Odometer disclosure requirements: Exemptions; rulemaking petition denied,

[Federal Register: January 25, 2006 (Volume 71, Number 16)]

[Proposed Rules]

[Page 4090-4092]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr25ja06-29]

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 580

[Docket No. NHTSA-2005-22899]

Petition for Rulemaking; Diane and Dorsey Smith

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

ACTION: Denial of Petition for Rulemaking.

SUMMARY: This notice denies a petition filed by Diane and Dorsey Smith requesting that the National Highway Traffic Safety Administration (NHTSA) amend its regulation concerning odometer disclosure requirements to eliminate the exemption for vehicles having a Gross Vehicle Weight Rating of more than 16,000 pounds.

FOR FURTHER INFORMATION CONTACT: The following persons at the National Highway Traffic Safety Administration, 400 Seventh St., SW., Washington, DC 20590.

For technical issues, you may contact Richard C. Morse, Director of the Office of Odometer Fraud Investigation, by phone at (202) 366-4761.

For legal issues, you may contact Katherine Gehringer of the NHTSA Office of Chief Counsel by telephone at

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(202) 366-5263 and by fax at (202) 366-3820.

SUPPLEMENTARY INFORMATION:

Background

In 1972, Congress enacted the Motor Vehicle Information and Cost Savings Act, which included requirements regarding odometers in motor vehicles. Public Law 92-513, 86 Stat. 947, 961-63.\1\ Among other things, the Act prohibits disconnecting, resetting, or altering motor vehicle odometers and requires the execution of an odometer disclosure statement on the title incident to the transfer of ownership of a motor vehicle. The Act also subjects violators to civil and criminal penalties and provides for federal injunctive relief, state enforcement, and a private right of civil action.

\1\ The Motor Vehicle Information and Cost Savings Act, as amended, was repealed in the course of the 1994 recodification of various laws pertaining to the Department of Transportation and was reenacted and recodified without substantive change. Public Law 103- 272; see 108 Stat. 745, 1048-1056, 1379, 1387 et seq.

The Act directs the Secretary of Transportation (the Secretary) to promulgate rules governing the making and retention of odometer disclosure statements. 49 U.S.C. 32705. Pursuant to a delegation from the Secretary, 49 CFR 1.51, NHTSA promulgated 49 CFR Part 580, which requires that each transferor of ownership in an automobile must disclose the mileage to the transferee in writing on the title, the document being used to reassign the title, or in cases where the title has been lost or is being held by a lienholder, on a secure power of attorney form issued by the states. In these cases, the secure power of attorney form must be returned to the state that issued it for retention. All dealers and distributors are required to keep a copy of each odometer disclosure statement they issue and receive for a period of five years.

The regulations exempt certain categories of vehicles, including vehicles more than ten years old, from the disclosure requirements. 49 CFR 580.17(a). Another exemption relates to vehicles in excess of a certain weight. One important reason for exempting these categories of vehicles is that the odometer reading is not the principal guide to the condition and value of the vehicles, either because of their age or the use to which the vehicles are put. Because other information is a better source of the condition of the vehicles, NHTSA has exempted them from the odometer disclosure requirements.

The Petition for Rulemaking filed by Diane and Dorsey Smith pertains to 49 CFR 580.17(a)(1), which provides that the transferor of a vehicle having a Gross Vehicle Weight Rating (GVWR), as defined in 49 CFR 571.3, of more than 16,000 pounds need not disclose the vehicle's odometer mileage.

This exemption for large vehicles was adopted in 1973. 49 CFR 580.5 (1973), 38 FR 2979 (Jan. 31, 1973). In the course of a rulemaking, NHTSA agreed with certain comments, submitted by Freightliner Corporation, White Motor Corporation, and the National Association of Motor Bus Operators, that buses and large trucks are routinely driven hundreds of thousands of miles and their buyers have traditionally relied on their maintenance records as the principal guide to their condition and value. Id. The comments pointed out that such vehicles often accumulate more than 100,000 miles in a year and that major components are often overhauled or replaced during the life of a typical bus or large truck. The most important factor in assessing the condition of such vehicles is to determine when and how such maintenance occurred. Odometer mileage is linked only to the vehicle as a whole and provides no indication of whether and when such important work was done on major components of these heavy-use vehicles. Freightliner Corp., Comment (January 8, 1973) (docket no. 73-31-N01- 029). NHTSA amended the regulations in 1988 (53 FR 29476) and 1989 (54 FR 35888) and redesignated the exemptions as Sec. 580.17 in 1997. 62 FR 47765.

