[Congressional Record Volume 145, Number 54 (Tuesday, April 20, 1999)]
[Senate]
[Pages S3909-S3910]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


 CONGRESS NEEDS TO MOVE FORWARD ON A RESPONSIBLE TITLE BRANDING MEASURE

  Mr. LOTT. Mr. President, a few weeks ago I reintroduced the National 
Salvage Motor Vehicle Consumer Protection Act, S. 655. This bipartisan 
bill has several cosponsors including Senator Breaux. It is similar to 
the measure that Senator Ford and I coauthored during the 105th 
Congress.
  This responsible legislation is important to used car buyers and 
motorists across the country because it will help curtail motor vehicle 
titling fraud. It does so by providing states with incentives to adopt 
minimal uniform definitions and standards that promote greater 
disclosure to potential used vehicle purchasers.
  During the last Congress, this legislation received the formal 
support of over 55 of our colleagues from both sides of the aisle and a 
modified version passed the House of Representatives by an overwhelming 
majority last October.
  Mr. President, every year used car buyers throughout the nation are 
cheated by those who pass off rebuilt salvage vehicles as undamaged. 
These consumers are never notified that the used vehicle they purchased 
was totaled and subsequently rebuilt. Often times, they find out only 
when the supposedly undamaged car or truck they bought is taken in for 
repair. It is at this point that they find their vehicle has been 
rebuilt and that it may pose a safety hazard. One where the cost of 
repair far exceeds the vehicle's worth or which cannot be fixed for 
safe operation
  Today, used car buyers and automobile dealers are paying over $4 
billion dollars annually for vehicles that have been rebuilt--many of 
which are virtually worthless. It is happening in Mississippi and in 
your own states. Title laundering is a growing problem. It must be 
stopped.
  Congress recognized the primary reason that millions of structurally 
unsafe vehicles were being placed back on America's roads and highways 
was due to the lack of uniformity in state titling rules. That is why 
the 103rd Congress passed the Anti-Car Theft Act of 1992 which required 
the Department of Transportation (DOT) to establish a task force, the 
Motor Vehicle Titling, Registration and Salvage Advisory Committee, to 
study problems related to motor vehicle fraud and theft. The Act 
directed the Committee to include representatives from several cabinet 
agencies, police chiefs and municipal auto theft investigators, State 
motor vehicle officials, industry and insurance representatives, 
recyclers, salvage yard operators, and scrap processors. Their primary 
function was to develop reasonable and balanced recommendations that 
would protect consumers.
  The Salvage Advisory Committee was formed in 1993. It was chaired by 
the Chief of the Odometer Fraud Staff for the National Highway Traffic 
Safety Administration. It included the Justice Department's Assistant 
Director for Consumer Litigation and a senior attorney from the 
Criminal Justice Division. It also included several Secretaries of 
State, State DMV Directors and other stakeholders. These are the 
experts on the front line who deal with titling issues on a day-to-day 
basis that Congress chose for the Committee. The Salvage Advisory 
Committee deliberated for almost a year and issued its findings in 
February 1994. The Committee's report identified a series of practical, 
well thought out solutions to address the issue of title washing. It 
included the establishment of national uniform titling definitions and 
