect of 
     confusion and errors among states that do not implement.
       The amended bill would also create a burden upon users of 
     the National Motor Vehicle Title Information System. As 
     additional variations of salvage brand codes increase, the 
     possibility of misinterpretation would increase as well. The 
     bill's provisions would also require modifications to 
     technical system design, which would in turn require 
     expenditures of resources by states, central file providers, 
     service providers, and the system operator to accommodate.
       There are dozens of other practical concerns with the 
     federal overlay approach, but the above give a sense for the 
     impracticality of the approach. The more difficult an 
     approach is to administer and to understand, the easier it is 
     for the unscrupulous to again ``work the system'' and for 
     consumers to be defrauded.
       If you would like additional information, please contact 
     Larry Greenberg, Vice President, Vehicle Services, or Linda 
     Lewis, Director, Public and Legislative Affairs, at 703/522-
     4200.
           Sincerely,
                                                  Kenneth M. Beam,
                                                  President & CEO.

  Mr. LOTT. The motor vehicle administrators, the real front line 
experts on this issue, carefully and thoughtfully outlined their 
practical concerns with the proposed federal overlay approach.
  First, the AAMVA letter noted that a federal overlay along with a 
separate state branding process undercuts the important objective of 
uniformity in the handling of salvage vehicles.
  Second, since participation in the federal standards is entirely 
voluntary for the states, the federal ``overlay'' approach serves no 
useful purpose.
  And, third, the letter pointed out that the federal overlay would 
create an unworkable, unmanageable system.
  The AAMVA also cautioned in its letter that ``the burden of 
interpreting and maintaining two sets of standards could discourage 
states from even attempting to implement the federal provisions. For 
the states that do attempt to implement, it will cause a ripple effect 
of confusion and errors among states that do not implement.'' In my 
view, these are compelling arguments against adopting the federal 
overlay approach that was added when the bill passed the Senate on 
October 2.
  Since the legislation was reported by the Senate Commerce Committee 
in November of last year, a large number of changes were made to the 
bill in an effort to address expressed concerns. Again, I would 
emphasize that the final title branding legislation included a number 
of significant changes to make the bill even more pro-consumer and to 
provide states with maximum flexibility. It closed the gaps that exist 
between conflicting state vehicle titling laws that allow dishonest 
rebuilders to perpetuate their fraudulent schemes without the need for 
a complicated, redundant, and burdensome federal overlay framework.
  The bipartisan compromise package included:
  A salvage threshold that was lowered from 80 percent to 75 percent.
  A provision that allows states to cover any vehicle, regardless of 
age.
  A provision that grants state Attorneys General the ability to sue on 
behalf of citizens who are victimized by rebuilt salvage fraud and 
recover monetary judgments for damages that citizens may have suffered.
  With respect to the bill's ``prohibited acts,'' the Senate bill 
replaced the House's ``knowingly and willfully'' standard with a 
``knowingly'' standard.
  Two new prohibited acts, one related to making a flood disclosure and 
the other related to moving a vehicle or title in interstate commerce 
for the purpose of avoiding the bill's requirements.
  Flexibility for the states to provide additional disclosures to their 
citizens regarding the damage history of vehicles; synonyms of the 
defined terms that a conforming state could not use in connection with 
a vehicle were deleted.
  A provision that allows a state to establish a lesser percentage 
threshold for salvage vehicles if it so chooses. In other words, a 
state could set its threshold below the 75 percent level and still be 
in compliance with the provisions of the bill. Some consumer groups and 
some attorneys general advocated that states should be able to set 
their thresholds lower if they so desire. In the interest of 
compromise, we agreed to adopt that position.
  The package that I just outlined clearly indicates that the 
supporters of the legislation proceeded in good faith to reach a 
reasonable compromise for an effective bill. A number of changes were 
adopted a long the way in effort to protect used car consumers from 
title laundering. Equally important, the changes preserved the right of 
the states to determine what is in the best interests of their 
citizens.
  While I commend my colleagues in both chambers and from both sides of 
the aisle for passing versions of this important consumer protection 
legislation, I again want to express my regret that the Administration 
chose to oppose the National Salvage Motor Vehicle Act.
  Now, instead of improving the hodgepodge of state titling laws, the 
Administration allows unscrupulous auto rebuilders to launder car and 
truck titles so they bear no indication of a vehicle's damage history. 
Perpetuating a costly fraud. A $4 billion annual consumer swindle.
  Instead of endorsing this pro-disclosure measure and protecting 
Americans from title fraud, the Administration has allowed more wrecks 
on wheels to be put back on our roads and highways.

                          ____________________