amendments but asked NHTSA to reconsider the storage or retention of
paper records altogether given state recordkeeping. Texas argued that
where jurisdictions facilitated the electronic odometer disclosures
needed to create a new title, it would be burdensome for dealers to
retain this information. According to Texas, dealers would have to
extract the information or require the jurisdiction to provide it, and
Texas perceived no benefit from this burden. Texas also contended the
requirements for auctioneers proposed by NHTSA were overbroad,
particularly in requiring secure storage as auctions only need to log
transactions and not store odometer disclosures. Texas also observed
that use of the term ``physical document'' in the proposal was
inappropriate as that term is defined by the NPRM. In contrast to other
states, Virginia stated records kept by motor vehicle dealers and
distributors and by auction companies should be held to the same
standard as records maintained by state vehicle administrators. As did
California, Florida, and Texas, AAMVA stated the proposed requirements
were unnecessary as states systems would provide the required security
protocols and data. NADA noted the proposed language changes to Sec.
508.8(a) should similarly be made to paragraphs (b) and (c). In NADA's
view, NHTSA should clarify that where electronic records are kept in a
centralized state system, the dealer record retention requirements are
satisfied to the extent those records are reasonably accessible from
their primary place of business. Allstate's comments stated record
retention requirements are needed to support the detection and
prosecution of odometer fraud but did not elaborate further.
9. Power of Attorney
    Prior to this final rule, part 580 contained secure paper power of
attorney provisions in Sec. Sec.  508.13, 508.14, and 580.15
facilitating transactions in cases where the title was lost or
physically held by the lienholder. These power of attorney provisions
provide an exception to the rule that a single person cannot execute an
odometer disclosure as both transferor and

transferee by allowing appointment of that individual to execute
odometer disclosures on behalf of the transferor when acquiring the
vehicle under Sec.  508.13, and, if transferring the vehicle, on behalf
of the new transferee under Sec.  508.14.
    The NPRM proposed amending Sec.  580.13(a) and (b), to allow an
individual with a vehicle titled in an electronic title state to use a
power of attorney to sell a vehicle in a paper title state. Further,
because the agency believed a power of attorney or reassignment
documents would not be needed in electronic title jurisdictions, the
NPRM proposed adding the word ``physical'' to certain phrases in Sec.
580.13(f), Sec.  580.14(a), (e), and (f), and in Sec.  580.15(a). Along
with proposing use of a power of attorney for interstate transfers from
electronic to paper jurisdictions, NHTSA specifically requested
comments on whether this power of attorney would be necessary in an
electronic odometer system for intra-state transfers. The NPRM also
sought comment on the feasibility of an electronic power or attorney as
well as the implications of variations among states in implementing the
power of attorney.
    The comments submitted in response to this section in the NPRM
identified several issues related to the proposed amendments. Several
commenters observed the NPRM's view that a power of attorney would be
useful in interstate transactions from an electronic title state to a
paper state was flawed. Commenters also offered varying degrees of
support for the continued use of the power of attorney in electronic
title jurisdictions while others advocated both electronic and paper
versions of the power of attorney in jurisdictions with electronic
title and odometer systems. Other comments addressed the restriction
that the power of attorney could be used only when a title is lost or
physically held by a lienholder in the context of contemporary
electronic title and lien schemes. Similarly, the status of an
electronic title made unavailable because of technical failures led
others to advocate expansion of the power of attorney provision in such
an instance. Others advocated expanding the power of attorney
provisions to facilitate vehicle financing.
    States generally argued against restricting power of attorney use
to jurisdictions without electronic title systems, advocated electronic
and paper power of attorney use and observed that a power of attorney,
without more, would not allow completion of an interstate vehicle
transfer from an electronic title jurisdiction to a paper title
jurisdiction. California agreed electronic disclosure would generally
eliminate the need for the power of attorney but urged that the rule
should not restrict its use only to a physical document. In
California's view, a power of attorney, by itself, is not sufficient to
sell a vehicle or otherwise convey ownership and that completing an
interstate sale from an electronic to paper jurisdiction would also
require a secure title printed on secure paper, with an application for
a duplicate title on which the disposition of the original paper title
is attested. Florida also agreed the secure power of attorney should
not be needed in an electronic title environment but that paper titles
will continue to be in use for some time, and the secure power of
attorney should remain available to states with e-title systems.
According to Florida, electronic powers of attorney would also be
needed, even if not used frequently. Oregon noted there is still an
issue with state-to-state transactions and will continue to be until
all states implement an electronic process and asked if the proposal
eliminated the use of the power of attorney with electronic titles.
Virginia's comments voiced the same concerns and observations raised by
California and Florida while also noting the NPRM does not address how
states deny accepting documents from other states.
    Texas strongly advocated allowing use of the power of attorney with
any electronic title, whether within the same jurisdiction or not.
Further, Texas observed electronic lien systems and electronic titles
raise the question of whether the power of attorney can be used under
the existing restriction that the power of attorney can be used only
when a title is lost or physically held by the lienholder. As the title
is neither lost or held by the lienholder but resides within state
electronic title systems, a transferor must either pay off the loan to
release the title prior to the transfer or must use the power of
attorney to allow the transferee to complete the odometer disclosure.
Texas also urged the power of attorney be permitted in jurisdictions
with electronic titles and that electronic powers of attorney be
allowed as well and requested there be no limitation to whom a
jurisdiction can provide a secure power of attorney. Texas strongly
encouraged NHTSA to amend Sec.  580.13(f), which specifies a power of
attorney is void if the odometer reading on the power of attorney is
lower than on the title. According to Texas, this rule does not address
situations where the power of attorney contains a statement from the
transferor that the odometer reading is known to be in excess of
mechanical limits or is not actual. The preceding circumstances, where
the odometer reading on the power of attorney may be lower than that on
the title should not, in the view of Texas, void the power of attorney.
Texas also asked that this section allow for electronic submission of
an original power of attorney by scanning or imaging. As the power of
attorney is useful only for a single transfer, Texas requested this
change not be accompanied by a requirement that the jurisdiction
confirm destruction or invalidation of the document. Finally, Texas
requested Sec.  580.16 be amended to specify that a copy of a power of
attorney be made available upon request rather than returned and that
NHTSA replace the term ``purchaser'' with ``transferee'' for
consistency.
    California, Texas, and AAMVA observed the current language in Sec.
580.13(f) states ``. . . [i]f the mileage disclosed on the power of
attorney form is lower than the mileage appearing on the title, the
power of attorney is void and the dealer shall not complete the mileage
disclosure on the title.'' (emphasis added). These three commenters all
observed that because the dealer does not complete the disclosure, the
reference to ``dealer'' in Sec.  580.13(f) should be changed to
``transferee'' for consistency.
    AAMVA also noted the power of attorney process described in the
NPRM would not allow completion of a transfer of a vehicle from an
electronic title state to a paper title state without the corresponding
title. In AAMVA's view, a power of attorney is or would be the
appropriate document to transfer ownership. These transactions should
be performed on a secure physical title like they are today. AAMVA also
urged a secure power of attorney, whether physical or electronic, is
needed when the title is electronic because a power of attorney may
still be necessary in intrastate transactions within an electronic
titling state in instances where the buyer or seller does not have the
ability to complete the transaction electronically. As did Texas, AAMVA
observed the power of attorney regulations did not provide relief when
an electronic title cannot be physically held, and there is no title
available for the seller to sign.
    Comments provided by the dealer and auctioneer communities
supported the continued use of the power of attorney in electronic
title and odometer disclosure jurisdictions as well as the availability
of both electronic and

