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					                                                                                                                            Friday,
                                                                                                                            January 30, 2009




                                                                                                                            Part III

                                                                                                                            Department of
                                                                                                                            Justice
                                                                                                                            28 CFR Part 25
                                                                                                                            National Motor Vehicle Title Information
                                                                                                                            System (NMVTIS); Final Rule
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                                      5740               Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations

                                      DEPARTMENT OF JUSTICE                                   the Anti-Car Theft Improvements Act of                      of Justice Assistance (BJA) to conduct a
                                                                                              1996, Public Law No. 104–152, 110 Stat.                     full review of the NMVTIS system
                                      28 CFR Part 25                                          1384. The Anti-Car Theft Improvements                       architecture to identify any
                                      [Docket No. FBI 117; AG Order No. 3042–                 Act of 1996 renamed the automobile                          technological barriers to NMVTIS
                                      2009]                                                   titling system the ‘‘National Motor                         implementation and to determine if any
                                                                                              Vehicle Title Information System’’ and                      potential cost savings was available
                                      RIN 1110–AA30                                           transferred responsibility for                              through emerging technology. The IJIS
                                                                                              implementing the system from DOT to                         Institute report found that ‘‘the NMVTIS
                                      National Motor Vehicle Title                            the Department of Justice (DOJ).                            program provides an invaluable benefit
                                      Information System (NMVTIS)                             Hereinafter, the Anti-Car Theft Act of                      to state vehicle administrators and the
                                      AGENCY:    Department of Justice.                       1992 and the revisions made by Public                       public community as a whole.
                                      ACTION:   Final rule.                                   Law 103–272 and the Anti-Car Theft                          Advantages of the program include
                                                                                              Improvements Act of 1996, codified at                       improving the state titling process, as
                                      SUMMARY: The National Motor Vehicle                     49 U.S.C. 30501–30505, are collectively                     well as providing key information to
                                      Title Information System (NMVTIS) has                   referred to as the ‘‘Anti-Car Theft Act’’or                 consumers and law enforcement
                                      been established pursuant to 49 U.S.C.                  the ‘‘Act.’’                                                agencies.’’ In addition to this study, the
                                      30502 and has the participation, or                        While the overall purpose of the Anti-                   Government Accountability Office
                                      partial participation, of at least 36 states.           Car Theft Act is to prevent and deter                       (GAO) also found NMVTIS to hold
                                      The purpose of NMVTIS is to assist in                   auto theft, title II of the Act, which                      benefit potential for states, and a private
                                      efforts to prevent the introduction or                  authorizes NMVTIS, is intended to                           cost-benefit study also determined that
                                      reintroduction of stolen motor vehicles                 address automobile title fraud.                             NMVTIS could provide benefits in the
                                      into interstate commerce, protect states                Accordingly, the primary purpose of                         range of $4 to $11 billion dollars
                                      and individual and commercial                           NMVTIS is to prevent various types of                       annually if fully implemented. NMVTIS
                                      consumers from fraud, reduce the use of                 theft and fraud by providing an                             and its benefits to states, law
                                      stolen vehicles for illicit purposes                    electronic means for verifying and                          enforcement, consumers, and others
                                      including fundraising for criminal                      exchanging title, brand, theft, and other                   have been widely touted by motor
                                      enterprises, and provide consumer                       data among motor vehicle                                    vehicle or auto-industry organizations
                                      protection from unsafe vehicles. This                   administrators, law enforcement                             including AAMVA and the National
                                      rule implements the NMVTIS reporting                    officials, prospective and current                          Automobile Dealers Association
                                      requirements imposed on junk yards,                     purchasers (individual or commercial),                      (NADA), by law enforcement
                                      salvage yards, and insurance carriers                   and insurance carriers.1 Currently, 37                      organizations such as the International
                                      pursuant to 49 U.S.C. 30504(c). This                    states are actively involved with                           Association of Chiefs of Police and the
                                      rule also clarifies the process by which                NMVTIS, representing nearly 75% of                          National Sheriffs Association, by the
                                      NMVTIS will be funded and clarifies                     the U.S. motor vehicle population.                          North American Export Committee
                                      the various responsibilities of the                     Specifically, 13 states are participating                   (NAEC), and by the International
                                      operator of NMVTIS, states, junk yards,                 fully in NMVTIS, 14 states are regularly                    Association of Auto Theft Investigators.
                                      salvage yards, and insurance carriers                   providing data to the system, and an                        NMVTIS’s benefits have also been
                                      regarding NMVTIS.                                       additional 10 states are actively taking                    recognized by national consumer
                                      DATES: Effective Date: This rule is                     steps to provide data or participate                        advocacy organizations, and by
                                      effective March 2, 2009.                                fully.2 States that participate fully in the                industry-affiliated groups including the
                                                                                              system provide data to the system on a                      National Salvage Vehicle Reporting
                                      FOR FURTHER INFORMATION CONTACT:
                                                                                              daily or real-time basis and make                           Program and many others, as identified
                                      Alissa Huntoon, 810 7th Street, NW.,
                                                                                              NMVTIS inquiries before issuing a new                       in the public comments.
                                      Washington, DC 20531, 202–616–6500,
                                                                                              title on a vehicle from out of state and                       NMVTIS is a powerful tool for state
                                      www.NMVTIS.gov.
                                                                                              preferably before every title verification,                 titling agencies. Fully participating state
                                      SUPPLEMENTARY INFORMATION:                              regardless of its origin or reason.                         titling agencies are able to use NMVTIS
                                      Background                                              Participating states also pay user fees to                  to prevent fraud by verifying the motor
                                                                                              support the system and the services                         vehicle and title information,
                                         The Anti-Car Theft Act of 1992,                      provided to the state.                                      information on brands applied to a
                                      Public Law No. 102–519, 106 Stat. 3384,                    In 2006, the Integrated Justice                          motor vehicle, and information on
                                      required the Department of                              Information Systems (IJIS) Institute, a                     whether the motor vehicle has been
                                      Transportation (DOT) to establish an                    nonprofit membership organization                           reported stolen—all prior to the titling
                                      information system intended to enable                   made up of technology companies, was                        jurisdiction issuing a new title. In order
                                      states and others to access automobile                  asked by Department of Justice’s Bureau                     to perform this check, these states run
                                      titling information. As part of the Anti-                                                                           the vehicle identification number (VIN)
                                      Car Theft Act of 1992, DOT was                            1 Brands are descriptive labels regarding the
                                                                                                                                                          against a national pointer file, which
                                      authorized to designate a third party to                status of a motor vehicle, such as ‘‘junk,’’ ‘‘salvage,’’   provides the last jurisdiction that issued
                                      operate the system. Since 1992, the                     and ‘‘flood’’ vehicles.
                                                                                                2 There are currently 13 states participating fully
                                                                                                                                                          a title on the motor vehicle and requests
                                      American Association of Motor Vehicle                   in NMVTIS: Arizona, Florida, Indiana, Iowa,                 details of the motor vehicle from that
                                      Administrators (AAMVA) has acted in                     Kentucky, Massachusetts, New Hampshire, Nevada,             jurisdiction. Using a secure connection,
                                      the capacity of the operator of the                     Ohio, South Dakota, Virgina, Washington, and                states then receive all required
                                      system. AAMVA is a nonprofit, tax                       Wisconsin. Fourteen states are providing regular            information or the complete title of
                                                                                              data updates to NMVTIS: Alabama, California,
                                      exempt, educational association                         Delaware, Georgia, Idaho, Louisiana, Nebraska, New          record from the state of record. States
                                      representing U.S. and Canadian officials                Jersey, New York, North Carolina, Pennsylvnia,              can then use this information to verify
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                                      who are responsible for the                             Tennesses, Texas, and Wyoming. Ten states are               information on the paper title being
                                      administration and enforcement of                       actively taking steps to provide data or participate        presented.
                                                                                              fully: Arkansas, Michigan, Minnesota, Missouri,
                                      motor vehicle laws. The requirements of                 Montaina, New Mexico, Oklahoma, South Carolina,
                                                                                                                                                             Verification of this data allows fully
                                      the Anti-Car Theft Act of 1992 were                     Vermont, and West Virginia. See www.NMVTIS.gov              participating states to reduce the
                                      amended by Public Law 103–272 and                       for a map of current participation status.                  issuance of fraudulent titles and reduce


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                                                         Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations                                            5741

                                      odometer fraud. Once the inquiring                      participating states, they often continue              addresses fraud, it is clear that brand
                                      jurisdiction receives the information, a                to be sold to new and unsuspecting                     information can be directly linked to
                                      state is able to decide whether to issue                owners. There have been cases                          vehicle theft in addition to fraud. Law
                                      a title. For states fully participating                 involving car dealers who had                          enforcement investigations have
                                      through integrated, online access, if a                 purchased stolen cloned vehicles and                   repeatedly shown that ‘‘clean title’’ total
                                      new title is issued, NMVTIS notifies the                resold them to individual consumers.                   loss vehicles are a preferred commodity
                                      last titling jurisdiction that another                  NMVTIS also provides protections from                  among car cloning and car theft rings, as
                                      jurisdiction has issued a title. The old                other types of related theft and fraud                 they bring a higher return on
                                      jurisdiction then can inactivate its title              that ultimately place lives at risk and                investment. The Anti-Car Theft Act
                                      record. This action allows fully                        cost states, consumers, and the private                exemption, which is in 49 U.S.C. 33111,
                                      participating jurisdictions to identify                 sectors billions of dollars each year. The             provides that junk and salvage yards are
                                      and purge inactive titles on a regular                  proceeds from these illicit activities                 not required to report on an automobile
                                      basis and eliminates the need for these                 support additional crime and fraud and                 if they are issued a verification under 49
                                      agencies to conduct these processes                     even serious and violent crime. For                    U.S.C. 33110 stating that the automobile
                                      manually. This service provides a                       more information on the benefits of                    or parts from the automobile are not
                                      measurable benefit to states in terms of                NMVTIS, visit www.NMVTIS.gov.                          reported as stolen.
                                      cost savings. In 2007, over 18.4 million                Discussion of Comments                                 2. Effectiveness
                                      title-update transactions were initiated
                                      and over 45 million messages were                         On September 22, 2008, the                              Comment: Several submissions
                                      generated via NMVTIS, which allows                      Department of Justice published a                      questioned the effectiveness of NMVTIS
                                      states to work and communicate                          proposed rule to implement various                     in eliminating or preventing fraud and
                                      securely and to perform electronic title                requirements concerning NMVTIS. See                    theft. Several of these commenters
                                      transactions between states.                            National Motor Vehicle Title                           suggested the need for quantitative
                                                                                              Information System (NMVTIS), 73 FR                     proof of the system’s effectiveness
                                         NMVTIS also allows fully                             54544 (Sept. 22, 2008). The rule                       before the law should be followed. At
                                      participating states to ensure that brands              proposed the imposition of reporting                   the same time, however, several
                                      are not lost when a motor vehicle travels               requirements on junk yards, salvage                    submissions recognized the value of
                                      from state to state. As noted above,                    yards, and insurance carriers. In                      NMVTIS. As one commenter noted,
                                      brands are descriptive labels regarding                 addition, the rule clarified the funding               ‘‘NMVTIS would undoubtedly cut down
                                      the status of a motor vehicle. Many                     process for NMVTIS and the                             on the number of rebuilt wreck fraud
                                      brands, such as a flood vehicle brand,                  responsibilities of the operator of                    cases.’’ And the State of Texas
                                      indicate that a motor vehicle may not be                NMVTIS, states, junk yards, salvage                    Department of Transportation noted that
                                      safe for use. Unfortunately, motor                      yards, and insurance carriers. The                     ‘‘[t]he system provides numerous
                                      vehicles with brands on their titles can                comments and the Department’s                          obvious benefits to titling agencies, law
                                      have their brands ‘‘washed’’ (i.e.,                     responses are discussed below:                         enforcement[,] and vehicle sellers, as
                                      removed ) from a title if the motor                                                                            well as consumer protection to the
                                      vehicle is retitled in another state that               1. General Comments                                    buying public.’’
                                      does not check with the state that issued                  Comment: Several commenters                            Response: The Anti-Car Theft Act’s
                                      the previous title and with other states                suggested that NMVTIS will deter                       participation requirements were
                                      that may have previously issued titles                  various types of crime and fraud and                   established based on analyses presented
                                      on the vehicle to determine if it has any               suggested that since the passage of the                at the time of the bill’s introduction and
                                      existing brands not shown on the paper                  Anti-Car Theft Act, the types of crime                 passing. Further, an extensive cost-
                                      title. Because NMVTIS keeps a history                   and fraud, as well as the methods, have                benefit analysis and a Government
                                      of brands applied by any state to the                   evolved. These commenters noted that                   Accountability Office study both have
                                      motor vehicle at any time, it protects                  the purpose of NMVTIS remains to                       independently determined that NMVTIS
                                      individual and corporate consumers by                   address these types of crime and fraud.                will produce a significant public benefit
                                      helping ensure full disclosure so that                     Response: DOJ agrees that since the                 that greatly exceeds the costs of
                                      purchasers are not defrauded or placed                  passage of the Anti-Car Theft Act,                     implementing the program. The cost-
                                      at risk by purchasing an unsafe motor                   crimes and crime techniques have                       benefit study found that the system is
                                      vehicle. Currently, there are                           evolved. DOJ, therefore, has updated the               only as effective as the number of
                                      approximately 300,000,000 VINs in                       stated purpose of NMVTIS to be more                    vehicles represented in the system. Non-
                                      NMVTIS with over 40,000,000 brands                      reflective of the crime and expansive                  participating states create ‘‘loopholes’’
                                      included. NMVTIS also prevents ‘‘clean                  direct and indirect fraud NMVTIS was                   where brands can be washed, allowing
                                      title’’ vehicles that are actually a total              intended to address and is addressing                  further fraud in any state—participating
                                      loss or salvage from being used to                      today.                                                 or not. Discussions with private-vehicle-
                                      generate a paper title that is later                       Comment: The American Salvage Pool                  history-report providers and ongoing
                                      attached to a stolen vehicle that is                    Association (ASPA) commented that                      law enforcement investigations at the
                                      ‘‘cloned’’ to the destroyed ‘‘clean title’’             junk and salvage yards have an                         state, local, and federal levels have
                                      vehicle. Criminal enterprises seek these                exemption for reporting where and                      shown that non-participating states are
                                      ‘‘clean title’’ vehicles, which are low                 when a non-stolen verification is                      targeted for exploitation because their
                                      cost to them (because they are destroyed                obtained under 49 U.S.C. 33110, which                  vehicle titling information is not
                                      or salvage), because it increases their                 authorizes a system that has never been                immediately shared with other states
                                      return when they sell a cloned stolen                   implemented. The ASPA commented                        and because they have no efficient
                                      vehicle. It has been noted that criminal                that this exemption ‘‘is telling, however,             ability to inquire with all other states
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                                      profits in such a case can more than                    in linking NMVTIS’[s] statutory purpose                that may have previously titled the
                                      quadruple if a ‘‘clean title’’ vehicle is               to theft prevention, as opposed to brand               vehicle.
                                      used for cloning. Even worse, because                   information.’’                                            Feedback from participating states
                                      these cloned vehicles are able to get into                 Response: In addition to the fact that              points to other positive outcomes of the
                                      the titling systems of the non-                         title II of the Anti-Car Theft Act                     program. One state reports a 17%


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                                      5742               Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations

                                      decrease in motor vehicle thefts; another                  Comment: One commenter asked if                     the system should be cancelled
                                      reports a 99% recovery rate on vehicles                 the information would have much                        ‘‘demonstrates a lack of understanding
                                      identified as stolen; three states have                 ‘‘practical utility,’’ or whether it would             [of] the magnitude of the vehicle theft
                                      identified cloned vehicles by working                   only serve as further documentation of                 problem in North America and Public
                                      together, prior to issuing new titles; and              a market that is only broadly related to               Safety issues surrounding ‘branded’
                                      another state reports cracking a car theft              secondary criminal enterprises. The                    vehicles.’’
                                      ring responsible for cloning more than                  commenter further noted that ‘‘the rule                   Response: DOJ agrees with the
                                      250 cars worth $8 million. Aside from                   will only spur increased sophistication                NAEC’s assessment of NMVTIS.
                                      these results, it is clear that if all states           of organized crime. This increased                        Comment: The State of Illinois Motor
                                      comply with the Anti-Car Theft Act                      sophistication must be balanced against                Vehicle Administration commented that
                                      requirements, brand washing in the way                  the proposed benefits from the small                   other services have become available
                                      it is most commonly conducted today                     contraction in the secondary criminal                  since the Anti-Car Theft Act was passed
                                      will be eliminated because there is no                  market that is assumed to occur under                  and that NMVTIS should ‘‘be put on
                                      other way to title a vehicle other than                 this rule. One of the benefits of the                  hold’’ while an analysis on the need for
                                      going through a state titling process. The              proposed rule is the documentation of                  NMVTIS can be conducted. The Maine
                                      same goes for vehicle cloning, which                    salvage pool sales. But this benefit is                Bureau of Motor Vehicles suggested that
                                      would be virtually eliminated if every                  limited: it will only require criminals to             NMVTIS was not needed because
                                      state participated as required.                         go through more steps, steps that require              ‘‘consumers have other options for
                                         Moreover, Experian Automotive                        increased organizational skills. Hence,                checking vehicle title status prior to
                                      reported that in the first six months of                although the rule may push some                        purchase.’’
                                                                                              criminals out of the market overall (the                  Response: While other fee-based
                                      2008 alone, there have already been
                                                                                              less sophisticated and organized), it will             options for checking vehicle title status
                                      more than 185,000 titles that initially
                                                                                              also indirectly spur increased                         are available for consumers, the ability
                                      were branded in one state, and were
                                                                                              sophistication and organization of the                 of consumers to check NMVTIS for
                                      then transferred and re-titled in a
                                                                                              surviving criminal organizations.                      vehicle title status is required by federal
                                      second state in a way that resulted in a
                                                                                              Although one of the primary goals of                   law and a federal court order. When
                                      purportedly clean title. Given all these
                                                                                              NMVTIS is theft deterrence, there is no                fully implemented, NMVTIS will
                                      facts, we can be sure that NMVTIS will
                                                                                              data to support the conclusion that this               provide assurances that no other option
                                      be effective in eliminating this type of
                                                                                              portion of the criminal market will be                 can provide—complete and timely
                                      fraud, preventing a significant number                                                                         information on all vehicles in the U.S.
                                      of crimes, and potentially saving the                   affected by the proposed rule.’’
                                                                                                 Response: DOJ disagrees with these                  The Anti-Car Theft Act provided no
                                      lives of citizens who would otherwise                                                                          flexibility for states, insurance carriers,
                                      purchase unsafe vehicles.                               comments. Substantial evidence,
                                                                                              statements, and documentation indicate                 or junk or salvage yards to filter
                                         In addition to the system’s                                                                                 information shared with NMVTIS; thus
                                                                                              that NMVTIS will impact vehicle theft
                                      documented value in reducing theft and                                                                         NMVTIS will be the most-reliable
                                                                                              and fraud.
                                      fraud in protecting consumers, the                         Comment: Several commenters,                        source of information once fully
                                      system also has been shown to create                    including law enforcement, consumer                    implemented. Several providers of
                                      greater efficiencies within the titling                 advocates, industry associations, and                  vehicle history information have agreed
                                      process when the inquiry and response                   state motor vehicle administrators,                    to make NMVTIS data available as a
                                      are integrated into the states’ titling                 including California’s, noted that                     way of enhancing their products,
                                      processes.                                              NMVTIS is needed and will be effective                 demonstrating that NMVTIS does have
                                         Comment: NAEC commented that                         in addressing the threats of auto theft,               unique value. DOJ is not in a position
                                      ‘‘the effectiveness [of NMVTIS] can only                cloning, and fraud, and in providing                   to put NMVTIS on hold, as recent
                                      be truly measured [when] all                            protection for consumers against fraud.                litigation was based on the complaint
                                      jurisdictions are participating, because                   Response: DOJ agrees with these                     that DOJ had waited too long to issue
                                      of the holes that are currently in the                  comments and notes that the expected                   NMVTIS regulations. A court has
                                      system due to lack of full participation.’’             benefits and positive outcomes of                      ordered DOJ to publish these regulations
                                      The State of California Department of                   NMVTIS have been confirmed not only                    by January 30, 2009. See Public Citizen,
                                      Motor Vehicles seemingly agreed with                    by government and private research, but                Inc. v. Mukasey, No. 3:08–cv–00833–
                                      this comment when it noted that ‘‘these                 also by multiple representatives of every              MHP, 2008 WL 4532540 (N.D. Cal. Oct.
                                      beneficial outcomes can only be                         stakeholder community affected by the                  9, 2008).
                                      achieved when all 50 states and the                     system, including state titling agencies,                 Comment: One commenter noted that
                                      District of Columbia are participating.’’               state and local law enforcement,                       ‘‘it is beyond the scope of the NMVTIS
                                      The Virginia Department of Motor                        consumers, insurance carriers, and junk-               regulations to reform the process by
                                      Vehicles commented that ‘‘the system                    or salvage-yard operators.                             which insurers assign title designations;
                                      provides a great value to participating                    Comment: The NAEC commented that                    however having the sales reported in a
                                      states, and that value will exponentially               law enforcement successes to date can                  timely fashion, and by including
                                      increase as each jurisdiction begins fully              validate the benefits and costs                        appropriate identification of both
                                      participating.’’                                        associated with NMVTIS and that ‘‘the                  international, domestic (out of state) and
                                         Response: DOJ agrees in part with                    NAEC is solid in its belief that NMVTIS                domestic (in state) buyers, it will help
                                      these assessments. As discussed above,                  is a fundamentally sound approach to                   the Law Enforcement Community in its
                                      partial participation creates loopholes                 ‘title washing,’ title fraud, vehicle                  effort to control crime and protect the
                                      that criminal organizations exploit, and,               theft[,] and public safety related to the              public.’’
                                      therefore, measuring the full benefit of                ‘branding’ of un-road worthy vehicles in                  Response: It is beyond the scope of
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                                      a comprehensive NMVTIS is difficult                     this Country.’’ The NAEC provided data                 NMVTIS and DOJ’s intentions to alter
                                      without participation by all states.                    from one state that uses NMVTIS and,                   insurance carrier policies and
                                      However, NMVTIS provides significant                    as a result, has identified and recovered              procedures in terms of title
                                      benefits to participating states even                   hundreds of stolen vehicles. The NAEC                  designations. While transfers of vehicles
                                      when state participation is not at 100%.                further commented that to suggest that                 from insurance carriers to others would


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                                                         Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations                                            5743

                                      likely be captured in the NMVTIS                        fully implemented, has any ability to                  are priorities for DOJ and for NMVTIS.
                                      reporting process due to subsequent                     fully verify brand histories and carry                 DOJ’s Strategic Plan includes in its
                                      reporting by junk and salvage yards, it                 forward out-of-state brands without                    second goal ‘‘Strategic Objective 2.5:
                                      is unlikely that the names of buyers will               manually contacting every state and the                Combat public and corporate
                                      be reported or captured in the system                   District of Columbia prior to issuing a                corruption, fraud, economic crime, and
                                      because this is not a required data field.              new title.                                             cybercrime.’’ U.S. Department of Justice
                                      Requiring the name of such buyers is of                    Comment: One commenter noted that                   Strategic Plan, Fiscal Years 2007–2012.
                                      significant value to law enforcement for                ‘‘the benefits of NMVTIS are also not                     Comment: One commenter noted that
                                      preventing and investigating automobile                 illogical simply because concrete figures              states often sell their vehicle history
                                      theft and fraud. Additionally, as is                    do not exist concerning its limited                    records to private, third-party
                                      pointed out elsewhere in these                          implementation.’’ ‘‘Given NMVTIS’[s]                   organizations who then resell the data.
                                      comments, establishing a ‘‘chain of                     [implementation] status, any figures                   The commenter requested that the final
                                      possession or custody’’ is important for                outlining the benefits would prove                     rule spell out that the states own the
                                      effective and efficient law enforcement                 highly conservative even if found. It is               data and that the operator of the system
                                      investigations.                                         not difficult to imagine though that                   may not resell the data to other
                                         Comment: One commenter noted that                    illegal reselling of salvaged vehicles                 providers without authorization of the
                                      ‘‘[a]ccording to Experian Automotive,                   takes advantage [of] reporting gaps by                 states.
                                      (PR Newswire August 25, 2008                            moving across state lines. Statistics                     Response: While NMVTIS may
                                      Experian, Schaumburg, IL), in the first                 concerning such operations are well-                   contain a subset of data on vehicles
                                      6 months of 2008 alone, there have                      documented even if the benefits of                     titled within the U.S., it does not
                                      already been more than 185,000 titles                   NMVTIS are not.’’ ‘‘Being able to verify               include all of the information a state
                                      that initially were branded in the first                the success and results of NMVTIS thus                 motor vehicle administration may
                                      state, and were then transferred and re-                depends critically on the provision of                 possess. DOJ agrees that the state-
                                      titled in a second state in a way that                  information from all states.’’                         maintained vehicle history databases are
                                      resulted in a ‘clean’ title. This situation                Response: DOJ agrees with this                      the province of the states, and that the
                                      cannot be addressed without much                        comment.                                               intent of the Anti-Car Theft Act was not
                                      stronger controls and full reporting.                      Comment: The Missouri Department                    to create a database of information for
                                      There is a great deal of abuse of the title             of Revenue commented that the system                   bulk resale. The operator of the system,
                                      system and we regularly observe                         is only as good as the number of                       therefore, will not resell the NMVTIS
                                      severely damaged units that have been                   jurisdictions participating, and in light              database in its entirety to anyone. Two
                                      given clean title designations to vehicles              of current participation levels, the state             key goals of the Anti-Car Theft Act,
                                      that have massive damage. As a result,                  is expending resources for data that may               however, are consumer access to the
                                      criminals regularly buy these vehicles                  not be inclusive or accurate.                          data and a self-funded system. For these
                                      for the paper, and steal a like vehicle                    Response: As of December 2008,                      reasons, the operator will be allowed to
                                      and engage in cloning or VIN                            NMVTIS includes nearly 75% of the                      charge consumers for use.
                                      swapping.’’                                             U.S. vehicle population. At the same                      Comment: The State of Illinois motor
                                         Response: Once all states comply with                time, several states are actively working              vehicle administration questioned how
                                      the law, NMVTIS will protect against                    towards participation in NMVTIS,                       NMVTIS will interface with law
                                      these types of abuses by creating a brand               which will take NMVTIS closer to 100%                  enforcement data systems within the
                                      history (a record of the various brands                 participation. With the inclusion of                   state that are used to identify and ‘‘flag’’
                                      associated with a particular VIN) for                   insurance and junk- and salvage-yard                   stolen vehicles.
                                      every vehicle, which will prevent a                     information, and given that many states                   Response: NMVTIS is not expected to
                                      future title-issuing agent from being                   report to NMVTIS in ‘‘real time,’’                     ‘‘interface’’ with law enforcement
                                      unaware of a vehicle’s brand history and                NMVTIS is likely to be as inclusive as                 systems within the state. Information in
                                      will eliminate the possibility of a                     any vehicle title history database                     NMVTIS related to a vehicle’s ‘‘theft
                                      vehicle being titled in more than one                   available, even before 100% state                      status’’ or history emanates from one of
                                      state (a common occurrence today).                      participation. As for accuracy, the                    two places—state brands and the theft
                                         Comment: Maine Bureau of Motor                       system currently includes only data                    file of the National Insurance Crime
                                      Vehicles commented that Maine                           from state motor vehicle                               Bureau (NICB), which is derived from
                                      ‘‘already has procedures in place to                    administrations, and DOJ is aware of no                the FBI’s National Crime Information
                                      check for stolen status prior to issuing                errors in NMVTIS. As stated in this rule,              Center (NCIC). Law enforcement
                                      a title and for carrying forward out-of-                procedures and safeguards will be put                  systems will be able to link or connect
                                      state brands.’’                                         into place to ensure identification and                to the NMVTIS law enforcement access
                                         Response: NMVTIS is designed to                      correction of any errors identified. Non-              site, however, which will include all
                                      provide more than a simple stolen-                      participating states, on the other hand,               NMVTIS information without
                                      vehicle check. Further, neither carrying                are expending their resources based on                 restriction. NCIC will always be the
                                      forward out-of-state brands based on                    fraudulent information when they issue                 primary repository of active theft files
                                      paper titles presented, nor checking the                titles in many situations.                             for law enforcement. Stolen vehicle
                                      paper documentation against a third-                                                                           information in NMVTIS is provided
                                      party data provider, eliminates brand                   3. Need and Purpose                                    only for state titling purposes for those
                                      washing. Washed brands may not                             Comment: One commenter asked ‘‘To                   states that cannot access NCIC or state-
                                      appear on paper or in third-party                       what extent is consumer protection and                 based law enforcement systems.
                                      databases. Because states are required to               the prevention of fraud in the secondary
                                      report title transactions to NMVTIS and                 car market domestically and                            4. Prospective Purchaser Inquiries
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                                      to check NMVTIS prior to issuing a new                  internationally a high priority for the                   Comment: The Idaho Transportation
                                      title, NMVTIS is the only system that                   agency?’’                                              Department commented that the
                                      can eliminate such brand washing when                      Response: The prevention of fraud                   proposed rules included several data
                                      fully implemented. No state, except                     that affects U.S. citizens, whether it be              elements in the requirement for
                                      those participating in NMVTIS when                      here or abroad, and consumer protection                prospective-purchaser inquiry responses


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                                      5744               Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations

                                      or consumer access reports that would                   generated from the index maintained by                 personal information primarily for the
                                      effectively eliminate the need for an                   NMVTIS, with limited information on                    benefit of law enforcement agencies,
                                      actual state record to be requested by a                the identified vehicle, as authorized and              including governmental regulatory and
                                      consumer or prospective purchaser,                      directed by the Anti-Car Theft Act. This               compliance-monitoring agencies that
                                      thereby reducing state revenues realized                federal statute provides the necessary                 may not have immediate access to such
                                      from the sale of motor vehicle records.                 authorization and direction concerning                 data or to state motor vehicle-history
                                         Response: At a minimum, NMVTIS                       what information will be shared, how it                files. NMVTIS will not provide personal
                                      will provide the following pieces of                    will be shared, and to whom it can be                  information in the NMVTIS central file
                                      information in response to an inquiry, if               shared. After providing the NMVTIS                     to individual prospective purchasers
                                      that data is present in NMVTIS: (a) The                 information in response to a consumer                  and may not provide access to any other
                                      current state of title; (b) the brand                   inquiry, NMVTIS, through the third-                    type of user without securing DOJ
                                      history of the vehicle; (c) the latest                  party portal providers, will offer                     approval of such access.
                                      reported odometer reading; and (d)                      consumers the ability to be directed to                   Comment: Several commenters,
                                      information about the vehicle’s reported                the state of record’s Web site in order to             notably from the consumer-advocacy
                                      appearance in the inventory of a                        purchase the state’s full vehicle title                community, encouraged DOJ to
                                      covered junk or salvage yard or on any                  record from the current state of record.               ‘‘minimize, to the greatest extent
                                      insurance carrier determination of total                Once that ‘‘handoff’’ occurs, any                      possible[,] any cost to consumers for
                                      loss related to that vehicle. There are                 decision by consumers to purchase the                  accessing the data base.’’
                                      several reasons, however, why states are                state’s title record will be governed by                  Response: By statute, the fees
                                      likely to continue to experience demand                 applicable state statutes, policies, and               NMVTIS charges will not be more than
                                      for their full title records. First, states             processes, and by the state’s vehicle-                 the costs of operating the system.
                                      often possess additional information                    history-report provider’s policies and                 Although NMVTIS does not control
                                      that is not anticipated to be within                    processes. NMVTIS prospective                          what portal providers will charge for
                                      NMVTIS but that is of interest to many                  purchaser inquiry was designed in this                 consumer access to the data, by making
                                      purchasers. This information may                        way in an effort to point consumers to                 that data available to all potential portal
                                      include ownership information, lien-                    state Web sites for state vehicle title                providers at the same price, it will be
                                      holder information, registration                        histories from that state should they be               difficult for any provider to charge too
                                      information, safety-inspection data, and                desired and available, thus enabling                   high a premium for access to that data.
                                      other details that the states may have                  consumers to purchase the full record                     Comment: One commenter noted that
                                      but are not required to report to                       and generating revenues for the states.                NMVTIS will make it possible for users
                                      NMVTIS. Second, by providing                              Comment: Several motor vehicle                       to understand either what a state-issued
                                      consumers with the current state of title,              administration agencies and other                      brand (i.e., statement of the condition or
                                      NMVTIS actually serves as a nationwide                  organizations commented that if                        prior use of a vehicle) means or to
                                      pointer that will result in an increase in              personal information is released by                    which state they need to go to
                                      requests for state records. And DOJ will                NMVTIS to non-government                               understand the brand’s meaning. ‘‘Even
                                      direct the operator to ensure that all                  organizations, it may be in conflict with              if in some circumstances NMVTIS can
                                      consumer access portal providers                        the provisions of the Driver’s Privacy                 say nothing more than ‘branded in
                                      provide consumers with a link to the                    Protection Act of 1994 (DPPA). Several                 jurisdiction X,’ at least the NMVTIS user
                                      state’s site or to the state’s designated               of these commenters recommended that                   will know which [state] jurisdiction to
                                      vehicle history report access point,                    this information only be available to law              consult.’’
                                      enabling consumers to purchase the full                 enforcement or government                                 Response: Because neither the Anti-
                                      state record. Third, states are eligible to             organizations, while others indicated                  Car Theft Act nor NMVTIS creates
                                      become portal providers, thereby                        that they would be prohibited from                     universal brands, DOJ will direct the
                                      capturing an opportunity to increase                    sharing personal information with                      NMVTIS operator to ensure that
                                      revenues by providing access to                         prospective purchasers.                                consumer-access portal providers
                                      NMVTIS data and to the states’ records                    Response: According to the DPPA, 18                  provide a link to brand definitions and
                                      for a state-determined fee.                             U.S.C. 2721(b)(2), permitted uses of                   any available related explanations, so
                                         Comment: The State of Nevada                         information protected by the DPPA                      that consumers can be aware of how
                                      Department of Motor Vehicles                            include ‘‘[f]or use in connection with                 brands may be defined. One of
                                      commented that ‘‘Nevada will not allow                  matters of motor vehicle or driver safety              NMVTIS’s benefits is that it will
                                      the unauthorized release of the title data              and theft; motor vehicle emissions;                    identify which states have branded a
                                      we send to NMVTIS. Nevada statutes                      motor vehicle product alterations,                     vehicle, informing consumers of which
                                      limit what data can be released and to                  recalls, or advisories; performance                    jurisdiction to consult for further
                                      whom. Will AAMVA have the                               monitoring of motor vehicles, motor                    information.
                                      capability and assume the responsibility                vehicle parts and dealers; motor vehicle                  Comment: The State of Alaska
                                      of prescreening those who want to                       market research activities, including                  commented that neither DOJ nor the
                                      access Nevada title data to ensure the                  survey research; and removal of non-                   NMVTIS operator should be permitted
                                      disclosure complies with Nevada                         owner records from the original owner                  to discount transaction fees for volume
                                      statutes? Will AAMVA have the                           records of motor vehicle                               purchasers. This commenter stated that
                                      capability of collecting and forwarding                 manufacturers.’’ In addition, 18 U.S.C.                not discounting the price will maximize
                                      the fees currently charged for accessing                2721(b)(3) provides additional                         revenue collected to offset NMVTIS
                                      and receiving Nevada’s title records                    authorizations ‘‘[f]or use in the normal               operational costs, resulting in reduced
                                      without Nevada becoming a third                         course of business by a legitimate                     rates charged to the states.
                                      party?’’                                                business or its agents, employees, [or]                   Response: The volume discounts
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                                         Response: Neither NMVTIS nor the                     contractors.’’ These exceptions include                established by the current operator have
                                      operator will be releasing any state’s                  sufficient authorization for states to                 been more effective in securing
                                      vehicle title records. The information                  provide access to personal identifying                 consumer-access portal providers than
                                      that will be shared via NMVTIS is not                   information, and many commenters                       the non-discounted rates. DOJ will
                                      a state’s vehicle title record and is                   agreed. Nonetheless, NMVTIS includes                   continue to monitor the fee structure to


