[Federal Register Volume 84, Number 188 (Friday, September 27, 2019)]
[Proposed Rules]
[Pages 51090-51092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20454]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 580

[Docket No. NHTSA-2019-0092]


Electronic Motor Vehicle Transactions Systems

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

ACTION: Request for comments.

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SUMMARY: In a separate Federal Register document, NHTSA issued a final 
rule that will allow for state adoption of electronic odometer 
disclosure systems without having to petition the agency for approval. 
NHTSA believes that, with the promulgation of this final rule, there 
are no longer any Federal disclosure requirements that must be done 
through paper, rather than electronic, disclosures. Therefore, States 
now possess the necessary authority to adopt completely paperless 
vehicle transactions if they choose to do so, and experience in other 
sectors of the economy suggest that adopting paperless systems 
generally reduces unnecessary transaction costs and may yield 
additional efficiency gains as well. In this document, NHTSA requests 
comment on the nature and scope of these potential benefits for States, 
consumers, and other stakeholders such as dealers and insurance 
companies; any interest or plans among States in moving towards 
paperless systems; and what resources and guidance may be needed to 
assist States to transition to purely electronic systems.

[[Page 51091]]


DATES: You should submit comments early enough to ensure that Docket 
Management receives them not later than October 28, 2019.

ADDRESSES: You may submit comments to the docket number identified in 
the heading of this document by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
     Mail: Docket Management Facility, M-30, U.S. Department of 
Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New 
Jersey Avenue SE, Washington, DC 20590.
     Hand Delivery or Courier: West Building Ground Floor, Room 
W12-140, 1200 New Jersey Avenue SE, between 9 a.m. and 5 p.m. Eastern 
Standard Time, Monday through Friday, except Federal holidays.
     Fax: (202) 493-2251.
    Regardless of how you submit your comments, you should mention the 
docket number of this document. You may call the Docket at (202) 366-
9324.
    Instructions: For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the Public 
Participation heading of the Supplementary Information section of this 
document. Note that all comments received will be posted without change 
to http://www.regulations.gov, including any personal information 
provided. Please see the Privacy Act discussion below.
    Privacy Act: In accordance with 5 U.S.C. 553(c), DOT solicits 
comments from the public to better inform its decision-making process. 
DOT posts these comments, without edit, including any personal 
information the commenter provides, to http://www.regulations.gov, as 
described in the system of records notice (DOT/ALL-14 FDMS), which can 
be reviewed at https://www.transportation.gov/privacy. Anyone can 
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.).
    Confidential Information: If you wish to submit any information 
under a claim of confidentiality, you should submit two copies of your 
complete submission, including the information you claim to be 
confidential business information, and one copy with the claimed 
confidential business information deleted from the document, to the 
Chief Counsel, NHTSA, at the address given below under FOR FURTHER 
INFORMATION CONTACT. In addition, you should submit two copies, from 
which you have deleted the claimed confidential business information, 
to Docket Management at the address given above under ADDRESSES. When 
you send a comment containing information claimed to be confidential 
business information, you should follow the procedures set forth in 49 
CFR part 512 and include a cover letter setting forth the information 
specified in our confidential business information regulation. (49 CFR 
part 512.)
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov and follow the 
online instructions for accessing the dockets or go to the street 
address listed above.

FOR FURTHER INFORMATION CONTACT:  For policy and technical issues: Mr. 
David Sparks, Director, Office of Odometer Fraud, National Highway 
Traffic Safety Administration, 1200 New Jersey Avenue SE, Washington, 
DC 20590. Telephone: (202) 366-5953. Email: [email protected]. For 
legal issues: Mr. Thomas Healy, Office of the Chief Counsel, National 
Highway Traffic Safety Administration, 1200 New Jersey Avenue SE, 
Washington, DC 20590. Telephone: (202) 366-5263.

SUPPLEMENTARY INFORMATION: NHTSA has issued a final rule amending Part 
580 to allow for the establishment of electronic odometer disclosure 
systems allowing odometer disclosures required by the Motor Vehicle 
Information and Cost Savings Act (Cost Savings Act) to be made 
electronically (81 FR 16107). The odometer disclosure laws and 
regulations protect purchasers of motor vehicles from odometer fraud. 
See Public Law 92-513, 86 Stat. 947, 961-63 (1972). NHTSA had 
previously published a notice of proposed rulemaking (NPRM) for this 
rulemaking on Friday, March 25, 2016, and the comment period for the 
NPRM closed on May 24, 2016.
    The scope of this rulemaking's cost-benefit analysis was limited to 
the direct effects of odometer disclosures, and thus the NPRM did not 
explore broader issues associated with adopting purely paperless 
transactions for automotive sales, particularly the wider benefits to 
States, consumers, and other stakeholders that could arise should 
States adopt such systems. To assist States and other stakeholders in 
assessing whether to adopt purely paperless procedures, NHTSA now seeks 
additional comments on these potential benefits and the plans and 
interest among the States in adopting these systems.