secure paper versions of these documents. Additionally, support was
also expressed for expanded application of the power of attorney beyond
situations where the title is lost or physically held be a lienholder.
    NADA noted the power of attorney should be unnecessary for
electronic transfers but stated that there will be situations where a
power of attorney will continue to be necessary. Therefore, NADA fully
supported the use of a power of attorney in situations involving
electronic state to physical state transactions when it is impractical
for sellers to obtain physical copies of their electronic titles. In
addition, NADA stated NHTSA should recognize that physical state to
electronic state transfers may also involve lost paper titles or paper
titles held by lienholders, and electronic disclosure states should
have to provide for a power of attorney. The organization gave the
example of a paper state trade-in customer transferring to an
electronic state dealership needing to use the power of attorney if the
title is lost or held by a lienholder. NADA urged amending Sec. Sec.
580.13 and 580.14 to accommodate both physical and electronic powers of
attorney or, at the least, NHTSA allow ``electronic states'' to issue
physical powers of attorney.
    NIADA offered similar comments and supported continued availability
of the power of attorney as well as electronic versions of the
document. Dealertrack asked the agency to recognize paper and
electronic titles and odometer disclosures will both be used for many
years and the availability of the power of attorney is essential for
commerce. The company also advocated allowing an electronic power of
attorney. Copart stated powers of attorney will continue to be
necessary for intra-state transfers, particularly if the electronic
system is not available during a catastrophic event. IAA asked if NHTSA
intended for power of attorney forms only to be submitted to paper
title states if their use was not allowed in electronic title and
odometer disclosure states. NAAA requested NHTSA consider expanding the
availability of the power of attorney to situations where technical
problems in an e-title state made electronic titles unavailable. In
NAAA's view, a power of attorney should be available to allow transfers
to occur during the interval when the e-title is inaccessible.
    Lenders and their affiliates also supported broad availability of
the power of attorney. NTSF supported the continued use of the power of
attorney, including electronic systems allowing for electronic power of
attorney forms. CUCTX requested Sec.  580.13 be amended to permit the
use of an electronic power of attorney, even when the title is still a
physical document. According to CUCTX, if parties to a transaction
execute a power of attorney electronically refinancing a vehicle would
be expedited. Similarly, CUCTX encouraged NHTSA to amend Sec.  580.13
to expressly provide that financial institutions may be appointed as an
agent of either the transferee or transferor to execute documents in
these transactions. HCUA also urged the agency to allow that a
lienholder may serve as agent of both transferor and transferee and
execute the statements on their behalf. In HCUA's view, this is
necessary for credit unions involved in the financing of private sales
of automobiles. NAFCU also noted the agency should look for areas
within part 580, especially Sec.  580.13, to identify how the
regulation can be amended to enable the efficient performance of a
financial institution's essential duties when facilitating a vehicle
sale.
    Therefore, NAFCU recommended the regulation be amended to clearly
specify that a financial institution can serve as an ``agent'' for the
parties in the transaction.
    ESRA's comments acknowledged that an electronic odometer disclosure
system would allow most e-titling transactions to occur without a power
of attorney. ESRA further stated an odometer disclosure by power of
attorney can be made electronically. According to ESRA, if a state
requires notarization of such a power of attorney, electronic
notarization could be applied, and the form signed electronically, as
allowed by ESIGN or the Uniform Electronic Transactions Act (``UETA'').
10. Exemptions
    Section 580.17(3) exempts any vehicle which is more than 10 years
old from the odometer disclosure requirements. Because the average age
of the United States vehicle fleet has been trending upward, the NPRM
proposed raising this exemption to 25 years. NHTSA also requested
comments on whether this exemption should be eliminated.
    The comments responding to this proposal were mixed, with most
states supporting the proposal or remaining neutral with some concerns
about increased costs. Lenders, insurers, and dealer-related
organizations generally opposed the proposal while other groups aligned
with consumer protection strongly supported it. Many of the commenters
also exhibited concerns about the practicalities of how disclosures
would be made and mileage reported when the exemption is changed given
the large numbers of vehicles whose titles may already have had their
odometer disclosures marked as ``exempt'' instead of having their
mileage reported as set forth in Sec.  580.5(e).
    Among the states providing comments to this proposal, California
supported raising the exemption to 25 years but not eliminating it.
California suggested implementing the change incrementally at one year
intervals until the 25-year threshold it attained. Florida noted the
NPRM did not discuss why 25 years was proposed and questioned how this
could be implemented. Oregon stated changing the exemption from 10
years to 25 years would require computer system reprogramming and
result in a higher rejection rate of transactions, which would increase
costs. Texas strongly supported proposed change to 25 years or
eliminating the exemption. According to Texas, eliminating the
exemption would simplify processing and technological requirements.
Texas observed NHTSA would have to address the issues raised by
currently ``exempt'' vehicles having no mileage recorded.
    According to Texas, a solution to the problems raised by
implementation would be to make the change effective when the
regulation becomes effective and then phase in the applicability year-
by-year over the next 15 years. Alternatively, Texas suggested vehicles
exempt at the time of promulgation be grandfathered unless other
evidence of false mileage exists. Virginia simply stated it does not
oppose raising the exemption to 25 years or eliminating the exemption.
AAMVA supported the extension of the exemption beyond 10 years, noting
25 years is consistent an antique vehicle classification in many
jurisdictions. AAMVA also noted some states discontinue the issuance of
titles at a certain age, such as 15 years. This, AAMVA noted, would
leave no title available to carry the odometer disclosure. AAMVA
expressed concern on how the change in the exemption would be
implemented. At the least, AAMVA recommended any vehicle that does not
reflect ``actual'' mileage in the title record be precluded from
obtaining an ``actual'' mileage brand on the title even if this mileage
is disclosed later. Beyond that, AAMVA recommended the rule change
phase-in the 25-year exemption, by first applying the requirement to
vehicles under 25 years old that are currently subject to odometer
reporting.
    NADA opposed the proposed change as it would greatly increase
disclosure and recordkeeping burdens for transferors, transferees, and
states, with no demonstration by NHTSA that vehicles 11 to 25 years-old
have become