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                                      ensure that it is effective in securing                 available without DOJ approval to any                  6. Timely Reporting
                                      participating providers without                         NMVTIS user, other than state-titling,                    Comment: Several commenters,
                                      increasing reliance on state fees. Fees                 law enforcement, or other government                   including several national consumer-
                                      generated through the portal providers                  agency. Additionally, the operator shall               advocacy organizations, requested that
                                      will offset the financial impact on states.             ensure that no individual prospective                  dispositions by insurance, junk, or
                                        Comment: One commenter noted that                     purchaser has access to any personal                   salvage sales to other entities be
                                      the NMVTIS prospective-purchaser                        information. DOJ will require that the                 reported at the time of the sale and
                                      inquiry is redundant of similar services                operator of NMVTIS have an approved                    include the identity of the buyer, which
                                      that already exist.                                     privacy policy in place that describes
                                        Response: A significant number of                                                                            would support law enforcement
                                                                                              how the operator will ensure adequate                  investigations into fraud and theft. The
                                      consumer advocacy, law enforcement,                     privacy protections, consistent with the
                                      and other organizations submitted                                                                              National Salvage Vehicle Reporting
                                                                                              DPPA and other relevant statutes.                      Program also commented that salvage
                                      comments arguing that NMVTIS’s                             Comment: NAEC noted that data
                                      prospective-purchaser inquiry is not                                                                           pools should be required to report sales
                                                                                              privacy fields should be available for                 within one business day of the sale in
                                      redundant with existing services. For                   law enforcement purposes.
                                      example, NMVTIS receives certain state                                                                         order to reduce fraud and theft.
                                      data more frequently than some of the                      Response: DOJ agrees with this                         Response: The reporting of
                                      third-party databases, and the data                     comment.                                               dispositional information is critical and
                                      NMVTIS receives includes information                       Comment: The Automotive Recyclers                   needs to be timely, but the DOJ cannot
                                      that some of the third-party databases                  Association (ARA) and ISRI both                        require that the reporting be anything
                                      do not have.                                            emphasized that confidential business                  other than monthly in accordance with
                                        Comment: The Institute of Scrap                       information, such as the number and                    the requirements of the Anti-Car Theft
                                      Recycling Industries, Inc. (ISRI) argued                type of automobiles processed by                       Act. DOJ has added a requirement for
                                      that the law does not give DOJ the                      individual junk and salvage yards in a                 such entities to report the name of the
                                      authority to expand NMVTIS data                         given period of time, the sources of                   primary buyer of such vehicles.
                                      collection to further the interests of a                those vehicles, and related information,                  Comment: ARA and ISRI commented
                                      particular group of stakeholders. The                   should not be released to the public or                that junk- and salvage-yard operators
                                      ISRI expressed concern that certain                     other data providers.                                  have an interest in reporting efficiency
                                      stakeholders would promise smooth and                      Response: The operator will not                     and recommended that such entities be
                                      easy implementation of the rule if DOJ                  disseminate this type of information to                permitted to report the ultimate
                                      were to demand collection of additional                 any non-governmental entity or                         intended disposition of the vehicle at
                                      data for NMVTIS.                                        individual, and this information will                  the time of initial reporting. ASPA also
                                        Response: No individual or entity has                 not be available to prospective                        reported that requiring an entity to
                                      made such claims or promises, and DOJ                   purchasers. DOJ will closely monitor                   continuously report that a vehicle is in
                                      has not expanded the scope of data to                   this aspect of the system to ensure that               its inventory is inefficient and pointless.
                                      be collected beyond that which was                      access to sensitive or personal data only                 Response: In cases where the ultimate
                                      intended or demonstrated to be                          proceeds with DOJ approval.                            disposition is known with certainty,
                                      necessary to accomplish the program’s                                                                          junk- and salvage-yard operators now
                                                                                                 Comment: Several commenters
                                      goals as set forth in statute.                                                                                 will be permitted to report disposition
                                                                                              requested clarification in the final rule
                                                                                                                                                     in their initial report. The reporting
                                      5. Privacy                                              on any liability or immunity for
                                                                                                                                                     entity is responsible for ensuring that
                                                                                              providing data to NMVTIS as the Anti-
                                         Comment: One commenter noted that                                                                           the vehicle is disposed of in the manner
                                                                                              Car Theft Act requires.
                                      ‘‘[t]here are provisions in law in regards                                                                     reported or for filing an updated report
                                      to privacy of individual identity that do                  Response: The Anti-Car Theft Act                    to account for a different disposition. In
                                      not appear to be satisfactorily addressed               grants certain immunity for those                      response to concerns of reporting
                                      in this document.’’ Another commenter                   reporting data to the system. The scope                inefficiency, DOJ notes that entities
                                      noted that it will not send any names to                of this immunity is described in the Act               report once when the vehicle enters the
                                      NMVTIS because names do not validate                    at 49 U.S.C. 30502(f) and does not                     inventory and are only required to
                                      a title and because of concerns over                    require clarification.                                 report again on that vehicle if they need
                                      compliance with the DPPA. The                              Comment: Several commenters                         to update the record. Should the
                                      Virginia Department of Motor Vehicles                   recommended maintaining provisions                     disposition be known at the time of
                                      commented that NMVTIS was intended                      for accessing personal information to                  initial reporting (e.g., ‘‘sale’’), the entity
                                      as a pointer system, and it is not                      qualified DPPA commercial consumers,                   would only be reporting once on each
                                      necessary for that pointer system to                    so that entities that currently work with              vehicle.
                                      include all data fields, particularly                   the states to access this information                     Comment: One state motor vehicle
                                      private information. AAMVA also                         could continue to do so, which would                   administration and other commenters
                                      recommended against requiring owner                     benefit the states and NMVTIS.                         asked that insurance carriers report
                                      name in the NMVTIS central file for                        Response: Providing continued access                more frequently. That state motor
                                      privacy and cost reasons.                               to these entities may facilitate effective             vehicle administration noted that ‘‘if a
                                         Response: DOJ takes these concerns                   and efficient service to the states, but               vehicle is damaged on the 5th day of the
                                      very seriously and agrees that privacy                  such access may only occur with DOJ                    month and the insurance carrier has
                                      interests must be protected. While                      approval, and may also require                         already sent [its] file for the month, the
                                      names may not be needed to validate a                   compliance with state application and                  state will not know of the damage until
                                      title, names are relevant and necessary                 certification processes and procedures.                the following month’s update.’’ Several
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                                      from a law enforcement perspective,                     In most cases, these entities will only                commenters representing nearly every
                                      and in certain other situations. To                     use NMVTIS as a pointer to connect                     stakeholder group noted that it was
                                      ensure the protection of privacy,                       with and access the state’s data,                      important for the reporting into
                                      however, DOJ has amended the rule to                    including personal information, if the                 NMVTIS to be timely, ideally in ‘‘real
                                      provide that no privacy fields shall be                 state provides for that access.                        time.’’ Experian Automotive commented


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                                      5746               Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations

                                      that a monthly reporting requirement                    through an identified third party that is              salvage reporting. The state suggested
                                      would be slower than the current                        approved by the system operator. DOJ                   that it does not have the resources
                                      industry practice for insurers.                         and the operator have attempted to                     available to accept and report all of the
                                         Response: The 16-year-old language of                identify potential third parties that can              information required from junk and
                                      the Anti-Car Theft Act is no longer                     report to NMVTIS who already receive                   salvage yards. Another state motor
                                      consistent with business practices in an                this type of information from insurance                vehicle administration made a similar
                                      electronic age. Nonetheless, the                        carriers and junk- and salvage-yard                    point and stated that the requirements
                                      language of the Anti-Car Theft Act                      operators.                                             effectively establish an inefficient dual-
                                      provides no flexibility with regard to                     Comment: ARA commented that                         reporting requirement. Another
                                      this reporting requirement. DOJ does                    pursuant to the Act, ‘‘junk and salvage                suggested that the phrase ‘‘or cause to be
                                      strongly encourage, however, that all                   yard operators are not required to report              provided on its behalf’’ be clarified so
                                      reporters provide data to the system as                 on a vehicle when they are issued a                    that it is clear that states do not have a
                                      quickly as possible, preferably within 24               verification stating that the automobile               responsibility to report insurance, junk,
                                      hours of acquisition, determination, or                 or parts from the automobile are not                   or salvage information to NMVTIS on
                                      other reporting trigger. DOJ expects to                 reported as stolen.’’ ARA argued against               behalf of these organizations. The State
                                      highlight such reporting efficiencies and               the exemption’s implement on the                       of New York commented that it receives
                                      stakeholder participation on its official               grounds that the exemption is                          reports from junk and salvage yards in
                                      NMVTIS site, www.NMVTIS.gov.                            ‘‘completely unworkable’’ without time                 paper, that it does not process all of the
                                                                                              limits on the verification and other                   reports received, and that the processing
                                      7. Third-Party Reporting and Reporting
                                                                                              controls, and because the exemption                    time may be beyond the reporting
                                      Exceptions
                                                                                              creates a ‘‘significant loophole that                  timeframes required of junk and salvage
                                         Comment: Two commenters argued                       could foster additional illegal activity.’’            yards. Another asked that entities
                                      that an exception allowing junk- and                       Response: Pursuant to the Anti-Car                  reporting to states as their chosen
                                      salvage-yard reporting to occur through                 Theft Act, a junk or salvage yard that is              method of compliance be required to
                                      a state titling agency was flawed. One of               issued a verification under 49 U.S.C.                  certify that they are meeting their
                                      these commenters suggested that all                     33110 stating that an automobile or                    reporting requirements by reporting to a
                                      junk and salvage yards should be                        parts from that automobile are not                     specific state or states.
                                      required to report directly into NMVTIS.                reported as stolen is not required to                     Response: A state’s willingness to
                                      The NADA also commented that                            report to NMVTIS. Therefore, the                       make such alterations to accommodate
                                      allowing this exemption would only                      Department has retained this exemption                 third-party reporting is strictly
                                      serve to create a loophole, particularly                from NMVTIS reporting in these                         voluntary. Junk and salvage yards in
                                      in cases of conflicting definitions among               regulations.                                           states that cannot accommodate third-
                                      the states and between states and the                      Comment: The ARA commented that                     party reporting as required by the Anti-
                                      Anti-Car Theft Act. Instead, NADA                       it appreciates attempts to exempt                      Car Theft Act and the rules will have
                                      suggested allowing an exemption in                      reporting by junk and salvage yards that               other options for compliance reporting.
                                      cases where an insurance carrier reports                already report to a third-party                        While DOJ is committed to avoiding
                                      to a third party that has no definitional               organization that is sharing its                       inefficient processes, DOJ is not able to
                                      restrictions, such as the NICB, that can                information with NMVTIS. The ARA                       eliminate data fields for the sake of
                                      transmit the information to NMVTIS                      further commented, however, that yards                 efficiency alone and is not willing to
                                      without concern for conflicting                         not currently participating with a                     impose additional requirements on the
                                      definitions.                                            cooperating third party will need a                    states to expand data collection and
                                         Response: While DOJ will take steps                  separate reporting mechanism that is                   reporting on behalf of junk- and salvage-
                                      to ensure data integrity and quality, it                labor efficient and economical in order                yard operators.
                                      would be unreasonable to prevent third-                 to report NMVTIS information.                             Comment: ASPA commented that
                                      party reporting. Ultimately, insurance                     Response: DOJ agrees. The operator                  while the proposed rule allows states to
                                      carriers and junk and salvage yards are                 will designate at least three third-party              share junk and salvage information with
                                      responsible for their compliance with                   organizations that have expressed a                    NMVTIS, the inclusion of this data in
                                      the Act, including the reporting of                     willingness to share with NMVTIS                       state title information systems would be
                                      required information. These reporters                   information that they receive from                     based on the state’s definition of
                                      must ensure that they are compliant                     insurers and junk and salvage yards. In                ‘‘salvage’’ and ‘‘junk’’ vehicles. ASPA
                                      with the reporting requirements for                     addition, DOJ will endeavor to identify                questioned how the state would report
                                      every vehicle handled. If such reporters                a reporting mechanism that is ‘‘sector’’               data that it may not have because that
                                      cannot be certain of a third party’s                    and ‘‘stakeholder’’ neutral. Third-party               state does not require submission of that
                                      ability to provide the required                         providers need to be identified who will               data.
                                      information into NMVTIS, the reporter                   provide the information to the                            Response: The rule requires that junk-
                                      must report through a different third-                  stakeholders or allow such third-party                 and salvage-yard reporting by or
                                      party provider. Additionally, certain                   providers to charge a nominal fee for                  through states must include all of the
                                      states require this reporting, and                      collecting and reporting the information               data that junk- and salvage-yard
                                      therefore, a duplicate reporting structure              on behalf of junk and salvage yards. DOJ               operators are required to report. State
                                      would continue to exist even if DOJ did                 hopes to identify providers that do not                definitions of ‘‘salvage’’ or ‘‘junk’’ do
                                      not allow junk or salvage yards to report               charge fees, but this is difficult with                not alter a junk-or salvage-yard
                                      through states. For purposes of                         sector-or stakeholder-neutral providers.               operator’s responsibility to report
                                      clarification, however, the Anti-Car                       Comment: Several state motor vehicle                vehicles in its inventory. If junk- and
                                      Theft Act does not provide a specific                   administrations commented on the                       salvage-yard operators are not reporting
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                                      exemption for insurance carriers to                     third-party exemptions provided in the                 all of the required data to the state, or
                                      report through states, as it does for junk-             proposed rule. One state motor vehicle                 the state is not able to report all of the
                                      and salvage-yard operators. Instead, DOJ                administration commented that it                       data to NMVTIS as required of the yard,
                                      has provided an exemption for                           currently has some but not all of the                  the junk or salvage yard must report
                                      insurance carriers to report to NMVTIS                  information required for junk and                      independently of the state.


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                                        Comment: ASPA contended that the                      recognizes that, in certain                            was the intention of the Anti-Car Theft
                                      provisions of the proposed rule with                    circumstances, the decision to declare a               Act to require them to do so.
                                      regard to the direct-reporting                          vehicle a ‘‘total loss’’ may be based on                  Comment: Several insurance-related
                                      exemptions for junk or salvage yards                    other determinations, such as the fact                 associations commented that ‘‘[t]he
                                      that already report inventories to the                  that a vehicle has been stolen. To                     statute requires that insurers report junk
                                      states appear to conflict with the                      address this issue, insurance carriers are             and salvage automobiles, yet the
                                      wording of the statute that ASPA                        strongly encouraged to include with                    regulation would require reporting of
                                      described as ‘‘only requir[ing] the                     ‘‘total loss’’ reporting the primary reason            ‘total losses,’ a term that would include
                                      reporting of acquisition’’ of such                      for the determination. Doing so not only               some automobiles that are not junk or
                                      vehicles.                                               would provide a better position for                    salvage. It is axiomatic that a regulation
                                        Response: The Act specifically spells                 insurance carriers, but it also would                  cannot expand the limits of a statute,
                                      out what information is to be reported                  allow the consumer to be aware of the                  and especially if in doing so, the
                                      by junk and salvage yards and requires                  specific circumstances for the                         regulation imposes added burdens and
                                      junk and salvage yards to report more                   determination. DOJ does not agree that                 costs. Not only is such expansion
                                      than the mere acquisition of the vehicle.               ‘‘obtained’’ should be defined in such a               inconsistent with the underlying statute
                                                                                              limited way to include only ownership.                 but there is also nothing in the Court’s
                                      8. Total Loss Definition/Fair Salvage
                                                                                                 Comment: Nationwide Mutual                          order in Public Citizen et al. v. Michael
                                      Value
                                                                                              Insurance Company commented that                       Mukasey that mandates or authorizes
                                         Comment: One commenter expressed                                                                            any such expansion of the statutory
                                                                                              DOJ should clarify the definitions of
                                      concern at the reference to ‘‘fair salvage                                                                     definition of automobiles to be
                                                                                              junk and salvage by requiring insurers
                                      value.’’ Any vehicle with a high salvage                                                                       reported.’’
                                                                                              to report on those automobiles titled as
                                      value will be totaled with a lower                                                                                These commenters further noted ‘‘that
                                                                                              ‘‘junk’’ or ‘‘salvage’’ under the laws of
                                      damage appraisal, and any vehicle with                                                                         the statutory definitions of ‘junk’ and
                                                                                              the state where the insurer obtains title
                                      a low salvage value will be totaled with                                                                       ‘salvage’ in 49 U.S.C. 30501 are not used
                                                                                              to the motor vehicle.
                                      a high damage appraisal. The                                                                                   by most state or insurance carriers. To
                                      commenter noted that without                               Response: DOJ disagrees and notes
                                                                                                                                                     enable consistency with the existing
                                      uniformity as to the assignment of the                  that not even half of the states require
                                                                                                                                                     state laws and data systems and thereby
                                      salvage declaration, consumer                           such titles or brands (see Texas’s
                                                                                                                                                     to expeditiously implement NMVTIS,
                                      protection cannot be guaranteed. The                    comment below). Such a definition,
                                                                                                                                                     we request that the last sentence of
                                      commenter argued for a more uniform                     therefore, would create a significant
                                                                                                                                                     Section 25.55(a) be amended to read in
                                      definition of total loss that is not driven             loophole that would be counter to the
                                                                                                                                                     the final regulation: ‘An insurance
                                      by the salvage value, noting that ‘‘[t]his              consumer-protection intentions of the                  carrier shall report on any automobile
                                      proposed market assessment of the                       Anti-Car Theft Act.                                    that it has determined to be a junk or
                                      vehicle value can either make or break                     Comment: The State of Texas                         salvage automobile under the law of the
                                      the rule.’’ Others commented positively                 Department of Transportation                           applicable jurisdiction.’ This approach
                                      on the use of a ‘‘value-based’’ definition.             commented that ‘‘ ‘Total loss’ is not a                makes sense because since the Congress
                                         Response: DOJ used this reference                    term used in Texas salvage motor                       enacted this statute in 1992, most states
                                      because it was required by the Anti-Car                 vehicle law and has no bearing on                      have defined the meaning of ‘junk’ or
                                      Theft Act. DOJ understands that there                   whether a vehicle is determined to be a                ‘salvage.’ These state laws represent the
                                      are different ways or bases for                         salvage vehicle. A vehicle can be                      best understanding of these terms today.
                                      determining total loss, and that different              considered a ‘total loss’ by an insurance              Requiring their use by regulation would
                                      stakeholders may argue for different                    company, but not be branded as salvage                 implement the spirit of the law in a
                                      standards based on their interests.                     because the vehicle does not meet the                  practical way. Data reported by insurers
                                         Comment: Nationwide Mutual                           definition of salvage in the title state.              in this manner will also be consistent
                                      Insurance Company commented that                        * * * Use of this term could be                        with data reported by the states.’’
                                      Congress specifically granted the DOJ                   problematic if NMVTIS shows a vehicle                     Opposing this view, consumer-
                                      authority to collect information from                   as a total loss and the Texas records                  advocate litigators commented that
                                      insurers on vehicles that such insurers                 indicate nothing.’’                                    ‘‘[t]he Insurers comment that ‘any
                                      have ‘‘obtained possession of’’ and                        Response: The requirement for                       expansion via regulation of the
                                      determined to be ‘‘junk automobiles or                  insurance carriers to report ‘‘total loss’’            categories of automobiles for which
                                      salvage automobiles.’’ Nationwide                       information is put in place for exactly                reporting is mandated * * * would be
                                      further commented that ‘‘[i]t is not                    this reason—vehicles that are salvage                  unauthorized. * * *’ However, they do
                                      logical that declaring a vehicle a total                may not be branded as salvage by many                  not suggest that it is outside the scope
                                      loss should trigger reporting of the total              states. To resolve this discrepancy,                   of the Department’s authority to provide
                                      loss automobiles as salvage and/or junk.                NMVTIS blends reported information                     construction for such terms in the
                                      The determination of [a] vehicle as a                   from multiple sources so that                          statutes. It is obviously the duty and the
                                      total loss can be based upon other                      prospective purchasers are aware of the                province of the Department to use its
                                      economic considerations not reflective                  vehicle’s true history and can avoid                   broad discretion in construing these
                                      solely on the actual cost of reporting the              being defrauded and placed in an unsafe                terms.’’ The consumer-advocate
                                      vehicle. Therefore, we assert that the                  vehicle. The presence of ‘‘total loss’’                litigators further commented that the
                                      inclusion of total loss information in the              information in the absence of a state                  rule’s enabling of electronic reporting
                                      proposed rule is inconsistent with our                  salvage brand will need to be explained                through third parties that may already
                                      understanding of the intent of the                      by portal providers, so that prospective               have access to the data addresses the
                                      statute.’’                                              purchasers (and others) are aware of                   need for reporting in the least-
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                                         Response: DOJ disagrees. DOJ is                      what the apparent discrepancy means,                   burdensome and least-costly fashion.
                                      mandated to require reporting of                        and how it occurs. DOJ does not expect                 These commenters further argued that
                                      ‘‘salvage’’ vehicles, which DOJ has                     states to take any action based on this                ‘‘[t]he Insurers take issue with the
                                      determined to include those vehicles                    information that is not authorized in                  Department’s proposal to provide that a
                                      determined to be a ‘‘total loss.’’ DOJ                  state law and does not believe that it                 vehicle treated as a total loss is deemed


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                                      a salvage vehicle. However, it is                          The insurance-related organizations                 ‘‘clean title.’’ Such a loophole was
                                      squarely with the Department’s                          further commented that ‘‘[r]eplacing                   clearly not intended to exist under
                                      province to make the determination that                 ‘possession’ in the regulation with                    NMVTIS, and in order to provide
                                      the fact that a vehicle has been treated                ‘titled owner’ would also be workable                  consumer protection against fraud,
                                      as a total loss indeed is evidence that it              and consistent with the remainder of the               insurance carriers must be required to
                                      is a ‘salvage’ vehicle, and that both                   sentence which requires that insurers                  report on all vehicles that they
                                      legally and practically the vehicle is a                must report automobiles which they                     determine to be a total loss.
                                      ‘salvage’ vehicle. Similarly, it is                     possess and have decided they are junk                    Comment: Several insurance-related
                                      necessary, in carrying out the clear                    or salvage automobiles. Both the                       organizations and associations
                                      protective purposes of the statutes, that               ‘possession’ and ‘decision’ are                        commented that ‘‘[s]ection 25.55(b) sets
                                      this construction be given to these                     manifested by re-titling, which is                     forth the mandatory data elements. We
                                      terms. * * * The Insurers next propose                  reportable by insurers in an efficient                 believe that applying the following
                                      amending the last line of § 25.55(a) to                 manner. Therefore, the language would                  interpretations will allow a reporting
                                      state ‘An insurance carrier shall report                read, ‘a report that contains an                       system to be put in place that complies
                                      on any automobile that it has                           inventory of all automobiles of the                    with all aspects of the statute, including
                                      determined to be a junk or salvage                      current model year or any of the four                  the ‘least burdensome and costly’
                                      automobile under the law of the                         prior model years, that the carrier                    directive and that can reasonably meet
                                      applicable jurisdiction.’ Such a change                 during the past month is the titled                    the Court’s deadline in Public Citizen et
                                      would incorporate the limitation they                   owner and has decided are junk                         al. v. Mukasey.
                                      seek of disregarding total loss vehicles.               automobiles or salvage automobiles.’ ’’                   ‘‘a. VIN. This can be reported.
                                      It also appears to be an attempt to                        Opposing this view, several                            ‘‘b. The date on which the automobile
                                      require that state definitions of ‘junk’ or             consumer-advocate litigators                           was obtained or designated as a junk or
                                      ‘salvage’ be substituted for the                        commented that while the term is not                   salvage automobile. Again, interpreting
                                      definitions in the statutes, rather than                clear and needs construction in                        this requirement to mean the date on
                                                                                              furtherance of the protective purposes of              which the automobile was re-titled
                                      additional to and supplementary of
                                                                                              the statute, they disagreed with the                   ‘junk’ or ‘salvage’ comports with legal
                                      them. That would be entirely improper,
                                                                                              insurers’ proposed substitution of ‘‘is                and practical considerations and would
                                      of course, defeating the central purpose
                                                                                              the titled owner of’’ for ‘‘has obtained               be most cost effective.
                                      of providing a national definition of                                                                             ‘‘c. The name of the individual or
                                      ‘salvage’ that sets a floor for reporting,              possession of’’ in section 25.55(a). These
                                                                                              commenters further noted that the effect               entity from whom the automobile was
                                      not a ceiling.’’ These commenters                                                                              obtained or who possessed it when the
                                      further noted the ‘‘extraordinary                       of the insurers’ comments would be to
                                                                                              ‘‘eliminate any reporting requirement of               automobile was designated as a junk or
                                      patchwork of state laws regarding title                                                                        salvage automobile. Again, as set forth
                                      ‘brands’ and even the terms used for                    salvage vehicles by insurance carriers
                                                                                              whatsoever for all but those vehicles                  above, the only cost effective way for
                                      labeling ‘salvage’ or ‘total loss’ vehicles.                                                                   insurers to meet this obligation is to
                                      The uniform minimal reporting                           that they do in fact actually title in their
                                                                                              name. There are innumerable reasons                    construe it to mean the name of the
                                      standard provided by the NMVTIS                                                                                insurer when the automobile was re-
                                      statutes is of critical importance.’’                   why, and methods by which, they may
                                                                                              legally in many instances not obtain                   titled. Providing the name of the
                                         Response: DOJ agrees that it possesses               titles to salvage vehicles in their names              individual or entity from whom the
                                      authority and responsibility to provide                 under the existing hole-laden patchwork                automobile was obtained does not
                                      the definition of these terms.                          of state laws. In addition, if this change             provide useful information to law
                                      Additionally, in order to meet the                      were made, and if they blatantly                       enforcement or consumers.
                                      requirements of the Act with regard to                  violated a state law by failing to get a                  ‘‘d. The name of the owner of the
                                      providing prospective purchasers with                   salvage title issued in their names, they              automobile at the time of the filing of
                                      the information needed to make an                       would appear not to be in violation of                 the report. In most instances, this will
                                      informed purchase decision, and in                      the federal law by not reporting to                    be the buyer of the salvage or junk
                                      order to inform state title                             NMVTIS, because they would not have                    automobile, or the insurance company
                                      administrations and law enforcement of                  been the ‘titled owner.’ The opposite                  when the insurance company retains
                                      that vehicle’s history, full disclosure of              construction of ‘possession’ is crucial.               ownership, for instance to crush a junk
                                      total-loss information is needed                        In fact, the very example they provide                 vehicle.’’
                                      regardless of a state’s action or inaction              of a salvage vehicle that comes into their                Opposing this view, several
                                      on that vehicle.                                        possession but that they do not title                  consumer-advocate litigators
                                         Comment: Several insurance-related                   shows how NMVTIS should work to be                     commented that the insurers suggest
                                      organizations and associations                          effective: They should report such                     ‘that the regulations should provide that
                                      commented that ‘‘[s]ection 25.55(a)                     vehicles. If there are multiple reports on             they do not have to report the name of
                                      states that the insurer must report                     the same vehicle, there is no harm done;               the person from whom a salvage vehicle
                                      automobiles that it has obtained                        but if such salvage vehicles are not                   was obtained. This is directly contrary
                                      ‘possession of and has decided are junk                 reported, there is every harm done.’’                  to 49 U.S.C. 30504(b)(3). The ownership
                                      automobiles or salvage automobiles.’                    Other consumer advocates commented                     trail of all of these vehicles is critical for
                                      The term possession is not clear. To be                 that ‘‘possession’’ should be defined to               law enforcement and consumer
                                      workable, ‘possession’ should be                        include both actual and constructive                   investigative purposes, and Congress
                                      construed as ‘the titled owner’ as                      possession and should include                          noted that by writing it into law.’’’
                                      represented on the certificate of title,                exercising control over an automobile                     The consumer-advocate litigators
                                      because insurers would only be able to                  directly or indirectly.                                further commented that ‘‘[t]he Insurers
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                                      report on those automobiles to which                       Response: Limiting insurance                        also suggest that the ‘owner of the
                                      they are titled owners. Otherwise, they                 reporting to those vehicles owned by                   automobile at the time of the filing of
                                      do not record ‘possession’ of                           insurance companies would create a                     the report’ would normally be the buyer
                                      automobiles and could not report                        large loophole through which total-loss                of the salvage vehicle, and would only
                                      them.’’                                                 or salvage vehicles would remain under                 be the insurance carrier if it retained


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                                      ownership to crush a vehicle. I submit                     Comment: The NADA commented                         and, therefore, requires no
                                      that it is important that both the buyer                that ‘‘total loss’’ should be defined                  ‘clarification.’ ’’
                                      and the insurance carrier be identified                 broadly to capture all total-loss vehicles.               ‘‘In the Proposed Rule, the DOJ is
                                      under the regulations.’’                                ‘‘The final rule should not define ‘total              attempting to expand the definition of
                                         Response: DOJ agrees with the                        loss’ in Section 25.52, but rather should              salvage automobile ‘[f]or purposes of
                                      comments of the consumer-advocacy                       define ‘total loss motor vehicle’ as ‘those            clarification’ to include automobiles
                                      organizations and has retained the total-               motor vehicles determined to be a total                determined to be a total loss under the
                                      loss reporting requirements that were                   loss under the laws of the applicable                  law of the applicable jurisdiction or
                                      included in the proposed rule.                          jurisdictions and those designated as a                designated as a total loss by the insurer
                                         Comment: Several commenters,                         total loss by each insurance company                   under the terms of its policies. We
                                      including the NADA, ARA, Experian                       under the terms of its policies.’ ’’                   contend that this significant expansion
                                      Automotive, the National Salvage                           Response: DOJ appreciates this                      of the definition is not necessary, and
                                      Vehicle Reporting Program, insurance                    clarification and agrees that ‘‘total loss’’           that the proposed definition actually
                                      services organizations, consumer                        includes all total-loss vehicles.                      contradicts accepted custom and usage
                                      advocate attorneys, and others,                            Comment: ASPA commented that                        within the insurance and salvage
                                      expressed strong support for DOJ’s                      ‘‘[w]hen an automobile is classified as a              industries.
                                      ‘‘modernization and clarification of                    total loss by an insurance company, it                    ‘‘The DOJ’s proposed amendment to
                                      language found in the Anti-Car Theft                    does not necessarily mean that the                     the definition of salvage automobile
                                      Act related to salvage and junk vehicles,               automobile is a ‘salvage automobile.’ On               would subject many clear title
                                      to include within this the requirement                  page 54546 of the Federal Register, in                 automobiles to the reporting
                                      to report on all total loss vehicles,                   Section 2 ‘Insurance Carriers,’ the                    requirements of NMVTIS. This is
                                      including those recognized by the state                 explanation of the Proposed Rule                       problematic, and is clearly not what
                                      and those not recognized by the state                   expands the definition of ‘salvage                     Congress envisioned when it created the
                                      but determined a total loss by an                       automobiles’ when it states: ‘For                      definition for salvage automobile. In
                                      insurance carrier.’’ Several of these                   purposes of clarification, the                         Chevron U.S.A., Inc. v. Natural
                                      commenters also pointed out that many                   Department of Justice has determined                   Resources Defense Council, Inc., 467
                                      total-loss vehicles do not receive salvage              that this definition [salvage                          U.S. 837 (1984), the Court implemented
                                      brands due to varied and unreliable                     automobiles] includes all automobiles                  a two-part analysis to determine the
                                      state definitions and criteria. Relying on              found to be a total loss under the laws                appropriate standard of review towards
                                      state definitions of ‘‘salvage,’’ therefore,            of the applicable jurisdiction or                      a government agency that attempts to
                                      would be highly inconsistent, would                     designated as a total loss by the                      amend statutory language. Here, since
                                      perpetuate fraud and theft, and would                   insurance carrier under the terms of its               the current definition of salvage
                                      fail to accomplish the objective.                       policies.’ ’’                                          automobile is not ambiguous, the
                                      Comments submitted by Amica Mutual                         ‘‘In common usage, ‘salvage’ is not                 proposed ‘clarification’ by the DOJ is
                                      Insurance Co. underscore the need to                    synonymous with ‘total loss.’ There are                not based on a permissible construction
                                      collect ‘‘total loss’’ data. Such data                  many circumstances in which an                         of the statute and should not be
                                      provides additional consumer                            insurance company may declare a                        allowed.’’
                                      protection, potentially decreases                       vehicle a ‘total loss,’ but the vehicle                   Response: DOJ disagrees. Total-loss
                                      fraudulent activity, and reduces the                    does not meet the ‘salvage’ definition of              vehicles are just that—a total loss—at
                                      number of unsafe vehicles in the                        the relevant state. If a stolen vehicle is             the time the determination is made.
                                      marketplace.                                            not recovered quickly, the insured may                 Total-loss vehicles fall within the
                                         Response: DOJ agrees with these                      be paid for the missing vehicle. If the                definition of ‘‘salvage’’ and must be
                                      comments.                                               vehicle is later recovered in a largely                reported. In response to other
                                         Comment: The NADA, ARA, National                     undamaged condition, the vehicle,                      comments, DOJ notes that insurance
                                      Salvage Vehicle Reporting Program,                      although a ‘total loss’ due to its late                carriers are strongly encouraged by the
                                      several national consumer-advocacy                      recovery, may not meet the relevant                    final rule to report to NMVTIS the
                                      organizations, and other organizations                  ‘salvage’ definition and, often, is sold by            primary reason for the determination of
                                      commented that the proposed rules fail                  the insurer with a ‘clear’ (i.e., not                  total loss, addressing this commenter’s
                                      to require insurance carriers to report all             branded) title. The definition in the                  concerns specifically and providing
                                      vehicles that they declare a total loss,                Proposed Rule lumps this undamaged                     much-improved disclosure for
                                      including those retained by insureds.                   theft recovery into the ‘salvage’                      consumers.
                                      Often, individuals who retain                           definition, thus devaluing the vehicle                    Comment: One submission argues for
                                      possession of their ‘‘total loss’’ vehicle              and, again, creating confusion about the               ‘‘the necessity of all states to adhere to
                                      can avoid disclosure, or they may not                   applicability of the laws of the relevant              the Uniform Certificate of Title Act.’’ ‘‘If
                                      apply for salvage titles. The NADA                      state.’’                                               the state has a different definition of a
                                      commented that the final rule should be                    ASPA further commented that                         Salvage vehicle the branding now
                                      revised to eliminate the concept of                     ‘‘[m]ore generally, pursuant to 49 U.S.C.              becomes an arbitrary issue.’’
                                      possession and instead focus on those                   30501(7), ‘salvage automobile’ is clearly                 Response: The Uniform Certificate of
                                      insured motor vehicles that the                         defined as ‘an automobile that is                      Title Act and the benefits of uniform
                                      insurance company declares, or the                      damaged by collision, fire, flood,                     titling procedures aside, the Anti-Car
                                      applicable jurisdiction defines, to be a                accident, trespass, or other event, to the             Theft Act does not require States to
                                      ‘‘total loss.’’                                         extent that its fair salvage value plus the            adopt standard brand labels or
                                         Response: DOJ disagrees that the                     cost of repairing the automobile for legal             definitions. NMVTIS has a process in
                                      proposed rule puts such a limitation in                 operation on public streets, roads, and                place to record each state’s unique
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                                      place. DOJ requires that insurance                      highways would be more than the fair                   brand label and to relate it to one of the
                                      carriers who declare a vehicle a total                  market value of the automobile                         78 brand types used in the NMVTIS
                                      loss and allow the insured to retain the                immediately before the event that                      database. The state’s brand labels and
                                      vehicle must still be required to report                caused the damage.’ This definition is                 definitions remain unchanged in
                                      such declarations.                                      both clear and unambiguous on its face                 NMVTIS.


