[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.
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