a ``hot bed'' for odometer fraud. The organization argued NHTSA could
revisit the issue in the future after electronic titling and odometer
disclosures provide data on older vehicle odometer fraud but should not
act until NHTSA can show changing the exemption will significantly
reduce odometer fraud. In NADA's view, this proposal runs contrary to
NHTSA's time-honored and well-deserved reputation for being a data
driven agency. Moreover, NADA noted the proposal fails to provide for
any transition period to account for currently exempt vehicles. In
contrast to NADA, dealer association NIADA supported the increase of
the exemption to 25 years but urged NHTSA to ``grandfather'' currently
exempt vehicles.
    Copart opposed the proposal as an unreasonably high threshold given
the average vehicle age is 11 years. Copart also questioned the benefit
to be realized in relation to costs imposed by the change on state
title systems. Auctioneer IAA argued that mileage as an indicator of
condition and value do not apply to older cars or factor into the
decisions of those who buy them. According to IAA, the proposed change
is not warranted, and the costs of the expansion far outweigh any
benefit.
    Insurer representative AIA opposed the proposed change arguing the
vehicles subject to theft and/or cloning are most often late model
high-value vehicles. In AIA's view, the age of vehicles is simply not
reason enough to change the existing exemption without a thoughtful
discussion of the underlying need to do so. PCI argued against the
proposed change stating the value of older vehicles is driven primarily
by the appearance and condition of the vehicle, not its mileage.
Further, PCI noted the odometers on older vehicles may not be
functional, further complicating the process and providing little if
any benefit to a purchaser of an older vehicle. PCI suggested if NHTSA
believes that a change is necessary, the threshold for the exemption
should not be higher than 15 years.
    Lender affiliated organization NTSF supported changing the exempt
vehicle age from 10 years to 25 years. The NSVRP, a non-profit consumer
organization, stated there is no justification to retaining the 10-year
recording limit. In NSVRP's view, the older the vehicle, the more
likely it is there will be risks to the public from non-disclosure of
odometer discrepancies. The organization noted it is likely that most
vehicles now on the road are exempt and therefore not covered because
of the 10 model years of age cut-off for required reporting. NOTFEA
urged NHTSA to adopt the proposal. NOTFEA observed the average vehicle
age is now 11.5 years and that operation of vehicles older than 12
years old is expected to increase 15% by 2020. Further, NOTFEA cited a
survey indicating drivers were keeping and driving their vehicles more
than 100,000 miles and planned on continuing to drive them until
200,000 miles and/or until they stopped running. Participants planned
on keeping their vehicles more than 12 years.
    According to NOTFEA, a recent odometer fraud investigation revealed
a dealer rolled back the odometers on 547 vehicles, and only 134 were
not exempt. NOTFEA stated the exempt status of vehicles gave the dealer
an opportunity to reduce the mileage and that this dealer removed
approximately 26 million miles from the odometers of all the exempt
vehicles he sold. According to NOTFEA, this accounted for an
approximate fraud loss of $1.2 million and approximately 26 million
miles rolled back on 300 vehicles. NOTFEA also offered examples of
similar cases involving exempt vehicles. To address the mechanics of
implementing the change to the exemption threshold, NOTFEA suggested
when the change becomes effective, NHTSA should make it apply only to
vehicles less than 10 years old on the effective date.
11. Miscellaneous Amendments
    The NPRM proposed various amendments updating the agency's address,
removing obsolete text, and conforming the petition for alternative
disclosure schemes requirements to the other proposed amendments. These
included inserting a new address in Sec. Sec.  580.10(b)(2) and
580.11(b)(2), deleting the text in Sec.  580.12, and amending Sec.
580.11(a). One commenter, NADA, indicated they supported these proposed
amendments.
12. Other Comments
    Several commenters addressed issues unrelated to specific proposals
in the NPRM as well as other odometer disclosure concerns and issues.
Some of these comments related to terms used within part 580. Texas
suggested the term ``purchasers'' in Sec.  580.2 be changed to
``transferees'' because not all transfers of ownership requiring an
odometer disclosure are the result of a purchase and ``purchaser'' is
not defined in part 580. Texas also recommended changing the language
``at the time the lessors transfer the vehicle'' in Sec.  580.2 to ``at
the time the lessees return possession of the vehicle to the lessors''
to more accurately fix the time when a lessee must make disclosure.
AAMVA recommended NHTSA remove references to the term ``form'' as it
relates to electronic odometer disclosure and electronic titles because
such disclosures are not made on a paper-based ``form.''
    AAMVA also asked for clarification on when a power of attorney may
be used in conjunction with odometer disclosure. Specifically, AAMVA
wanted to know if use by third parties such as lienholders, title
services, and auctions signing a non-secure power of attorney
permissible. ESRA noted none of the proposed rulemaking provisions
address ``end of life'' of vehicle title processing. In ESRA's view,
NHTSA should consider if an odometer disclosure is needed once a
vehicle is declared a total loss, and, if so, create an electronic
disclosure process for such vehicles.
    The NSVRP urged NHTSA to make whatever changes were needed to
ensure odometer readings were reported to the correct jurisdiction at
every transfer, including dealer-to-dealer transfers. According to
NSVRP, gaps in reported mileage occurring when reassignment documents
or a power of attorney are used create opportunities for title skipping
and false odometer disclosure statement.
    Auctioneer representative NAAA argued the proposed rule does not
adequately address U.S. and international export rules. According to
NAAA, U.S. Customs and Border Protection regulations require vehicles
titled domestically be exported with the original certificate of title
or a certified copy and destination countries may require original
titles for importation. Because the proposed rule requires destruction
of paper titles when those titles are converted to electronic titles,
NAAA is concerned domestic and foreign customs officials may not be
prepared to work with electronic titles and disclosures and that delays
in processing requests to create official paper titles may harm vehicle
exporters.
    Two commenters, Texas and AAMVA, addressed the petition process for
establishing alternative odometer disclosure schemes. AAMVA asked that
the final rule ensure the petition process remains available while
Texas requested Sec.  580.12, which the NPRM proposed to remove and
reserve, be used to provide the parameters for rescinding a grant of
approval.
    Finally, two lender organizations, NTSF and HCUA, recommended
electronic odometer systems provide the means for lienholders to
electronically

receive the mileage reading for vehicles they intend to finance.

III. Final Rule and Response to Comments

A. Summary of the Final Rule

    This final rule adopts the amendments proposed by the NPRM for
Sec. Sec.  580.1, 580.10, 580.11, and 580.12 without substantive
change. Minor changes from NPRM proposals include replacing ``his''
with ``their'' to achieve gender neutrality throughout part 580 and
establishing a definition of ``jurisdiction'' that encompasses states
and territories to replace the term ``state'' wherever formerly used in
part 580. Also for clarity and accuracy, Sec.  580.2 is amended to
better describe the status of a vehicle upon termination of a lease,
and the term ``purchasers'' has been replaced with the more accurate
and less restrictive term ``transferees.'' Consistent with the former
amendment, the term ``dealer'' in Sec.  508.13(g) has been changed to
``transferee'' to reflect that those receiving ownership are not just
dealers.
    The NPRM proposed facilitating adoption of electronic title and
odometer disclosure systems by adapting the existing physical document
requirements of part 580 to a broadly defined class of electronic
documents. In response to comments criticizing this approach, the final
rule contains new definitions for ``Access,'' ``Electronic Power of
Attorney,'' ``Electronic Title,'' ``Jurisdiction,'' and ``Printed
Name,'' and revises the definitions of ``Original Power of Attorney,''
``Sign or Signature,'' and ``Transferor.'' These more precise
definitions are applied throughout part 580 to allow odometer
disclosures with both physical and electronic titles and powers of
attorney. This final rule also authorizes use of an electronic power of
attorney and, provides for electronic reassignments when a transferee
is given a paper title by the transferor but does not take title to the
vehicle. The definition of ``Sign or Signature'' includes an electronic
signature employing NIST level 2 authentication system or its
equivalent, instead of NIST Level 3. The regulations now also more
clearly allow authorized modifications to electronic records and
recognize that electronic titles and odometer disclosures may be held
in a variety of formats. The final rule retains our proposal that an
individual signing a disclosure on behalf of a business must identify
himself and the business. Also, because technologies such as ``pen
pads'' may be used in electronic titling and odometer disclosure
systems and that paper documents may, in some jurisdictions, be
employed in an electronic odometer disclosure system, the final rule
abandons the NPRM's proposal to delete printed names from electronic
transactions. This final rule also substantially relaxes the proposed
requirements for scanning documents to allow document conversion in
black and white at a resolution of 200 dot per inch (dpi) and
recordkeeping requirements in Sec. Sec.  580.8 and 580.9 provide more
options for dealers and relax the rules for auctions. NHTSA now
promulgates provisions allowing both electronic and paper powers of
attorney if a title is unavailable to a transferor because the title is
lost, physically held by a lienholder, electronically controlled by a
lienholder or when an electronic title is inaccessible. The exemption
rules in Sec.  580.17 are now set so vehicles that are 20 years old or
older are exempt from mileage reporting. The final rule also now
explicitly establishes how this exemption will be applied to different
model years.