standards for salvage, rebuilt salvage, flood, and non-repairable 
passenger vehicles.
  This esteemed group knew what would work and what would not. They did 
not recommend a complex, overly burdensome titling and registration 
scheme. Instead, they identified a few definitions that should be 
standardized and minimal procedures that should be adopted by states.
  The task force recommended that a passenger vehicle that experiences 
damage exceeding 75% of its pre-accident value be designated as 
``salvage.''
  It also recommended that salvage vehicles that have been repaired for 
safe operation be branded ``rebuilt salvage,'' have an inspection to 
determine whether stolen parts were used to fix the vehicle, and have a 
decal permanently affixed to the driver's door jamb indicating the 
vehicle's history.
  The Salvage Committee identified a nonrepairable vehicle as a 
passenger motor vehicle that is incapable of safe operation for use on 
roads or highways and which has no resale value except as a source of 
parts or scrap.
  Another recommendation included the carrying forward of all brands on 
new title documents so that the terms used in one state would be 
identified on the titles of other states where the vehicle is re-
registered.
  Mr. President, Senator Ford and I simply authored a bill during the 
last Congress that codified these task force recommendations.
  The bill also included a slightly modified definition of flood 
vehicles. One that focuses on the electrical and mechanical damage 
resulting from excessive water. The task force originally recommended 
that all passenger vehicles submerged in water that has reached over 
the door sill or has entered the passenger or trunk damage be 
designated as a flood vehicle.
  Upon further reflection, and actual real world experience, the flood 
definition in this legislation was modified to brand only those 
vehicles that suffer debilitating damage instead of simply cosmetic 
damage, such as wet carpeting, that would have occurred under the 
original flood definition. The reason for this change was to ensure 
that a consumer's vehicle is not branded as a flood vehicle merely 
because its floor mats got wet. It makes no sense to brand a car or a 
truck as a flood vehicle, causing a significant and unnecessary 
devaluation of its worth, when the vehicle's operating functions and 
electrical, mechanical or computerized components are not damaged by 
water. This legislation also improves upon the task force's 
recommendations by including any vehicle acquired by an insurer as part 
of a water damage settlement.
  S. 655, the National Salvage Motor Vehicle Consumer Protection Act 
retains these important provisions and also includes additional 
technical corrections offered by state Attorneys General, consumer 
groups, and the U.S. Department of Transportation. Modifications that 
improve the legislation but do not take it in a completely different 
direction than proposed by the Salvage Advisory Committee. The changes 
I have made are consistent with the Supreme Court's decision in New 
York v. United States, 505 U.S. 144. The bill now includes the complete 
range of modifications that states are willing to make to their own 
titling rules and procedures. To push the envelope further by advancing 
prescriptive federal titling standards would seriously hinder Congress' 
efforts to achieve full state participation. Stricter titling 
requirements, those that create unnecessary and onerous procedures, 
additional paperwork, and more bureaucracy may also impose an unfunded 
mandate on states.