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                                      9. Chain of Custody/Names of Those                      through NCIC. NCIC is and will remain                  Car Theft Act did not require a national
                                      Who Provided/Those Who Purchased                        the primary system used and relied                     standard for branding. Although
                                         Comment: One commenter noted that                    upon by local law enforcement to check                 differing definitions may create
                                      ‘‘[t]he reporting requirement of the junk               the ‘‘stolen’’ status of a vehicle.                    complexity in deciphering a vehicle’s
                                      and salvage yards may need some                         NMVTIS’s capturing of ‘‘stolen’’ status                brand history, NMVTIS will accept any
                                      change. There are many different routes                 and history information is to inform                   official state brand and will share that
                                      for a vehicle to come into a yard, very                 state titling agencies and others who                  brand with other states, thereby relating
                                      often it is not by the ‘owner of record’                may not have access to NCIC that a                     that brand to a brand type or ‘‘NMVTIS
                                      or the titled owner. A more definitive                  vehicle was at one time reported as                    Brand.’’ Users of NMVTIS will notice
                                      approach to recording the information                   ‘‘stolen.’’ Stolen vehicle information is              state brands as well as a separate
                                                                                              included in NMVTIS via NICB so that                    category for insurance, junk, and salvage
                                      of the entity placing the vehicle into the
                                                                                              states that do not have access to NCIC                 information, if any is available. The
                                      salvage yard should be taken, more
                                                                                              can be apprised of a vehicle’s                         differences in these reporting streams
                                      identifying information regarding the
                                                                                              questionable status before issuing a new               also will be defined so that users will
                                      entity placing the vehicle into the
                                                                                              title.                                                 know if a vehicle has been or is a junk
                                      salvage yard should be captured. * * *                     Comment: The National Auto Auction                  or salvage automobile by virtue of a
                                      How does the system handle this in a                    Association commented that ‘‘NMVTIS                    state brand indicating such, or by an
                                      manner that will notify the title State of              should include lien holder names and                   insurer’s determination that the vehicle
                                      a cancel record and provide a bona-fide                 license plate numbers’’ for various                    was a total loss. Consumers and others
                                      chain of events leading to the yard?’’                  reasons.                                               also will be advised if a vehicle has
                                         Response: The reporting requirement                     Response: While DOJ will authorize                  been in the possession of a junk or
                                      for junk and salvage yards applies to                   the operator to seek additional                        salvage yard. Information is reported by
                                      every vehicle regardless of what ‘‘route’’              information for NMVTIS as may be                       multiple data sources and is reported in
                                      it took into the yard or who brought in                 necessary to accomplish program goals,                 a segregated fashion with links for
                                      the vehicle. Further, it is the                         DOJ will not require these data fields to              explanations.
                                      responsibility of the junk or salvage                   be included in NMVTIS.                                    Comment: ASPA provided the
                                      yard to provide, among other data, the                     Comment: The National Auto Auction                  following example as evidence of the
                                      name of the individual or entity from                   Association commented that DOJ should                  problems that would be created by the
                                      whom the automobile was obtained.                       clarify in the final rule whether data                 proposed rule: ‘‘Michigan’s salvage law
                                      The NMVITIS reporting requirements                      maintained in the NMVTIS central file                  covers current model year passenger
                                      do not affect existing state-level                      is to be considered the official legal                 vehicles and those of the preceding five
                                      requirements for junk- and salvage-yard                 record of a jurisdiction’s data.                       model years. Therefore, a 2002
                                      operators to provide states with a notice                  Response: The official record for any               passenger motor vehicle does not
                                      of title or record cancellation and any                 vehicle will be determined by the state.               become a ‘salvage vehicle’ or a ‘scrap
                                      data fields required in such                            However, NMVTIS is expected to be a                    vehicle’ in Michigan, regardless of the
                                      notifications. NMVTIS will not issue                    reliable source of title information that              fact that the vehicle has been damaged
                                      such notifications to states, but states                users can rely on to make decisions.                   and ‘totaled’ by an insurance carrier. In
                                      will be able to view the reported                                                                              this situation, Michigan, when reporting
                                      salvage- or junk-yard status of any                     10. Brand Definitions
                                                                                                                                                     to NMVTIS, presumably would not
                                      vehicle at any time. With the                              Comment: One commenter asked,                       include the car in the state’s branded
                                      cumulative vehicle histories constructed                ‘‘[h]ow is the branding procedure                      title submissions. An insurance carrier
                                      in NMVTIS, states and law enforcement                   determined? Is there a preexisting                     reporting to NMVTIS presumably would
                                      can identify the ‘‘chain of events’’ with               national standard for what brands exist                not include the car because it is outside
                                      reliability once there is full system                   and how a vehicle is classified under                  of the age limitations applicable to
                                      participation.                                          such brands or is the determination                    insurance carriers. However, a salvage
                                         Comment: One commenter noted that                    made on a state-by-state basis? If the                 yard or junk yard, using the definitions
                                      ‘‘stolen’’ designations or notifications                standard is national (which would make                 in the Proposed Rule, presumably
                                      sometimes are not made when a vehicle                   sense given the national objective),                   would report the vehicle as a ‘salvage
                                      is first reported stolen. In these                      maybe a list of definitions of the                     automobile’ or a ‘junk automobile,’
                                      instances, the commenter suggested that                 applicable brands should be placed in                  when reporting to NMVTIS. So, for a
                                      law enforcement may receive a false                     the rule’s definition section.’’ Another               state or other inquirer of NMVTIS,
                                      negative response on a stolen check due                 commenter noted that the development                   NMVTIS will show that the vehicle has
                                      to this delay. The commenter suggested                  of standardized definitions and brands                 a salvage or junk history. This occurs
                                      that the system provide a notification to               for all states would be extremely                      regardless of the fact that the relevant
                                      law enforcement officers filing a report                beneficial in ensuring that the intent of              state did not deem the vehicle salvage
                                      on a stolen vehicle that a prior stop and               NMVTIS is fully recognized. Several                    or scrap.’’
                                      ‘‘stolen’’ check was made on the                        state motor vehicle administrations                       Response: This comment offers an
                                      vehicle, providing notification and an                  pointed out that the definitions of                    excellent example of how NMVTIS
                                      investigative lead to the reporting officer             ‘‘salvage’’ and ‘‘total loss’’ in the                  reporting will fill the holes that
                                      of where the vehicle was stopped and                    proposed rule are different from state                 currently allow salvage or junk vehicles
                                      who made the stolen inquiry. Another                    definitions. Another commenter noted                   to remain unbranded, creating
                                      commenter noted that stolen-vehicle                     that to add information based on the                   opportunities for theft and consumer
                                      information is not required to be in                    definitions in the proposed rule will                  fraud.
                                      NMVTIS, and nothing in the regulations                  conflict with State definitions of brands,
                                                                                                                                                     11. Brand Washing
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                                      requires a state to check NCIC before                   compromise the integrity of the
                                      issuing a title.                                        NMVTIS database, and reduce the value                    Comment: One commenter asked ‘‘if
                                         Response: NMVTIS is not intended or                  of the information in the database.                    brand information is already collected
                                      expected to replace the information or                     Response: NMVTIS does not affect                    by states, how exactly would brand
                                      services available to law enforcement                   state branding procedures, and the Anti-               ‘washing’ occur? If the retitling state


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                                      checks the title of the previous state                  from an insurance carrier, or from any                 should be considered a junk or salvage
                                      wouldn’t that information be included                   person or entity in connection with the                automobile. DOJ agrees that a junk or
                                      with the title?’’ Another commenter                     resolution of insurance claims, should                 salvage yard may be excepted from
                                      recommended that NMVTIS retain a                        be deemed as a salvage automobile or                   reporting any vehicle that a qualified
                                      prior state’s brand history even when a                 junk automobile and must be reported                   independent appraiser determines does
                                      state does not accept a previous state’s                as such. These commenters suggested                    not meet the definition of a salvage or
                                      brand.                                                  that the rules should provide for a                    junk automobile. This determination by
                                         Response: Brand histories or                         presumption that any automobile                        the appraiser must be in writing and
                                      designations are not always carried                     obtained or sold by a salvage or junk                  made after performing a good-faith
                                      forward by the states. Retitling states do              yard, and that has known unrepaired                    physical and value appraisal. Although
                                      not necessarily check with the previous                 wreck or flood damage, is either a                     not required, the Department
                                      states before issuing a new title. In some              salvage automobile or junk automobile,                 recommends that junk and salvage yards
                                      states, the paper title from the previous               and that such a vehicle must be reported               retain the reports and written appraisals
                                      state of record is accepted as the basis                as such. Similarly, the rules should                   for a period of ten years from the date
                                      for the new title to be issued. Because                 include a presumption that any                         of the report. Additionally, a salvage
                                      of the reliance in some states on paper                 automobile obtained or sold by a salvage               auction or salvage pool that does not
                                      titles as evidence of prior titling history,            yard or junk yard, without knowledge as                handle any vehicles from or on behalf
                                      and because not all states check with                   to the automobile’s physical condition,                of insurance carriers is categorically
                                      the prior states of record, brand washing               is either a salvage automobile or junk                 exempted from this rule until such time
                                      occurs regularly. NMVTIS will create a                  automobile, and must be reported as                    as they may handle a vehicle from an
                                      nationwide brand history for every                      such. This would prevent salvage yards                 insurance carrier.
                                      vehicle, requiring that all states check                or junk yards from maintaining an                        Comment: One commenter noted that
                                      with NMVTIS rather than simply                          ‘‘empty head’’ to avoid compliance. The                the lack of common terms will
                                      relying on paper documentation. Brand                   commenters suggested that ‘‘these                      undermine the clarity and usefulness of
                                      washing will be significantly reduced, if               presumptions (as to automobiles not                    the information provided: ‘‘How will
                                      not eliminated. A state’s decision not to               obtained from insurers) can be                         NMVTIS reconcile the differences in
                                      acknowledge a prior state’s branding                    overcome if and only if the salvage or                 law as to what constitutes a ‘total loss?’
                                      will not affect the NMVTIS brand                        junk yard has qualified appraisal                      How will this undermine or effect
                                      history.                                                personnel employees or others acting                   achievement of NMVTIS’[s] goals? How
                                                                                              solely on its behalf, entirely                         will NMVTIS reconcile the differences
                                      12. Self Insurers Included in the
                                                                                              independent of any other persons or                    amongst insurance company policies as
                                      Definition
                                                                                              entities, perform a good-faith physical                to what constitutes a ‘total loss?’ How
                                         Comment: Several commenters                          and value appraisal of the automobile                  will this undermine or effect
                                      expressed disappointment that self                      and determine that the automobile does                 achievement of NMVTIS’[s] goals?’’ The
                                      insurers were left out of the rule. One                 not meet the definition of ‘salvage’ or                West Virginia Department of
                                      commenter noted that the definitions                    ‘junk.’ ’’                                             Transportation also commented that the
                                      should encompass a ‘‘self insurer,’’ be it                 Response: Based on the proposed                     rule should establish a standard for
                                      a municipality, lease company, or large                 rule, a ‘‘salvage auto’’ is defined as ’’an            establishing total loss as opposed to
                                      corporation, and that this is a current                 automobile that is damaged by collision,               relying on the rules of insurance carriers
                                      ‘‘hole’’ in the system.                                 fire, flood, accident, trespass, or other              and states.
                                         Response: DOJ agrees that the Anti-                  event, to the extent that its fair salvage               Response: NMVTIS will not attempt
                                      Car Theft Act’s definition of ‘‘insurance               value plus the cost of repairing the                   to ‘‘reconcile’’ differences in definitions.
                                      carrier’’ includes entities that                        automobile for legal operation on public               Rather, NMVTIS recognizes that
                                      underwrite their own insurance, such as                 streets, roads, and highways would be                  different definitions and criteria are in
                                      certain rental car companies. The                       more than the fair market value of the                 place within different insurance
                                      definition, however, excludes any                       automobile immediately before the                      companies and states. NMVTIS accepts
                                      organization that does not underwrite                   event that caused the damage.’’ 49                     these ‘‘native’’ determinations and
                                      its own insurance.                                      U.S.C. 30501(7).                                       notifies users that ‘‘X company’’ or ‘‘X
                                                                                                 For purposes of clarification, the                  state’’ has made a determination that the
                                      13. Salvage Automobile Defined
                                                                                              Department of Justice has determined                   vehicle is a ‘‘total loss,’’ ‘‘salvage
                                         Comment: One commentator noted                       that this definition includes all                      vehicle,’’ etc. NMVTIS will provide all
                                      that the definition of a ‘‘salvage                      automobiles found to be a total loss                   users with full disclosure and
                                      automobile’’ should also include any                    under the laws of the applicable                       explanation on the differences in
                                      automobile that an insurance company                    jurisdiction or designated as a total loss             definitions and determinations and how
                                      has taken ownership of in settlement of                 by the insurance carrier under the terms               this may or may not affect a vehicle.
                                      a claim and any vehicle that a state has                of its policies. By definition, this would             NMVTIS’s mandate is to notify users of
                                      issued a title to an insurer for. Another               mean that every automobile obtained by                 the determinations made in a vehicle’s
                                      commenter noted that ‘‘[t]he                            a salvage yard or junk yard that the                   history, not to make such
                                      responsibilities of the insurance carriers              salvage yard or junk yard knows, or has                determinations uniform or conforming.
                                      should include, in the area of the                      reason to know, has come from an
                                      reporting, if the insurance company                     insurance carrier, or from any person or               14. Junk Yard Definition
                                      obtained a title from the state in their                entity in connection with the resolution                  Comment: ISRI commented that it
                                      name, the state in which they obtained                  of insurance claims, should be deemed                  objects to the presumption in the rule
                                      it and the type of title.’’ Several                     as a salvage automobile or junk                        that vehicle recyclers operate only one
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                                      consumer-advocacy organizations                         automobile and must be reported as                     of two things, a ‘‘junk yard’’ or a
                                      commented that every automobile                         such. DOJ does not agree that any                      ‘‘salvage yard,’’ and suggests that DOJ
                                      obtained by a salvage yard or junk yard                 automobile with unknown damage or                      clarify the full scope of entities to be
                                      that the salvage yard or junk yard                      any automobile obtained without                        included under the general heading of
                                      knows, or has reason to know, has come                  knowledge of its physical condition                    ‘‘junk or salvage yards.’’


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                                         Response: While DOJ relied upon the                  appraisal conducted by a qualified                     referred to in the proposed rule is
                                      language in the Anti-Car Theft Act to                   independent appraiser is not required to               related to total-loss or ‘‘end-of-life’’
                                      describe the category of required                       be reported. Second, DOJ has added a                   vehicles that are purchased because
                                      entities, DOJ acknowledges that the                     clarification that individuals and                     they have a ‘‘clean title’’ that is then
                                      terms do not adequately reflect the                     entities that handle less than five                    fraudulently connected with a stolen
                                      professional and varied nature of the                   salvage or total-loss vehicles per year                vehicle, which ‘‘clones’’ the stolen
                                      vehicle-recycling industry. In general                  need not report under the salvage-yard                 vehicle to the non-stolen, ‘‘clean title’’
                                      terms, any entity that owns, controls,                  requirements, which is consistent with                 vehicle. Because the non-stolen vehicle
                                      handles, or acquires salvage vehicles is                existing standards that used car dealers               was destroyed and sold to an
                                      included in the reporting requirements                  are familiar with.                                     individual, it no longer appears on the
                                      of this rule, which is consistent with                     Comment: Many commenters,                           road and no notification of its
                                      current business practices. Similarly,                  including Iowa Attorney General                        destruction may be made to the current
                                      scrap-vehicle shredders, scrap-metal                    Thomas J. Miller, noted that the                       state of title.
                                      processors, ‘‘pull- or pick-apart yards,’’              inclusion of salvage pools in the                         Comment: Copart, Inc. argued that
                                      salvage pools, salvage auctions, and                    reporting requirements for junk and                    because salvage pools do not own the
                                      other types of auctions handling salvage                salvage yards ‘‘will help close a                      vehicles sold at salvage pools or auto
                                      vehicles (including vehicles declared a                 significant loophole’’ and will ‘‘further              auctions, and therefore by definition do
                                      ‘‘total loss’’) are included in the                     deter fraudulent used car sales, vehicle               not ‘‘resell’’ them, they do not meet the
                                      definition of ‘‘junk or salvage yards.’’                theft,’’ and other crimes.                             definition of salvage yard and are
                                         Comment: ISRI also requested that                       Response: Requiring salvage pools or                therefore not required to report. Copart
                                      new definitions of ‘‘scrap vehicle,’’                   auto auctions to report on salvage or                  further contended that salvage pools
                                      ‘‘scrap-vehicle shredder,’’ and ‘‘scrap-                insurance claim vehicles will increase                 should be required to report only those
                                      metal processor’’ be added to the rule to               the effectiveness of the program,                      vehicles that they purchase for resale,
                                      exclude these entities from the reporting               ensuring that consumers and others are                 and that any other interpretation goes
                                      requirement.                                            not defrauded by sellers who conceal                   beyond the plain language of the statute.
                                         Response: DOJ has clarified the rule,                salvage or ‘‘total loss’’ histories.                      Response: DOJ disagrees with this
                                      but rather than eliminate the reporting                    Comment: Several commenters,                        interpretation and notes that salvage
                                      requirements for these entities, DOJ                    including the ISRI, the Virginia                       pools do in fact handle and cause to be
                                      revised the regulations to establish an                 Department of Motor Vehicle                            resold (on behalf of their current owner,
                                      exemption that would cover prohibitive                  Administrators, and other industry                     who ‘‘bought’’ the vehicle from another)
                                      reporting circumstances that these                      associations and representatives,                      salvage and total-loss vehicles.
                                      entities face.                                          commented that the proposed rules do                      Comment: Copart, Inc. argued that
                                         Comment: One commenter argued                        not clearly indicate that scrap-metal                  salvage pools do not typically have
                                      that the definition of ‘‘junk yard’’ is too             processors, shredders, pull-apart yards,               access to the information needed to
                                      broad and may unnecessarily include                     and others who often receive and                       determine whether a vehicle meets the
                                      used car dealers and others who may                     demolish many end-of-life vehicles are                 NMVTIS definition of junk vehicle or
                                      rebuild vehicles with the intention of                  included in the reporting requirements.                salvage vehicle. Copart further
                                      reselling them. The commenter                              Response: The regulations have been                 contended that junk and salvage yards
                                      suggested that having such entities                     revised to clarify that the definition of              should only be required to report to
                                      report these vehicles into NMVTIS                       junk and salvage yards includes not                    NMVTIS those vehicles sold on a
                                      would potentially label these vehicles as               only salvage pools, but also scrap-metal               salvage or junk certificate under
                                      ‘‘junk or salvage’’ and preclude the                    processors, shredders, pull-apart yards,               applicable state law.
                                      vehicles from being retitled in some                    and others who handle or control total-                   Response: Allowing junk and salvage
                                      states.                                                 loss, junk, or salvage automobiles,                    yards to report only on vehicles with
                                         Response: One of the main purposes                   otherwise described as end-of-life                     salvage titles would perpetuate the
                                      of NMVTIS is to provide prospective                     vehicles.                                              problems described elsewhere,
                                      purchasers and others with reliable                        Comment: ASPA commented that DOJ                    including fraud and theft. Nonetheless,
                                      histories of a vehicle’s previous and                   should recognize that VIN inspections                  DOJ has addressed this issue in the
                                      current condition as it relates to salvage              conducted in most states would make a                  definition of a ‘‘salvage auto’’ that now
                                      and loss. Vehicles reported as having                   salvage automobile an unattractive                     includes exceptions for vehicles that are
                                      been in the possession of a ‘‘junk’’ or                 choice for criminals, and that cloning a               not salvage, including total-loss
                                      ‘‘salvage yard’’ may not be viewed in the               salvage vehicle would result in the                    vehicles.
                                      same way that vehicles with a ‘‘junk’’ or               cloned vehicle having a ‘‘salvage’’                       Comment: Copart, Inc. argued that
                                      ‘‘salvage’’ brand may be viewed in state                branded title.                                         requiring salvage pools to report to
                                      titling processes. Each state will                         Response: DOJ recognizes that some                  NMVTIS is wasteful and duplicative
                                      continue to make its own                                states require vehicle inspections upon                because they function as an
                                      determinations regarding vehicle titling                retitling, and some states place a                     intermediary between other entities that
                                      based on state law. Although any                        ‘‘brand’’ on salvage vehicles. In these                are required to report, such as insurance
                                      individual or business engaged in the                   states, a salvage vehicle may not make                 carriers, dismantlers, and scrap-metal
                                      business of acquiring ‘‘junk’’ or                       an attractive choice for VIN cloning.                  processors.
                                      ‘‘salvage’’ automobiles (which includes                 However, not every state has these                        Response: Criminal organizations
                                      motor vehicles determined by an                         requirements, and VIN inspections                      exploit salvage-pool services,
                                      insurance carrier to be a ‘‘total loss’’)               typically do not inspect or verify hidden              purchasing total-loss vehicles with
                                      generally must by law report such                       VINs. As a result, cloned vehicles go                  ‘‘clean titles’’ to facilitate the cloning
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                                      vehicles to NMVTIS, there are two                       undetected. Even electronic diagnostic                 and resale of stolen vehicles. To address
                                      exceptions to this requirement. First, an               modules that would otherwise display                   this issue, law enforcement and other
                                      automobile that is determined to not                    the VIN can be defeated, allowing the                  organizations require information on the
                                      meet the definition of salvage or junk                  clone to be virtually undetectable. Most               vehicles handled by salvage pools.
                                      after a good-faith physical and value                   often, the criminal activity that DOJ                  Additionally, many if not most vehicles


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                                      sold by salvage pools do not end up in                  brands to create greater awareness and                 workable in any manner is unfair and
                                      a junk or salvage yard, and not all                     understanding of their meaning.                        unrealistic.’’ Other commenters noted
                                      vehicles sold by salvage pools,                                                                                that it would take time to accomplish
                                                                                              16. Definition of Automobile
                                      including those with significant                                                                               the necessary statutory and regulatory
                                      damage, are determined to be a total loss                  Comment: NAEC argued that the rule                  changes that may be required, and that
                                      by insurance carriers. For these reasons,               should require the inclusion of ‘‘trucks,              their states had not budgeted for
                                      it is essential that salvage pools report               SUVs and other non-automobiles as                      NMVTIS and could not pay NMVTIS
                                      to NMVTIS.                                              prescribed by the Federal Anti-Car Theft               fees in light of current economic
                                         Comment: Copart, Inc. argued that                    Act for Parts Marking’’ because of their               circumstances. AAMVA further
                                      DOJ should interpret ‘‘junk yard’’ and                  popularity with vehicle thieves. Other                 commented that DOJ should establish a
                                      ‘‘salvage yard’’ to include all vehicle                 organizations, including the Idaho                     process for approving ‘‘temporary
                                      auction companies so as not to                          Transportation Department, contended                   exemptions from the deadline where a
                                      discriminate against ‘‘salvage pools’’                  that ‘‘NMVTIS records should also                      reasonable timeline for compliance is
                                      that sell both clean-titled and salvage                 include all vehicles that a state may                  presented and approved by the
                                      vehicles.                                               title, and not be limited to standard                  Department.’’ The State of California
                                         Response: All vehicle auction                        types of vehicles.’’ The Minnesota                     proposed a ‘‘phasing in’’ of participants.
                                      companies should not be required to                     Department of Public Safety stated that                The dates proposed by states as
                                      report on all vehicles handled or in their              if it is required to report on all vehicles            alternative start dates ranged from 2010
                                      inventory. Instead, those organizations                 in its database, ‘‘it might well grind to              to ‘‘1 year from the date funding is
                                      that handle or resell vehicles on behalf                a halt,’’ and costs would increase                     secured’’ by the state.
                                      of insurance carriers after a                           considerably.                                             Response: Although DOJ has worked
                                      determination of total loss, regardless of                 Response: Although DOJ cannot                       closely with the system operator to
                                                                                              extend the Act’s definition to include all             reduce the need for state system
                                      salvage title, should be required to
                                                                                              motor vehicles, it is important to note                modifications, and although the
                                      report. This should hold true regardless
                                                                                              that many states currently include such                requirements of the Act have been in
                                      of whether the entity operates as a
                                                                                              vehicles in their reporting to NMVTIS.                 place since 1992, DOJ understands that
                                      ‘‘salvage pool’’ or refers to itself as an
                                                                                              DOJ strongly encourages this continued                 it will take time for states to implement
                                      ‘‘auto auction,’’ ‘‘salvage auction,’’
                                                                                              reporting practice in light of supporting              some provisions of the regulation. To
                                      ‘‘abandoned-vehicle auction,’’ ‘‘tow-lot
                                                                                              comments, the value to law                             provide relief in this regard, DOJ has
                                      auction,’’ ‘‘scratch-and-dent’’ sale or
                                                                                              enforcement, and the need to protect                   elected to extend the compliance date
                                      auction, etc. As the National Salvage
                                                                                              citizens against fraud and theft.                      for states not yet participating to January
                                      Vehicle Reporting Program noted, ‘‘the
                                                                                              Moreover, it may be more costly or                     1, 2010. By this date, all states and the
                                      recommended guideline for determining                                                                          District of Columbia will be required to
                                      that an entity is required to report * * *              burdensome for states to filter out those
                                                                                              vehicles not meeting the statutory                     provide daily title transaction updates
                                      should be if the entity owns or acquires,                                                                      to NMVTIS, make inquiries into
                                      [or handles] total loss/salvage vehicles                requirement than to submit all motor
                                                                                              vehicles to NMVTIS.                                    NMVTIS before issuing a title on a
                                      in whole or in part.’’ Under such                                                                              vehicle coming in from out-of-state, and
                                      circumstances, it should be required to                    Comment: One commenter
                                                                                              recommended that DOJ clarify when a                    paying any user fees that may be billed
                                      report all vehicles to NMVTIS. DOJ will                                                                        by the operator. The Department
                                      clarify this requirement in the final rule.             vehicle is no longer a vehicle for
                                                                                              purposes of reporting, especially in junk              believes that the states can comply by
                                      15. Salvage Brand                                       or salvage yards that often do not                     that date. Similarly, DOJ has decided
                                                                                              receive a complete vehicle.                            against a ‘‘phasing in’’ approach to state
                                         Comment: One commenter noted that                                                                           participation commencement because
                                      ‘‘[i]f the NMVTIS project is to succeed                    Response: DOJ offers two
                                                                                              clarifications in response to this                     there is no equitable way of selecting
                                      it would be a reasonable assumption to                                                                         phasing dates and participants in each
                                      require a uniform approach to the                       comment. First, a vehicle is thought to
                                                                                              be present for reporting purposes when                 phase. DOJ points out that most of the
                                      assignment of the ‘salvage’ brand by any                                                                       provisions required to be implemented
                                      member state. The system is only as                     a vehicle frame is present. Similarly, in
                                                                                              cases where questions as to the ‘‘true                 by January 1, 2010, are essentially the
                                      good as the data in it, if the data is not                                                                     same requirements that have been a part
                                      applicable to uniform situations there                  VIN’’ of a vehicle arise, DOJ has
                                                                                              determined that the true VIN for                       of the Anti-Car Theft Act since either
                                      will always be discrepancies.’’                                                                                1992 or 1996, and states, therefore, have
                                         Response: A uniform approach to                      NMVTIS’s purposes is the VIN on the
                                                                                              frame of the vehicle.                                  had at least 12 years to implement the
                                      branding would be advantageous in                                                                              provisions of the Act. Thirteen states
                                      many respects. The Anti-Car Theft Act,                  State Responsibilities                                 have already done so without
                                      however, does not provide the authority                                                                        regulations in place.
                                      for DOJ to develop or mandate uniform                   17. Start Dates
                                                                                                                                                        Comment: One commenter noted that
                                      branding, which would be a significant                    Comment: In reference to the                         the proposed start date is just prior to
                                      and potentially costly change for states                proposed June 1, 2009, start date for                  an AAMVA-announced decision to
                                      to implement. As each state makes its                   state reporting and inquiries into the                 continue as the operator of the system
                                      own determinations, and NMVTIS                          system, several states and AAMVA                       and therefore creates a conflict for states
                                      relates state brands to an aggregated                   noted that the states would have                       should AAMVA decide not to continue
                                      brand or brand category within                          difficulty meeting this date. One state                as the operator.
                                      NMVTIS, the non-uniform approach                        commented that ‘‘[t]he requirement to                     Response: AAMVA has assured DOJ
                                      does not create an insurmountable                       budget, upgrade and work to complete                   that should a decision be made in
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                                      problem. DOJ will ensure that those                     compliance requirements for NMVTIS                     August of 2009 to discontinue its role as
                                      who access NMVTIS information have                      cannot be met by this timeline—it is                   the operator, AAMVA will continue to
                                      the opportunity to learn about the                      simply not doable even with the                        provide transition services and
                                      different state brands that exist and the               political will and funds available. To                 continuity until a new operator is
                                      impact of other reporting on these                      arbitrarily select a date that is not                  identified and is able to assist states that