B. Supplemental Notice of Proposed Rulemaking (SNPRM)

    As noted above, NADA and NAAA, suggested NHTSA issue an SNPRM prior
to issuing a final rule while NAMIC and Texas stated NHTSA might
consider delaying this final rule. NADA felt that an SNPRM would help
to provide more comments and information about interstate transfers.
NAAA asked for an SNPRM to explore the effect of any delays inherent in
producing paper titles on exporting vehicles. Texas urged delay in
issuance so the agency could craft clearer language. NAMIC thought
delay would give a greater opportunity for NHTSA and state officials to
forge a national electronic titling and odometer disclosure system.
    Given the amount of time that has passed since the issuance of the
NPRM and the extensive changes made to the agency's original proposal
as detailed elsewhere in this notice, NHTSA does not believe that an
SNPRM is needed or would provide any added value in addressing the
concerns voiced by these commenters. NHTSA shares NADA's concerns about
the challenges posed by interstate transactions and has drafted the
final rule to provide solutions. Additionally, the agency's approach is
to provide as much flexibility as possible while protecting the
integrity of mileage disclosures. This approach will allow states to
adopt and develop means for addressing different transactions in what
will certainly be an evolutionary process. Similarly, the agency
believes NAAA's concerns would not be addressed by issuing an SNPRM.
States have an interest in meeting the needs of citizens and resident
businesses and will likely develop methods for providing paper titles
efficiently. The commenters urging delay, Texas and NAMIC, raised
entirely different issues. Texas urged delay so better language could
be developed. The extensive revisions made to our original proposal
signal NHTSA's strenuous effort to do just that. NAMIC's loftier goal,
to delay issuance until a national titling system could be developed,
would require significant and unacceptable delay in issuing this final
rule.

C. Scope of the Final Rule

    In considering the breadth of the proposals in the NPRM and the
amendments promulgated in this final rule, NHTSA remained mindful of
the direction given by Congress in directing that the agency
``prescribe regulations permitting any written disclosures or notices
and related matters to be provided electronically.'' (Section 31205,
126 Stat. 761, Pub. L. 112-141 (2012)). NHTSA notes this direction was
unaccompanied by any suggestion that a national electronic title system
be created, however laudable that goal may be. Moreover, in enacting
section 24111 of the FAST Act authorizing states to create electronic
odometer disclosure systems without NHTSA's approval until the
effective date of this final rule, Congress also did not offer any
indication it supported the creation of a national title system by
expansion of NMVTIS or other means. (Section 24111, Pub. L. 114-94
(2015)). However desirable a national electronic title or odometer
disclosure infrastructure might be, the agency concluded it has not
been tasked with creating such a system. Accordingly, this final rule
does not answer to the sentiments expressed by AIA, NAMIC, and Texas
that this rulemaking action create such a system.
    A secondary scope issue exists to the extent the NPRM contemplated
that NHTSA take two approaches to regulating electronic odometer
disclosures. As reflected in the NPRM's request for comments, one
approach would be to draft a set of detailed and comprehensive
regulations creating rules governing technical aspects of system
security, identity authentication, interstate communications, and the
mechanics of executing transfers. Alternatively, the NPRM posited the
agency take a less prescriptive approach aimed at preserving the
essential characteristics of odometer disclosure and providing states
with the latitude needed to develop electronic systems consistent with
their environment. On

the whole, commenters strongly favored NHTSA adopt this less
prescriptive approach, noting that rapidly changing technologies and
traditional rulemaking are incompatible, that overly restrictive rules
would preclude development of electronic systems, and that states have
a deeply rooted fundamental interest in erecting and maintaining
electronic titling and odometer disclosure systems that are secure,
functional, and efficient. The agency concurs in these assessments and
believes this less restrictive approach is consistent with the brevity
exhibited by Congress in directing the promulgation of this final rule.

D. Definitions

    The definitions in this final rule differ significantly from those
proposed in the NPRM and remedy some significant shortcomings in our
earlier proposal. Commenters identified many issues created by the
proposed definitions. In posing the terms ``Electronic Document'' and
``Physical Document'' our proposal apparently created an impression
that NHTSA's vision of permissible electronic odometer disclosure
schemes was limited to instances where the electronic record was
nothing more than a scanned or imaged conversion of a paper document.
Although it was not NHTSA's intent to erect such a limitation, many
commenters noted these terms were inconsistent with many existing
systems where electronic titles and odometer disclosures are entries in
a database. Commenters also correctly observed the types of documents
encompassed by the respective definitions suffered from real or
apparent conflicts with other sections of the proposed rules. Some
comments addressed the proposed definition of ``Sign or Signature'' and
noted it did not appear to encompass signatures made on ``pen pads'' or
similar devices on which an individual's physical signature is captured
electronically. Two commenters, NADA and Texas, also suggested NHTSA
modify the definitions section to ensure no doubt exists that the
proposed rules apply to any jurisdiction that issues titles, including
territories.
    As noted, Texas included a ``redline'' version of the regulatory
text proposed in the NPRM along with its substantive comments. Noting
first that Texas has already implemented an electronic title and
odometer disclosure system known as webDEALER consistent with NHTSA's
approval of its petition to implement alternative electronic disclosure
requirements and thereby gained valuable experience in a new field,
NHTSA examined the changes to the regulatory language proposed by that
state. After consideration of the proffered language and the comments
addressing concerns about our proposals in this, and other, sections,
the agency is incorporating many of the changes suggested by Texas into
this Final Rule.
    To distinguish between the ability to view an electronic title,
power of attorney, and the electronic odometer disclosures incorporated
into those records and the ability to modify those records, the final
rule adds the definition of ``Access'' to Sec.  580.3. This definition
states ``Access'' is the authorized display and entry of information
into an electronic title or power of attorney in a manner allowing
modification of previously stored data. The definition further
differentiates ``Access'' from the mere ability to view information
without being able to modify it and distinguishes ``Access'' from the
modification of a record resulting in creation of a new title. Adding
this definition, in our view, also assists in alleviating concerns
voiced by commenters that different rules proposed in the NPRM failed
to adequately provide opportunities for legitimate error correction in
secure records by authorized persons.
    This final rule also disposes of the definition of ``Electronic
Document'' by replacing the latter with new definitions of ``Electronic
Power of Attorney'' and ``Electronic Title.'' The definition of
``Physical Document'' has been retained in modified form to establish
the meaning of the term ``Physical'' as it applies to documents. The
term is inserted where appropriate throughout part 580 to identify
paper documents. Although the NPRM did not provide for an electronic
power of attorney or propose to define one on the basis that such a
document should not be necessary where electronic titles exist, NHTSA
has reconsidered this position in response to the observations of some
commenters that this tool will be needed as the transition from paper
titles to electronic titles moves forward. The final rule definition
simply states an electronic power of attorney is simply a power of
attorney created and maintained in an electronic format that meets all
the requirements of part 580. Our definition of ``Original Power of
Attorney'' is amended in the final rule by adding the word ``physical''
for clarity. Similarly, the final rule definition for the electronic
version excludes a scanned copy of a paper power of attorney. The final
rule adopts a similar definition of ``Electronic Title,'' by specifying
this record as created and maintained in an electronic format and
incorporating and odometer disclosure and reassignment process. For
clarity, a scanned copy of a paper title is specifically excluded from
the definition. Responding to other comments that the applicability of
proposed rules should be clarified, the final rule also includes a
definition of ``Jurisdiction'' as a state, territory, or possession of
the United States. To ensure all governmental entities with the power
to title vehicles are clearly encompassed by part 580, the final rule
replaces the term ``state'' with ``jurisdiction'' wherever it appears.
The agency also notes that the definition of ``Jurisdiction'' is
singular and signals NHTSA's decision not to establish security
standards or similar regulations governing the exchange of electronic
title information between jurisdictions. While it is most certainly the
agency's intent to ensure that odometer disclosures be properly
executed in interstate and intrastate transfers, the manner in which
jurisdictions may share electronic title information is beyond the
purview of this final rule.
    For electronic documents, the NPRM proposed eliminating the
requirement found Sec.  580.5(f) for a person completing an odometer
disclosure to provide their printed name when transferring a vehicle.
The agency viewed this requirement as superfluous when identity
authentication requirements should ensure the information would be
available. While NHTSA still believes this to be the case where a party
would have to log on to a state website to conduct a transaction,
electronic title and odometer disclosure schemes may involve other
procedures. For example, our approval of Florida's petition for
alternative odometer disclosure requirements involved a system where
individuals presented secure documents to a tag agent who entered the
information into a state system. A variant of such a system might
involve parties employing a pen pad to sign documents and enter
information at a state or state-authorized facility after presenting
identification. In such an instance, providing a printed name would be
necessary to ensure identification in the future. Accordingly, the
final rule is adding a definition of ``Printed Name'' to Sec.  580.3
specifying what constitutes a printed name in both an electronic record
and a physical document.
    NHTSA's proposed changes to the definition of ``Sign or Signature''
generated many comments. These comments were directed at the NIST
authentication level proposed in the definition as well as more prosaic
concerns about the definition not