  Mr. President, my colleagues and I believe that it is time to act 
upon the task force's now five-year old recommendations by enacting the 
National Salvage Motor Vehicle Consumer Protection Act. A number of 
hearings have been held on this issue in both the House of 
Representatives and the Senate. All with the same conclusion--title 
washing is a serious problem affecting the wallets of used car buyers 
and the safety of motorists nationwide. Since the Salvage Advisory 
Committee issued its report in 1994, consumers have lost as much as $20 
billion and as many as 8 million more potentially structurally unsafe 
vehicles have been placed back on our nation's roads and highways. Some 
of the unsafe salvage vehicles stealthfully returned to the road were 
previous Department of Transportation crash test cars. These are cars 
that were deliberately wrecked, then rebuilt and sold to unsuspecting 
buyers across America.
  The National Salvage Motor Vehicle Consumer Protection Act would help 
put unscrupulous rebuilders out of business. It is a workable and well 
accepted legislative solution. It establishes a rational voluntary 
uniform titling regime that state Motor Vehicle administrators support. 
The bill is also supported by law enforcement agencies, consumers, and 
the automobile and insurance industries because it is a common sense 
approach that will effectively curtail title laundering.
  It is a program that state legislatures will adopt because it is a 
win-win

[[Page S3910]]

for consumers, states, and industry. That is key. Congress should not 
spin its wheels and push for a burdensome and overly complex titling 
scheme that most states will reject even if they are eligible to 
receive offsetting federal funding or are penalized in some way for not 
adopting such a scheme. The only winners under such a scenario are the 
thieves and charlatans who will continue to take advantage of state 
inconsistencies by washing the titles of severely damaged vehicles.
  Instead of being a federal mandate, The National Salvage Motor 
Vehicle Consumer Protection Act provides participating states with a 
new incentive grant to adopt uniform titling and registration 
standards. These standards will protect the used car buyers in their 
states from unknowingly purchasing totaled and subsequently rebuilt 
vehicles. The authorized funding can be used by states to issue new 
titles, establish and administer vehicle theft or safety inspections, 
enforce titling requirements, and for other related purposes.
  Mr. President, since this is a voluntary program, no state will be 
penalized for non participation.
  Mr. President, this particular approach was recommended by the 
Department of Transportation. It was a sound recommendation and I 
accepted it.
  This modification is good public policy since it no longer links 
state participation with federal seed money for states to participate 
in the National Motor Vehicle Title Information System (NMVTIS).
  NMVTIS is beneficial to states because it will allow them to 
instantaneously share and retrieve titling and registration information 
with each other. The effectiveness of NMVTIS depends on the total 
number of states that choose to participate in the system. Thus, it is 
important to have the maximum number of states using NMVTIS whether or 
not they utilize common terms. The Congressional Budget Office 
concluded in 1997 that a penalty-based titling branding scheme which 
denies states funding for NMVTIS would significantly reduce the number 
of states that choose to utilize the system. This, in turn, would 
severely undermine the intent of the 103rd Congress which created 
NMVTIS and would jeopardize the overall effectiveness of a nationwide 
titling information system.
  I think it is also important to note that the National Salvage Motor 
Vehicle Consumer Protection Act does not recommend definitions or 
standards that none of the 50 states currently have in place. Instead, 
this legislation accepts, codifies, and in some cases improves upon the 
recommendations put forward by a Congressionally mandated task force. A 
commission created by a Democratically controlled Congress to 
specifically address the issue of title fraud.
  The National Salvage Motor Vehicle Consumer Protection Act goes even 
further in the direction of promoting disclosure by requiring a written 
disclosure statement be provided to purchasers of rebuilt salvage 
vehicles. It permits states to use terms that are synonymous with those 
identified in the bill. And, it expressly allows states to adopt even 
greater disclosure standards than are provided for in the legislation. 
In the case of salvage vehicles, it lets states adopt an even lower 
threshold than 75% if they so choose. It does not, however, establish a 
minimum baseline of 65%, a threshold that no state in the union has 
today. None. The 65% threshold would negatively affect tens of millions 
of car owners with low value vehicles. A proposal advanced by some that 
would unnecessarily brand for life the vehicles of low income drivers 
involved in minor accidents such as fender-benders.
  There are similar counter-productive proposals that would brand 
vehicles that have only slight cosmetic and structural damage such as a 
dented front end and a busted headlight. Who benefits from this? Who 
will be harmed by this? I want answers to these questions. America's 
motor vehicle owners deserve answers to these questions.
  I think my colleagues will agree that Congress should not force 
states into enacting standards that adversely impact consumers or 
titling provisions that not even one state has chosen to adopt. 
Remember, these well intentioned but impractical, confusing, and unwise 
proposals have been around for many years. States, as well as the task 
force, expressly rejected them. No one who works on vehicle titling 
issues wants them.
  Let me say again that the National Salvage Motor Vehicle Consumer 
Protection Act creates a voluntary federal titling program. It creates 
minimal national standards while offering participating states the 
flexibility they need and want to adopt additional disclosure 
requirements and more stringent provisions. It provides appropriate 
vehicle titling terms and definitions that do not unnecessarily devalue 
vehicles or cause repairable automobiles to be junked. The bill focuses 
on pre-purchase disclosure, helps motorists by requiring the tracking 
of salvage vehicle VIN numbers, continues consumers' ability to pursue 
private rights of actions available under state law, and allows states 
to adopt new civil and criminal penalties. And, it has wide-spread 
support.
  The National Salvage Motor Vehicle Consumer Protection Act is the 
right legislative solution to combat title fraud. It solves the problem 
without creating new problems and new headaches for consumers, for 
states, and for industry. It is time for Congress to pass this 
important measure.

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