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                                      rely on NMVTIS in their daily                           the site which states are not                          to a title being transferred out-of-state or
                                      operations.                                             participating.                                         into the state. States are required to
                                         Comment: One commenter asked how                        Comment: The State of Alaska                        check incoming titles related to vehicles
                                      the proposed start date had been                        commented that ‘‘there should be a                     from out-of-state. States are not required
                                      determined and has requested                            process in place that allows states to                 to check titles being transferred out of
                                      justification for the date. The                         continue to issue titles when NMVTIS is                the state. With regard to the need to
                                      commented wrote that in the absence of                  not operational during states’ normal                  verify titles during dealer reassignment
                                      this justification, the date appears                    business days and hours.’’ Alaska                      or the transfer of vehicles from one
                                      arbitrary. The State of Illinois motor                  recommended that states be permitted                   dealer to another, the Act requires that
                                      vehicle administration maintained that                  to ‘‘issue titles when NMVTIS is not                   states verify the title of any automobile
                                      ‘‘the proposed timeframe for                            operational, hold the inquiries in a                   coming from another state, which DOJ
                                      implementing the NMVTIS program                         queue and submit the queued inquiries                  has determined includes dealer
                                      under these rules is unrealistic to the                 when NMVTIS is operational. If a                       reassignments when involving dealers
                                      point of being absurd.’’ Although that                  problem is detected with a title, it                   in different states.
                                      Illinois agency conceded that the start                 would be revoked.’’ The State of Illinois                 Comment: One commenter argued
                                      date was likely driven by ongoing                       commented that standards of                            that the system should provide state
                                      litigation and a court order, the                       performance should be established to                   motor vehicle titling agencies with
                                      commenter noted ‘‘that [the] order is                   address these issues.                                  sufficient information to resolve
                                      either currently under appeal and a stay                   Response: While NMVTIS is typically                 discrepancies during the title-
                                      of enforcement should be sought                         only down for various reasons between                  verification process.
                                      pending appeal, or the Department of                    1 a.m. and 6 a.m. Eastern Time and one                    Response: NMVTIS provides state
                                      Justice [may have] chose[n] not to seek                 Sunday morning each month, there are                   motor vehicle-title administrations with
                                      an appeal.’’                                            processes in place for unexpected down                 all relevant data in the system and a
                                         Response: The proposed start date                    time during state business hours. While                seamless and secure electronic
                                      was chosen after an analysis of                         specific processes vary by state
                                                                                                                                                     connection to other online state title
                                      historical timelines to provide batch                   according to state business processes,
                                                                                                                                                     records. NMVTIS will make available
                                      data to the system, the number of states                there are methods of continuing offline,
                                                                                                                                                     any additional information within
                                      that currently have implementation                      such as mailing the new title at a later
                                                                                                                                                     NMVTIS that may be needed to resolve
                                      funding from DOJ either directly or                     time, issuing a temporary title, etc. DOJ
                                                                                                                                                     such discrepancies. In the last year
                                      through AAMVA, the number of states                     cannot alter the Anti-Car Theft Act’s
                                                                                                                                                     alone, the system generated 45 million
                                      that have indicated previously that they                requirement to make a NMVTIS inquiry
                                                                                                                                                     secure messages and notifications and
                                      were working towards implementation                     prior to issuing a new title. Therefore,
                                                                                                                                                     made 18.4 million update transactions.
                                      already, and an expected release of                     new titles should not issue when
                                      stand-alone access to facilitate title                  NMVTIS is unavailable. Current system                     Comment: One commenter noted that
                                      verifications. As noted previously,                     response time is less than three seconds               information gleaned from a state’s
                                      however, the Anti-Car Theft Act has                     per inquiry, and the number of                         ‘‘instant title verification,’’ such as
                                      been in place for over 16 years, and                    unexpected system down times has                       reports of prior removal of a vehicle
                                      many states have already implemented                    been minimal. DOJ notes that the                       from the vehicle population by export,
                                      the provisions beyond the minimum                       NMVTIS connection has not been                         destruction, reported existence in a
                                      specifications. Finally, the court order                ‘‘down’’ for 30 minutes or more at any                 salvage or junk yard, or other indication
                                      does not affect the state-implementation                time during the last three years,                      that the vehicle should not be present,
                                      date in any way, and in fact is not even                demonstrating that it is a reliable                    should result in a physical inspection of
                                      mentioned in that order.                                connection and service.                                the vehicle to determine the validity of
                                         Comment: Several state motor vehicle                    Comment: A state motor vehicle                      the title and the vehicle.
                                      administrations asked what penalties                    administration agency suggested that                      Response: While DOJ agrees that such
                                      are in place for states that do not                     the requirement for an ‘‘instant title                 reports or results will flag for states the
                                      implement prior to the required start                   verification check’’ is problematic for                title transactions and vehicles that
                                      date and what provisions will be made                   states that do not issue titles over-the-              should be further reviewed prior to
                                      for jurisdictions that are in process or                counter. The commenter suggested that                  undertaking a new title transaction, DOJ
                                      intend to implement at a later date.                    the word ‘‘instant’’ be removed from the               cannot require such inspections. It is
                                         Response: While DOJ will place its                   final rule.                                            each state’s responsibility to institute
                                      priority on supporting state                               Response: Some states do not issue                  policies and procedures for resolving
                                      implementation, DOJ would review                        titles ‘‘instantly.’’ The ‘‘instant title              such concerns. This comment does
                                      state refusals to participate to determine              verification check,’’ therefore, may take              illustrate how NMVTIS can ‘‘flag’’ for
                                      the proper response. DOJ also will work                 place after the customer has left the title            states those vehicles and transactions
                                      with state officials in support of                      administration agency but before a new                 that should be carefully reviewed to
                                      NMVTIS to encourage state compliance.                   title is issued. In these cases, states may            prevent fraud and theft.
                                      This outreach could include contacts                    make the NMVTIS inquiry when                              Comment: One state motor vehicle
                                      with state legislatures, governors,                     appropriate in the titling process, so                 administration asked how NMVTIS will
                                      consumer-action networks, and law                       long as the inquiry is made and title                  obtain data from the insurance
                                      enforcement associations.                               verified before a new permanent title                  companies and junk and salvage yards.
                                         Comment: One commenter suggested                     issues.                                                   Response: Insurance carriers, junk
                                      that DOJ publish a map of participating                    Comment: One commenter asked if a                   yards, and salvage yards are required to
                                      and non-participating states, so that                   title-verification check would need to be              report the data enumerated in the Act
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                                      citizens can observe the participation                  performed on a state title that was being              and regulations. The operator will
                                      status of every state.                                  reassigned after being purchased from                  identify more than one reporting
                                         Response: DOJ will make this map                     an out-of-state dealer.                                mechanism for electronic reporting, in a
                                      available on www.NMVTIS.gov and also                       Response: It is unclear from the                    format prescribed by the operator.
                                      will notify every consumer that accesses                comment if the commenter was referring                 AAMVA and DOJ will identify the


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                                      official reporting mechanisms and                          Response: There are already at least                search, these requirements have
                                      processes via www.NMVTIS.gov.                           two approaches for state compliance                    changed and this information is no
                                         Comment: The Nevada Department of                    with NMVTIS: (1) A fully integrated,                   longer needed. At the present time, only
                                      Motor Vehicles complained that                          online approach, whereby a state’s title               the VIN is needed to make an inquiry.
                                      requiring states to provide ‘‘the date the              information system automatically                       This update will be reflected in the final
                                      vehicle was obtained is an expensive                    queries NMVTIS, and NMVTIS provides                    rule.
                                      and time consuming process’’ and that                   real-time updates to both states involved                Comment: The West Virginia
                                      states should be permitted to continue                  in the transaction; and (2) a stand-alone              Department of Transportation argued
                                      sending the title-issue date instead.                   approach, whereby title clerks send                    that some states exempt vehicles that
                                         Response: There is no requirement                    inquiries to NMVTIS via a web access                   reach a certain age from the
                                      proposed for states to submit the date a                point, and their state sends daily                     requirements of titling, and that these
                                      vehicle was obtained. This requirement                  updates through a batch upload. A third                vehicles should be exempt from
                                      is in relation to insurance carrier and                 option, serving central site states,                   reporting.
                                      junk and salvage reporting.                             entailing a process whereby                              Response: The rule requires states to
                                         Comment: The Oregon Department of                    verifications are performed via batch                  report on all automobiles included in
                                      Motor Vehicles commented that it                        inquiry, will be explored and may be                   the states’ titling systems, regardless of
                                      currently only collects odometer                        implemented soon. However, DOJ                         age. However, if state law exempts
                                      information on those vehicles subject to                disagrees with the need to prepare a cost              certain vehicles from titling, those
                                      federal odometer requirements and                       study because an extensive cost-benefit                vehicles need not be reported to
                                      would be burdened to collect such                       study of this issue already exists, and                NMVTIS. The state should make the
                                      information on all vehicles. The                        cost data from other state                             operator aware of these exceptions,
                                      National Salvage Vehicle Reporting                      implementations is already available for               however, so that consumers in the state
                                      Program argued that states and insurers                 estimation purposes.                                   and in other states are advised of this
                                      should be required to include mileage                      Comment: The NADA and at least one                  exception, which they may take into
                                      reporting in their data provided to                     state motor vehicle administration                     account when checking the history of
                                      NMVTIS.                                                 commented that DOJ should clarify that                 vehicles through NMVTIS.
                                         Response: States are only required to                states are required to submit all brands
                                      provide odometer information on those                                                                          18. Unfunded Mandate
                                                                                              to NMVTIS for all automobiles titled
                                      vehicles subject to federal odometer                    within the state.                                        Comment: Commenters argued that
                                      requirements, 49 U.S.C. 32705, and not                     Response: DOJ agrees and has                        the mandate for NMVTIS has not been
                                      on all vehicles unless already recorded                 clarified this requirement under                       funded, and that the requirement for
                                      by the state. States are required to                    25.54(a)(2), consistent with statutory                 compliance has not been applied or
                                      provide to NMVTIS the most recent                       requirements.                                          enforced for the 15 years of this process.
                                      odometer reading for such vehicles and                     Comment: The Minnesota Department                   On the other hand, one commenter
                                      any later odometer information                          of Public Safety argued that states                    noted that NMVTIS is not an unfunded
                                      contained within state title records. DOJ               should be required to provide title                    mandate in view of DOJ’s investment of
                                      strongly encourages all reporting                       numbers, ‘‘since it would be nearly                    over $15 million in the system since its
                                      entities to include odometer readings                   impossible to establish the ‘validity and              inception and in view of DOJ grants to
                                      where available.                                        status’ of purported titles without                    states to support system participation.
                                         Comment: One commenter                               them.’’                                                  Response: The Anti-Car Theft Act
                                      recommended that the final rules spell                     Response: Participating states already              explicitly requires that user fees, rather
                                      out what is actually required from the                  have access through NMVTIS to observe                  than federal funding, sustain NMVTIS.
                                      states and how (i.e., in which format)                  the full title of record, including the title          Although no funds have been
                                      this information is to be provided.                     numbers and other information needed                   appropriated to DOJ for NMVTIS, DOJ
                                      Another commenter, the California State                 to establish the validity and status of                has invested over $15 million in
                                      Motor Vehicle Title Administration,                     titles presented. However, DOJ                         NMVTIS, with a substantial portion
                                      recommended that the rule be revised to                 encourages the states to voluntarily                   going to states to assist them with
                                      require information that is consistently                submit that information to NMVTIS                      compliance. The U.S. Department of
                                      available across all states and that only               with the approval of the operator and                  Transportation previously provided
                                      information held by state titling                       the Department.                                        funding during the period it was
                                      agencies be subject to reporting                           Comment: The Minnesota Department                   responsible for the system, which ended
                                      requirements.                                           of Public Safety commented that ‘‘the                  in 1996.
                                         Response: DOJ will clarify what is                   proposed rule also would require states                  Comment: One commenter noted that
                                      required of each state and will describe                to provide [‘t]he name of the state that               DOJ’s determination that the rule does
                                      format issues to the extent practical and               issued the most recent certificate of title’           not meet the threshold cost or burden
                                      appropriate. DOJ cannot simply choose                   and ‘[t]he name of the individual or                   requirements of the Unfunded Mandate
                                      to use only information that is available               entity to whom [it] was issued’ when                   Reform Act of 1995 is not sufficient in
                                      in every state consistently for purposes                making an inquiry to NMVTIS. This                      and of itself to satisfy the legal
                                      of populating the system, as doing so                   information is not, and cannot be,                     responsibilities. Specifically, the
                                      would limit the included data and                       recorded in MnDVS’ current title                       commenter noted that ‘‘[t]he fact that
                                      significantly reduce the system’s value.                information system.’’                                  the Department of Justice (DOJ) has
                                         Comment: One commenter                                  Response: This language was taken                   decided that it is a small enough
                                      recommended that DOJ require that the                   from the Anti-Car Theft Act to describe                amount of money that the Unfunded
                                      operator be responsible for developing                  what information would be needed in                    Mandate Reform Act of 1995 does not
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                                      at least two approaches for NMVTIS                      order for states to make an inquiry into               apply, or that the DOJ has determined
                                      inquiries and that DOJ should prepare a                 NMVTIS. Since the passage of the Anti-                 that per Executive Order 13132, the cost
                                      cost study relating to the expenses                     Car Theft Act, and with the very recent                imposed does not provide sufficient
                                      associated with the fully integrated,                   development of a standalone access                     cause for a Federalism issue, is not
                                      online approach to compliance.                          model that only requires a VIN to                      sufficient.’’


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                                         Response: The Department of Justice,                 requirements for extracting and                        source of comprehensive information.
                                      based on its own analysis, made                         mapping the required data are                          Current services such as Carfax have
                                      appropriate determinations based on                     burdensome, and that should the                        partially filled the need for information,
                                      law and regulation. The White House                     operator undertake these                               but these providers do not offer as
                                      Office of Management and Budget                         responsibilities, batch data submission                current and complete titling information
                                      reviewed and approved this analysis.                    would be much easier to achieve.                       as the proposed NMVTIS system.’’
                                         Comment: The City and County of                         Response: The Unfunded Mandates                        Response: NMVTIS provides a unique
                                      Honolulu Division of Motor Vehicle,                     Reform Act and 5 U.S.C. 601(5) define                  service in terms of the source of its data,
                                      Licensing and Permits disagreed with                    ‘‘small governmental jurisdiction’’                    its comprehensiveness, and its
                                      the aggregate amount estimated by DOJ                   generally as rural jurisdictions, those                timeliness. Services such as CARFAX
                                      in the ‘‘Unfunded Mandates Reform Act                   with populations under 50,000, and                     will continue to provide information to
                                      of 1995’’ section of the proposed rule                  areas of limited revenues. Based on this               the public that is not intended to be
                                      ‘‘because their estimate is based on the                definition, the city/county identified by              included in NMVTIS, such as vehicle
                                      less expensive standalone web solution                  the commenter would not appear to                      repair histories, etc. For this reason,
                                      which operationally degrades customer                   qualify as a ‘‘small governmental                      these private services will continue to
                                      service and increases the work of our                   jurisdiction.’’ In terms of the operator’s             offer unique and beneficial services.
                                      over-the-counter staff.’’ The commenter                 requirements and the burden associated
                                                                                                                                                     20. Time Lags
                                      further noted that the aggregate amount                 with such requirements, DOJ will
                                      should ‘‘factor in the development and                  continue to direct the operator to                        Comment: Several commenters noted
                                      deployment of the much more costly                      provide as much flexibility in                         that allowing states to upload data (e.g.,
                                      integrated on-line solution option that                 requirements as is feasible, and DOJ will              batch uploading) may create a ‘‘time
                                      will ultimately be the final solution that              continue to provide technical assistance               lag’’ that could impact law enforcement
                                      states will move towards’’ and should                   upon request to identify alternative                   investigations and impede the ability of
                                      include the additional costs that will                  solutions where necessary.                             the system to accomplish its goals. One
                                      result ‘‘from the increased load on the                                                                        commenter suggested that it would be
                                                                                              19. Inquiring Into NMVTIS Versus Other                 better to wait until states secure the
                                      system to each jurisdiction when all
                                                                                              Systems                                                necessary funding before proceeding
                                      jurisdictions, insurance companies,
                                      salvage yards, consumers, law                              Comment: More than one state motor                  with implementation.
                                      enforcement, etc. are given access to the               vehicle administration commented that                     Response: DOJ has examined this
                                      system.’’ The commenter concluded by                    NMVTIS will not provide a more                         issue closely with the system operator
                                      stating that using this methodology, the                substantial benefit than checking third-               and with third-party vehicle-history
                                      aggregate costs will ‘‘easily exceed the                party vehicle history databases which                  providers. While many third-party
                                      $100 million resulting in the                           some states already check. One state                   databases experience lag time of several
                                      applicability of the Unfunded Mandates                  motor vehicle administration suggested                 weeks or months in getting state
                                      Reform Act.’’                                           that the law was unclear as to whether                 updated data, NMVTIS is designed to
                                         Response: The methodology                            the Anti-Car Theft Act required states to              significantly reduce or eliminate the lag
                                      employed to calculate the aggregate                     check NMVTIS or another third-party                    time entirely to provide reliable
                                      costs of the program uses the minimum                   database, stating that ‘‘[t]he previous                information to users. For this reason,
                                      requirements for system participation.                  intent was to provide a system that a                  states choosing the stand-alone method
                                      DOJ sees no purpose in using a level of                 state may utilize to verify title before               of participation and batch uploads will
                                      participation not required by DOJ as the                titling a vehicle. This left open the use              be required after initial set-up to
                                      basis for the cost calculations. While                  of other systems, such as Carfax, to                   establish batch updates at least every 24
                                      states ultimately may move towards an                   research titles. The requirement to                    hours. This requirement will greatly
                                      integrated, online solution for                         mandate use of NMVTIS to verify titles                 diminish the possibility of exploitation
                                      efficiency, and although this method of                 is unrealistic, unworkable and unfair.                 of lag time and provide a more up-to-
                                      participation does benefit NMVTIS, DOJ                  The intent of the process is to protect                date vehicle history check than is
                                      does not require it for compliance. It is               citizens against fraud. NMVTIS is not                  currently available. States do have the
                                      DOJ’s responsibility to determine the                   the only system that supports this                     option of implementing in fully online
                                      least-costly, most-effective way for                    intent. Limiting research to this system               mode where data transmission is in real
                                      implementing the solution, and that is                  could also lead to misinformation and                  time. DOJ does not have the flexibility
                                      the methodology used in the proposed                    misapplication of process.’’                           to delay implementation until states
                                      rule. Further, a fully implemented                         Response: The Anti-Car Theft Act                    have funding to implement the fully
                                      system, with all jurisdictions, insurance               requires states to verify titles through               online mode. Pursuant to a federal
                                      carriers, junk and salvage yards,                       NMVTIS. No other system, public or                     district court order, DOJ is required to
                                      consumers, and law enforcement                          private, can provide the same level of                 have the rules published and system
                                      personnel accessing and reporting, does                 assurance as NMVTIS once full                          available by January 30, 2009.
                                      not translate directly into an increase in              compliance is reached. DOJ also points                    Comment: One state motor vehicle
                                      costs for states. In fact, it could very                to comments submitted by several                       administration noted that when using
                                      well decrease state costs through offset                organizations that highlighted concerns                the stand-alone method of making
                                      fees.                                                   with the reliability of third-party                    inquiries before issuing a new title on
                                         Comment: The City and County of                      databases. States wishing to provide                   out-of-state vehicles, an impact on
                                      Honolulu Division of Motor Vehicle,                     increased protections for consumers are                customer service is expected.
                                      Licensing and Permits further                           encouraged to continue to check such                   Specifically, the commenter stated that
                                      maintained that because the combined                    private databases in addition to making                an additional ‘‘three to five minutes of
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                                      city/county government is a ‘‘small’’                   the NMVTIS inquiry as required by                      processing time’’ is expected due to the
                                      government, it is uniquely impacted by                  federal law.                                           fact that title clerks in this
                                      the regulations and is entitled to relief.                 Comment: One commenter noted that                   administration are using a mainframe
                                      Additionally, this commenter                            ‘‘the fully implemented system * * *                   that does not allow simultaneous
                                      contended that the operator’s                           will also provide consumers with a                     internet access, and that to make such


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                                                         Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations                                           5757

                                      a check, the clerk would have to log out,               anyway? Conversely if there is an                      disposition or update. Many comments
                                      make the NMVTIS inquiry, and log back                   opportunity for other disposal of the                  emphasized the importance of timely
                                      in to the mainframe for each out-of-state               vehicles, shouldn’t the insurance                      reporting, even when the named owner
                                      title transfer.                                         carriers be required to report all vehicles            in the initial report is the insurance
                                         Response: The lower cost stand-alone                 since the VINs could still be stolen for               company.
                                      method of participation is not as timely                swapping?’’ Other commenters noted                       Comment: Farmers Insurance
                                      as the fully integrated online method.                  that vehicles older than five years are                suggested that a 12-month grace period
                                      DOJ is committed to working with states                 often involved in consumer fraud and                   should be granted for insurance
                                      and the operator to identify new                        encouraged provisions for the database                 reporting to begin in light of ‘‘proper
                                      alternative methods to reduce or                        to cover the same ten-year age range as                system upgrades’’ that may be required.
                                      eliminate such inefficiencies, such as                  is used for odometer reporting.                          Response: DOJ is not able to provide
                                      dedicating one internet-capable PC that                    Response: The Anti-Car Theft Act                    a grace period, as the court has ordered
                                      could be available to all clerks with the               only required insurance carriers to                    the reporting to begin by March 31,
                                      NMVTIS page continuously running.                       report vehicles in the current and four                2009. Additionally, because DOJ aims to
                                      With system response time currently at                  prior model years. DOJ is not able to                  enable third-party reporting through
                                      three seconds or less, this alternative                 reverse or alter this limitation by                    organizations that may already receive
                                      may impact customer service less.                       increasing the reporting parameters.                   such data from insurance carriers, the
                                      Ultimately, however, although the                       Junk and salvage yards later may report                burden of any system changes should be
                                      stand-alone method of making inquiries                  some vehicles that insurance carriers are              minimal.
                                      is far less costly for states to implement,             not required to report. The Department,
                                      it may be less efficient than the fully                 however, encourages insurance carriers                 22. Non-Required Data
                                      integrated, online method.                              to report older vehicles.                                 Comment: One commenter argued
                                         Comment: One state motor vehicle                        Comment: ASPA commented that                        that ‘‘[t]he proposed rule overstates the
                                      administration recommended that ‘‘all                   section 25.55(b)(3) of the proposed rule               benefits provided to consumers.
                                      surrendered titles should be verified                   requires insurance carriers to report
                                                                                                                                                     Particularly, the fact that insurance
                                      when being transferred[,] and the rule                  ‘‘the name of the individual or entity
                                                                                                                                                     carriers are only ‘strongly encouraged to
                                      should not limit this requirement only                  from whom the automobile was
                                                                                                                                                     provide * * * other information
                                      to ‘purchased’ vehicles. Without                        obtained or who possessed it when the
                                                                                                                                                     relevant to a motor vehicle’s title’
                                      verifying all surrendered titles it is not              automobile was designated as a junk or
                                                                                                                                                     undermines the broad benefits implied
                                      known whether the title surrendered is                  salvage automobile,’’ which would seem
                                                                                                                                                     by the rule.’’ ‘‘The type of information
                                      the latest title issued[,] and there are                to be two different individuals or
                                                                                                                                                     not reported includes the reason why
                                      many reasons titles are transferred other               entities in most cases. Further, ASPA
                                                                                                                                                     the insurance carrier may have obtained
                                      than through a sale.’’                                  notes that it is unclear if the insurance
                                                                                                                                                     possession of the motor vehicle—flood,
                                         Response: DOJ agrees with this                       carrier would know the name of the
                                                                                              owner when it files the report.                        water, collision, fire damage, or theft.’’
                                      recommendation and notes that the final                                                                        The NADA further recommended that
                                                                                                 Response: Although the proposed rule
                                      rule clarifies that the requirement to                                                                         the rule should require insurers to
                                                                                              required reporting of the name of the
                                      make verifications pertains to any title                                                                       report the reasons they obtained
                                                                                              individual or entity either from whom
                                      or vehicle coming in from another state,                                                                       possession of the vehicle to prevent
                                                                                              the automobile was obtained or who
                                      including transfers. States are also                                                                           brand washing and fraud. Additionally,
                                                                                              possessed it when the automobile was
                                      strongly encouraged to perform such                                                                            this information would assist in cases
                                                                                              designated as a junk, salvage, or total-
                                      verifications on every title transaction,                                                                      where a vehicle is considered a total
                                                                                              loss automobile, the Anti-Car Theft Act
                                      which is most effective when                                                                                   loss for purely economic reasons (e.g.,
                                                                                              specifically states that both names are
                                      implementing via the online, integrated                                                                        theft). Several insurance-related
                                                                                              required. Reporting both names is
                                      approach.                                                                                                      organizations contended that for any
                                                                                              necessary to establish a ‘‘chain of
                                         Comment: One state motor vehicle                                                                            voluntary reporting that may be
                                                                                              custody’’ and for other law enforcement
                                      administrator asked if manufacturers’                                                                          contemplated, immunity provisions
                                                                                              and consumer-protection purposes. DOJ
                                      certificates of origin (MCOs) must be                                                                          must apply to this voluntary reporting
                                                                                              changed this language in the final rule
                                      verified as well.                                                                                              as well.
                                                                                              to require both names pursuant to the
                                         Response: Because MCOs are not                                                                                 Response: DOJ disagrees that the rule
                                                                                              Anti-Car Theft Act. In reference to the
                                      vehicle titles per se, states are not                                                                          overstates the benefits of NMVTIS. DOJ
                                                                                              concern that insurers may not know the
                                      required to verify MCOs in NMVTIS.                                                                             does agree, however, that the reason for
                                                                                              name of the owner, most carriers do
                                      However, DOJ strongly recommends                                                                               the total-loss or salvage designation by
                                                                                              possess this information, as this would
                                      that state motor vehicle administrators                                                                        insurance carriers may be of importance
                                                                                              be the owner of the automobile at the
                                      make inquiries on all title transactions,                                                                      to a prospective purchaser and to others.
                                                                                              time the vehicle was determined a total
                                      including initial registration of an MCO,                                                                      Not only does this protect the
                                                                                              loss, salvage, or junk.
                                      to identify and eliminate fraud and to                     Comment: Farmers Insurance                          consumer’s interest, but the additional
                                      protect consumers.                                      commented that the ‘‘trigger’’ for                     reporting criteria also benefit insurance
                                      Insurance Carriers                                      insurance-carrier reporting should be                  carriers. Therefore, the Department
                                                                                              when the insurance carrier sells the                   strongly encourages insurance carriers
                                      21. Reporting on Recent-Year Vehicles                   vehicle or when the customer                           to report this data element.
                                         Comment: One commenter asked                         determines it will retain ownership of                    Comment: AAMVA commented that
                                      ‘‘[w]hat is the reason to require                       the vehicle, because such dispositions                 unless the rule requires ‘‘junk and
                                      insurance carriers to report only                       may not be known for as much as 90                     salvage dealers’’ to report the percentage
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                                      vehicles manufactured within the past                   days after the loss occurs.                            of damage sustained by each vehicle in
                                      five model years that they consider junk                   Response: Because disposition may                   their inventories to the states, the states
                                      or salvage? If these vehicles will always               not be known at the time of initial                    would not be able to consider applying
                                      go directly to junk or salvage yards,                   reporting, this rule allows the insurance              a state junk or salvage brand on these
                                      won’t the vehicle be reported there                     carrier to file a supplemental                         vehicles.


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                                      5758               Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations

                                         Response: States will not be in a                    contended that DOJ should limit the                    crosscheck of information, close up
                                      position to make such judgments based                   ability of the operator to request                     loopholes, and improve NMVTIS.
                                      on junk- and salvage-yard operator                      additional, non-required data, because                    Response: This comment
                                      reporting. Insurance carriers have ready                the current operator would be                          demonstrates the importance of
                                      access to this information, which is the                encouraged to request additional                       allowing the operator of the system to
                                      typical basis for a state’s designation.                information that would generate                        request and accept additional
                                      Although the reporting of junk- and                     revenues to the benefit of the                         information beyond the NMVTIS
                                      salvage-yard inventories was likely not                 association and its members, creating a                requirements. While states and others
                                      intended to support state-branding                      conflict of interest. The Minnesota                    are not required to comply, there may be
                                      decisions, reporting of junk- and                       Department of Vehicle Services                         good reason to do so that would result
                                      salvage-yard inventories may be helpful                 (MnDVS) argued that the provisions of                  in cost savings among the stakeholders.
                                      to states in making brand decisions, but                section 25.53(c), which allow the                      In terms of lien-holder information,
                                      likely not conclusive. Although such                    providers of non-required data to query                while DOJ is not in a position to require
                                      vehicles may not end up branded by the                  the system if beneficial in addressing                 that lien-holder information be included
                                      states, consumers and other states have                 motor vehicle theft, ‘‘exceeds the                     in the central file, DOJ notes that the
                                      the benefit of knowing that the vehicle                 authority conferred by Congress, is                    existing secure network could be used
                                      was in the possession of a junk or                      overly broad, and as such represents an                in conjunction with the NMVTIS
                                      salvage yard and therefore may wish to                  arbitrary and capricious exercise of                   central-file information to query the
                                      inspect the vehicle or to require an                    rulemaking power.’’ Other commenters,                  current state of record and to access
                                      inspection before making purchase or                    however, reported that other data may                  lien-holder information in that state’s
                                      titling decisions. DOJ is not in a position             be needed for specific purposes and                    title record through the secure network
                                      to require reporting of the percentage of               argued in support of this flexibility.                 provided by the current operator.
                                      damage. However, insurance carriers                        Response: It would be difficult to                  Queries of and access to the actual state
                                      and others are encouraged to report this                describe what data the operator is                     records should only be permitted when
                                      information.                                            restricted from asking for or accepting,               a state has agreed to provide such
                                         Comment: One commenter asked                         other than social security number, dates               access, when any state application or
                                      ‘‘[h]ow will DOJ know which states,                     of birth, and addresses. DOJ points out                certification procedures are completed,
                                      junk, salvage, and insurance companies                  that states need not provide data that is              and when such access is in conformance
                                      are reporting information and reporting                 not specifically required in these                     with the Anti-Car Theft Act, the DPPA,
                                      all the information that is required? Will              regulations or the Act, and DOJ will                   etc.
                                      someone audit their reports? I                          need to approve the acceptance of non-                    Comment: One commenter suggested
                                      recommend that the system operator                      required data. Moreover, the non-                      that DOJ include registration
                                      and the DOJ both make a list of who is                  required data that is readily available                information in the list of required data
                                      reporting and publish that list * * *                   would add great value to some                          as a means to ensure accurate tracking
                                      and audit reporting compliance.’’ The                   consumers, to law enforcement, and to                  of vehicle ownership.
                                      commenter also suggested that DOJ                       others (e.g., NICB flood vehicle                          Response: Including registration
                                      require entities to report the company                  database, vehicle export data, other                   information is beyond the scope of
                                      name, address, and phone number for                     North American vehicle history records,                NMVTIS. Although it may be useful,
                                      any reports submitted. Another                          NICB theft file, etc.). While more data                DOJ cannot require such information.
                                      commenter asked who would inform                        always increases the chances of                           Comment: The National Salvage
                                      insurance carriers and junk and salvage                 discrepancies, DOJ does not want to                    Vehicle Reporting Program commented
                                      yards of the requirement to report                      discourage this voluntary reporting.                   that insurance-carrier reporting should
                                      information to NMVTIS, and who                          While the current operator does have                   commence on or before March 31, 2009,
                                      would identify those organizations                      the best interests of its membership in                as required by the federal district court,
                                      required to report.                                     mind, however, it also has expressed                   and that initial reporting by all covered
                                         Response: DOJ will instruct the                      concern for others affected by the rule                entities should include historical data to
                                      operator to publish and maintain a list                 and will represent the concerns of all                 the extent available, so that NMVTIS is
                                      of the entities reporting information to                stakeholders, not as a trade association,              complete beginning on March 31.
                                      NMVTIS. The list will include the name                  but as the operator of a DOJ system. In                Several insurance-related organizations
                                      of the reporting entity, city and state of              response to MnDVS’s comment, DOJ is                    or associations reported that ‘‘[t]he start
                                      the reporting entity, the date that data                of the opinion that if not in violation of             date for insurers should be clarified. We
                                      was last submitted by the entity, and                   the Anti-Car Theft Act or other federal                believe the best approach is to provide
                                      any contact information for the                         privacy statutes, such cooperation is                  that the system applies to automobiles
                                      reporting entity. With regard to who                    necessary and not arbitrary or                         declared junk or salvage on or after
                                      would inform reporting entities of the                  capricious.                                            April 1, 2009, [and that] the system
                                      requirements, DOJ will work with the                       Comment: Several commenters,                        must be established by March 31, 2009.
                                      operator, state-licensing authorities, and              including at least one from the state                  However, we prefer that more time is
                                      affected associations and advocacy                      motor vehicle administration                           provided for insurers to comply.’’
                                      organizations to ensure proper outreach                 community, encouraged the inclusion of                    Response: DOJ will require that all
                                      and education.                                          lien-holder information in the data                    vehicles declared junk or salvage
                                         Comment: Several state motor vehicle                 provided to NMVTIS in light of the                     (including ‘‘total loss’’) on or after April
                                      administrations argued that DOJ should                  difficulty of obtaining this information               1, 2009, be reported to NMVTIS.
                                      limit what non-required data the                        on out-of-state titles and the associated              However, DOJ strongly encourages
                                      operator could ask for and receive (e.g.,               budget impact on states. Other                         insurance carriers and junk- and
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                                      address of the vehicle owner). Another                  commenters, including insurance-                       salvage-yard operators to provide data
                                      believed that the value of encouraging                  related organizations, Assurant                        on vehicles that were declared junk,
                                      non-required data is unknown, and that                  Solutions, and the NADA, suggested                     salvage, or total loss before that date and
                                      reporting may only increase the number                  that additional data (including lien-                  as far back as 1992, if such data is
                                      of discrepancies or errors. ISRI                        holder information) will provide a                     available.