adequately encompassing the full range of potential means for making an
electronic signature. NHTSA's response to the NIST authentication
issues is discussed below, and the agency now addresses the remaining
issues.
    The final rule leaves the language pertaining to physical
signatures unchanged and adopts a two-part definition of electronic
signature. In the first part of this definition, the language remains
essentially the same as that in the NPRM aside from the NIST level
requirement. The second part of the definition, which states that an
electronic signature may include an electronic sign or process made
before an employee or statutory employee of the jurisdiction,
encompasses situations where an electronic title and odometer
disclosure system may involve entering information and executing
signatures at a state office or a state-authorized facility. NHTSA
added this language to accommodate electronic title systems that may
rely on physical signatures as part of the titling and odometer
disclosure process

E. Identity of Parties to a Motor Vehicle Transfer and Security of
Signatures

    As NHTSA observed in the NPRM, a physical signature is a unique
mark linked to the person who made it. That unique mark may be tied to
its maker even in the event a false name is used when the signature is
given. In contrast, an electronic signature is anonymous. Confirming
the identity of a person making an electronic signature is therefore
dependent on factors other than the signature and requires a degree of
corroboration. Because of concerns that the use of electronic
signatures may impede the ability to identify persons making an
odometer disclosure, NHTSA proposed the definition of ``Sign or
Signature'' require that an electronic signature identify a specific
individual. The NPRM also proposed this requirement be included in
580.6(a)(2), that proposed requirements for electronic transfers. This
proposal was supported by those commenters choosing to address it, and
NHTSA is adopting this requirement in this final rule.
    The NPRM simultaneously proposed that in the context of an
electronic odometer disclosure, the identity of the individual making
or acknowledging the disclosure be verified using an identity
authentication scheme meeting, or equivalent to, Level 3 as described
in the NIST Special Publication 800-63-2, Electronic Authentication
Guideline. This NIST guideline specified four different levels of
identity assurance which are assigned according to the level of risk
posed by the potential failure to authenticate the identity of an
individual using an electronic system for a transaction. These four
levels of assurance (LOA)--with Level 1 being the lowest and Level 4
being the highest set out different authentication requirements. At
Level 1 a user name and a password is sufficient verification and there
is no identity proofing. The only assurance is the fact that the user
can authenticate to the identity provider that some relationship exists
between the two because the user provides a previously issued
credential (username and password or cryptographic key). At Level 2,
proof of identity requirements are introduced, requiring presentation
of identifying materials or information. Both in-person and remote
registration are permitted. For in-person registration the applicant
must be in possession of a primary government photo ID (such as a
driver's license or passport). For remote registration, the applicant
submits the references of and attests to current possession of at least
one primary government photo ID and a second form of identification.
The applicant must provide to the registration authority at a minimum
their name, date of birth, and current address or personal telephone
number. At Level 3 proof of identity requires verification of
identifying materials and information. Both in-person and remote
registration are permitted. Level 3 requires the same evidence for
issuing credentials as Level 2; however, at this level verification of
the documents or references through record checks is required. The most
stringent requirements, at Level 4, do not permit remote registration.
Potential users must appear before a registration officer and provide
two independent ID documents or accounts which must be verified. One of
these must be a current primary government photo ID that contains
applicant's picture, and either address of record or nationality (e.g.
driver's license or passport).
    Most of the commenters submitted views on this proposal, and all
the commenters protested imposition of a NIST Level 3 requirement. As
noted above, the comments in opposition stated the Level 3 standard was
inapposite, costly, and overly restrictive. In specifying the NIST
Level 3 standard, NHTSA intended to ensure the identities of those
giving electronic signatures would be established to the extent
necessary to ensure imposters did not execute or acknowledge mileage
disclosures.
    However, the agency has also re-examined the applicability of the
Level 3 standard. The comments submitted in response to the NPRM,
directed toward this proposal and other proposed and potential security
requirements, underscored the degree to which states are invested in
providing secure electronic systems and, to a lesser but still
sufficient degree, in verifying the identities of persons using those
systems for vehicle transfers. The final rule, therefore, specifies the
required level of authentication for confirming the identity of persons
participating in electronic odometer disclosures shall meet the NIST
Level 2 requirements or an alternative scheme providing an equivalent
level of security.
    Furthermore, since the June 2017 issuance of NIST Special
Publication 800-63-3, Digital Identity Guidelines (including sub-parts
800-63-3A, 800-63-3B and 800-63-3C) superseded Special Publication 800-
63-2, Electronic Authentication Guideline, the final rule has updated
the reference to the new NIST guidance. While making this change, NHTSA
is mindful the NIST guidelines, or similar guidance, will continue to
evolve as technology advances. As discussed in the NPRM, advances in
technology are likely to proceed at a faster pace than NHTSA's ability
to revise and issue new rules. It is for this reason that the NPRM, as
well as this final rule, specified that states need adopt a system
meeting the specified NIST guideline or its equivalent. Moreover, in
specifying that the NIST Level 2 standard or its equivalent must be
met, NHTSA does not intend that states must update their systems to
meet each new NIST guideline when it is issued. Instead, our
expectation is that states will recognize the need to properly
authenticate participants in odometer disclosure transactions and
maintain a level of authentication security comparable to what the 2017
NIST Level 2 guideline establishes now. NIST guidelines can be met with
currently available products on the market.
    The final rule's definition of an electronic signature--``an
electronic sound, symbol, or process''--is intended to encompass the
full range of methods and technologies that may be employed to
electronically sign a disclosure. Accordingly, a signature executed by
writing on a pen pad or using a biometric such as a fingerprint, falls
within an ``electronic process'' as described in the definition. While
a biometric such as a fingerprint or retina scan might serve as a
signature under the definition, NHTSA notes that employment of a
biometric does not relieve a state or jurisdiction from having to meet
the authentication

requirements in subsection (b)(i) of the definition.

F. Document or Record Security and System Security

    The NPRM proposed amending Sec.  580.4 to require electronic
titles, powers of attorney, and reassignment documents to be maintained
in a secure environment preventing unauthorized modification and
recording when records are created, accessed, altered or unauthorized
attempts to modify them are made as well as the date and time any
attempt is made to alter the documents and any alterations are actually
made in the records. The NPRM explained NHTSA might consider specifying
security standards for these systems and requested comment on doing so.
Commenters supported the proposed changes on the condition the final
rule take adequate steps to ensure the final rule allowed authorized
changes to electronic records to correct errors. One commenter,
Virginia, objected to the requirement that unauthorized attempts to
alter or modify records be tracked as the proper response in that event
is to deny access and not create a record. Commenters overwhelmingly
supported NHTSA's tentative decision to not issue security standards
for overall system security.
    The final rule adopts the language proposed in the NPRM with a
small number of modifications. The heading for Sec.  580.4 is changed
to make it clear that it applies to physical documents, electronic
titles, and electronic powers of attorney. As electronic reassignments
are addressed in the definition of Electronic Title the final rule also
removes the reference to an electronic reassignment document in Sec.
580.4(b). In transactions where paper titles are used, separate
reassignment documents become necessary when the title is reassigned
multiple times and the existing title can no longer physically
accommodate the required odometer disclosures. In the case of an
electronic title, no such physical limitation exists, and, for all
practical purposes, all the necessary reassignment disclosures will be
incorporated into the electronic title. However, as there may be
instances where a transferee is provided with a paper title by the
transferor in a state with electronic titles, and the transferee may
not wish to take title to the vehicle, an electronic reassignment
option should be made available in those circumstances where a paper
reassignment form would otherwise be used. Accordingly, Sec.  580.5(g)
of the final rule provides that an electronic reassignment shall be
made before issuance of an electronic title where the transferee
receives a paper title and no room exists on that title for the desired
reassignment. Other changes made in this section for the sake of
clarity and consistency include deletion of the word ``forms'' when
referring to electronic records, substitution of ``jurisdiction'' for
``state,'' and expansion of the term ``secure process'' in Sec.
580.4(a) to ``secure printing process or other secure process.''