The Petition

On June 30, 2005, the Smiths filed a petition seeking an amendment to NHTSA's regulation that would eliminate the exemption in Sec. 580.17(a)(1) for vehicles having a GVWR of more than 16,000 pounds. The Smiths purchased a used truck with 450,000 miles on the odometer and, as recently as the date of their petition, were unable to determine if the odometer reading is the actual mileage or to obtain the maintenance records for the truck. The Smiths have not provided any evidence that the odometer reading on the truck they purchased was incorrect. Instead, they contend that the problems they have experienced with the truck are likely due to its having more mileage than the odometer shows or to the previous owner's having not done certain maintenance they believed had been done.

The Smiths believe that an odometer disclosure requirement for these vehicles would deter odometer fraud and that without the odometer disclosure, the true mileage of the vehicles can never be ascertained. According to the Smiths, being assured that the mileage is true and correct assists purchasers in determining a vehicle's mechanical condition and value. The Smiths further state that a vehicle's mechanical history or maintenance records are not always available from the previous owner.

Discussion

As enacted in 1972, the primary purpose of the odometer disclosure law was to protect buyers of motor vehicles who ``rely heavily on the odometer reading as an index of the condition and value of such vehicle.'' 86 Stat. 961, 49 U.S.C. 32701(a)(1). In establishing the exemptions to its odometer disclosure regulation in 1973, NHTSA paid close attention to the purposes of the Act. The exemptions in the regulations focused on the types of vehicles for which the odometer reading is not used as a principal guide to the condition and value of the vehicles. Under these exemptions, the public and state agencies were not burdened with paperwork that has not been particularly beneficial to purchasers.\2\

\2\ We also note that in a recent amendment, Congress endorsed exemptions for classes and categories of vehicles. Under this amendment, the Secretary may exempt such classes or categories of vehicles as the Secretary deems appropriate from these disclosure requirements. 49 U.S.C. 32705(a)(5). This provision was added by Public Law 105-178, 7105, 112 Stat. 467.

The Smiths have not provided information to persuade NHTSA that conditions have changed meaningfully since the agency's original determination with regard to the importance of odometer readings in purchases of these large vehicles. Indeed, in a copy of a news article submitted by the petitioners, the president of the Used Truck Association is quoted as saying that high mileage does not hurt a truck, but the lack of maintenance does. Sean Kelly, Something Used, Commercial Carrier Journal Magazine, July 2005, at http://www.etrucker.com/apps/news/article.asp?id=48018. Although some news

articles submitted by the petitioners address the advantages of purchasing trucks with lower mileage, the articles go on to say that those advantages can vanish if the trucks are not maintained properly. See, e.g., Sean Kilcarr, Used Trucks: Maximizing Value, Drivers Magazine, March 1, 2003, at http://driversmag.com/ar/fleet_used_trucks_maximizing/ .

With regard to the lack of availability of maintenance records, a problem of particular concern to the Smiths with regard to their own purchase, neither the Act nor NHTSA's regulations

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require that such records be kept for any vehicles. However, buyers of heavy vehicles are free to insist that maintenance records be made available to them at the time of, and as a condition of, purchase of such vehicles, just as buyers of automobiles, light trucks, and other motor vehicles not exempt from odometer disclosure ensure that the odometer disclosure statement is available at the time of purchase. Removing the odometer certification exemption would not alleviate this concern over maintenance records, and purchasers have sufficient market power to mandate records before they purchase the vehicles in question.

In NHTSA's experience, there has not been a significant odometer fraud problem involving heavy trucks or buses. The agency receives very few complaints pertaining to these types of vehicles. Eliminating the exemption for these vehicles would impose costs on state and the sellers of such vehicles that, in the aggregate, are not insignificant. Moreover, expenditure of agency resources on a rulemaking to eliminate this exemption would divert those resources from the agency's regulatory priorities, which involve measures that may save numerous of lives on the nation's highways.

For the foregoing reasons, the petition is denied.

Issued on: January 18, 2006. Daniel C. Smith, Associate Administrator for Enforcement. [FR Doc. E6-858 Filed 1-24-06; 8:45 am]

BILLING CODE 4910-59-P