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                                                         Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations                                           5759

                                         Comment: The National Salvage                        purposes. For this reason, these                       about who owned the vehicle prior to it
                                      Vehicle Reporting Program commented                     commenters also recommended                            being junked is unnecessary.’’ The
                                      that ‘‘NSVRP strongly endorses the                      reporting the buyer’s name for these                   Wisconsin Department of
                                      inclusion in the rules of 3rd party                     vehicles. Several national consumer-                   Transportation contended that requiring
                                      enhanced standards that allow for data                  advocacy organizations also supported                  junk and salvage yards to report the
                                      generators to report to NMVTIS more                     the constructive definition including                  name of the vehicle supplier is
                                      completely and more frequently than                     salvage pools and the requirement to                   unnecessary, as is the disposition of
                                      minimally specified in the rules.’’                     add buyer name in the reporting                        such vehicles. Wisconsin DOT
                                         Response: While DOJ is not in a                      requirements.                                          commented that because these vehicles
                                      position to articulate data-reporting                      Response: DOJ reaffirms its                         are scrapped or destroyed by these
                                      requirements or standards regarding                     determination to include ‘‘salvage                     entities and cannot be returned to road
                                      data that is not statutorily or otherwise               pools’’ and ‘‘salvage auctions’’ in the                use, it is unnecessary to report this
                                      required, DOJ notes that the National                   definition of junk or salvage yards,                   information.
                                      Salvage Vehicle Reporting Program has                   thereby requiring them to comply with                     Response: Comments from law
                                      worked with nearly every stakeholder                    the corresponding reporting                            enforcement entities on the proposed
                                      group affected by NMVTIS to develop                     requirements. The name of the buyer is                 rule demonstrates that this information
                                      standards for voluntary reporting to                    not reported elsewhere despite being                   is of significant value. Additionally,
                                      NMVTIS that would benefit states, law                   very valuable for law enforcement and                  even when a vehicle cannot return to
                                      enforcement, consumers, and others.                     other purposes. DOJ, therefore, added                  the road, the VIN can be used to clone
                                      DOJ applauds the National Salvage                       the name of the buyer as required data                 a stolen vehicle. In states that do not
                                      Vehicle Reporting Program and strongly                  to report. Because many of the                         have the same junk-branding
                                      encourages the operator to adopt these                  purchasers are reportedly international                requirements as Wisconsin, a junked
                                      standards as suggested voluntary                        buyers, some of whom have been linked                  vehicle can ‘‘live on’’ through a cloned
                                      compliance standards. While the                         to fraud and theft rings that purchase                 stolen vehicle, which will only cease
                                      standards cannot be mandated on any                     such vehicles for clean paper to use on                once NMVTIS is fully implemented.
                                      reporting entity, those entities that                   stolen vehicles in the U.S., DOJ also will                Comment: The Virginia Department of
                                      adopt the standards and report                          add to the requirements an indication                  Motor Vehicles expressed concern that
                                      voluntarily in a manner that is                         whether the vehicle is intended for                    the proposed rule seemed to encourage
                                      consistent with the standards will be                   export.                                                junk- and salvage-yard operators to
                                      providing a significant public benefit.                    Comment: The Nevada Department of                   submit data via FTP or facsimile that
                                         Comment: The National Salvage                        Motor Vehicles commented that by                       potentially would include personal
                                      Vehicle Reporting Program commented                     statute, Nevada requires wreckers and                  identifying information.
                                      that NMVTIS must support the                            salvage pools to apply and transfer their                 Response: DOJ encourages all
                                      electronic MCO process and should                       salvage titles, junk certificates, and non-            reporters to report electronically
                                                                                              repairable certificates within 10 to 30                whenever possible. In cases where
                                      serve as a catalyst for implementation of
                                                                                              days. Nevada suggested that these                      electronic reporting is not an option,
                                      the electronic MCO system nationwide.
                                         Response: DOJ is in favor of                         organizations should be exempt from                    DOJ will direct the operator to identify
                                      supporting an electronic MCO process                    reporting because the DMV already                      a reporting procedure to accommodate
                                      as a way of eliminating and preventing                  sends this data to NMVTIS.                             the situation. Regardless of the reporting
                                      fraud and reducing theft. In addition to                   Response: Junk and salvage yards,                   method, DOJ and the operator will
                                      NMVTIS, the use of the secure                           including salvage pools, are not                       ensure that all possible safeguard
                                      AAMVAnet communications network                         required to report data to NMVTIS if the               measures are taken, including secure
                                      for states would likely be necessary, and               state already reports the required junk-               FTP wherever possible.
                                                                                              and salvage-yard information to                           Comment: One commenter requested
                                      it would be AAMVA’s responsibility to
                                                                                              NMVTIS pursuant to this regulation.                    that DOJ require the operator to accept
                                      authorize its use for this purpose.
                                                                                                 Comment: One commenter asked                        junk- and salvage-yard data from any
                                      Junk Yards and Salvage Yards                            whether ‘‘the definitions of junk yard                 junk or salvage yard directly or through
                                                                                              and salvage yard, which include even a                 a third party on their behalf to minimize
                                      23. Salvage Pools
                                                                                              single individual, [are] a substantial                 administrative burden.
                                         Comment: Several law enforcement                     overstep?’’ Several consumer-protection                   Response: DOJ has provided the
                                      and related commenters strongly agreed                  organizations also suggested that, with                operator with flexibility in identifying
                                      with the assessment that Salvage Pools                  respect to the definition of ‘‘in the                  the specific methods of reporting to
                                      are one of the most significant sources                 business of,’’ junk and salvage yards                  NMVTIS. It is not in the system’s best
                                      used by criminal groups as a source of                  should be defined as any entity or                     interest for all required reporters to
                                      paperwork and as a way to fund their                    individual meeting the description in                  report directly into the system, due to
                                      operations. These commenters agree                      the definition that acquires or owns five              technical and business reasons. The
                                      that Salvage Pools must report vehicles                 or more salvage or junk automobiles                    operator is expected to identify three or
                                      to NMVTIS both when they receive                        within the preceding 12 months, which                  more different methods of transmitting
                                      vehicles for sale, and when they sell                   is analogous to other similar reporting                information to NMVTIS and will make
                                      those vehicles. These commenters                        standards.                                             this information available via its Web
                                      further noted that such salvage pools                      Response: DOJ modified the final rule               site, as will DOJ via www.NMVTIS.gov.
                                      have sophisticated technological                        consistent with the comment from the                      Comment: Several commenters have
                                      capabilities and should not have any                    consumer-protection organizations. The                 noted that, similar to insurance-carrier
                                      problem meeting the reporting                           qualifier of five or more vehicles is                  reporting, junk and salvage reporting of
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                                      requirements. Several of these                          taken from federal odometer law, and its               vehicle presence in inventory on a 30-
                                      commenters noted that in some cases,                    definition of ‘‘car dealers’’ from 49                  day basis leaves a significant amount of
                                      individuals purchase severely damaged                   U.S.C. 32702(2).                                       time for fraud and theft to occur. These
                                      units at or via these pools and then steal                 Comment: One commenter (CARS of                     commenters recommended that DOJ
                                      a similar make and model for cloning                    Wisconsin) argued that ‘‘information                   require reporting of not only presence in


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                                      inventory, but also disposition of the                  a VIN for every vehicle is nearly                      between NMVTIS and its users. In terms
                                      vehicle. The recommendations for the                    impossible. Both ISRI and the National                 of providing lenders and dealers with
                                      revised reporting timeline varied in the                Salvage Vehicle Reporting Program                      the ability to make corrections and
                                      recommendations from immediately to                     assert that such entities are at the ‘‘end             changes, DOJ notes that it has concerns
                                      several business days.                                  of the line’’ in handling end-of-life                  with authorizing any user other than a
                                         Response: The Anti-Car Theft Act                     vehicles, and almost always receive                    state motor vehicle administration or its
                                      defines the reporting timeline, and,                    vehicles from those who are required to                agents (where applicable) to make
                                      therefore, DOJ can only require                         report on the vehicle before it is crushed             corrections directly or changes to
                                      reporting on a monthly basis. DOJ does                  or bundled. Additionally, with scrap-                  NMVTIS data. However, DOJ directed
                                      strongly encourage all reporters to                     metal processors and shredders, there is               the operator to develop a process for
                                      report data as soon as possible or on a                 no possibility that the vehicle will be                reporting possible errors and requesting
                                      daily basis.                                            subsequently purchased for operation                   changes that may also be used by
                                         Comment: ASPA commented that                         on public roads by an unsuspecting                     lenders and dealers.
                                      ‘‘while ‘salvage pools’ were not                        consumer. However, cloning and
                                      included by Congress in the ‘Anti-Car                   destruction of stolen vehicles remain a                Responsibilities of the Operator of
                                      Theft Act of 1992’ as an entity with                    threat. For these reasons, DOJ created an              NMVTIS
                                      reporting requirements, the DOJ sweeps                  exception for reporting to NMVTIS in                   24. Consumer Access Methods
                                      our industry into the group which has                   cases where a scrap-metal processor or
                                      these reporting requirements. * * * The                                                                           Comment: One commenter argued
                                                                                              shredder confirms that the vehicle
                                      salvage pool industry wants to be                                                                              that ‘‘[t]he Web-based access should be
                                                                                              supplier reported the required data to
                                      helpful in combating vehicle theft, but                 NMVTIS. Scrap-metal processors and                     open to private individuals who wish to
                                      we want to insure that any reporting                    shredders that receive automobiles for                 check the status of a prospective
                                      requirements imposed on our industry                    recycling in a condition that prevents                 purchase.’’ And the NADA supported
                                      are reasonable, in light of the fact that               identification of the VINs need not                    the provisions in the proposed rule
                                      Congress did not specifically place                     report the vehicles to the operator if the             allowing dealers to access NMVTIS as
                                      reporting requirements on salvage                       source of each vehicle has already                     prospective purchasers, which is likely
                                      pools.’’                                                reported the vehicle to NMVTIS. In                     to help thwart motor vehicle-title fraud.
                                         Response: DOJ appreciates ASPA’s                     cases where a supplier’s compliance                    A consumer-advocate attorney
                                      declaration and will work to ensure that                with NMVTIS cannot be ascertained,                     commented that if this information
                                      reporting requirements on every                         however, scrap-metal processors and                    becomes widely and readily available,
                                      industry are reasonable. The reporting                  shredders must report these vehicles to                the vehicle-fraud industry will be
                                      requirements proposed for salvage pools                 the operator based on a visual                         significantly reduced.
                                      are the same requirements placed on                     inspection, if possible. If the VIN cannot                Response: Prospective purchasers
                                      salvage yards, which also handle                        be determined based on this inspection,                (including dealers who purchase
                                      salvage vehicles. Because a salvage pool                scrap-metal processors and shredders                   vehicles for resale) are required to have
                                      is in the business of acquiring                         may rely on primary documentation                      access to information necessary to make
                                      (constructively defined to include                      (i.e., title documents) provided by the                an informed purchase decision, and DOJ
                                      handling or controlling on behalf of)                   vehicle supplier.                                      will require that consumer access be
                                      salvage automobiles for resale, it fits                                                                        available by January 30, 2009.
                                      well within the statutory definition of                 Lenders and Automobile Dealers                            Comment: Experian Automotive
                                      salvage yards.                                             Comment: Iowa Attorney General                      argued that DOJ should not overlook the
                                         Comment: ASPA commented that                         Thomas J. Miller supported the DOJ                     significant costs involved in marketing
                                      because salvage pools generally serve as                proposal that lenders and auto dealers                 and distributing vehicle-history
                                      ‘‘agents’’ for insurance carriers, salvage              have access to NMVTIS in order to                      information, and suggested that these
                                      pools should only be subject to the                     further NMVTIS’s goals of reducing                     costs are beyond what the operator can
                                      reporting requirements of insurance                     crime, especially fraud.                               provide.
                                      carriers as they relate to the age of                      Response: Commercial consumers                         Response: These costs are significant.
                                      automobile to be reported.                              will have access to NMVTIS.                            Under the model of third-party portal
                                         Response: DOJ disagrees with this                       Comment: Assurant Solutions argued                  providers (as opposed to a single,
                                      recommendation because salvage pools                    that lenders and dealers need not only                 operator-provided consumer access
                                      are included in the definition of salvage               the ability to query NMVTIS for                        model), the third parties, not the
                                      yards, as opposed to insurance carriers.                information, but also need the ability to              operator or DOJ, will bear the most
                                         Comment: ISRI and the National                       communicate and electronically                         significant marketing and distribution
                                      Salvage Vehicle Reporting Program both                  exchange motor vehicle information to                  costs. It is partly because of these costs
                                      suggested an exemption from reporting                   achieve greater efficiencies in title                  that the third-party model was selected.
                                      for vehicles acquired from an entity that               processing, and to limit the number and                   Comment: Experian Automotive
                                      is obligated to meet the reporting                      type of paper-based transactions as a                  argued that NMVTIS is not chartered to
                                      requirements of the Act and rule. They                  strategy to significantly decrease fraud.              provide the level of information and
                                      argued that this exemption is necessary,                Specifically, the commenter suggested                  support that Experian or other private
                                      not because of the burden of double                     that lenders and dealers communicate                   vehicle-history report companies
                                      reporting, but because, in the case of the              errors or changes to NMVTIS.                           provide.
                                      scrap-metal-recycling industry, many                       Response: Communication to and                         Response: DOJ has no intention of
                                      vehicles are acquired after being                       from NMVTIS is currently facilitated                   competing with private vehicle-history-
                                      flattened or crushed to an extent that a                through the use of the current operator’s              report companies. Those private
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                                      VIN cannot be reasonably obtained.                      secure and proprietary network,                        services possess data that NMVTIS does
                                         Response: Many scrap-metal                           AAMVANet. This network is not a                        not intend to provide (e.g., vehicle
                                      processors and shredders do receive                     component of NMVTIS per se, and                        repair and service histories). NMVTIS is
                                      flattened and bundled vehicles and                      therefore the operator governs use of                  simply intended as a government-
                                      vehicle parts. In those cases, recording                this network for communication                         sponsored service to verify the title and


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                                      brand history of a vehicle reliably,                    arise from a report submitted by a junk                   Comment: The NADA commented on
                                      thereby preventing fraud and theft.                     or salvage yard or insurance carrier.                  the importance of providing access to
                                         Comment: Several motor vehicle                          Comment: One commenter noted that                   NMVTIS information for the wholesale
                                      administrations and one services                        ‘‘[w]ith the expected low                              vehicle market: ‘‘If wholesale auctions
                                      organization argued that the operator                   implementation costs for this consumer                 have access to NMVTIS data,
                                      should not be permitted to sell bulk                    system, there are major benefits to                    fraudulently titled vehicles could be
                                      vehicle data from any state, which                      centralizing the system within a                       easily flagged and reported to law
                                      would effectively allow private                         government Web site in order to reduce                 enforcement officials expeditiously and
                                      information resellers to bypass                         further consumer misinformation. In the                efficiently. * * * Transparency at the
                                      contractual agreements and seek the                     alternative, a detailed scheme                         wholesale level will only help to deter
                                      state’s database from the NMVTIS                        prohibiting third-parties from charging                motor vehicle title fraud and enhance
                                      operator. Additionally, at least one state              certain fees for accessing the system’’                the NMVTIS system.’’
                                      motor vehicle administration suggested                  would be desirable. The commenter                         Response: DOJ agrees and notes that
                                      that the operator should conduct regular                further emphasized the importance of                   enabling this type of access also will
                                      program and security audits and should                  regulating third-party involvement.                    assist in generating revenues to sustain
                                      screen potential access providers.                         Response: Third-party involvement                   the system and possibly offset or
                                         Response: The operator will not sell                 will be regulated and monitored by the                 eliminate state fees. So long as this
                                      the NMVTIS central file or any                          operator and DOJ. DOJ believes that this               access is on an inquiry basis, and
                                      particular state’s dataset (i.e., all VINs              is the most sensible manner of                         NMVTIS data is not sold in bulk as
                                      from a particular state). All information               implementing consumer access. DOJ has                  previously described, DOJ will
                                      provided will be in response to VIN                     established www.NMVTIS.gov as a                        authorize and direct the operator to
                                      queries, except in cases of law                         central source of reliable information                 provide such access to dealers and other
                                      enforcement queries, which could                        concerning NMVTIS, providers,                          commercial consumers, consistent with
                                      include searches of NMVTIS by                           requirements, etc.                                     the Anti-Car Theft Act.
                                      reporting entity name, names associated                                                                           Comment: Several commenters
                                                                                                 Comment: One commenter suggested
                                      with reports, location, etc. Data                                                                              expressed concern that the operator
                                                                                              that the operator be required to establish
                                      provided to NMVTIS will remain in the                                                                          must provide robust security protections
                                                                                              a data-quality plan that may rely on
                                      possession of the operator and any                                                                             for the information to be included in
                                                                                              technological tools to scan for and flag
                                      contractors supporting the operator (i.e.,                                                                     NMVTIS.
                                                                                              errors in VINs that may be reported to                    Response: DOJ will ensure that the
                                      data center hosting or backup).
                                                                                              the system.                                            operator relies on industry-standard
                                      Consumer-access providers are
                                      restricted from downloading and storing                    Response: DOJ agrees with this                      security and related protections,
                                      bulk NMVTIS data for resale or reuse                    comment and will direct the operator to                including any relevant policy
                                      and must use data in accordance with                    adopt all reasonable strategies and                    recommendations of the Global Justice
                                      the Anti-Car Theft Act. Any entity using                techniques for ensuring data quality.                  Information Sharing Initiative that relate
                                      NMVTIS data in a manner inconsistent                       Comment: In response to DOJ’s                       to security and privacy protections of
                                      with these regulations may not be                       request for comments on methods of                     information systems used in the
                                      covered under the Act’s immunity                        NMVTIS access, several commenters                      criminal-justice environment.
                                      provisions. The operator shall conduct                  agreed that third-party providers may be                  Comment: ISRI argued that DOJ’s
                                      regular reviews and audits of security                  better suited for handling information                 authorization for the operator to identify
                                      arrangements and program compliance                     access than a single provider. The                     third-party organizations to receive and
                                      and shall work with DOJ to establish                    Minnesota Department of Public Safety                  provide data to NMVTIS in lieu of
                                      access-provider standards to ensure that                argued, however, that private third                    allowing all required entities to report
                                      the access providers are professional                   parties should not be permitted to have                directly to NMVTIS is problematic. ISRI
                                      and reputable, and that information and                 access to NMVTIS data in the manner                    believes that allowing third-party
                                      access are provided according to the                    proposed, with little oversight, or to                 organizations to handle the information
                                      Act.                                                    generate profit from the data contributed              creates a security risk, provides an
                                        Comment: One commenter argued                         by the states. Additionally, the                       opportunity for market participants to
                                      that ‘‘[t]he responsibilities of the                    commenter stated that this would                       access confidential business
                                      operator of the NMVTIS system are                       violate the provisions of the Anti-Car                 information, and could create a cost
                                      confusing in subsection (b)(3) and (b)(5),              Theft Act that restrict the operator from              burden for reporting entities. ISRI
                                      [as] they appear to have the same                       taking a profit from its role as the                   recommended additional security
                                      meaning and impact.’’                                   NMVTIS operator.                                       protections and restrictions that would
                                        Response: These subsections describe                     Response: The third-party providers                 prevent these potential problems.
                                      what the operator of NMVTIS is                          are not given open access to NMVTIS                       Response: The current operator’s
                                      statutorily required to provide to users                data. Rather, they are only provided                   information architecture is not designed
                                      of the system, including information                    access to that data that the Anti-Car                  to allow hundreds, and possibly
                                      regarding a vehicle’s current or past                   Theft Act requires to be available to                  thousands, of reporting entities to report
                                      status as a junk or salvage vehicle. In                 prospective purchasers. Additionally,                  directly to NMVTIS. In light of this, and
                                      other words, NMVTIS will make                           the operator will maintain much more                   because many of the covered reporting
                                      information about vehicle history                       than ‘‘little’’ oversight over these                   entities are already reporting to third-
                                      available to consumers, state titling                   contractors. Last, while the Anti-Car                  party entities, such as the Insurance
                                      agencies, law enforcement, and others                   Theft Act restricts the operator from                  Services Office (ISO), allowing a third
                                      through an electronic (e.g., Web-based)                 making a profit, the Anti-Car Theft Act                party to receive and provide the
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                                      inquiry. Although subsections (b)(3) and                provides no restrictions on third-party                required information is effective and
                                      (b)(5) overlap somewhat, it is possible                 contractors, including states that wish to             reduces burden on reporting entities by
                                      that the operator may have information                  be a portal provider. DOJ will move                    allowing their current reporting to be
                                      indicating that a vehicle has been                      forward with a third-party provider                    used in NMVTIS compliance. DOJ will
                                      branded a junk or salvage that did not                  approach to consumer access.                           require the operator to designate at least


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                                      5762               Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations

                                      three third-party organizations for                     AAMVA with federal funds of nearly                     others to ensure that appropriate notices
                                      reporting purposes, so that covered                     $300,000, and AAMVA expects to                         and disclaimers are in place.
                                      entities can choose which third party                   receive approximately $1,500,000 in                       Comment: One commenter noted the
                                      they are most comfortable with.                         user fees by end of year 2008. Much of                 need for proactive efforts by DOJ and
                                      Additionally, any third-party                           these funds are spent on other activities,             the operator in the areas of public
                                      organization that develops a reporting                  including and especially support for                   awareness and education on NMVTIS
                                      application at the operator’s request will              currently participating states. DOJ                    and the issues it addresses.
                                      agree to terms and conditions restricting               expects to work with AAMVA on cost                        Response: DOJ will work with the
                                      the sale or use of the data, consistent                 controls and to intervene to ensure that               operator and the various stakeholder
                                      with the Anti-Car Theft Act.                            the basic connection is established as                 communities to develop and distribute
                                         Comment: Auto Data Direct, Inc.                      required by the court. The Anti-Car                    information through www.NMVTIS.gov
                                      suggested creating a policy to prevent                  Theft Act specifies that NMVTIS will                   and other means.
                                      free dissemination of prospective-                      not depend on federal funds and is to                     Comment: Several consumer-
                                      purchaser-inquiry data by any entity                    be supported by user fees.                             advocacy organizations argued that
                                      and suggested charging all consumer-                       Comment: The National Salvage                       consumers should be provided access
                                      access providers the same fees in order                 Vehicle Reporting Program commented                    either at no cost or nominal cost without
                                      to maintain a level playing field.                      that commercial consumers such as auto                 onerous access requirements and
                                         Response: DOJ agrees and will direct                 dealers would desire the ability to                    allowed to make multiple inquiries for
                                      the operator to ensure that all consumer-               inquire on multiple VINs at the same                   a fixed price. Similarly, these
                                      access portal providers are charged the                                                                        organizations contended that consumers
                                                                                              time in a ‘‘batch’’ format at an
                                      same fees for NMVTIS information,                                                                              who have completed vehicle purchases
                                                                                              appropriate cost. Consumer-advocate
                                      notwithstanding volume discounts.                                                                              should be able to verify their vehicles’
                                                                                              attorney Bernard Brown commented
                                      Consumer-access providers, however,                                                                            history, and that the Department should
                                                                                              that ‘‘such broad access to NMVTIS data
                                      are currently not restricted in what they                                                                      take into account consumers’ lack of
                                                                                              should be provided for all of these
                                      can charge the end user (prospective                                                                           access to credit and the ‘‘digital divide.’’
                                                                                              businesses and entities to level the                      Response: DOJ agrees that consumers
                                      purchaser) for an inquiry, as DOJ has                   playing field’’ in the competitive market
                                      determined that the ‘‘market’’ can                                                                             should be able to access NMVTIS at
                                                                                              place. Other consumer-advocacy                         nominal cost, that there should be no
                                      determine this better than any artificial
                                                                                              organizations commented that such                      onerous access requirements, and that
                                      caps or minimums.
                                                                                              commercial consumers should not be                     any consumer—including those who
                                         Comment: The Minnesota Department
                                      of Public Safety commented that section                 permitted to provide the NMVTIS                        recently purchased a vehicle and those
                                      30504 of the Act requires DOJ to                        vehicle history to other consumers                     who may be considering purchasing a
                                      prescribe by regulation the procedures                  without also notifying such consumers                  vehicle in the future—should be
                                      and practices to facilitate reporting to                of the NMVTIS disclaimers and                          permitted access. DOJ will take into
                                      NMVTIS. The commenter suggests that                     warnings.                                              account the comments on pricing
                                      DOJ is merely placing this burden on                       Response: Similar to the need for                   structures and the issues of credit access
                                      the operator to circumvent the DOJ’s                    central-issue states to inquire against                and ‘‘digital divide’’ while working with
                                      own responsibilities.                                   multiple VINs at the same time,                        the operator to establish the consumer-
                                         Response: DOJ strongly disagrees with                commercial consumers should have the                   access provisions.
                                      this assessment. Requiring that these                   same service available at a cost
                                      procedures, which are subject to change                 commensurate with the service. Because                 25. Operator Accountability
                                      and modification as technology                          DOJ is directing the operator to make                    Comment: Several state departments
                                      advances, be published in federal                       such a batch-inquiry process available                 of Motor Vehicle Administration argued
                                      regulations is unwise and inefficient                   for central-issue states, this same service            that the operator must provide a
                                      and would only serve to restrict the                    should be available to dealers and other               reasonable and timely process for
                                      states and other covered participants                   commercial consumers. DOJ points out,                  correction and amendment of records
                                      from working with the operator to                       however, that these searches will                      that contain errors, and that the operator
                                      improve reporting practices. It is in                   require a VIN for each vehicle to be                   must take responsibility for notifying
                                      everyone’s best interest that such                      searched. That is, no bulk data will be                users of the erroneous information.
                                      detailed procedures are not codified in                 made available to any consumers. DOJ                   Another asked who would be
                                      regulation beyond the procedures and                    will require the operator to require all               responsible for working with insurance
                                      practices that are described herein (i.e.,              third-party portal providers to make a                 carriers and junk and salvage yards
                                      third-party reporting, reporting via                    NMVTIS Notice and Disclaimer                           when their data is questionable or
                                      batch upload or realtime, etc.).                        available to all consumers accessing the               incorrect. The commenter also asked
                                         Comment: AAMVA asserted that it                      system. Additionally, DOJ has                          how the data would be corrected.
                                      cannot support the development and                      collaborated with the Federal Trade                      Response: DOJ agrees that an error-
                                      implementation of a third-party                         Commission on its Used Car Buyers                      verification and correction process is
                                      reporting mechanism to support                          Guide regulations to ensure that the FTC               vital to the success of the program.
                                      insurance, junk, and salvage reporting.                 is aware of NMVTIS and the                             However, in some circumstances, it may
                                      AAMVA reports that to establish this                    accompanying notice and disclaimer.                    be impossible to fully verify the facts of
                                      connection with the required two or                        Comment: Several commenters,                        some situations (e.g., vehicles disposed
                                      three third-party organizations would                   including the National Salvage Vehicle                 of). The operator will be required to
                                      require $1 million to $1.5 million in                   Reporting Program, stated that the                     work with data reporters to identify and
                                      development costs and up to $400,000                    inclusion of specific disclaimers for                  resolve potential data errors, to note
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                                      in annual operating costs from federal                  limitations to the data reported by the                within the central file any discrepancies
                                      funds to implement this provision.                      system is essential for consumer                       reported or the findings of any
                                         Response: DOJ is under court order to                protection purposes.                                   investigations of errors, and to notify
                                      establish this mechanism by March 31,                      Response: DOJ agrees and will work                  those who accessed the information of
                                      2009. DOJ has recently provided                         collaboratively with the operator and                  any confirmed erroneous information.


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                                      No entity, including the operator, may                  active role in overseeing the                          and the operator? Because these
                                      remove any data reported by another                     administration of the system. DOJ also                 questions are obvious and because
                                      organization, and only state motor                      has added requirements for the operator                others have already asked questions
                                      vehicle-title administrations can                       to publish an annual report to include                 about the same issues, I recommend that
                                      unilaterally change their data, which                   revenues and expenses by category. DOJ                 DOJ create some kind of governance
                                      will update in NMVTIS. Insurance                        leaves operator labor cost structures up               model to oversee the project. The
                                      carriers and junk- and salvage-yard                     to the operator to determine what is                   current operator has close ties to the
                                      operators do not have access to modify                  most advantageous and cost-effective                   states, but other groups required to
                                      data in the system, but are required to                 while complying with DOJ financial                     participate don’t have a seat at the table.
                                      notify the operator immediately of                      requirements. DOJ also has added a                     A board of governors that has people
                                      erroneous information that they                         requirement (should DOJ not be the                     from the groups that use the system or
                                      previously reported and to immediately                  operator) for an annual independent                    need the system is definitely needed.’’
                                      report corrected information, which will                audit of NMVTIS revenues and                           Similarly, one state motor vehicle
                                      be flagged or noted in the system as an                 expenses, the results of which will be                 administration noted that ‘‘the proposed
                                      update. Although the erroneous                          publicly available. DOJ also may                       rules and the options AAMVA is willing
                                      information may be retained in the file,                terminate the operator status of any                   to provide do not match. The lack of
                                      it will be noted as corrected via update,               organization (if not the Department of                 flexibility on the part of AAMVA results
                                      and the updated, correct information                    Justice) for cause, should that be                     in many options set forth in the
                                      will be available. In releasing insurance,              necessary. DOJ also has coordinated                    proposed rule not actually being
                                      junk, or salvage information, the                       with another federal agency, the Office                available to the states.’’ The California
                                      operator may include the name of the                    of the Inspector General (OIG), which                  motor vehicle administration
                                      reporting organization and its contact                  recently completed audits of the                       commented that a board or commission
                                      information, so that anyone questioning                 operator’s financial recordkeeping and                 made up of state representatives, DOJ,
                                      the validity of the report can go directly              practices and will continue to monitor                 and the operator should be engaged to
                                      to the source of the information. It is                 these issues. DOJ also notes that the                  discuss and agree upon the
                                      important to point out that while                       GAO study was completed many years                     requirements relating to consumer
                                      NMVTIS is authorized to serve as a data                 ago, and that AAMVA has undergone                      access. Other commenters also
                                      repository and data provider, NMVTIS                    many changes since that time.                          recommended the establishment of a
                                      was not expected to serve as an                            Comment: One commenter asked ‘‘to                   steering committee to govern operation
                                      arbitrator of questionable or even                      what extent is the potential for                       of NMVTIS outside of the rules.
                                      conflicting information. It is the                      corruption of those who manage the                        Response: It is DOJ’s responsibility to
                                      responsibility of the data reporters                    system a concern? What internal                        oversee the program and make or
                                      (including states and insurance, junk,                  controls will be implemented? Is this                  approve all policy decisions regarding
                                      and salvage organizations) to provide                   why access provided by the operator to                 the implementation of NMVTIS. To
                                      correct information, and to provide                     users of NMVTIS must be approved by                    ensure input from all stakeholders, the
                                      updates and corrections as soon as they                 the Department of Justice? § 25.53(d).’’               Department may establish a NMVTIS
                                      are identified. Although the operator                      Response: DOJ has no basis for any                  Advisory Board to make
                                      should not remove previously reported                   concerns of corruption. The internal                   recommendations to DOJ regarding the
                                      information, the operator can add a                     controls in place to protect the integrity             system and its operation.
                                      ‘‘note’’ to the record regarding the                    of the system are many and varied,                        Comment: Several commenters
                                      corrected information, along with the                   including technological controls,                      recommended that DOJ publish the
                                      corrected information. Additionally,                    transparency, and oversight from a                     NMVTIS system budget on an annual
                                      DOJ added a section to the regulation                   variety of stakeholders.                               basis for review as a part of an annual
                                      (section 25.57) that provides for error                    Comment: One commenter noted that                   report, and another commented that the
                                      correction in exceptional circumstances.                ‘‘[t]he estimates in the regulations give              operator should be required to provide
                                         Comment: One commenter stated that                   the impression that the operator doesn’t               quarterly reports on the number of
                                      ‘‘[t]he GAO report stated that there have               know exactly how much the system                       vehicles reported on during each
                                      been problems with funding NMVTIS                       costs to operate[.] The estimates                      quarter, along with dispositional
                                      through AAMVA, including: excessive                     provided all seem pretty high. Why does                information, in order to give better
                                      consultant fees; lack of documentation                  it cost so much to operate the system?                 insight into the effectiveness and
                                      for payments; failing to maintain                       Is DOJ sure that the operator has the                  compliance rates within the system.
                                      records supporting financial reports;                   experience and ability to run the system               Another state motor vehicle-title
                                      and failing to adequately administer                    well?’’                                                administration recommended that the
                                      contractual arrangements with the                          Response: DOJ is very concerned                     operator be required to have procured
                                      states. GAO report at 10. How has the                   about current system costs. DOJ will                   an independent audit of the fees
                                      track record for management of NMVTIS                   continue to monitor and encourage cost-                generated and expenses incurred on an
                                      improved since then? What type of                       saving options and will look to the                    annual basis.
                                      financial oversight is expected for the                 annual independent audits to inform the                   Response: DOJ will require the
                                      system? And what type of compensation                   operator and DOJ of additional cost-                   operator (if not the Department of
                                      structure does NMVTIS propose for its                   saving strategies. DOJ notes that the                  Justice) to prepare and publish
                                      labor costs?’’                                          current operator, AAMVA, already                       electronically a detailed annual report
                                         Response: Because the current                        administers other federal-state systems                that includes many of these items, and
                                      operator (AAMVA) has received grant                     successfully. DOJ will continue to                     DOJ also will require an annual
                                      funding from DOJ, the operator is                       encourage AAMVA to seek cost savings                   independent audit of NMVTIS revenues,
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                                      responsible for complying with all grant                by outsourcing technological solutions                 costs, expenditures, and financial
                                      requirements, including financial and                   as appropriate and by adopting current                 controls and practices, which shall also
                                      programmatic requirements relating to                   and less-costly technological solutions.               be available.
                                      contracting, documentation, and                            Comment: One commenter asked                           Comment: The California motor
                                      performance. Also, DOJ will play an                     ‘‘[h]ow will DOJ oversee the program                   vehicle administration suggested that