G. Odometer Disclosures

    NHTSA proposed changing Sec.  580.5, Disclosure of odometer
information, to accommodate electronic odometer disclosures by adding
references to electronic systems, directing information required on a
paper title be entered in an electronic form incorporated into the
electronic title, requiring warnings be provided electronically for
electronic transactions, and executed electronic disclosures be made
available to the parties. Where paper transactions required
participants to provide a printed name, the NPRM proposed the printed
name was not needed in electronic transactions and sought to delete
that requirement. NHTSA also proposed an existing requirement that
transferees provide a copy of a completed paper disclosure form to
transferors be expanded to electronic transactions by requiring that
the completed electronic disclosure be made available to the parties.
To address situations where a vehicle has not yet been titled, NHTSA
proposed amendments for the use of disclosures separate from the title
in both paper and electronic systems.
    Commenters supported the proposed changes while offering
modifications aimed at improving clarity and flexibility. The final
rule addresses many of the concerns found in the comments. Because this
final rule adopts a definition of an ``electronic title'' instead of
the proposed ``electronic document,'' changes consistent with that
definition are now incorporated into Sec.  580.5. Section 580.5(a)
states the mileage and other information required for odometer
disclosures must be incorporated into a physical title or an electronic
title presented to a transferee. Because an electronic title has
unlimited space available for disclosures, Sec.  580.5(b) of the final
rule provides physical titles must have space available for the
required elements of the disclosure. Where NHTSA proposed in Sec.
580.5(c) that an odometer disclosure be made an ``electronic form
incorporated into the electronic title,'' the final rule now provides
disclosures be made on an electronic title to clarify that electronic
title systems are not, as many commenters noted, limited to systems
where ``forms'' are scanned into an electronic format. The final rule
also differs from our proposal by requiring that parties provide a
printed name on both physical and electronic titles. As noted above,
using ``pen pads'' or similar handwriting conversion technologies could
result in an inability to identify individuals in ``hybrid'' electronic
title and odometer disclosure systems. Section Sec.  580.5(d) of this
final rule specifies the warnings and notices present on paper odometer
disclosures also be presented to parties executing an electronic
disclosure. The NPRM proposed an additional requirement be added to
this section in electronic transactions in the form of a check box or
similar mechanism to ensure the notices were read and understood before
the transaction can move forward. In response to comments that this
requirement is superfluous, since the electronic or physical signature
already constitutes acknowledgement of these warnings, the final rule
does not require a separate acknowledgement or ``check box'' in
electronic disclosures.
    NHTSA is also adopting the language proposed in the NPRM for Sec.
580.5(f), with some modifications. Because of comments that the
proposal did not sufficiently specify the sequence in which odometer
disclosure statements are signed, this final rule states a transferee
must execute the disclosure statement ``upon receipt'' of the
transferor's signed disclosure. While the concept of ``receipt'' is
arguably more ephemeral in an electronic transaction when no physical
document is present, the agency believes that ``receipt'' in that
context occurs when a system provides a display confirming the
transferor's signature and all the required elements of the disclosure
itself. For electronic systems, this final rule also adapts the
requirement in Sec.  580.5(f) that a transferor provide a paper copy of
the executed disclosure statement to the transferee by requiring that
such systems must make the completed statement available to the
parties. Although one commenter objected to states being required to
provide this copy, the requirement is satisfied if the electronic
system allows the parties to print or download a record of the odometer
disclosure and the required elements of that disclosure.
    The requirement that odometer disclosures be made on the title and
not on a separate document is critical for preventing odometer fraud.
Since the title is nearly indispensable when establishing ownership,
making

disclosures on the title ensures that opportunities for counterfeiting
odometer statements are kept to a minimum. Consistent with this theme,
part 580 allows odometer disclosures to be made on a document other
than the title only in very prescribed circumstances. One of these is
when the title is lost or held by a lienholder and the power of
attorney authorized by this part may be used. Another exists when a
paper title, which is required to have space for an odometer disclosure
and subsequent reassignments, no longer has space available for
additional reassignments. A reassignment document may also be used when
the vehicle at issue has never been titled. While preserving the
foregoing provisions for physical documents in paper title states, our
NPRM proposed amendments stating electronic title and odometer
disclosure systems shall provide a means for making the disclosure
electronically and incorporating it into the electronic title when the
title is created. Commenters supported this proposal but requested
states have the option of employing either a paper or an electronic
system for these transactions, even where the jurisdiction provided an
electronic title and odometer disclosure system. NHTSA agrees that
states, whether they have an electronic or paper-based title and
odometer disclosure system, must have the option of using either paper
or electronic disclosure statements in instances when a vehicle has not
yet been titled. The final rule now provides that option.
    The final rule also allows the use of electronic or physical
reassignments under specific conditions after a vehicle has been
titled. These conditions stem from the nature of physical titles and
the fact that transfers occurring in electronic title jurisdictions
will inevitably involve transactions where a transferor has a paper
title. Because physical titles can only accommodate a certain number of
reassignments, separate secure reassignment documents can be employed
to facilitate transfers between parties that do not take title to the
vehicle. Where a transaction involves a vehicle with an electronic
title, the electronic title system should accommodate any number of
reassignments. Therefore, reassignment documents, either electronic or
physical, would not be needed in electronic title jurisdictions. There
will, however, be situations where an electronic title system must
allow electronic reassignment before an electronic title has been
created. The first will be instances where the vehicle has never been
titled and neither an electronic or a physical title is available for
recording reassignments. Another circumstance requiring an electronic
reassignment would arise when a transferor holding a paper title for a
vehicle wishes to transfer that vehicle in a jurisdiction with an
electronic title system. In that circumstance, a mechanism needs to
exist to allow further reassignments prior to issuance of the
electronic title. If the transferor holding the physical title makes
the disclosure on that title, the final rule requires subsequent
electronic reassignments in such an instance, even though the vehicle
has a physical title.
    Consistent with other provisions of this final rule, Sec.  580.5(g)
disposes of the use of separate physical odometer disclosure statements
in states with electronic title and odometer disclosure systems. To
make this limitation on the use of separate physical odometer
disclosure statements after a title has been issued, the final rule now
states a separate physical disclosure statement may only be used after
the holder of a physical title has made a proper odometer disclosure,
assigned the title to their transferee, the title no longer has space
for a reassignment and the transaction's locale does not have an
electronic title and odometer disclosure system. Finally, while states
with electronic title and odometer disclosure systems may choose to
employ separate physical disclosure statements in instances where a
title has not been issued, the final rule establishes these states must
provide a means for electronic odometer disclosures both before and
after a title has been issued.