I. Background

    There were 17.3 million new vehicles \1\ and approximately 40 
million used vehicles \2\ sold in the U.S. in 2018, but the total 
number of vehicle transactions is much larger because every consumer 
purchase and sale may involve multiple wholesale transactions, and 
because transfers to salvage companies or the scrappage of vehicles 
necessitates additional transactions by insurance companies and other 
stakeholders. Until the publication of today's final rule, Federal law 
prohibited electronic odometer disclosures except in and to the extent 
that a subset of States that had received specific NHTSA exemptions.
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    \1\ The Year in Auto Sales: Facts, Figures and the Best Sellers 
from 2018, Automobile, (Jan. 4, 2019), available at https://www.automobilemag.com/news/year-auto-sales-facts-figures-bestsellers-2018/ (last visited June 19, 2019).
    \2\ Used Vehicle Outlook 2019, Edmunds, available at https://www.edmunds.com/industry/insights/ (last visited June 7, 2019).
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    Now that NHTSA has lifted this general prohibition, the Department 
anticipates that States may be interested in moving towards completely 
electronic transactions for motor vehicles. As experience in other 
sectors of the economy has demonstrated, electronic transactions would 
be expected to lead to many efficiency gains to the significant number 
of entities involved in motor vehicle transactions, including motor 
vehicle dealers; motor vehicle auction companies; insurance and 
casualty companies; banks, credit unions, and finance companies; 
salvage companies and junk yards; state departments of motor vehicles; 
and consumers; and all other persons or entities required to make 
odometer disclosures. For example, stakeholders will no longer be 
required to scan hard copy documents with wet signatures to retain or 
manage records electronically. Moreover, reductions in postage and 
delivery costs, including overnight delivery, will accrue from removing 
the need to mail hard copy documents with wet signatures. NHTSA also 
anticipates that paperless transactions will reduce the time needed to 
complete vehicle transactions, which could lead to substantial 
additional cost savings. States adopting electronic transaction systems 
may also see cost savings through reduction in records retention and 
retrieval costs and by eliminating the need to print titles on secure 
paper. NHTSA estimates that there are at least 48.5 million 
transactions involving odometer disclosures completed annually by motor 
vehicle dealers and private parties through private party

[[Page 51092]]

sales that could potentially be conducted electronically as a result of 
the final rule if all states that have not already adopted electronic 
odometer disclosures decide to do so.\3\
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    \3\ Virginia, Wisconsin, New York, Florida, Texas and Arizona 
already have adopted some form of electronic odometer disclosure. 
These states together account for 5 million new vehicle sales. See 
Auto Retailing: State by State, National Automobile Dealers 
Association, https://www.nada.org/statedata/ (last visited Jul. 22, 
2019). Because NHTSA was not able to obtain used vehicle sales data 
by state, we are using vehicle registrations for each state as a 
percentage of total vehicle registrations as a proxy for used 
vehicle sales. Together Virginia, Wisconsin, New York, Florida, 
Texas and Arizona account for 24.9 percent of all vehicle 
registrations. See Highway Statistics Series, Office of Highway 
Policy Information, Federal Highway Administration, https://www.fhwa.dot.gov/policyinformation/statistics/abstracts/2015/ (last 
visited Jul. 22, 2019). Based on this number, we estimate that there 
are approximately 10.12 million used vehicles sold in states 
employing some form of electronic odometer disclosure. We subtracted 
new and used vehicle sales in states already employing electronic 
odometer disclosure from the total number of new and used vehicle 
sales in 2018. Of these used vehicle sales, approximately 70 to 75 
percent are currently subject to the odometer disclosure 
requirements of part 580. See Used Vehicle Outlook 2019, Edmunds, 
available at https://www.edmunds.com/industry/insights/ (last 
visited June 7, 2019). In 2017, approximately 71 percent of used 
vehicles were sold by either a franchise or independent dealer. We 
stated in the final rule that used vehicles sold through dealers 
will likely involve at least two odometer disclosures, one when the 
vehicle is wholesaled and again when the vehicle is retitled. We 
arrived at our estimate by determining the total number of used 
vehicle sales currently subject to odometer disclosure requirements 
in states without electronic disclosures and added this number to 
the number of used vehicles sold by dealers currently subject to the 
odometer disclosures in states without electronic disclosure. This 
number was added to the number of new vehicles sold in states 
without electronic disclosure. The equation is ((29.88 * .70) + 
(20.9 * .71) + 12.7). NHTSA seeks comment on whether this is a 
reasonable method of estimating the number of sales-related odometer 
disclosures in these states.
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    Therefore, NHTSA believes that there is strong incentive for States 
to adopt electronic transaction systems. To assist States in making 
prudent decisions based on the best available evidence, in this 
document, NHTSA requests comment on the ways that adopting purely 
paperless transaction systems may reduce vehicle transaction costs for 
States, consumers, and other stakeholders. Specifically, can these 
systems reduce State transaction costs for receiving, processing, and 
storing odometer disclosures and creating titles? Also, will adopting 
purely paperless procedures reduce transaction costs for (i) wholesale 
transactions; (ii) auction transactions; (iii) salvage or junk 
transactions; or (iv) retail transactions? Moreover, what benefits will 
purely paperless transactions have for stakeholders, including from the 
following industries: (i) Insurance; (ii) salvage and whole automobile 
auctions; (iii) new, used, and wholesale vehicle dealers; (iv) vehicle 
registration companies; and/or (v) technology companies providing 
systems for any of the above industries?
    NHTSA also requests comment on any plans that States currently have 
to adopt electronic transaction systems now that the Federal 
requirement for paper odometer disclosures has been eliminated, as well 
as the general interest that States may have in adopting these systems 
even if no specific plans exist yet. In addition, NHTSA requests 
comment on the steps the agency can take to assist in assisting States 
in determining whether and how best to implement such procedures. For 
instance, (i) what questions do States have in determining whether and 
how to implement these systems and what can NHTSA do to help?; (ii) 
What can be done to support development of secure odometer disclosure 
programs and electronic titling systems more generally?; (iii) How can 
NHTSA support the interoperability of multiple state electronic titling 
systems?
    Instructions for submitting comments are described above.

    Issued in Washington, DC, pursuant to authority delegated in 49 
CFR 1.81, 1.95, and 501.8(d).
Jonathan Charles Morrison,
Chief Counsel.
[FR Doc. 2019-20454 Filed 9-26-19; 8:45 am]
 BILLING CODE 4910-59-P