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                                      DOJ should identify its responsibility                  know fees in advance, which would                      implement key aspects of NMVTIS in
                                      for oversight of the system and operator                assist in budget planning and requests.                accordance with a federal court’s order
                                      performance, and that specific                          Finally, a transaction-based fee structure             without critical funding. For these
                                      performance measures should be                          would require the operator of NMVTIS                   reasons, DOJ must resolve this issue
                                      established along with a minimum-                       to revise its billing process and would                now. DOJ agrees that all expenses and
                                      performance period such as a year. The                  likely be more costly to implement. For                revenues for NMVTIS be made publicly
                                      commenter further suggested that the                    these reasons primarily, DOJ has                       available annually.
                                      review of operator performance should                   determined that state user fees will be                   Comment: More than one commenter
                                      include solicited comments from the                     based on the number of motor vehicles                  argued that ‘‘[c]harging a ‘user fee’ to a
                                      various system stakeholders.                            titled or registered as reported by the                state for the information they are
                                        Response: As previously stated in                     U.S. Department of Transportation’s                    required to upload to the system is
                                      these comments, the Anti-Car Theft Act                  Federal Highway Administration                         simply unfair. If anything, the states are
                                      provides that NMVTIS is a DOJ system                    through its Highway Statistics Program                 providing this information as a courtesy
                                      over which DOJ has sole responsibility                  and reports. With full state participation             to enable the NMVTIS process to
                                      and control. As necessary, DOJ will                     mandated beginning January 1, 2010,                    function. As such, a state should not be
                                      enter into an Memorandum of                             the operator will invoice all states                   charged a fee for providing data. Rather,
                                      Understanding (MOU) with the operator                   regardless of their level of participation.            anyone, including a state, which uses
                                      that addresses these issues in greater                  State fees shall be reviewed biennially                the system to process requests, should
                                      detail.                                                 and announced to the states as soon as                 pay fees for system use.’’
                                        Comment: Several commenters noted                     possible, preferably more than one year                   Response: The user fee is not charged
                                      the need to require the operator to                     in advance of becoming effective.                      to a state solely for sharing its data with
                                      provide information to reporters and                       Comment: Experian Automotive                        the system and other states. The user
                                      others on its compliance and the                        commented that some aspects of the                     fees are assessed in light of the states’
                                      compliance of others in the program.                    proposed rule could be read to allow the               use of the system overall as is required
                                        Response: DOJ will work with the                      establishment of a fee beyond what                     by law, including making inquiries into
                                      operator to establish the specific                      would be reasonable for the records,                   the system, relying on the system to
                                      compliance monitoring, management-                      which would be essentially the same as                 maintain a national brand history, and
                                      control functions, and administrative-                  prohibiting the disclosure of                          facilitating the secure exchange of title
                                      dashboard features that will be required.               information outright.                                  information and updates between states
                                      In its annual report, the operator will                    Response: The current inquiry fee                   to protect the states’ consumers.
                                      provide compliance data and                             used in consumer-access pricing is                     Additionally, all states receive a level of
                                      information on which states, insurance                  based on market assessments, and with                  added protection from fraud via
                                      carriers, and junk- and salvage-yard                    volume discounts included, has been                    participation by other states.
                                      entities are reporting to the system and                effective in securing consumer-access                     Comment: The State of South Carolina
                                      participating, if available.                            provider-organization agreements.                      Department of Motor Vehicles suggested
                                                                                              However, DOJ will carefully monitor                    that ‘‘states could be charged for
                                      User Fees                                               consumer access pricing to ensure that                 inquiries prior to the issuance of a new
                                                                                              the average consumer is not ‘‘priced                   jurisdictional title based on an out-of-
                                      26. Per Transaction
                                                                                              out.’’                                                 state title; however, states should be
                                         Comment: Several commenters noted                       Comment: AAMVA and the States of                    reimbursed for these charges based on
                                      that the user fees should be based on a                 California, New York, and Alaska                       the number of third-party inquiries that
                                      ‘‘per transaction’’ basis: ‘‘The fee                    commented that user fees based on the                  the system receives. If such a model is
                                      structure based on a pro-rata share to                  number of vehicles registered in the                   not developed, then states will take a
                                      states based on the number of registered                state are the preferred basis, as this will            double hit: the cost of full participation
                                      vehicles is not an equitable structure.                 enable states to determine the fees in                 in the program, as well as the loss of
                                      States put information into the system                  advance, which will support budget                     revenue resulting from third parties
                                      and all the states involved in the system               planning. At the same time, states such                being able to obtain current
                                      benefit from this. Under a pro-rata                     as Texas, Oregon, South Carolina, and                  jurisdictional data through alternative
                                      system, states that have a low number                   Hawaii have recommended a fee                          means.’’
                                      of title transfers but a high number of                 structure other than the number of                        Response: Regardless of the fee
                                      vehicles ha[ve] to pay in more for the                  registered vehicles because of the high                model, DOJ has taken steps with the
                                      system for marginal benefit. Other                      number of registered vehicles in some                  operator of the system to ensure that
                                      states, for example states that act as                  states. The State of California                        impact on states is minimized. In fact,
                                      dealer hubs and have a large number of                  recommended that the fees be the                       the model that South Carolina proposes
                                      title transfers but a small number of                   subject of a separate, future rulemaking,              is very similar to the model being
                                      registered vehicles[,] would be                         that the operator be required to make its              considered by DOJ and the operator.
                                      benefitting disproportionately. For those               expenses publicly available, and that a                The model DOJ is proposing for
                                      reasons, the fees should be applied on                  stakeholder group comprising the                       generating revenue includes a
                                      a per transaction basis.’’                              operator, DOJ, and states provide input                component designed to ‘‘point’’
                                         Response: Several commenters,                        into the fees.                                         consumers to the full title history in the
                                      including state motor vehicle-title                        Response: DOJ agrees with AAMVA                     state of record, thereby potentially
                                      administrations, noted that fees based                  and several states in making the basis                 generating additional revenues for the
                                      on a ‘‘transaction’’ basis could serve as               for state fees the number of vehicles                  state, and the model includes a strategy
                                      a disincentive for states to participate                registered or titled. DOJ cannot defer                 of using revenue to cover system
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                                      and to make NMVTIS inquiries, which                     rulemaking on fees because the operator                operational costs as well as offsetting
                                      would leave consumers and others                        has indicated extensively that funding                 state user fees. Once system operational
                                      vulnerable. Additionally, several                       for NMVTIS is critical. In fact, in the                costs are covered, DOJ anticipates
                                      commenters noted that fees based on a                   operator’s public comments on this rule,               offsetting or eliminating state fees
                                      pro rata basis provided the ability to                  it acknowledges that it cannot                         entirely with revenues generated by the


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                                      system. Should NMVTIS ever reach the                    should not be charged for assisting the                   Comment: The State of New York
                                      point where an unexpected surplus of                    DOJ.’’                                                 Department of Motor Vehicles
                                      user fee revenue exists, DOJ could direct                  Response: States are not charged for                commented that a transaction-based fee
                                      the operator to reduce user fees the                    simply submitting data to NMVTIS.                      could serve as a disincentive to states to
                                      following year or could use the funds to                States are required to use NMVTIS for                  query the system often. The state further
                                      support state upgrades to motor vehicle                 inquiries prior to issuing new titles for              commented that a flat fee may be more
                                      title information systems. This latter use              out-of-state vehicles, and NMVTIS can                  effective.
                                      of funds would be directed by DOJ                       provide real-time updates and                             Response: DOJ appreciates this input
                                      exclusively.                                            corrections as well as a secure method                 and assumes that the commenters’
                                         Comment: The State of Illinois motor                 of sharing title information between                   reference to a ‘‘flat fee’’ could include a
                                      vehicle administration commented that                   states. In fact, for the 13 states currently           tiered fee structure, such as what is in
                                      in order for NMVTIS to be effective,                    online, 45 million messages or                         place today, as this results in a flat fee
                                      NMVTIS should purchase vehicle-                         exchanges have been processed by                       for the states in each tier.
                                      history data from the state, ‘‘mark up’’                NMVTIS, and the State of California has                   Comment: One commenter noted that
                                      the price of the data, and sell the data                commented that NMVTIS is an ‘‘integral                 ‘‘[w]e remain convinced that if this is a
                                      to third parties. Illinois suggested that               part of state operational activities,’’                program that is as effective as it is
                                      ‘‘with this model, everyone wins,’’ and                 demonstrating that NMVTIS does                         pronounced to be, if it will truly
                                      that ‘‘consumers win because they can                   provide services to the states. The                    accomplish all of the goals it is said to
                                      rely on the complete, consistent, and                   purpose of NMVTIS is not to assist DOJ,                have, then it should be fully funded and
                                      efficient flow of information about                     and DOJ has limited use for the data in                supported by the Department of Justice.
                                      motor vehicles.’’                                       NMVTIS. NMVTIS is a service to states                  Otherwise, it should be funded by fees
                                         Response: While this concept may be                  that provides greater consumer                         charged for those states, individuals and
                                      appealing to some, the concept has                      protection, reduces crime, and can                     organizations who request data from the
                                                                                              improve titling process efficiencies, all              system, based on a transaction fee as
                                      several major flaws. First, the Anti-Car
                                                                                              three of which ultimately reduce costs                 determined by AAMVA to sustain the
                                      Theft Act does not authorize or even
                                                                                              to the states overall as well as to                    system. If that is not possible and the
                                      suggest that DOJ should purchase state
                                                                                              consumers.                                             DOJ will not fund it, it should be
                                      data. Had this been contemplated by
                                                                                                                                                     cancelled.’’
                                      Congress, funds would have to have                         Comment: One commenter noted that                      Response: The Anti-Car Theft Act
                                      been appropriated or at least authorized                ‘‘the Department of Justice does possess               explicitly states that NMVTIS should
                                      to make the purchases. Additionally,                    a legitimate interest in incentivizing full            not be dependent on federal funds for
                                      government agencies are not in a                        state participation in NMVTIS.’’ All                   operation. DOJ has awarded over $15
                                      position to engage in speculative                       states receive a benefit from NMVTIS.                  million to NMVTIS and participating
                                      purchases. Consumers would not win                      ‘‘Title washing and rebranding of                      states, in addition to the funds awarded
                                      under this scenario because they would                  vehicles remain a national problem, not                by the Department of Transportation
                                      be left to pay high prices for vehicle-                 somehow confined merely within state                   prior to 1996. Since 1992, no more than
                                      history information, which many cannot                  borders. Providing information to                      $2 million has been collected in user
                                      afford and should not have to do to be                  NMVTIS allows law enforcement                          fees by the operator. DOJ will comply
                                      protected. Last, this is not what is                    agencies to confront crimes that may                   with the Anti-Car Theft Act in requiring
                                      required under the Anti-Car Theft Act.                  have originated or affected states                     a system of user fees to support system
                                         Comment: The State of California                     outside of their jurisdiction.’’                       development, operation, and
                                      recommended that the states be charged                     Response: DOJ agrees with this                      maintenance. Because the Anti-Car
                                      a flat fee for participation that would                 comment.                                               Theft Act requires that DOJ implement
                                      cover NMVTIS operating expenses, and                       Commenter: One commenter                            the system so that it is sustained by user
                                      that all revenues generated from                        expressed disappointment regarding                     fees, DOJ has no ability to ‘‘cancel’’ the
                                      consumer access be returned to the                      state concerns over user fees and system               program.
                                      states.                                                 costs and recommended that DOJ
                                         Response: DOJ believes that, based on                pursue enforcement against non-                        27. Tier Structure
                                      the arguments presented by the states in                participating states.                                     Comment: Several commenters,
                                      response to the proposed rule, there is                    Response: DOJ appreciates the                       including AAMVA, noted that a tiered
                                      no equitable way to charge a flat fee due               concern and will monitor state                         structure is the most workable structure
                                      to variances in the number of vehicles                  compliance with the Anti-Car Theft Act                 from a budgeting perspective, given that
                                      in the states, number of title                          and the NMVTIS rules.                                  this type of basis or structure will lessen
                                      transactions, number of out-of-state                       Comment: One commenter noted that                   the need for annual changes to fees,
                                      transfers into the states, etc. DOJ                     the fee structure should be based on the               which are unworkable for states with
                                      believes that the fees must be based on                 activities generating the most costs,                  biennial budgets. However, some states,
                                      a factor that is correlated to a state’s                such as storing vehicle data, performing               such as Oregon, Virginia, Alaska,
                                      required use of the system. In terms of                 verifications, etc.                                    Minnesota, and others, noted that a non-
                                      returning revenues generated from                          Response: DOJ agrees that the fees                  tiered structure is preferred.
                                      consumer access to the states, this is not              should match the costs of the system. In                  Response: DOJ appreciates this input
                                      too dissimilar to what DOJ has                          asking for comments on the fee                         and has elected to keep the tier structure
                                      proposed—offsetting state fees                          structure, however, DOJ was attempting                 in place. While there is still disparity
                                      (potentially entirely) with revenues                    to solicit input from the field regarding              between small and large states, and
                                      from consumer access once system                        the most equitable manner of                           between those states that have
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                                      operating costs are covered.                            developing the fees and applying them                  significant differences in the number of
                                         Comment: One commenter stated that                   to all states. As for costs, the majority of           titled vehicles, the tiered structure does
                                      ‘‘states should not be charged simply for               current expenses are for supporting                    help in reducing disparities between
                                      submitting their title data to NMVTIS.                  online states and states in the process of             states of similar size. Additionally, the
                                      States that choose to use NMVTIS                        implementation and data storage.                       tier structure allows the per-vehicle


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                                      basis fee structure to remain relatively                noted that ‘‘paying for the privilege of               rule requires the operator to issue
                                      stable, rather than fluctuating                         participating * * * is patently unfair                 invoices and charge users of the system
                                      constantly, and because it acts as a                    and simply ludicrous.’’ Another                        a user fee based on system operating
                                      stabilizer, it results in a stable fee that             commenter stating the same conclusion                  costs and other factors that affect the
                                      states can budget for appropriately. Last,              described the system as ‘‘an unfunded                  costs, such as necessary upgrades or
                                      the tier structure is the structure that the            mandate where the particular costs to                  enhancements. Payment of the user fee
                                      AAMVA Board has adopted as a                            states are vague, and the total costs ill-             is required for compliance with Federal
                                      workable method for establishing fees.                  defined.’’ The State of Texas                          law.
                                         Comment: AAMVA commented that                        commented that this would not                             Comment: One commenter noted that
                                      in addition to retaining the tiered fee                 represent a true ‘‘user fee,’’ and the State           all users of the system should be
                                      structure, DOJ should modify the final                  raised the possibility of ‘‘constitutional             charged user fees, including entities
                                      rule to allow changes to the fee structure              problems’’ in paying such a fee.                       reporting data.
                                      to be determined through a mutual                          Response: DOJ disagrees with each of                   Response: At this time, DOJ is not in
                                      agreement between DOJ and the                           these comments. Because all states are                 favor of this recommendation because of
                                      operator.                                               required to participate fully in NMVTIS                the increased financial burden it would
                                         Response: DOJ firmly believes that                   and all states receive benefits from the               place on junk and salvage yards and
                                      issues such as the structure of                         system, all states must pay the user fees.             insurance carriers, and the disincentive
                                      mandatory fee systems should be                         There is no option for states to not                   it would impose on their reporting of
                                      addressed in a public manner, as                        participate in NMVTIS, which includes                  data.
                                      opposed to handled informally and                       paying user fees to support the system
                                      without input from stakeholders.                                                                               30. Enforcement
                                                                                              as required by the Anti-Car Theft Act.
                                                                                              Existing research demonstrates                            Comment: Several commenters from
                                      28. Per Vehicle                                                                                                various stakeholder groups asked who
                                                                                              NMVTIS’s effectiveness. Moreover, state
                                         Comment: More than one commenter                     and local law enforcement                              would be responsible for enforcement of
                                      noted that user fees should be based on                 organizations, as well as automotive                   the provisions of the rule and how
                                      the number of ‘‘automobiles’’ titled                    insurance experts, agree that non-                     enforcement responsibilities will be
                                      versus the number of ‘‘motor vehicles’’                 participating states are being targeted for            conducted.
                                      titled in a particular state.                           exploitation. It is important to note that                Response: Responsibility for
                                         Response: While DOJ understands the                  the operator of the system has no                      enforcement of this rule resides with the
                                      comment and agrees in principle, the                    discretion with regard to charging user                Department of Justice overall. Within
                                      ‘‘basis’’ for calculating such fees has no              fees, as this is the economic model                    DOJ, several component organizations
                                      impact when fees are adjusted to cover                  established by the Anti-Car Theft Act.                 (including the Bureau of Justice
                                      system costs. In other words, charging a                The operator has been steadfast in                     Assistance, the Federal Bureau of
                                      user fee of $0.02 based on the number                   ensuring that DOJ understands and                      Investigation, and the Civil Division’s
                                      of ‘‘motor vehicles,’’ versus $0.04 based               appreciates the perspective of its                     Federal Programs Branch) will
                                      on number of ‘‘automobiles,’’ is                        members and has worked closely with                    collaborate with each other, with the
                                      academic. Because NMVTIS already                        DOJ to identify ways of lessening the                  operator, and with state and local law
                                      includes and services titles on all motor               burden of implementation on state                      enforcement to ensure compliance and
                                      vehicles that a state may provide data                  agencies. Additionally, states have                    to respond to allegations of non-
                                      on, many stakeholders and DOJ                           multiple options for implementation in                 compliance.
                                      encourage states to make verifications                  order to best manage the costs of                         Comment: ARA commented that an
                                      on all motor vehicle transactions. States               participation, and certain cost-saving                 ‘‘amnesty period’’ should be provided
                                      have been paying fees based on number                   and potential state-revenue-enhancing                  because most automotive recyclers will
                                      of motor vehicles, and because the                      features have been established or                      depend on inventory-management
                                      number of motor vehicles (a more                        planned.                                               vendors to provide a reporting
                                      comprehensive figure) is easier to                         Comment: The State of California                    mechanism.
                                      calculate for states and the operator,                  commented that ‘‘we agree with the                        Response: While an ‘‘amnesty period’’
                                      DOJ authorizes the operator to continue                 recommendation to charge all states. If                per se is not established, DOJ will work
                                      the practice of charging user fees based                the fee is charged to all states regardless            closely with the ARA and other
                                      on the number of motor vehicles titled                  of participation, there will likely be                 organizations including the operator (if
                                      in the states.                                          greater participation by all states. This              not the Department of Justice) to ensure
                                                                                              could increase the value of the database,              that the commencement of reporting is
                                      29. Charging Non-Participants
                                                                                              generating additional consumer                         not impeded. During the initial period
                                         Comment: Several commenters,                         transactions, which can then be used to                of reporting, DOJ will be focused on
                                      including the current operator,                         offset the user fees charged to states.’’              implementation as opposed to purely
                                      expressed concern with charging fees to                    Response: DOJ agrees that by charging               enforcement.
                                      all states regardless of participation. The             all states a user fee in light of the                     Comment: Several insurance carriers
                                      North Dakota Department of                              requirement for all states to participate              suggested language for clarifying the
                                      Transportation noted that the proposal                  and the benefits all receive, any                      enforcement aspects of the rule,
                                      to allow the operator to charge the user                disincentive to make title verifications               recommending that a ‘‘violation’’ be
                                      fee to all states, even if a state is not a             or use the system in the manner                        defined as ‘‘an act in flagrantly and in
                                      current participant in NMVTIS, is                       required is eliminated.                                conscious disregard of this chapter’’ and
                                      ‘‘unfair’’ and that there has been no                      Comment: One commenter noted that                   that the rule include a statement
                                      evidence provided that demonstrates                     his or her state ‘‘will not voluntarily pay            limiting liability of insurance carriers
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                                      the enhanced effectiveness of NMVTIS                    user fees.’’                                           for what is reported and not reported.
                                      when all states participate. That                          Response: User fees will not be                        Response: DOJ will not define
                                      commenter also argued that there is no                  voluntary. Because the Anti-Car Theft                  ‘‘violation’’ in this regulation because
                                      evidence that criminals have targeted                   Act requires that NMVTIS be self-                      such a definition is unnecessary. The
                                      non-participating states. The commenter                 sustaining through user fees, the final                Anti-Car Theft Act provides DOJ with


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                                      sufficient discretion to seek and assess                respect to the reporting requirements of               operator. While the operator is free to
                                      penalties, including a requirement that                 the Anti-Car Theft Act and its                         consider outsourcing opportunities for
                                      DOJ consider the size of the business of                implementing regulations.’’                            operational components (e.g.,
                                      the person charged and the gravity of                     Response: As a matter of policy, DOJ                 technology, financial oversight, etc.), the
                                      the violation.                                          will preserve its full enforcement                     Anti-Car Theft Act requires that the
                                         Comment: The National Salvage                        authority and discretion, including the                operator of the system, if it is not the
                                      Vehicle Reporting Program commented                     ability to determine what constitutes a                DOJ, be an organization that represents
                                      that any penalties levied against a                     violation of the Act. As noted above, the              the interests of the states. The Act also
                                      required reporter should be determined                  Department believes that enforcement                   restricts the ability of the operator to
                                      in a way that will result in a material                 concerns are adequately addressed by                   make any profit from the operation of
                                      fine that could force a modification in                 the Anti-Car Theft Act and other                       the system. Based on the current
                                      behavior. This comment was supported                    applicable statutes and regulations.                   operator’s statements regarding
                                      by comments from consumer-advocate                                                                             continued participation as the operator,
                                                                                              31. Liability
                                      attorneys who noted that ‘‘[t]he                                                                               DOJ is currently exploring outside
                                      Department should construe the                             Comment: Several commenters                         bidding processes that could result in
                                      enforcement provisions of the statutes to               requested that DOJ clarify liability and               moving the program to another operator
                                      make them as strong as possible with                    immunity protections for all users of the              or to DOJ.
                                      respect to any potential deliberate                     system—those using the data to make
                                      violations by insurance carriers or                     decisions and those providing the data                 33. Concerns With Cost-Benefit Study
                                      salvage yards.’’                                        to the NMVTIS. At least one of these                      Comment: Several commenters noted
                                         Response: DOJ will carefully consider                commenters indicated that without such                 concerns with the cost-benefit study
                                      any penalties applied as required by the                clarification, some data reporters may be              cited in the proposed rule and
                                      Anti-Car Theft Act.                                     hesitant to comply. Some commenters                    completed by Logistics Management
                                         Comment: The National Salvage                        requested that DOJ clarify protections                 Institute (LMI). Concerns include
                                      Vehicle Reporting Program commented                     from both criminal and civil liability.                overstatement of the benefits of
                                      that ‘‘the establishment of regular                        Response: DOJ does not believe that                 NMVTIS, lack of details regarding the
                                      document procedures by an entity to                     the applicable immunity provisions                     study’s methodology, vague
                                      provide compliance should be                            require clarification. Pursuant to 49                  presentation of findings and issues, and
                                      considered a mitigating factor to                       U.S.C. 30502(f): ‘‘Any person                          a noted possibility that underreported
                                      demonstrate good intent.’’                              performing any activity under this                     costs were not well addressed. One
                                         Response: The Department did not                     section or sections 30503 or 30504 in                  commenter argued that ‘‘the LMI study
                                      propose any regulations governing its                   good faith and with the reasonable                     is thoroughly unconvincing, and its
                                      enforcement efforts in the proposed                     belief that such activity was in                       methodology is not sufficiently revealed
                                      rule. At this time, the Department                      accordance with this section or section                as to permit rebuttal.’’
                                      believes that enforcement concerns are                  30503 or 30504, as the case may be,                       Response: The LMI study was
                                      adequately addressed by the Anti-Car                    shall be immune from any civil action                  commissioned in 1999 by the National
                                      Theft Act and other applicable statutes                 respecting such activity which is                      Institute of Justice (NIJ). The reports
                                      and regulations.                                        seeking money damages or equitable                     cited are the only reports available to
                                         Comment: Several insurance-related                   relief in any court of the United States               DOJ at this time. Although more details
                                      organizations or associations                           or a State.’’                                          may be desirable, the LMI study’s
                                      commented that ‘‘49 U.S.C. 40505 sets                                                                          findings clearly indicate that NMVTIS’s
                                      forth a $1000 civil penalty for ‘each                   32. System Operating Costs                             benefits outweigh the costs. Comparing
                                      violation of the chapter.’ With millions                   Comment: One commenter noted that                   an individual state’s cost estimates for
                                      of data points reported from and to                     the operator should examine its                        implementation with the financial
                                      many sources, there needs to be an                      financial records and projections more                 benefits of eliminating even a modest
                                      interpretation of this provision that                   closely in order to narrow the estimated               number of thefts and brand washings
                                      makes clear that good faith efforts to                  system operating cost projections of                   demonstrates the same thing. Moreover,
                                      comply would be enough to avoid the                     $3,000,000 to $5,000,000 annually. Such                the LMI study likely overestimated the
                                      penalty. For example, we request that                   examination would create greater                       costs of participation because the only
                                      the Department include language along                   reliability and equity in determining                  method of participation known at the
                                      these lines in the final regulation: ‘A                 user fees. The commenter further                       time of the study was the fully
                                      violation for purposes of 49 U.S.C.                     suggested that ‘‘an outside bidding                    integrated method, which required a
                                      30505 means an act that is committed                    process should be enacted to shift the                 state to reconfigure title information
                                      flagrantly and in conscious disregard of                entire program onto a contractor.’’                    systems to integrate NMVTIS inquiries
                                      this chapter.’ ’’                                          Response: Because the system has not                and updates into their automated title
                                         Opposing this view, several national                 yet been fully implemented, and                        processes. With a new ‘‘stand alone’’
                                      consumer organizations commented that                   because costs are driven in part by                    method of participation available, the
                                      ‘‘the Department should flatly reject the               system usage, the annual operating costs               most costly aspect of known
                                      American Insurance Association’s                        vary annually and therefore are                        participation at that time (i.e., major
                                      proposal that its enforcement authority                 estimates at this time. DOJ agrees,                    modifications to title information
                                      be limited by a ‘flagrant disregard’                    however, that it is imperative that more               systems) has been eliminated as a
                                      standard. Nothing in the Anti-Car Theft                 robust and tighter financial procedures                requirement.
                                      Act authorizes or contemplates such a                   and controls be put in place, and that                    Comment: One commenter noted that
                                      standard, and the AIA does not                          transparency be encouraged through an                  ‘‘many improvements will remain
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                                      adequately explain why such a standard                  annual publication of an operator report               theoretical without full participation.
                                      is necessary, or how it would be                        of progress and costs, as well as budget               The expected benefits however are not
                                      satisfied. Consistent with congressional                projections for the coming years. DOJ                  illogical; states will only fully gain from
                                      intent, the Department should preserve                  will ensure that these goals are reflected             NMVTIS once most states are full
                                      its full enforcement authority with                     in the requirements of the system                      participants.’’ ‘‘The best interests of


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                                      states, through their consumers, lies                   VIN, wait approximately 3 seconds for                  information was being collected under
                                      with full participation in NMVTIS.’’ In                 the response, and review the response (a               the ‘‘guise’’ of consumer protection,
                                      agreement with this, the Virginia                       process estimated to take as little as 60              when it will provide ‘‘any real benefit?’’
                                      Department of Motor Vehicles                            seconds or as much as 3 minutes). DOJ                     Response: DOJ estimated the costs to
                                      commented that ‘‘the system provides a                  has included this estimation in the costs              insurance companies and presented
                                      great value to participating states and                 described in the proposed rule. Clearly,               these costs and a description of how
                                      that value will exponentially increase as               if discrepancies are found, the time                   they were determined in the proposed
                                      each jurisdiction begins fully                          required to process the transaction                    rule. These costs were not balanced
                                      participating.’’                                        could increase substantially. However,                 against the benefit of consumer
                                         Response: NMVTIS will not achieve                    DOJ notes that this is not a new cost, but             protection. For insurance carriers
                                      its full value until there is 100% state                a cost that states already have today.                 already reporting to a third party that
                                      participation. However, some states,                       Comment: One commenter asked ‘‘has                  provides the required information to
                                      such as California, have commented                      the agency considered the day-to-day                   NMVTIS, no additional costs will be
                                      very favorably on the benefits of the                   cost of requiring a title clerk to ‘switch             incurred. Amica Mutual Insurance and
                                      system, even though all states do not yet               to an internet enabled PC to perform a                 other insurance organizations that have
                                      participate.                                            Web search of NMVTIS via a secure                      begun reporting this information on
                                                                                              virtual private network’ for every single              their own have publicly stated the
                                      34. Cost Calculations
                                                                                              title check of every single day? (Section              benefits of such reporting. The benefits
                                         Comment: One commenter noted that                    25.54(c) requires that each state shall                of NMVTIS in terms of consumer
                                      ‘‘[t]here are specific examples of laxity               perform an instant title verification                  protection are well founded and
                                      in the cost-accounting figures for this                 check through NMVTIS before issuing a                  common sense.
                                      rule. For instance, although the                        certificate of title.) Is this additional cost            Comment: The State of Illinois motor
                                      proposed rule states that average fees                  something an underfunded state is                      vehicle administration commented that
                                      charged to states by the operator should                supposed to bear simply because it is                  compliance in the first year of the
                                      be less than 3 cents per vehicle, it goes               underfunded? What is the actual cost of                program would cost the state an
                                      on to say that ‘states that choose to                   having a clerk provide such a search                   estimate $3,700,000, including start-up
                                      integrate the NMVTIS processes of data                  based on the total number of title checks              costs, user fees, and the loss of
                                      provision and inquiry into their titling                that a state will do in a year?’’ A state              approximately $2,600,000 in annual
                                      process generally incur one-time                        motor vehicle administration                           sales of vehicle information. Illinois
                                      upgrade costs to establish these                        commented on the need to provide a                     commented that these costs and the
                                      connections.’ It would seem that * * *                  ‘‘batch’’ verification method via stand-               model being implemented by the
                                      a ballpark figure for this ‘onetime                     alone access, so that many title                       operator is ‘‘nonsensical.’’ Other states
                                      upgrade’ is needed. Further, the cost of                verifications can be conducted as part of              estimated their costs at approximately
                                      this ‘one-time upgrade’ may not be                      a ‘‘back room’’ operation.                             $200,000. The NADA added that ‘‘[a]ny
                                      insignificant, as suggested by the fact                    Response: The estimated costs for this              state claims of excessive reporting costs
                                      that ‘states can lower their upgrade costs              function have been included in the                     should be weighed against the huge
                                      by choosing to integrate the NMVTIS                     overall cost calculations for the system               costs associated with vehicles with
                                      reporting and inquiry requirements into                 as described in the response above. It is              hidden histories entering the stream of
                                      their business rules but not into their                 important to point out, however, that a                used vehicle commerce.’’
                                      electronic titling processes.’ This would               state is only required to check NMVTIS                    Response: DOJ disagrees with
                                      bring with it, however, a definite loss in              when an out-of-state title is presented.               Illinois’s assessment of start-up costs.
                                      efficiency.’’                                           Although states are encouraged to make                 Because the proposed rule did not
                                         Response: It is important to note that               NMVTIS inquiries before all                            prescribe a specific user-fee model,
                                      there is no requirement in this rule or                 transactions, it is only required in these             Illinois’s estimate of $700,000 in user
                                      otherwise that states integrate NMVTIS                  limited instances. Additionally, states                fees is not reliable. Additionally,
                                      processes into their title-information                  that determine that this process is                    organizations that typically purchase
                                      systems. Because doing so would be                      unworkable may make a one-time                         state motor vehicle records have
                                      strictly and totally voluntary on the part              system modification to automate the                    signaled that they will continue to
                                      of the states, DOJ does not see the need                NMVTIS inquiry function. While most                    purchase state data, as they are unable
                                      to attempt to estimate the costs for this               states may opt to use the individual                   to purchase the bulk state data from or
                                      type of implementation. Requests from                   title-verification method for over-the-                through NMVTIS. For this reason,
                                      states for DOJ grant funds have ranged                  counter operations, DOJ will encourage                 Illinois’s assertion that it will loose
                                      from $17,000 to nearly $500,000 to                      the operator to make available a ‘‘batch’’             $2,600,000 in revenues likely is
                                      implement various aspects of NMVTIS,                    verification method as quickly as                      unfounded. The only place these
                                      e.g., data provision only, full                         possible to make compliance more                       organizations can purchase bulk vehicle
                                      implementation, etc. While                              flexible for central-issue states.                     data from Illinois is from Illinois—
                                      implementing NMVTIS through the                            Comment: One commenter asked                        NMVTIS will not sell data in this
                                      stand-alone method eliminates the need                  ‘‘what are the anticipated costs of                    manner. While DOJ is not in a position
                                      for nearly all system modifications, DOJ                causing an insurance carrier to provide                to address Illinois’s estimate of start-up
                                      agrees that this approach may still affect              the requested information ‘in a format                 costs, DOJ issued a solicitation in fiscal
                                      business processes and could therefore                  acceptable to the operator?’ § 25.55(a).               years 2007 and 2008 to provide funds to
                                      impact overall operating costs.                         Where is the study indicating this cost?               states to support NMVTIS start-up costs
                                      However, given that NMVTIS inquiries                    How was this cost determined? And was                  and encouraged states to apply under
                                      are only required on out-of-state                       this cost balanced against the benefit of              other unrestricted, eligible funding
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                                      vehicles coming into the state, and                     consumer protection? This rule will                    programs as well. For many years
                                      given that system response time is less                 increase insurance costs.’’ The                        between FY 1997 and FY 2004, AAMVA
                                      than three seconds on average, we can                   commenter also asked why insurance                     also offered funding support to states
                                      reasonably estimate that the cost is                    carriers should have to provide the                    based on DOJ grant awards to the
                                      minimal for a title clerk to enter the                  information at its own cost. If the                    operator.