H. Requirements for Electronic Transactions

    NHTSA proposed employing Section 580.6, previously reserved, to
address issues specific to electronic transactions. These proposals
included electronic storage in Sec.  580.6(a)(1), electronic signatures
in Sec.  580.6(a)(2), availability of electronic records in Sec.
580.6(a)(3), accounting for the potential for co-existing paper and
electronic records in Sec. Sec.  580.6(a)(4) and 580.6(a)(6), allowing
a non-negotiable paper ownership record option in Sec.  580.6(a)(5),
NHTSA also proposed, requiring secure physical documents be used in
electronic odometer disclosure systems in Sec.  580.6(a)(7), and
setting standards for converting secure paper documents to electronic
formats in Sec.  580.6(a)(8).
    As set out in the NPRM, Sec.  580.6(a)(1) stated electronic records
shall be retained in a format which cannot be altered, and which
indicates any attempts to alter it. Commenters supported this proposal
if the final rule allowed authorized alterations to the records to make
corrections and other permissible changes. In response to these
comments, the final rule makes several changes to this section. First,
NHTSA has narrowed the applicability of this section from electronic
``records'' to electronic titles to remedy the overbreadth of our
proposed language and for consistency with the remainder of the final
rule. The final rule similarly changes the heading for Sec.  580.6 to
``Additional Requirements for Electronic Odometer Disclosures'' to add
clarity and precision. Proposed Sec.  580.6(a)(1) is now redesignated
as Sec.  580.6(a) and, also for clarity, Sec.  580.6(a)(2) through (8)
are re-designated as Sec.  580.6(b) through (h).
    Section 580.6(a) of the final rule states electronic titles and
power of attorney shall be retained in a format which cannot be altered
unless such alterations are authorized and which indicates any
unauthorized attempts to alter it (Sec.  580.6(a)(1)). This language
allows authorized modifications in response to comments requesting this
authority. To assist in detecting odometer fraud, these records must be
stored in an order that permits systematic retrieval (Sec.
580.6(a)(2)) for a minimum of five years following conversion to a
physical title, issuance of a subsequent title, or permanent
destruction of the vehicle. Absent those events, the record shall be
retained indefinitely. Final rule Sec.  580.6(a)(2) and (3) mirror
provisions for electronic record retrieval and storage that were found
in Sec.  580.6(a)(4) of the NPRM's regulatory text. These have been
relocated as the focus of Sec.  580.6, which has been narrowed to
electronic odometer disclosures embedded in electronic titles and
powers of attorney. The agency observes that two commenters, Texas and
California, indicated the five-year retention period was unnecessarily
burdensome and suggested three and four years respectively. Although
NHTSA acknowledges that a shorter retention period would be less
burdensome, the agency believes effective detection and prosecution of
odometer fraud requires that states retain records, as dealers must,
for not less than five years.
    The agency also proposed requirements for signatures in electronic
transactions. Section 580.6(a)(2), as set forth in the NPRM, stated any
electronic signature identify an individual, and, further specified a
business or entity be identified if the individual is acting on behalf
of that business or entity. Comments submitted in response to this
proposal were generally split--states,

AAMVA, and consumer or law enforcement-oriented groups supported it
while dealers, auction firms, and their associations opposed it. Dealer
groups believed the requirement to be unnecessary and inflexible as
dealerships are entities regulated and licensed by their home states.
Auction interests argued the requirement would impose a crippling
burden on their ability to do business as they process hundreds or
thousands of vehicles at a time. The final rule amends the language
proposed in the NPRM to alleviate some of these concerns. Redesignated
as Sec.  580.6(b), this section is now restricted in application to
electronic signatures made on odometer disclosures embedded in
electronic titles or power of attorney. In contrast to our proposal,
which was capable of being read as applying to all electronic
transactions, the final rule requirement applies specifically to
odometer disclosures.
    In addition, the final rule also explains the requirement to
identify both an individual and the entity that individual represents
is, for auctions and dealers, limited to identifying the individual and
the dealer or auction firm. NHTSA believes these modifications should
relieve auctions from identifying multitudes of consignees that bring
cars to them for sale, particularly since auctions typically do not
take title or execute odometer disclosures. The agency does not,
however, believe the requirement to identify both an individual and an
entity when the individual represents an entity, should be eliminated.
Identity verification schemes may rely heavily on personal information,
not business information. Considering this, maintenance of what may be
a rapidly changing list of ``authorized'' employees for a business
would impose burdens on states and promote misidentification.
    Executing odometer disclosures requires notices, warnings, and
instructions to be read, information to be supplied by the transferor,
acknowledgement and acceptance of the disclosure by the transferee,
and, in paper transactions, a copy of the signed disclosure statement
must be given to the transferor by the transferee. Transitioning from
paper to electronic odometer disclosure requires parties have this
information available. Then NPRM proposed any requirement in part 580
to disclose, issue, execute, return, notify, or otherwise provide
information to another person is satisfied when the required
information is electronically transmitted or otherwise electronically
accessible to the party required to receive the disclosure. One
association and one state opposed this proposal as imposing a
requirement on states that more properly lies with the parties.
Objection was also made to this requirement as ``process based'' and
not transaction based because of the proposed Sec.  580.6 applying to
electronic transactions.
    The final rule adopts the language proposed in Sec.  580.6(a)(3) in
the redesignated Sec.  580.6(c) with modifications responsive to
commenter concerns. NHTSA observes first that Sec.  580.6 has been
recast to focus on electronic odometer disclosures instead of
transactions to correct the impression it applies to processes. In
addition, the final rule strikes the word ``execute'' from the proposed
regulatory text and directs a requirement to disclose, issue, return,
notify, or otherwise provide information to another person in the
course of an electronic odometer disclosure is satisfied when the
required information is electronically transmitted or otherwise
electronically available to the party required to review or receive it.
Therefore, the final rule clarifies the information at issue is that
which is necessary for an odometer disclosure, and the duty to provide
it is satisfied when it is made available to a party. As any electronic
odometer disclosure must, at a minimum, provide an opportunity for
parties to the transfer to view information, this requirement does not,
for all practical purposes, impose an unnecessary burden.
    Paper and electronic title and disclosure systems are likely to
coexist for the foreseeable future. The NPRM proposed adding two
sections to 580.6 to address the issues posed by the co-existence of
paper and electronic systems. Section 580.6(a)(4) proposed requiring
prior paper titles be copied electronically and then destroyed when a
new electronic title is created. To preserve the paper title as a
record, NHTSA also proposed the electronic copy of the paper title be
retained for five years. Section 580.6(a)(6) proposed electronic title
states must have an ability to issue secure paper titles and upon
issuing such a title must invalidate any electronic title. Commenters
supported these proposals but offered some concerns. One of these is
that requiring destruction of physical titles by states is cumbersome,
and the same purpose can be met by invalidating the paper title.
Commenters also noted the requirement that only states can print paper
titles might be too restrictive as technological advances might make it
possible for secure paper titles to be produced by other entities.
Indeed, one individual commenter suggested individuals could print
their own titles.
    The agency is adopting the proposed sections with several
modifications. Section 580.6(d), Sec.  580.6(a)(4) in the NPRM, of the
final rule requires states issuing electronic titles to obtain the
prior physical title or proof that it was lost or invalidated before
issuing a new title. These states must retain a physical or electronic
copy of the physical title for five years, a period NHTSA believes is
required for effective enforcement. As noted, the storage requirements
for these records have been incorporated into the general requirements
for storing electronic odometer disclosures in Sec.  580.6(a) of this
final rule. The final rule further adopts the language proposed in
Sec.  580.6(a)(6) of the NPRM without substantive change as Sec.
580.6(f). NHTSA does not presently believe entities other than states
should have the capability to issue titles.
    NHTSA's NPRM proposed, in Sec.  580.6(a)(5), that states with
electronic title systems have the option of providing vehicle owners
with a paper record of ownership, including odometer disclosure
information, if that document clearly indicates it is not an official
title or odometer disclosure for that vehicle. The comments received in
response to this proposal were very supportive, with some commenters
expressing reservations such a document could be used fraudulently if
not clearly marked. The final rule adopts the proposal in Sec.
580.6(e), allowing issuance of such a document if it clearly indicates
it is not an official title for the vehicle and may not be used to
transfer ownership.
    States may implement electronic title and odometer disclosure
schemes by employing physical documents at some stage of the process.
NHTSA's approval of alternative odometer disclosure schemes presented
by the Florida and New York petitions, was conditioned on the use of
secure documents for portions of the odometer disclosure process.
Section 580.6(a)(7) of the NPRM proposed any physical documents used
make odometer disclosures for entry into an electronic title and
odometer disclosure system to comply with the existing requirements of
part 580. Comments directed toward this portion of the NPRM supported
it, but two commenters, Arizona and Texas, respectively noted the
proposed language conflicted or may conflict with other portions of the
proposed rule.
    The final rule adopts the regulatory text of Sec.  580.6(a)(7) of
the NPRM as Sec.  580.6(g) and modifies the requirement that such a
document meet the existing requirements of part 580. For clarity and