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                                         Comment: AAMVA contended that                        objectives while minimizing the burden                 theft and fraud. The rule also clarifies
                                      although the Anti-Car Theft Act states                  on states.                                             the various responsibilities of the
                                      that NMVTIS should be self sustaining,                                                                         operator of NMVTIS, states, junk yards,
                                                                                              Provisions of This Rule
                                      NMVTIS represents an unfunded                                                                                  salvage yards, and insurance carriers
                                      mandate that has serious impact on                         The continued implementation of                     under the Anti-Car Theft Act to help
                                      states. AAMVA went on to assert that to                 NMVTIS and its effectiveness depend                    ensure its effectiveness. Finally, this
                                      achieve full implementation and long-                   on the participation and cooperation of                rule provides a means by which user
                                      term success, federal funding of the                    a number of parties. According to the                  fees will be imposed to fund NMVTIS,
                                      remaining development work and                          cost-benefit study conducted by the                    consistent with the requirements of the
                                      support for system operation is needed.                 Logistics Management Institute: ‘‘The                  Anti-Car Theft Act and its requirement
                                         Response: The Anti-Car Theft Act                     way NMVTIS is implemented—                             that NMVTIS be self sustaining and ‘‘not
                                      requires NMVTIS to be self-sustaining                   piecemeal, regionally, or nationally—                  dependent on Federal funds.’’
                                      and ‘‘not dependent on federal funds’’                  will affect how criminals respond.
                                                                                              Criminals are highly mobile and may                    1. State Responsibilities
                                      for its operation. To date, DOJ has
                                      invested more than $15 million in                       avoid NMVTIS states until most of the                     The effectiveness of NMVTIS
                                      NMVTIS development, combined with                       country is covered by the system.                      increases as more states fully
                                      investments from the U.S. Department                    Criminals use technology to their                      participate. NMVTIS will only be as
                                      of Transportation, as well as a reported                advantage, both to identify potential                  good as the quality and quantity of
                                      $30 million investment from AAMVA.                      theft targets and to camouflage stolen                 information it contains. Consequently,
                                      Since 1992, less than $2 million has                    vehicles.’’ As a result, any states not                all non-participating states are strongly
                                      been collected from user fees. DOJ is                   fully participating in NMVTIS and their                urged to comply with their obligations
                                                                                              citizens may be disproportionately                     under the Anti-Car Theft Act and to
                                      concerned that additional investments
                                                                                              targeted by criminals committing                       begin title verifications and reporting
                                      of federal funds will be used to support
                                                                                              vehicle crimes. This finding has been                  title information to NMVTIS as soon as
                                      the required ‘‘services to states’’ and
                                                                                              repeatedly confirmed by law                            possible. While the immediate
                                      will not lead to additional development
                                                                                              enforcement at the local, state, and                   requirement of this rule is to, at a
                                      of the system. Additionally, DOJ notes
                                                                                              federal levels, and by national anti-theft             minimum, have all states make
                                      that much of the federal funds provided
                                                                                              organizations based on experience and                  verifications on incoming, out-of-state
                                      to states through AAMVA remains
                                                                                              active investigations. Even private                    titles and provide regular (at least daily)
                                      unexpended even years after being
                                                                                              vehicle-history providers have agreed                  data updates to NMVTIS, the ultimate
                                      provided to facilitate participation.
                                                                                              that criminals exploit these and similar               goal is for all states to participate in the
                                      From 2003 to date, AAMVA and the                        weaknesses in the vehicle-titling system               system via an integrated, online method
                                      states have strongly encouraged DOJ to                  in the U.S., particularly the lack of                  that provides real-time data updates,
                                      implement the rules for NMVTIS as a                     communication between state motor                      making inquiries into NMVTIS prior to
                                      necessary step to system                                vehicle title and registration agencies.               issuing new titles on vehicles coming
                                      implementation. With rules now                          The Anti-Car Theft Act also referred to                from out-of-state, and sharing other
                                      published, system operation and user                    the ‘‘weakest link’’ in referring to this              information and data electronically, via
                                      fees established, and third-party                       problem as it relates to brand washing.                NMVTIS. All states must be fully
                                      providers generating additional user                    See Public Law No. 102–519, section                    participating as required by the Act and
                                      fees, it is DOJ’s hope that additional                  140(a)(1).                                             this rule by January 1, 2010. However,
                                      federal funding may not be needed, and                     Participation in NMVTIS must be                     for purposes of continuity and to ensure
                                      that the system can begin to be self                    expanded to all states. In addition,                   that there is no degradation of services
                                      sustaining as originally envisioned.                    insurance carriers, junk yards, and                    currently provided by NMVTIS, the
                                         Comment: AAMVA commented that                        salvage yards also need to provide                     final rule requires all states to maintain
                                      its Board of Directors recently                         certain information relevant to the life-              at least the level of participation (data
                                      concluded that AAMVA will not be able                   cycle of an automobile in order for                    provision, title verifications, remitting
                                      to continue as the system operator if it                NMVTIS to function properly and                        fees) that they had established as of
                                      must subsidize the ongoing                              achieve the intended benefits. The Anti-               January 1, 2009 for the remainder of that
                                      development and operation costs of                      Car Theft Act requires junk yards,                     year and until the full compliance date
                                      NMVTIS. As a result, AAMVA expects                      salvage yards, and insurance carriers to               for all states arrives on January 1, 2010.
                                      a decision by August 2009 from its                      report at least monthly to NMVTIS on                      In accordance with 49 U.S.C. 30502,
                                      Board of Directors as to its continued                  all junk and salvage automobiles they                  NMVTIS must provide a means of
                                      participation as the operator of the                    obtain. Pursuant to 49 U.S.C. 30504(c),                determining whether a title is valid,
                                      system.                                                 the Attorney General is authorized to                  where the automobile previously was
                                         Response: DOJ acknowledges                           issue regulations establishing                         titled, the automobile’s reported
                                      AAMVA’s position and, in response,                      procedures and practices to facilitate                 mileage, if the automobile is titled as a
                                      developed a Request for Information                     reporting the required information in                  junk or salvage automobile in another
                                      (RFI) that was published to identify                    the least-burdensome and costly                        state, and whether the automobile has
                                      prospective new operators and                           fashion.                                               been reported as a junk or salvage
                                      organizations that could support DOJ                       Accordingly, this rule implements the               automobile under 49 U.S.C. 30504. Each
                                      should DOJ become the operator. DOJ                     reporting requirements imposed on junk                 state is required to make its titling
                                      expects that any new operator, if not                   yards, salvage yards, and insurance                    information available to NMVTIS. 49
                                      DOJ, will comply with the same                          carriers pursuant to 49 U.S.C. 30504(c).               U.S.C. 30503(a). Each state also is
                                      provisions of this rule and will work                   In addition, this rule clarifies, consistent           required ‘‘to establish a practice of
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                                      with DOJ, AAMVA, and the NMVTIS                         with section 202(a)(1) of the Act, the                 performing an ‘instant’ title verification
                                      stakeholders to perform a seamless                      title and related information to be                    check before issuing a certificate of
                                      transition. The results from the RFI are                included in the system to determine its                title.’’ 49 U.S.C. 30503(b). This rule
                                      being used to identify new ideas and                    adequacy, timeliness, reliability, and                 clarifies the procedures for verifying
                                      capabilities to accomplish the program                  capability of aiding in efforts to prevent             title information and the information


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                                      states must report to NMVTIS pursuant                   that is disclosed pursuant to 49 U.S.C.                accident, trespass, or other event, to the
                                      to the Anti-Car Theft Act, and the                      32705 on the date the certificate of title             extent that its fair salvage value plus the
                                      procedures and practices that states                    was issued and any later mileage                       cost of repairing the automobile for legal
                                      must follow to provide this needed                      information, if in the state’s title record            operation on public streets, roads, and
                                      information. Pursuant to 49 U.S.C.                      for that vehicle. Accordingly, the rule                highways would be more than the fair
                                      30503(a), states are required to perform                requires states to provide such mileage                market value of the automobile
                                      an ‘‘instant’’ title verification check                 information to NMVTIS. States shall                    immediately before the event that
                                      before issuing a certificate of title to an             provide new title information and any                  caused the damage.’’ 49 U.S.C. 30501(7).
                                      individual or entity bringing a vehicle                 updated title information to NMVTIS at                 For purposes of clarification, the
                                      into the state. Because several states are              least once every 24 hours.                             Department of Justice has determined
                                      ‘‘central issue’’ states where titles are                  In addition, with the approval of DOJ,              that this definition includes all
                                      produced at a central location after an                 the operator, and the state, the rule will             automobiles found to be a total loss
                                      application for title has been made,                    allow the state to provide any other                   under the laws of the applicable state,
                                      ‘‘instant’’ is considered to mean at any                information that is included on a                      or designated as a total loss by the
                                      point before a permanent title is issued.               certificate of title or that is maintained             insurance carrier under the terms of its
                                      The primary purpose of the verification                 by the state in relation to the certificate            policies, regardless of whether an
                                      is to determine the validity and status                 of title.                                              insurance carrier retitles the vehicle into
                                      of a document purporting to be a                           The Anti-Car Theft Act specifically                 its name or allows the owner to retain
                                      certification of title, to determine                    covers ‘‘automobiles’’ as defined in 49                the vehicle.
                                      whether the automobile has been a junk                  U.S.C. 32901(a). That definition, which                   As a practical matter, the
                                      or salvage vehicle or has been reported                 is part of the fuel economy laws, was                  determination that an automobile is a
                                      as such, to compare and verify the                      most recently amended by the Energy                    total loss (i.e., that the automobile has
                                      odometer information presented with                     Independence and Security Act of 2007,                 been ‘‘totaled’’) is the logical event that
                                      that reported in the system, and to                     Public Law No. 110–140, and generally                  shall trigger reporting to NMVTIS by an
                                      determine the validity of other                         covers four-wheel vehicles that are rated              insurance carrier. Insurance carriers are
                                      information presented (e.g., lien-holder                at less than 10,000 pounds gross vehicle               required under this rule to provide
                                      status, etc.). While the laws and                       weight, but excludes vehicles that                     NMVTIS with: (1) The VIN of such
                                      regulations of the receiving state will                 operate on rails, certain vehicles                     automobiles; (2) the date on which the
                                      prevail in determining the status of the                manufactured in different stages by two                automobile was obtained or designated
                                      vehicle (e.g., branding, title type, or                 or more manufacturers, and certain                     as a junk or salvage automobile; (3) the
                                      status), the information in NMVTIS                      work trucks. Participating states,                     name of the individual or entity from
                                                                                              however, have been providing                           whom the automobile was obtained
                                      should be used by the state to identify
                                                                                              information to NMVTIS on other types                   (owner name or lien-holder name) and
                                      inconsistencies, errors, or other issues,
                                                                                              of motor vehicles 3 possessing VINs,                   who possessed the automobile when it
                                      and to follow state procedures and
                                                                                              such as motorcycles and various work                   was designated a junk or salvage
                                      policies for their resolution. Because
                                                                                              trucks. Information on these other types               automobile; and (4) the name of the
                                      NMVTIS can prevent many types of
                                                                                              of motor vehicles is very useful to the                owner of the automobile at the time of
                                      fraud in addition to simple brand
                                                                                              users of NMVTIS, and law enforcement                   the filing of the report with NMVTIS
                                      washing, states are encouraged to use
                                                                                              organizations including DOJ have                       (either the insurance company or the
                                      NMVTIS for verifications on all
                                                                                              strongly encouraged states to continue                 owner, if owner-retained). DOJ strongly
                                      transactions whenever possible. This
                                                                                              to provide information on such vehicles                encourages insurers to include the
                                      verification includes in-state title
                                                                                              in order to reduce the theft of such                   primary reason for the insurance
                                      transactions, dealer reassignments,                     vehicles. Therefore, while states only                 carrier’s designation of salvage or total
                                      lender and dealer verifications, updates,               are required to report on automobiles,                 loss in this reporting as well. In
                                      corrections, and other types of title                   they are strongly encouraged to                        accordance with 49 U.S.C. 30504(b), the
                                      transactions. This business process is                  continue reporting to NMVTIS                           report must provide such information
                                      made possible through the integrated,                   information on all motor vehicles                      on ‘‘all automobiles of the current
                                      online method of state participation and                possessing VINs in their state titling                 model year or any of the 4 prior model
                                      is strongly encouraged by law                           systems.                                               years that the carrier, during the prior
                                      enforcement, consumer protection                                                                               month, has obtained possession of and
                                      groups, and private sector entities.                    2. Insurance Carriers
                                                                                                                                                     has decided are junk automobiles or
                                         States are also required under 49                       The Anti-Car Theft Act authorized the               salvage automobiles.’’
                                      U.S.C. 30503(a) to make selected titling                Attorney General to issue regulations                     In addition, although not specifically
                                      information they maintain available for                 establishing procedures by which                       required by the Anti-Car Theft Act or
                                      use in NMVTIS. Specifically, states are                 insurance companies must report                        this rule, this rule will permit insurance
                                      required to report: (1) An automobile’s                 monthly to NMVTIS on the junk and                      carriers to provide the NMVTIS operator
                                      VIN; (2) any description of the                         salvage automobiles they obtain. 49                    with information on other motor
                                      automobile included on the certificate                  U.S.C. 30504(c). Accordingly, this rule                vehicles, including older model
                                      of title, including all brand information;              clarifies the reporting requirements                   automobiles, and other information
                                      (3) the name of the individual or entity                imposed on insurance carriers regarding                relevant to a motor vehicle’s title,
                                      to whom the title certificate was issued;               junk and salvage automobiles. The Anti-                including the disposition of such
                                      and (4) information from junk or salvage                Car Theft Act defines a salvage                        automobiles, and the name of the
                                      yard operators or insurance carriers                    automobile to mean ‘‘an automobile that                individual or entity that takes
                                      regarding their acquisition of junk                     is damaged by collision, fire, flood,                  possession of the vehicle. The reporting
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                                      automobiles or salvage automobiles, if                                                                         of this information by insurance carriers
                                                                                                3 Pursuant to 49 U.S.C. 30102(a)(6), a ‘‘motor
                                      this information is being collected by                                                                         will help reduce instances in which
                                                                                              vehicle’’ means a vehicle driven or drawn by
                                      the state. The Anti-Car Theft Act also                  mechanical power and manufactured primarily for
                                                                                                                                                     thieves use the VINs of junk or salvage
                                      requires that the operator of NMVTIS                    use on public streets, roads, and highways, but does   motor vehicles on stolen motor vehicles
                                      make available the odometer mileage                     not include a vehicle operated only on a rail line.    and will assist in preventing and


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                                      eliminating fraud. Accordingly, the                     other persons or entities. Second, DOJ                 others in using NMVTIS as an electronic
                                      Department of Justice strongly                          has added a clarification that                         means of performing title transactions
                                      encourages insurance carriers to report                 individuals and entities of this type that             and verifications. Conducting such
                                      such additional information to the                      handle fewer than five vehicles per year               efforts in an electronic fashion will
                                      operator.                                               that are determined to be salvage or total             eliminate a major source of fraud—
                                                                                              loss are not required to report under the              paper-based title exchanges, updates,
                                      3. Junk and Salvage Yards and Auto
                                                                                              salvage yard requirements, consistent                  lien releases, etc.
                                      Recyclers
                                                                                              with requirements for automobile
                                         Under this rule, junk yards and                                                                             5. Responsibilities of the Operator of
                                                                                              dealers, see 49 U.S.C. 32702(2).
                                      salvage yards are required to provide                     Pursuant to 49 U.S.C. 30504(a)(2),                   NMVTIS
                                      NMVTIS with the VIN, the date the                       junk yards and salvage yards will not be                  In accordance with 49 U.S.C. 30502,
                                      automobile was obtained, the name of                    required to submit reports to NMVTIS if                NMVTIS must provide a means of
                                      the individual or entity from whom the                  they already report the required                       determining whether a title is valid,
                                      automobile was obtained, and a                          information to the state in which they                 where the automobile is currently titled,
                                      statement of whether the automobile                     are located and that state makes                       the automobile’s reported mileage, if the
                                      was crushed or disposed of, for sale or                 available to the operator the information              automobile is titled as a junk or salvage
                                      other purposes. Such entities must also                 required by this rule of junk and salvage              automobile in another state, and
                                      report whether the vehicle is intended                  entities. Because some junk or salvage                 whether the automobile has been
                                      for export out of the United States,                    yards may hold vehicles for several                    reported as a junk or salvage automobile
                                      which will assist law enforcement in                    months or years before a final                         under 49 U.S.C. 30504. Further, the
                                      investigations related to the export and                disposition (e.g., crushed, sold, rebuilt,             operator of NMVTIS must make relevant
                                      cloning of exported vehicles. The                       etc.) is known, some junk and salvage                  information available to states, law
                                      reporting of this information will be                   yards may need to provide a                            enforcement officials, prospective and
                                      limited to junk yards and salvage yards                 supplemental or additional report at the               current purchasers (individual and
                                      located within the United States.                       time of disposition or within 30 days of               commercial), and prospective and
                                      Pursuant to the Anti-Car Theft Act, junk                the date of disposition. Nothing in this               current insurers. This rule clarifies that
                                      and salvage yards are defined as                        rule shall preclude a junk or salvage                  the operator of NMVTIS will be
                                      individuals or entities engaged in the                  yard from reporting the disposition of a               responsible for collecting the required
                                      business of acquiring or owning junk or                 vehicle at the time of first reporting, if             information and providing the necessary
                                      salvage automobiles for resale in their                 such a disposition is known with                       access to all permitted users.
                                      entirety or as spare parts or for                       certainty. Junk and salvage yards are                     The Department will instruct the
                                      rebuilding, restoration, or crushing. See               responsible for ensuring the accuracy                  operator that if it is not receiving
                                      49 U.S.C. 30501(5), (8). ‘‘Rebuilding,                  and completeness of their reporting and                reporting entity data directly, then it
                                      restoration, and crushing’’ is reflective               for providing corrected information to                 must identify at least three third-party
                                      of the varied nature of entities that meet              the system should the disposition be                   organizations willing to receive reports
                                      this definition. Included in this                       changed from what was initially                        from reporting entities (junk, salvage,
                                      definition are scrap-vehicle shredders                  reported.                                              insurance) and to share such data with
                                      and scrap-metal processors, as well as                                                                         NMVTIS. The operator also will take
                                      ‘‘pull- or pick-apart yards,’’ salvage                  4. Lenders and Automobile Dealers
                                                                                                                                                     steps to ensure data quality to the extent
                                      pools, salvage auctions, and other types                   The Anti-Car Theft Act requires that                possible and take steps as described in
                                      of auctions, businesses, and individuals                the operator make NMVTIS information                   this rule to correct reported data, if not
                                      that handle salvage vehicles (including                 available to prospective purchasers,                   reported by a state, which has the
                                      vehicles declared a ‘‘total loss’’). A                  including auction companies and                        authority to make changes via updates.
                                      salvage pool is an entity that acquires                 entities engaged in the business of                       The operator will be using the
                                      junk and salvage automobiles from a                     purchasing new or used automobiles.                    National Information Exchange Model
                                      variety of parties and consolidates them                The Department believes that the scope                 or any successor information-sharing
                                      for resale at a common point of sale. The               of prospective purchasers also includes                model for all new information
                                      pooling of junk and salvage automobiles                 lenders who are financing the purchase                 exchanges established, and DOJ may
                                      attracts a large number of buyers. It is                of automobiles and automobile dealers.                 require the operator to use Web services
                                      the belief of the Department of Justice                 Lenders and dealers are integral                       for all new connections to NMVTIS.
                                      and the state and local law enforcement                 components of the automobile
                                      community that a significant number of                  purchasing and titling process who also                Services to State Motor Vehicle Title
                                      these buyers purchase junk and salvage                  can be the victims of fraud. This rule                 Administrations
                                      automobiles at salvage pools in order to                allows the operator to permit public and                  The operator will:
                                      acquire VINs or titles that can be used                 private entities involved in the                          • Make available to state motor
                                      on stolen motor vehicles or to create                   purchasing and titling of automobiles to               vehicle title administrations at least two
                                      cloned motor vehicles for other illicit                 access NMVTIS if such access will assist               methods of interacting with NMVTIS.
                                      purposes.                                               in efforts to prevent the introduction or              States will have the option of
                                         Such entities must report all salvage                reintroduction of stolen motor vehicles                participating via ‘‘stand alone’’ access,
                                      or junk vehicles they obtain, including                 and parts into interstate commerce and                 which is a basic Internet site that allows
                                      vehicles from or on behalf of insurance                 to prevent fraud. For purposes of                      a state to enter a VIN and receive the
                                      carriers, that can reasonably be assumed                clarification, this rule permits                       results of the search. States currently
                                      to be total-loss vehicles. Such entities                commercial consumers to access and                     have the option of fully integrating the
                                      are not required to report any vehicle                  verify NMVTIS information at the time                  NMVTIS search function into their title-
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                                      that is determined not to meet the                      of purchases, as well as at any time                   information systems. This method of
                                      definition of salvage or junk after a                   during the ownership of or involvement                 access allows state systems to perform
                                      good-faith physical and value appraisal                 with such vehicles (i.e., lender                       the search seamlessly and without
                                      conducted by qualified appraisal                        verifications). States are strongly                    specific effort of the titling staff. This
                                      personnel entirely independent of any                   encouraged to work with lenders and                    method allows updates made after the


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                                      5772               Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations

                                      title transaction to be shared with the                 vehicle registrations by linking state and             the potential that consumers may lack
                                      prior state of title and allows real-time               local authorities with real-time                       credit cards or Internet access.
                                      updates to NMVTIS as well. The                          verification of information. This system               Consumer-access fees charged by the
                                      operator also will make available a                     also will provide an additional tool to                operator may be in addition to fees that
                                      modified stand-alone access process                     identify and investigate international                 may be charged by other public or
                                      (that allows for batch inquiries) to                    organized criminal and terrorist activity.             private entities participating in
                                      central-issue states to support their                   NMVTIS will assist investigations of                   providing the service. While this rule
                                      efficient title administration needs.                   vehicles involved in violent crimes,                   does not establish minimum or
                                         • Share with states any and all                      smuggling (narcotics, weapons,                         maximum fees for such consumer access
                                      information in NMVTIS, including any                    undocumented aliens, and currency),                    in order to allow it to remain ‘‘market-
                                      intended export criteria, junk and                      and fraud. In addition to providing                    driven’’ and flexible, the Department
                                      salvage history, and any other                          access to NMVTIS based on a VIN                        requires that all consumer-access fees
                                      information obtained by the operator                    inquiry, the operator also will allow law              and methods be approved by the
                                      (e.g., title history information from other             enforcement agencies to make inquiries                 Department prior to enactment.
                                      North American title administrations,                   based on other search criteria in the                    The Department anticipates that the
                                      etc.).                                                  system, including the organizations                    operator will implement a Web-based
                                         • Provide the states with the greatest               reporting data to the system, individuals              method of permitting prospective
                                      amount of flexibility in such things as                 owning, supplying, purchasing, or                      purchasers to access NMVTIS
                                      data standards, mapping, and                            receiving such vehicles (if available),                information as required by the Act.
                                      connection methodology.                                 and export criteria.                                   Consumer access shall be available to
                                      Services to Law Enforcement                                                                                    individual and commercial consumers
                                                                                              Services in Support of Consumer                        who are considering purchasing a
                                         In particular, the operator of NMVTIS                Access                                                 vehicle or who have recently purchased
                                      will be responsible for ensuring that                      The operator of NMVTIS is                           a vehicle. Consumers accessing
                                      state and local law enforcement                         responsible for ensuring that a means                  NMVTIS shall receive an indication of
                                      agencies have access to all title                       exists for allowing insurers and                       and link to the current state of title, the
                                      information in or available through                     purchasers to access information,                      brand history (name of brand/brand
                                      NMVTIS, including personal                              including information regarding brands,                category), the most recent odometer
                                      information collected by NMVTIS for                     junk and salvage history, and odometer                 information in the system, and any
                                      law enforcement purposes. A thief can                   readings. Such access shall be provided                reports on the subject vehicle from junk
                                      take a stolen, cloned vehicle to a non-                 to individual consumers in a single-VIN                or salvage yards.
                                      participating state and get a valid title               search arrangement and to commercial
                                      by presenting the clone and matching                    consumers in a single-, multiple-, or                  Privacy and Security Protections for
                                      fraudulent ownership documentation to                   batch-VIN search arrangement. As noted                 NMVTIS
                                      the new state. Thieves often switch the                 above, motor vehicles that incur                         The operator may not release any
                                      VIN plate (and sometime other VIN                       significant damage are considered                      personal information to individual
                                      stickers) of a stolen motor vehicle with                ‘‘junk’’ or ‘‘salvage.’’ Fraud occurs when             prospective purchasers. The operator
                                      one from a junked car in order to get a                 junk or salvage motor vehicles are                     also will develop a privacy policy that
                                      valid title for the stolen car. These                   presented for sale to purchasers without               will address the release of this
                                      activities were possible because the                    disclosure of their real condition or                  information as well. The operator also
                                      states had no instantly updated, reliable               history. Not only are unsuspecting                     will ensure that NMVTIS and associated
                                      way of validating the information on the                purchasers paying more than the motor                  access services (i.e., secure networks
                                      ownership documentation prior to                        vehicle is worth, but they do not know                 used to facilitate access to personal
                                      issuing the new title. Investigations                   if the damaged vehicles have been                      information included in NMVTIS) meet
                                      have shown that sophisticated criminal                  adequately repaired and are safe to                    or exceed technology industry security
                                      organizations typically employ fraud                    drive. For example, during Hurricane                   standards, most notably any relevant
                                      schemes involving multiple state-title                  Katrina, thousands of motor vehicles                   Global Justice Information Sharing
                                      processes and either target non-                        were completely flooded, and many                      Initiative standards and
                                      participating states as the new title-                  remained under water for weeks before                  recommendations.
                                      issuing agent or use fraudulent or                      flood waters subsided. Many of these
                                      counterfeit title documents from a non-                 flooded motor vehicles were taken to                   Accountability and Transparency
                                      participating state in order to effect                  other states where they were cleaned                      The operator shall publish an annual
                                      brand washing or cloning. Exported                      and sold as purportedly undamaged                      report describing the performance of the
                                      vehicles also have become a key source                  used cars, despite the damage caused by                system during the preceding year and
                                      for cloning activities. NMVTIS will                     the flood, which jeopardizes the motor                 shall include a detailed report of
                                      provide law enforcement agencies with                   vehicles’ electrical and safety systems.               NMVTIS expenses and all revenues
                                      access to make inquiries to further their               In several reported cases, consumers                   received as a result of NMVTIS
                                      investigations of motor vehicle theft and               purchased vehicles that had previously                 operation. Additionally, the operator (if
                                      fraud—including fraud committed                         been involved in a collision, and airbags              not the Department of Justice) shall be
                                      against consumers, businesses, and                      were not reinstalled. These consumers                  required to procure an independent
                                      states. This access will allow law                      were later killed in a collision where the             financial audit of NMVTIS expenses and
                                      enforcement agencies to better identify                 airbags could not deploy because they                  revenues during the preceding year.
                                      stolen motor vehicles, enhance their                    were no longer present. This fraud has                 Both the annual performance and
                                      ability to identify vehicle theft rings,                serious consequences, not only for                     budget report and the independent audit
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                                      identify cases of public corruption, and                commerce and law enforcement, but                      report shall be publicly available via
                                      identify other criminal enterprises                     also for highway and citizen safety.                   www.NMVTIS.gov.
                                      involving vehicles. NMVTIS will reduce                     The cost for Web-based prospective-                    Although DOJ has primary
                                      the ability of organized criminal                       purchaser inquiries for individuals shall              enforcement responsibility for the
                                      organizations to obtain fraudulent                      be nominal and take into consideration                 provisions of this rule, the operator


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                                      shall conduct regular reviews of                        participate in order to receive the                       The expenses to be recouped by the
                                      reporting compliance by all reporters to                benefits of the system they are funding.               operator of NMVTIS through its fees
                                      assess the extent to which reporting                       In addition, the Department of Justice              will consist of labor costs, data center
                                      entities are reporting appropriately,                   requires that the operator charge user                 operations costs, the cost of providing
                                      documentation is in place, and other                    fees to all states, even if a state is not             access to authorized users, annual
                                      requirements of reporting are being met.                a current participant in NMVTIS. In                    functional-enhancement costs
                                      The operator shall provide the results of               accordance with 49 U.S.C. 30503(a) and                 (including labor and hardware), the cost
                                      such information to DOJ. The operator                   (b), each state is required to participate             of technical upgrades, costs to comply
                                      shall also maintain a publicly available,               in the system, which includes making                   with the provisions of this rule, and
                                      regularly updated listing of all entities               titling information available to NMVTIS,               other costs as approved by the
                                      reporting to NMVTIS. Such listing shall                 conducting title-verification checks                   Department of Justice in advance of the
                                      include the name of the reporting entity,               before issuing a title, and paying any                 expense. The operator is authorized to
                                      city/state, contact information, and last-              user fees. Because all states are required             develop a system-enhancement reserve
                                      data-reported date.                                     to participate in NMVTIS, this rule                    that does not exceed 50% of the annual
                                                                                              requires that the operator charge user                 cost of operating the system for use in
                                      6. User Fees                                                                                                   ensuring that critical upgrades can be
                                                                                              fees to all states, regardless of their
                                         Pursuant to 49 U.S.C. 30502(c),                      current level of participation. Further,               implemented on an emergency basis as
                                      NMVTIS is to be ‘‘paid for by user fees                 this rule requires that the operator                   necessary. AAMVA currently estimates
                                      and should be self-sufficient and not be                notify states at least one year in advance             that the annual cost of operating
                                      dependent on amounts from the United                    of user fees and invoice every state at                NMVTIS is approximately $5,650,000.
                                      States Government. The amount of fees                   least once per year. This schedule shall               According to DOT’s 2005 Highway
                                      the operator collects and keeps * * *                   remain in place until modified by                      Statistics, 241,193,974 vehicles were
                                      subject to annual appropriations laws,                  agreement with DOJ.                                    titled in the United States in 2005.
                                      excluding fees the operator collects and                   Under this rule, and consistent with                Therefore, the cost to fund NMVTIS will
                                      pays to an entity providing information                 the Anti-Car Theft Act, users, such as                 average less than 3 cents per motor
                                      to the operator, may be not more than                                                                          vehicle title, although states in different
                                                                                              purchasers, insurers, consumers, and
                                      the costs of operating the System.’’                                                                           tiers may pay slightly different rates.
                                                                                              other non-governmental entities, may be
                                      Rather than charge states user fees based                                                                      The operator of NMVTIS will inform the
                                                                                              charged a fee for inquiries they make to
                                      on the number of transactions they                                                                             states of the applicable fees either
                                                                                              NMVTIS. Because of the varying levels
                                      place with NMVTIS, AAMVA (the                                                                                  through publication in the Federal
                                                                                              of participation by the states, the
                                      operator of NMVTIS) currently employs                                                                          Register or by direct notice or invoicing
                                                                                              Department has decided to eliminate the
                                      a ten-tiered fee structure. The fee a                                                                          to the states.
                                                                                              proposed provision prohibiting the                        The operator will be required to
                                      particular state is charged depends on                  operator from charging transaction fees                recalculate its fees on at least a biennial
                                      the tier in which that state is placed                  for consumer transactions performed by                 (every two years) basis at least one year
                                      based on the number of currently titled                 fully participating states. However, the               in advance of their effective date. Any
                                      motor vehicles in that state. As a result               Department retains the authority to                    fees charged to the states would be
                                      of the great disparity between the states               allow the operator to discount such fees               offset by transaction fees received by the
                                      in their total number of titled motor                   for fully participating states. The                    operator. In addition, the total fees
                                      vehicles, the per-vehicle fee currently                 operator shall not charge any user fees                charged to the states would be reduced
                                      charged by the operator of NMVTIS                       or transaction fees for inquiries made by              by future funds awarded by the U.S.
                                      ranges from less than 1 cent per vehicle                law enforcement agencies. The operator                 Government to the operator to assist in
                                      in the states with the most titled motor                shall ensure that all third-party                      implementing the system. Any fees
                                      vehicles to nearly 7 cents per vehicle in               providers of NMVTIS information are                    imposed by the operator in connection
                                      the state with the lowest number of                     eligible for the same prices and                       to NMVTIS must be approved by the
                                      titled motor vehicles. This fee structure               discounts, based on the product                        Department of Justice.
                                      was developed by AAMVA and                              implemented or provided (e.g., single                     Notwithstanding individual and batch
                                      approved by its Board of Directors,                     VIN lookup, batch lookup, etc.). The                   lookups or inquiries, the operator shall
                                      comprising state motor vehicle                          operator shall require that all providers              not, under any circumstances, sell a
                                      administrators. As noted above,                         and methods of consumer access                         state’s entire data set in bulk or sell the
                                      AAMVA is a nonprofit, tax-exempt,                       include a visible notice and disclaimer,               entire NMVTIS data set in bulk.
                                      educational association representing                    or a link to such a notice or disclaimer,                 Since Fiscal Year 1997, the
                                      U.S. and Canadian officials who are                     that provides consumers with accurate                  Department of Justice, through BJA, has
                                      responsible for the administration and                  information on what NMVTIS includes                    provided over $15 million to AAMVA
                                      enforcement of motor vehicle laws.                      and any limitations in the database. The               for NMVTIS implementation. In Fiscal
                                         This rule requires the operator (if not              names of all noncompliant states shall                 Years 2007–2009, BJA invited states to
                                      the Department of Justice) to continue to               be disclosed to each consumer for                      apply for direct funding from DOJ to
                                      charge user fees to all states based on                 purposes of awareness. Providers and                   support initial NMVTIS
                                      the total number of motor vehicles titled               methods of consumer access also will                   implementation. In fiscal years 2007
                                      in the state and to continue the tiered                 include a link to operator-provided                    and 2008, less than six states applied for
                                      structure. Such a pro rata fee structure                information that explains to consumers                 funds each year. BJA awarded funds to
                                      simplifies billing for both the states and              how NMVTIS works, such as how                          five states in fiscal year 2007 and one
                                      the operator of NMVTIS. In addition, a                  different reporting streams may explain                state in 2008 to support system
                                      state would not be subject to a                         variances or seemingly conflicting                     implementation. BJA also invited
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                                      significant change in user fees if it                   information. Those providers and                       AAMVA, the system operator, to apply
                                      moves from one tier to another. Last, a                 methods of consumer access also will                   for direct funding from BJA in fiscal
                                      pro rata fee structure eliminates any                   provide a link to a state’s brand                      years 2007 and 2008, to supplement
                                      disincentive for states to make title                   definitions if those brands are displayed              state participation fees received by
                                      verifications and encourages all states to              and the information is available.                      AAMVA, as authorized under the Anti-


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                                      5774               Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations

                                      Car Theft Act, and encouraged states to                 have access to the data and may be in                  Executive Order 12866
                                      apply through its other funding                         a position to establish a data-sharing                    This regulation has been drafted and
                                      programs to enhance NMVTIS                              arrangement with NMVTIS in order to                    reviewed in accordance with Executive
                                      participation. As a result of these                     reduce the reporting burden on these                   Order 12866, ‘‘Regulatory Planning and
                                      solicitations, funding was awarded to                   entities.                                              Review,’’ section 1(b), Principles of
                                      AAMVA to assist with NMVTIS                                Moreover, insurance companies will                  Regulation. The Department of Justice
                                      implementation in fiscal years 2007 and                 not be required to provide data on                     has determined that this rule is a
                                      2008. As noted above, funds awarded to                  automobiles older than the four                        ‘‘significant regulatory action’’ under
                                      the operator of NMVTIS will reduce the                  previous model years. In addition, junk                Executive Order 12866, section 3(f).
                                      amount of user fees that must be                        and salvage yards will not be required                 Accordingly, this rule has been
                                      imposed to implement NMVTIS once all                    to report if they already report the                   reviewed by the Office of Management
                                      states are participating.                               required information to the state and the              and Budget.
                                      7. Governance                                           state makes that information available to
                                                                                              the operator. The Department has                       Regulatory Impact Assessment
                                         The Department of Justice may                        attempted to minimize the impact of the                   In 1999, the GAO conducted a review
                                      establish a NMVTIS Advisory Board to                    rule on small businesses by allowing
                                      provide input and recommendations                                                                              of NMVTIS. The GAO report found that
                                                                                              them to use third parties to report the                a life-cycle cost and benefits analysis
                                      from stakeholders on NMVTIS
                                                                                              statutorily required information to                    should be performed to determine if
                                      operations and administration. If
                                                                                              NMVTIS. In addition, the monthly                       further federal funding of NMVTIS was
                                      created, the Advisory Board’s costs
                                                                                              reporting requirements of this rule only               warranted. Accordingly, at the request
                                      would be supported by the operator
                                                                                              apply to automobiles obtained by the                   of the Department of Justice, the
                                      after approval of the Department of
                                                                                              business within the prior month or in                  Logistics Management Institute
                                      Justice.
                                                                                              cases where an update or correction to                 conducted such an analysis. The 2001
                                      Regulatory Flexibility Act                              previously reported data is needed.                    LMI report found that NMVTIS would
                                         The Attorney General, in accordance                  Paperwork Reduction Act                                achieve significant net benefits if it is
                                      with the Regulatory Flexibility Act, 5                                                                         fully implemented in all 50 states and
                                      U.S.C. 605(b), has reviewed this                           This information collection has been                the District of Columbia. In addition, the
                                      regulation and by approving it certifies                submitted to the Office of Management                  2006 IJIS Institute report found that:
                                      that this regulation will not have a                    and Budget (OMB) for review in                         ‘‘the NMVTIS program provides an
                                      significant economic impact on a                        accordance with the procedures of the                  invaluable benefit to state vehicle
                                      substantial number of small entities.                   Paperwork Reduction Act of 1995,                       administrators and the public
                                         Although the reporting requirements                  Public Law No. 104–13, 109 Stat. 163.                  community as a whole. Advantages of
                                      imposed by the Anti-Car Theft Act will                  If additional information is required                  the program include improving the state
                                      apply to all small insurance companies                  contact: Lynn Bryant, Department                       titling process, as well as providing key
                                      and small junk and salvage yard                         Clearance Officer, United States                       information to consumers and law
                                      operators that handle junk or salvage                   Department of Justice, Justice                         enforcement agencies.’’ Based on these
                                      automobiles, the Department believes                    Management Division, Policy and                        reviews of NMVTIS and the
                                      that the incremental cost for these                     Planning Staff, Patrick Henry Building,                Department’s experience with
                                      entities to collect VINs and the other                  Suite 1600, 601 D Street, NW.,                         automobile theft and fraud, the
                                      required information will be minimal                    Washington, DC 20530.                                  Department believes that the full
                                      and that the rule will not have a                                                                              implementation of NMVTIS should
                                                                                              Unfunded Mandates Reform Act of
                                      significant economic impact on them.                                                                           reduce the market for stolen motor
                                                                                              1995
                                      Many insurance companies and junk                                                                              vehicles, enhance public safety, and
                                      and salvage yards already capture VINs                    This rule will not result in the                     reduce fraud. This rule will serve to
                                      as a means of positively identifying                    expenditure by state, local, and tribal                enhance the efficacy of NMVTIS by
                                      automobiles and tracking inventory. The                 governments, in the aggregate, or by the               implementing the statutory reporting
                                      additional cost to insurance companies,                 private sector, of $100 million or more                requirements imposed on junk and
                                      junk yard operators, and salvage yard                   in any one year, and it will not                       salvage yards and insurance carriers and
                                      operators to report the collected                       significantly or uniquely affect small                 clarifying the obligations of the states
                                      information electronically to NMVTIS is                 governments. Therefore, no actions were                and the operator of NMVTIS.
                                      not expected to exceed 1 cent per motor                 deemed necessary under the provisions                     The operator of the NMVTIS is
                                      vehicle for most entities after the first               of the Unfunded Mandates Reform Act                    entitled to receive revenues from user
                                      year. In the first year only, start-up                  of 1995.                                               fees to support the system. Currently,
                                      investments increase this per-vehicle                                                                          these fees generate approximately $1.5
                                                                                              Small Business Regulatory Enforcement
                                      cost to approximately 4 cents per                                                                              million annually. AAMVA, however,
                                                                                              Fairness Act of 1996
                                      vehicle. For the estimated small number                                                                        estimates the annual operating cost of
                                      of non-automated reporting entities, a                    This rule is not a major rule as                     the system to be approximately
                                      manual reporting process may be                         defined by section 251 of the Small                    $5,650,000—depending on necessary
                                      required, in which case the additional                  Business Regulatory Enforcement                        system upgrades that may be required
                                      cost is estimated at 96 cents per vehicle               Fairness Act of 1996, 5 U.S.C. 804. This               and user volume. Therefore, the current
                                      annually. In the first year only, the cost              rule will not result in a major increase               AAMVA fee structure under-funds
                                      for these entities is estimated at $1.86                in costs or prices or have significant                 NMVTIS by $4,150,000 according to its
                                      per vehicle due to initial investment or                adverse effects on competition,                        estimates. According to the Department
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                                      start-up needs. Indeed, these costs may                 employment, investment, productivity,                  of Transportation’s 2005 Highway
                                      be significantly lower or possibly even                 innovation, or on the ability of United                Statistics, 241,193,974 vehicles were
                                      eliminated altogether if insurance,                     States-based companies to compete with                 titled in the United States in 2005.
                                      salvage, and junk data is provided                      foreign-based companies in domestic                    Therefore, the total cost to the operator
                                      through a third party that may already                  and export markets.                                    to fund NMVTIS ranges from 1 cent to


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                                      2.3 cents per motor vehicle title titled in                          changes to the state’s title-information              In those cases where the data is already
                                      the U.S.                                                             system is required and therefore there is             reported to a state or to a cooperating
                                         Consequently, the average fees                                    no cost for this aspect of compliance.                third party, there is no additional cost
                                      charged to the states by the operator                                For the reporting aspect however (i.e.,               to insurance carriers. In cases where this
                                      under this proposed rule should be less                              programming an automated batch                        data is not currently reported to a
                                      than 3 cents per vehicle. In most cases,                             upload process via file transfer protocol             cooperating third party, the carrier
                                      states that choose to integrate the                                  (FTP)), it is anticipated that states                 would be required to report the data to
                                      NMVTIS processes of data provision                                   would incur reporting costs of less than              NMVTIS. With the assumption that the
                                      and inquiry into their titling process                               1 cent per vehicle. Assuming the                      data is already collected in an
                                      generally incur one-time upgrade costs                               reporting costs for states are 0.005 cents            exportable format, and assuming that
                                      to establish these connections. In nearly                            per vehicle and that 241,193,974                      NMVTIS would establish a reporting
                                      every case, once a connection to the                                 vehicles are titled in the United States,             mechanism involving a simple FTP-
                                      system is established, data transmission                             the Department estimates that the                     based solution, the cost to insurance
                                      for uploads and inquiries is automated                               reporting costs for states is                         carriers is similar to the state reporting
                                      and occurs without recurring costs.                                  approximately $1,205,970.                             costs of less than 1 cent per vehicle. The
                                      With these one-time costs and state fees                               The incremental cost to insurance                   FBI previously has estimated that
                                      considered, the costs to states are                                  companies and junk- and salvage-yard                  approximately 10.5 million junk and
                                      estimated at 6 cents per vehicle. This                               operators that handle junk or salvage                 salvage vehicles are handled each year.
                                      scenario includes making the data                                    automobiles also is expected to be low.               Assuming that it costs insurance carriers
                                      available to NMVTIS via real-time                                    Many insurance companies and junk                     approximately 0.005 cents per vehicle to
                                      updates and making inquiries into the                                and salvage yards already capture VINs                report and that the insurance carriers
                                      system prior to issuing new titles. While                            as a means of positively identifying                  are required to report on all 10.5 million
                                      the frequency of reporting does not                                  automobiles and tracking inventory.                   junk and salvage vehicles, then the
                                      impact costs under this scenario, states                             Additionally, for both the insurance                  reporting costs to insurance carriers will
                                      can lower their upgrade costs by                                     sector and the junk/salvage industry,
                                                                                                                                                                 be approximately $52,500 annually.
                                      choosing to integrate the NMVTIS                                     many companies are already reporting
                                      reporting and inquiry requirements into                              much of the required data to                             Similarly, junk and salvage yard
                                      their business rules but not into their                              independent third parties who have                    operators that already are reporting to
                                      electronic titling processes. In these                               indicated a willingness to pass this data             cooperating third parties would not be
                                      cases, states would see lower costs by                               on to DOJ for NMVTIS use.                             required to report separately. Thus,
                                      establishing a regular reporting/data                                  According to the NICB, it is estimated              NMVTIS would impose no additional
                                      upload process but not re-engineering                                that there are approximately 321                      burden. For those entities not
                                      their own title-information systems for                              insurance groups representing                         voluntarily reporting to a cooperating
                                      real-time updates. Under this scenario,                              approximately 3,000 insurers that report              third party, a separate reporting
                                      instead of a state’s title-information                               an estimated 2.4 million salvage and                  mechanism would be established.
                                      system automatically making the                                      total-loss records annually (based on the             Depending on the type of mechanism
                                      NMVTIS inquiry, the title clerk would                                most recent three-year average).                      established (e.g., FTP-based solution,
                                      switch to an internet-enabled PC to                                  Furthermore, based on 2007 insurance                  form-fax solution, etc.), the costs will
                                      perform a web search of NMVTIS via a                                 data, over 60% of these motor vehicles                vary. It is assumed that all junk and
                                      secure virtual private network (VPN). In                             will originate from the ten largest                   salvage yard operators already collect
                                      addition, the cost is minimized because                              insurance groups. These 3,000 insurers                much of the information required under
                                      a state is only required to check out-of-                            would then be responsible for reporting               the rule, and therefore, it is only the
                                      state titles. Moreover, because this type                            this total-loss information to NMVTIS if              transmission of this data to NMVTIS
                                      of search is internet-based versus state-                            not already reported to a third party that            that will result in costs. The table below
                                      title-information system-based, no                                   agrees to provide the data to NMVTIS.                 summarizes these cost estimates.

                                                                                                                                                                                                    Total first year
                                                                                                                                                                                   Total annual     costs (includes
                                                                                                                   Initial         Annual ongoing labor       Annual vehicle      average labor      initial invest-
                                                Yard size                      Reporting method                 investment                costs                 volume *            costs per          ment costs
                                                                                                                   costs                                                          vehicle (cents)     and annual
                                                                                                                                                                                                      labor costs)

                                      Small (non-automated)                Fax ..............................               $90   12 hours per year/                     1–200                96    $1.86.
                                                                                                                                    $96.00.
                                      Small (automated) ........           FTP .............................                  0   24 minutes per year/                   1–200                 3    3 cents.
                                                                                                                                    $3.12.
                                      Medium .........................     FTP .............................                  0   24 minutes per year/              201–500                   <1    <1 cent.
                                                                                                                                    $3.12.
                                      Large ............................   FTP .............................                250   24 minutes per year/            501–7,800                   <1    6 cents.
                                                                                                                                    $3.12.
                                         (* Note: Per-vehicle costs based on an average annual vehicle volumes.)


                                        While it is difficult to estimate how                              if they do not have automation in place.              through its voluntary and independent
                                      many junk and salvage yards are not                                  The National Salvage Vehicle Reporting                efforts within the industry. If such
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                                      automated, the National Salvage Vehicle                              Program has discussed with many of the                assistance is available from these
                                      Reporting Program and other industry                                 inventory-management vendors the                      vendors, nearly all junk and salvage
                                      representatives estimate that nearly all                             assistance that can be made available to              yards will have some form of
                                      have some form of data collection even                               establish reliable reporting protocols                automation and be capable of exporting


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                                      5776               Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations

                                      and sending monthly reports                             funding NMVTIS, such as a tiered-based                   Authority: Public Law 103–159, 107 Stat.
                                      electronically.                                         fee structure and a transaction-based fee              1536, 49 U.S.C. 30501–30505; Public Law
                                         In cases in which small junk and                     structure. Based on the comments to the                101–410, 104 Stat. 890, as amended by Public
                                      salvage yards have no form of                           proposed rule, the Department believes                 Law 104–134, 110 Stat. 1321.
                                      automation or computerized files, the                   that a tiered fee structure based on the               ■ 2. Add a new subpart B to read as
                                      Department assumes that a fax or other                  total number of motor vehicles titled in               follows:
                                      data-transmittal process would be                       a state is preferable to these alternatives
                                      needed. This paper-based process                                                                               Subpart B—National Motor Vehicle Title
                                                                                              because it complies with the Anti-Car                  Information System (NMVTIS)
                                      would likely incur additional labor                     Theft Act and minimizes any burden
                                      costs that would bring the estimated                    imposed on reporting entities.                         Sec.
                                      per-vehicle costs for this small number                                                                        25.51 Purpose and authority.
                                                                                                 With regard to all sector reporting                 25.52 Definitions.
                                      of businesses to approximately 0.96                     requirements, in most cases reducing                   25.53 Responsibilities of the operator of
                                      cents per vehicle (annual labor costs).                 the reporting timelines from monthly to                     NMVTIS.
                                      However, according to industry                          semi-annually or less will not                         25.54 Responsibilities of the States.
                                      representatives, the number of junk and                 significantly reduce costs due to the                  25.55 Responsibilities of insurance carriers.
                                      salvage yards of this size is relatively                benefits of automated processes.                       25.56 Responsibilities of junk yards and
                                      small (estimated at 20% of licensed junk                Additionally, the costs that this reduced                   salvage yards and auto recyclers.
                                      and salvage yards) and the number of                    reporting would incur by enabling theft                25.57 Erroneous junk or salvage reporting.
                                      businesses without any automation is                    and fraud to continue far outweighs the
                                      even lower (expected to be less than                                                                           Subpart B—National Motor Vehicle
                                                                                              benefits. Consumers, states, law
                                      1,700 licensed businesses in the U.S.).                                                                        Title Information System (NMVTIS)
                                                                                              enforcement, and others need to know
                                      These businesses would not incur these                  as soon as possible when a vehicle is                  § 25.51   Purpose and authority.
                                      costs if already reporting this data to a               reported as totaled or salvage to prevent
                                      state or another cooperating third party.                                                                         The purpose of this subpart is to
                                                                                              the vehicle from being turned over to                  establish policies and procedures
                                         Assuming that small junk and salvage                 another state or consumer with a clean
                                      yards handle approximately 170,000                                                                             implementing the National Motor
                                                                                              title. Moreover, a monthly reporting                   Vehicle Title Information System
                                      vehicles annually (at $0.96 per vehicle
                                                                                              cycle is expressly required by statute.                (NMVTIS) in accordance with title 49
                                      annual labor costs) and that the
                                      remaining junk and salvage yards                        Executive Order 13132                                  U.S.C. 30502. The purpose of NMVTIS
                                      handle 10,330,000 vehicles annually (at                                                                        is to assist in efforts to prevent the
                                                                                                In accordance with section 6 of                      introduction or reintroduction of stolen
                                      an average labor cost of 1 cent per
                                                                                              Executive Order 13132, the Department                  motor vehicles into interstate
                                      vehicle), then the Department estimates
                                                                                              of Justice has determined that this rule               commerce, protect states and individual
                                      that their annual reporting costs will be
                                                                                              does not have sufficient federalism                    and commercial consumers from fraud,
                                      approximately $266,500.
                                         The Department anticipates that the                  implications to warrant a federalism                   reduce the use of stolen vehicles for
                                      cost for web-based prospective-                         summary impact statement. The rule                     illicit purposes including fundraising
                                      purchaser inquiries will be nominal.                    does not impose substantial direct                     for criminal enterprises, and provide
                                      Similarly, the cost to law enforcement to               compliance costs on state and local                    consumer protection from unsafe
                                      access NMVTIS also is expected to be                    governments and does not preempt state                 vehicles.
                                      minimal because law enforcement will                    law. In formulating this rule, the
                                                                                              Department has worked closely with                     § 25.52   Definitions.
                                      not be charged any direct transaction
                                      costs. Law enforcement will access                      AAMVA regarding the implementation                        For purposes of this subpart B:
                                                                                              of NMVTIS.                                                Acquiring means owning, possessing,
                                      NMVTIS through their existing
                                      infrastructure. The only cost will be to                                                                       handling, directing, or controlling.
                                                                                              Executive Order 12988                                     Automobile has the same meaning
                                      the operator of the system based on the
                                                                                                This rule meets the applicable                       given that term in 49 U.S.C. 32901(a).
                                      number of inquiries received from law                                                                             Certificate of title means a document
                                      enforcement. The expected cost to the                   standards set forth in sections 3(a) and
                                                                                              3(b)(2) of Executive Order 12988, Civil                issued by a state showing ownership of
                                      operator is less than 12 cents per
                                                                                              Justice Reform.                                        an automobile.
                                      inquiry.                                                                                                          Insurance carrier means an individual
                                         The Department of Justice also                       List of Subjects                                       or entity engaged in the business of
                                      considered possible alternatives to those
                                                                                              28 CFR Part 25                                         underwriting automobile insurance.
                                      proposed in the rule. Indeed, pursuant                                                                            Junk automobile means an automobile
                                      to 49 U.S.C. 30504(c), the Attorney                        Crime, Law enforcement, Motor                       that—
                                      General was required to establish                       vehicles safety, Motor vehicles,                          (1) Is incapable of operating on public
                                      ‘‘procedures and practices to facilitate                Reporting and recordkeeping                            streets, roads, and highways; and
                                      reporting in the least burdensome and                   requirements, Transportation.                             (2) Has no value except as a source of
                                      costly fashion’’ on insurance carriers                                                                         parts or scrap.
                                                                                              ■ Accordingly, by virtue of the authority
                                      and junk and salvage yards. Because of                                                                            Junk yard means an individual or
                                                                                              vested in me as Attorney General,
                                      the statutory requirements imposed by                                                                          entity engaged in the business of
                                                                                              including 5 U.S.C. 301 and 28 U.S.C.
                                      the Anti-Car Theft Act, however, the                                                                           acquiring or owning junk automobiles
                                                                                              509 and 510 and, for the reasons set
                                      Department of Justice did not have                                                                             for—
                                                                                              forth in the preamble, part 25 of chapter
                                      many options regarding the information                                                                            (1) Resale in their entirety or as spare
                                                                                              I of title 28 of the Code of Regulations
                                      that must be provided and the scope of                                                                         parts; or
                                                                                              is amended as follows:
                                      the entities that must report the required                                                                        (2) Rebuilding, restoration, or
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                                      information. In particular, the                         PART 25—DEPARTMENT OF JUSTICE                          crushing.
                                      information required to be reported by                  INFORMATION SYSTEMS                                       Motor vehicle has the same meaning
                                      the proposed rule is mandated by the                                                                           given that term in 49 U.S.C. 3102(6).
                                      Anti-Car Theft Act. The Department also                 ■  1. The Authority citation for part 25                  NMVTIS means the National Motor
                                      considered various alternatives for                     is revised to read as follows:                         Vehicle Title Information System.


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                                                         Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations                                           5777

                                         Operator means the individual or                     § 25.53 Responsibilities of the operator of            motor vehicles and parts into interstate
                                      entity authorized or designated as the                  NMVTIS.                                                commerce.
                                      operator of NMVTIS under 49 U.S.C.                         (a) By no later than March 31, 2009,                  (d) The operator shall develop and
                                      30502(b), or the office designated by the               the operator shall make available:                     maintain a privacy policy that addresses
                                      Attorney General, if there is no                           (1) To a participating state on request             the information in the system and how
                                      authorized or designated individual or                  of that state, information in NMVTIS                   personal information shall be protected.
                                      entity.                                                 about any automobile;                                  DOJ shall review and approve this
                                         Purchaser means the individual or                       (2) To a Government, state, or local                privacy policy.
                                      entity buying an automobile or                          law enforcement official on request of                   (e) The means by which access is
                                      financing the purchase of an                            that official, information in NMVTIS                   provided by the operator to users of
                                      automobile. For purposes of this                        about a particular automobile, junk                    NMVTIS must be approved by the
                                      subpart, purchasers include dealers,                    yard, or salvage yard;                                 Department of Justice.
                                                                                                 (3) To a prospective purchaser of an                  (f) The operator shall biennially
                                      auction companies or entities engaged
                                                                                              automobile on request of that purchaser,               establish and at least annually collect
                                      in the business of purchasing used
                                                                                              information in NMVTIS about that                       user fees from the states and users of
                                      automobiles, lenders financing the
                                                                                              automobile; and                                        NMVTIS to pay for its operation, but the
                                      purchase of new or used automobiles,
                                                                                                 (4) To a prospective or current insurer             operator may not collect fees in excess
                                      and automobile dealers.
                                                                                              of an automobile on request of that                    of the costs of operating the system. The
                                         Salvage automobile means an                          insurer, information in NMVTIS about                   operator is required to recalculate the
                                      automobile that is damaged by collision,                the automobile.                                        user fees on a biennial basis. After the
                                      fire, flood, accident, trespass, or other                  (b) NMVTIS shall permit a user of the               operator establishes its initial user fees
                                      event, to the extent that its fair salvage              system to establish instantly and                      for the states under this section,
                                      value plus the cost of repairing the                    reliably:                                              subsequent state user fees must be
                                      automobile for legal operation on public                   (1) The validity and status of a                    established at least one year in advance
                                      streets, roads, and highways would be                   document purporting to be a certificate                of their effective date. Any user fees
                                      more than the fair market value of the                  of title;                                              established by the operator must be
                                      automobile immediately before the                          (2) Whether an automobile bearing a                 established with the approval of the
                                      event that caused the damage. Salvage                   known VIN is titled in a particular state;             Department of Justice. The operator of
                                      automobiles include automobiles                            (3) Whether an automobile known to                  NMVTIS will inform the states of the
                                      determined to be a total loss under the                 be titled in a particular state is or has              applicable user fees either through
                                      law of the applicable jurisdiction or                   been a junk automobile or a salvage                    publication in the Federal Register or
                                      designated as a total loss by an insurer                automobile;                                            by direct notice or invoice to the states.
                                      under the terms of its policies,                           (4) For an automobile known to be                     (1) The expenses to be recouped by
                                      regardless of whether or not the                        titled in a particular state, the odometer             the operator of NMVTIS will consist of
                                      ownership of the vehicle is transferred                 mileage disclosure required under 49                   labor costs, data center operations costs,
                                      to the insurance carrier.                               U.S.C. 32705 for that automobile on the                the cost of providing access to
                                         Salvage yard means an individual or                  date the certificate of title for that                 authorized users, annual functional
                                      entity engaged in the business of                       automobile was issued and any later                    enhancement costs (including labor and
                                      acquiring or owning salvage                             mileage information, if noted by the                   hardware), costs necessary for
                                      automobiles for—                                        state; and                                             implementing the provisions of this
                                         (1) Resale in their entirety or as spare                (5) Whether an automobile bearing a                 rule, the cost of technical upgrades, and
                                      parts; or                                               known VIN has been reported as a junk                  other costs approved in advance by the
                                         (2) Rebuilding, restoration, or                      automobile or a salvage automobile                     Department of Justice.
                                      crushing.                                               under 49 U.S.C. 30504.                                   (2) User fees collected from states
                                                                                                 (c) The operator is authorized to seek              should be based on the states’ pro rata
                                         Note to definition of ‘‘Salvage yard’’:              and accept, with the concurrence of the
                                      For purposes of this subpart, vehicle                                                                          share of the total number of titled motor
                                                                                              Department of Justice, additional                      vehicles based on the Highway Statistics
                                      remarketers and vehicle recyclers,                      information from states and public and
                                      including scrap vehicle shredders and                                                                          Program of the Federal Highway
                                                                                              private entities that is relevant to the               Administration, U.S. Department of
                                      scrap metal processors as well as ‘‘pull-               titling of automobiles and to assist in
                                      or pick-apart yards,’’ salvage pools,                                                                          Transportation, except in cases where
                                                                                              efforts to prevent the introduction or                 states did not report to that program, in
                                      salvage auctions, and other types of                    reintroduction of stolen motor vehicles
                                      auctions handling salvage or junk                                                                              which case the states shall make
                                                                                              and parts into interstate commerce. The                available the most recent statistics for
                                      vehicles (including vehicles declared a                 operator, however, may not collect any
                                      ‘‘total loss’’), are included in the                                                                           motor vehicle title registrations.
                                                                                              social security account numbers as part                  (3) All states, regardless of their level
                                      definition of ‘‘junk or salvage yards.’’                of any of the information provided by                  of participation, shall be charged user
                                         State means a state of the United                    any state or public or private entity. The             fees by the operator.
                                      States or the District of Columbia.                     operator may not make personally                         (4) No fees shall be charged for
                                         Total loss means that the cost of                    identifying information contained                      inquiries from law enforcement
                                      repairing such vehicles plus projected                  within NMVTIS, such as the name or                     agencies.
                                      supplements plus projected diminished                   address of the owner of an automobile,                   (g) The operator will establish
                                      resale value plus rental reimbursement                  available to an individual prospective                 procedures and practices to facilitate
                                      expense exceeds the cost of buying the                  purchaser. With the approval of the                    reporting to NMVTIS in the least
                                      damaged motor vehicle at its pre-                       Department of Justice, the operator may                burdensome and costly fashion. If the
                                      accident value, minus the proceeds of
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                                                                                              allow public and private entities that                 operator is not the Department of
                                      selling the damaged motor vehicle for                   provide information to NMVTIS to                       Justice, the operator must provide an
                                      salvage.                                                query the system if such access will                   annual report to the Department of
                                         VIN means the vehicle identification                 assist in efforts to prevent the                       Justice detailing the fees it collected and
                                      number;                                                 introduction or reintroduction of stolen               how it expended such fees and other


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                                      funds to operate NMVTIS. This report                      (1) Communicating to the operator the                vehicle’s title, including the reason why
                                      must also include a status report on the                VIN of the automobile for which the                    the insurance carrier obtained
                                      implementation of the system,                           certificate of title is sought;                        possession of the motor vehicle. For
                                      compliance with reporting and other                       (2) Giving the operator an opportunity               example, the insurance carrier may have
                                      requirements, and sufficient detail and                 to communicate to the participating                    obtained possession of a motor vehicle
                                      scope regarding financial information so                state the results of a search of the                   because it had been subject to flood,
                                      that reasonable determinations can be                   information and using the results to                   water, collision, or fire damage, or as a
                                      made regarding budgeting and                            determine the validity and status of a                 result of theft and recovery. The
                                      performance. The operator shall procure                 document purporting to be a                            provision of information provided by an
                                      an independent financial audit of                       certification of title, to determine                   insurance carrier under this paragraph
                                      NMVTIS revenues and expenses on an                      whether the automobile has been a junk                 must be pursuant to a means approved
                                      annual basis. The Department of Justice                 or salvage vehicle or has been reported                by the operator.
                                      will make these reports available for                   as such, to compare and verify the                       (d) Insurance carriers whose required
                                      public inspection.                                      odometer information presented with                    data is provided to the operator through
                                                                                              that reported in the system, and to                    an operator-authorized third party in a
                                      § 25.54   Responsibilities of the States.               determine the validity of other                        manner acceptable to the operator are
                                         (a) Each state must maintain at least                information presented (e.g., lien-holder               not required to duplicate such reporting.
                                      the level of participation in NMVTIS                    status, etc.).                                         For example, if the operator and a
                                      that it had achieved as of January 1,                     (d) By January 1, 2010, those states                 private third-party organization reach
                                      2009. By no later than January 1, 2010,                 not currently paying user fees will be                 agreement on the provision of insurance
                                      each state must have completed                          responsible for paying user fees as                    data already reported by insurance to
                                      implementation of all requirements of                   established by the operator to support                 the third party, insurance companies are
                                      participation and provide, or cause to be               NMVTIS.                                                not required to subsequently report the
                                      provided by an agent or third party, to                                                                        information directly into NMVTIS.
                                      the designated operator and in an                       § 25.55 Responsibilities of insurance
                                      electronic format acceptable to the                     carriers.                                              § 25.56 Responsibilities of junk yards and
                                      operator, at a frequency of once every 24                  (a) By no later than March 31, 2009,                salvage yards and auto recyclers.
                                      hours, titling information for all                      and on a monthly basis as designated by                   (a) By no later than March 31, 2009,
                                      automobiles maintained by the state.                    the operator, any individual or entity                 and continuing on a monthly basis as
                                      The titling information provided to                     acting as an insurance carrier                         designated by the operator, any
                                      NMVTIS must include the following:                      conducting business within the United                  individual or entity engaged in the
                                         (1) VIN;                                             States shall provide, or cause to be                   business of operating a junk yard or
                                         (2) Any description of the automobile                provided on its behalf, to the operator                salvage yard within the United States
                                      included on the certificate of title                    and in a format acceptable to the                      shall provide, or cause to be provided
                                      (including any and all brands associated                operator, a report that contains an                    on its behalf, to the operator and in a
                                      with such vehicle);                                     inventory of all automobiles of the                    format acceptable to the operator, an
                                         (3) The name of the individual or                    current model year or any of the four                  inventory of all junk automobiles or
                                      entity to whom the certificate was                      prior model years that the carrier,                    salvage automobiles obtained in whole
                                      issued;                                                 during the past month, has obtained                    or in part by that entity in the prior
                                         (4) Information from junk or salvage                 possession of and has decided are junk                 month.
                                      yard operators or insurance carriers                    automobiles or salvage automobiles. An                    (b) The inventory shall include the
                                      regarding the acquisition of junk                       insurance carrier shall report on any                  following information:
                                      automobiles or salvage automobiles, if                  automobiles that it has determined to be                  (1) The name, address, and contact
                                      this information is being collected by                  a total loss under the law of the                      information for the reporting entity
                                      the state; and                                          applicable jurisdiction (i.e. , state) or              (junk, salvage yard, recycler);
                                         (5) For an automobile known to be                    designated as a total loss by the                         (2) VIN;
                                      titled in a particular state, the odometer              insurance company under the terms of                      (3) The date the automobile was
                                      mileage disclosure required under 49                    its policies.                                          obtained;
                                      U.S.C. 32705 for that automobile on the                    (b) The inventory must contain the                     (4) The name of the individual or
                                      date the certificate of title for that                  following information:                                 entity from whom the automobile was
                                      automobile was issued and any later                        (1) The name, address, and contact                  obtained;
                                      mileage information, if noted by the                    information for the reporting entity                      (5) A statement of whether the
                                      state.                                                  (insurance carrier);                                   automobile was crushed or disposed of,
                                         (b) With the approval of the operator                   (2) VIN;                                            for sale or other purposes, to whom it
                                      and the state, the titling information                     (3) The date on which the automobile                was provided or transferred, and if the
                                      provided to NMVTIS may include any                      was obtained or designated as a junk or                vehicle is intended for export out of the
                                      other information included on the                       salvage automobile;                                    United States.
                                      certificates of title and any other                        (4) The name of the individual or                      (c) Junk and salvage yards, however,
                                      information the state maintains in                      entity from whom the automobile was                    are not required to report this
                                      relation to these titles.                               obtained and who possessed it when the                 information if they already report the
                                         (c) By no later than January 1, 2010,                automobile was designated as a junk or                 information to the state and the state
                                      each state shall establish a practice of                salvage automobile; and                                makes the information required in this
                                      performing a title verification check                      (5) The name of the owner of the                    rule available to the operator.
                                      through NMVTIS before issuing a                         automobile at the time of the filing of                   (d) Junk and salvage yards may be
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                                      certificate of title to an individual or                the report.                                            required to file an update or
                                      entity claiming to have purchased an                       (c) Insurance carriers are strongly                 supplemental report of final disposition
                                      automobile from an individual or entity                 encouraged to provide the operator with                of any automobile where final
                                      in another state or in cases of title                   information on other motor vehicles or                 disposition information was not
                                      transfers. The check will consist of—                   other information relevant to a motor                  available at the time of the initial report


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                                                         Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations                                           5779

                                      filing, or if their actual disposition of               determined not to meet the definition of               primary documentation (i.e., title
                                      the automobile differs from what was                    salvage or junk after a good-faith                     documents) provided by the vehicle
                                      initially reported.                                     physical and value appraisal conducted                 supplier.
                                         (e) Junk and salvage yards are                       by qualified appraisal personnel, so long
                                                                                                                                                     § 25.57 Erroneous junk or salvage
                                      encouraged to provide the operator with                 as such appraisals are conducted
                                                                                                                                                     reporting.
                                      similar information on motor vehicles                   entirely independent of any other
                                      other than automobiles that they obtain                 interests, persons or entities.                           (a) In cases where a vehicle is
                                      that possess VINs.                                      Individuals and entities that handle less              erroneously reported to have been
                                                                                              than five vehicles per year that are                   salvage or junk and subsequently
                                         (f) Junk- and salvage-yard operators                                                                        destroyed (i.e., crushed), owners of the
                                      whose required data is provided to the                  determined to be salvage, junk, or total
                                                                                              loss are not required to report under the              legitimate vehicles are encouraged to
                                      operator through an operator-authorized                                                                        seek a vehicle inspection in the current
                                      third party (e.g., state or other public or             salvage-yard requirements.
                                                                                                                                                     state of title whereby inspection officials
                                      private organization) in a manner                          (h) Scrap metal processors and                      can verify via hidden VINs the vehicle’s
                                      acceptable to the operator are not                      shredders that receive automobiles for                 true identity. Owners are encouraged to
                                      required to duplicate such reporting. In                recycling where the condition of such                  file such inspection reports with the
                                      addition, junk and salvage yards are not                vehicles generally prevent VINs from                   current state of title and to retain such
                                      required to report on an automobile if                  being identified are not required to                   reports so that the vehicle’s true history
                                      they are issued a verification under 49                 report to the operator if the source of                can be documented.
                                      U.S.C. 33110 stating that the automobile                each vehicle has already reported the                     (b) To avoid the possibility of fraud,
                                      or parts from the automobile are not                    vehicle to NMVTIS. In cases where a                    the operator may not allow any entity to
                                      reported as stolen.                                     supplier’s compliance with NMVTIS                      delete a prior report of junk or salvage
                                         (g) Such entities must report all                    cannot be ascertained, however, scrap                  status.
                                      salvage or junk vehicles they obtain,                   metal processors and shredders must
                                      including vehicles from or on behalf of                 report these vehicles to the operator                    Dated: January 23, 2009.
                                      insurance carriers, which can be                        based on a visual inspection if possible.              Mark Filip,
                                      reasonably assumed are total loss                       If the VIN cannot be determined based                  Acting Attorney General.
                                      vehicles. Such entities, however, are not               on this inspection, scrap metal                        [FR Doc. E9–1835 Filed 1–26–09; 11:15 am]
                                      required to report any vehicle that is                  processors and shredders may rely on                   BILLING CODE 4410–02–P
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