to eliminate conflicts with other provisions, the final rule paragraph
states any document used to make odometer disclosures into an
electronic system must be set forth by means of a secure printing
process or other secure process. In addition, the final rule specifies
the foregoing requirement does not apply to a lessee's odometer
disclosure made in conformance with Sec.  580.7.
    The simultaneous existence of both paper and electronic title and
odometer disclosure systems requires paper documents be converted into
electronic records. As NHTSA remained concerned document conversion
presented opportunities for fraud, Sec.  580.6(a)(8) of the NPRM
proposed processes for converting titles and other secure documents to
electronic copies maintain security features and that scanning be made
in color at a resolution of 600 dpi. Commenters reacted strongly to
this proposal and argued strenuously that it was ill founded, costly,
and impractical. After consideration of these comments, the agency
agrees a 600-dpi requirement is impractical and that a 200-dpi standard
should provide the required level of security. Accordingly, the final
rule redesignates the proposal's paragraph Sec.  580.6(a)(8) as Sec.
580.6(h), eliminates the requirement that scanning or imaging be
performed in color and reduces the required resolution to not less than
200 dpi.
    Texas submitted comments suggesting an additional two subsections
be added to Sec.  580.6. The first of these would make an explicit
provision for using a power of attorney in an electronic title
jurisdiction where the transferor holds a lost physical title. Rather
than have the transferor execute a power of attorney and then have the
transferee obtain a physical title and then convert it to electronic
form, the provision would allow use of a single power of attorney to
complete the transaction and convert the title. NHTSA concurs with
adding this provision, which is adopted by this final rule as Sec.
580.6(i). Texas also offered an amendment providing that reassignment
documents may not be used for making odometer disclosures with an
electronic title because there is no physical limit on the number of
reassignments that can be incorporated into such a title. The agency
agrees this provision is desirable and has added Sec.  580.6(j) to
implement it in the final rule.

I. Leased Vehicles

    Leased vehicles present challenges in making odometer disclosures
because they are held by a lessee while the lessor holds the title and,
without the title accompanying the vehicle, frequently transferred by
the lessee to a transferor. Section 580.7 establishes special
procedures to ensure accurate mileage information is provided by the
lessee to the lessor so the lessor can execute the odometer disclosure
on the title. The NPRM proposed amendments to Sec.  580.7 allowing the
required documents be in the form of ``electronic documents.''
Commenters generally supported the proposed amendments provided NHTSA
did not extend the proposal to require states to play a role in
facilitating lease vehicle disclosures. Many commenters noted the use
of the terms ``physical document'' and ``electronic document'' as
employed in the proposed regulatory text were incompatible with the
definitions and security requirements of these documents proposed
elsewhere in the NPRM. Consistent with the revisions this final rule
makes to the definitions in Sec.  580.3, this final rule revises Sec.
580.7 by eliminating references to ``physical document'' and
``electronic document'' and stating required communications may be made
electronically and in writing. Because the existing paper process does
not contain such a requirement, the final rule also eliminates a
proposal stating a lessee completing an electronic odometer statement
must separately acknowledge understanding federal and applicable state
law requirements prior to signing the disclosure.

J. Document Retention

    Part 580's document retention requirements provide for the
maintenance of records essential to establishing the paper trail used
to detect and prove cases of odometer fraud. Section 580.8, applicable
to dealers and distributors, and Sec.  580.9, which applies to auction
companies were both the subject of amendments proposed to include
electronic copies or electronic documents as an acceptable form of
record. The NPRM further proposed Sec.  580.8 specify dealer electronic
records be retained in a format which cannot be altered, and which
indicates any attempts to alter it. Commenters questioned whether
extending paper record requirements would be necessary in electronic
title and odometer disclosure states given those states would store the
same data. Comments also questioned the use of the term ``electronic
document'' and ``physical document'' in the proposal given the
definition proposed in Sec.  580.3. Other comments questioned the
proposal's amending the requirements for odometer disclosure statements
for dealers and distributors while not applying similar requirements to
leased vehicle documents and powers of attorney. The final rule makes
several changes to the amendments proposed in the NPRM in response to
these comments
    This final rule amends Sec.  580.8(a) to provide dealers and
distributors must retain paper or electronic copies of each odometer
mileage statement they issue and receive for five years. The final rule
further states electronic data shall be retained so it cannot be
altered and which indicates any attempts to alter it. Similarly, the
final rule amends Sec.  580.8(c) to require dealers and distributors to
retain paper or electronic copies of each power of attorney, executed
pursuant to Sec. Sec.  580.13 and 580.14, that they receive for five
years and imposes the same storage requirements for electronic
documents as found in Sec.  580.8(a). Section 580.8(b) is also amended
to require lessors to retain both written and electronic odometer
disclosure statements they receive from lessees for five years and, if
the disclosure is electronic, the data shall be retained so it cannot
be altered and which indicates any attempt to alter it. The final rule
also adds a new paragraph, Sec.  580.8(d), specifying that in the case
of odometer disclosure statements made on electronic titles or
electronic powers of attorney, dealers and distributors need not retain
the data if the jurisdiction retains this information for five years
and makes it available to these dealers and distributors at their
principal place of business. To ensure these records are available to
enforcement officials, the paragraph further states such data must be
available at the dealer or distributors place of business upon demand.
    As proposed in the NPRM, Sec.  580.9, establishing document
retention requirements for auction companies, employed the terms
``electronic document'' and ``physical document'' to describe the
materials they must retain. Consistent with other changes made in this
final rule, this section dispenses with those terms as used in the NPRM
and states that the information may be physical or electronic. Also,
the final rule replaces the term buyer in Sec.  580.9(b) with
``transferee'' as that term is employed throughout part 580.

K. Power of Attorney

    As required by the Truth in Mileage Act of 1986 (TIMA), NHTSA
issued a final rule in August 1988 (53 FR 29464), stating odometer
disclosures may only be made on the vehicle title unless the vehicle
has never been titled or the title did not contain sufficient space for
the

disclosure. Id. at 29471. The command that odometer disclosures can
only be made on the title could cause serious difficulties in instances
where the title was held by a lienholder because the title, and the
means for making an odometer disclosure, would not be available to the
owner of the vehicle subject to the lien if that owner wished to sell
the vehicle or trade it in when buying a new car. Congress responded to
the foregoing final rule by inserting a provision in the Pipeline
Safety Reauthorization Act of 1988 (Pub. L. 100-561) amending TIMA's
requirement that odometer disclosures be made only on the title. This
amendment allowed use of a special power of attorney for executing
odometer disclosures when a title is physically held by a lienholder.
NHTSA implemented changes to part 580 authorizing use of this power of
attorney by an interim final rule published in the Federal Register on
March 8, 1989. (54 FR 9609). NHTSA later expanded the applicability of
the power of attorney provisions to instances where the title was held
by a lienholder or the title was lost. (54 FR 35879).
    The advent of electronic title and odometer disclosure systems
presents challenges stemming from the requirement that odometer
disclosures must be made on the title, a reassignment document if no
space for disclosure is available on the title, or through the special
power of attorney when a title is physically held by a lienholder or
has been lost. If an electronic title is subject to an electronic lien,
it is not available to the vehicle owner to allow odometer disclosure
until the lien is released. Further, as explained in the NPRM, a person
holding an electronic title issued in one state may wish to sell their
vehicle in a state that does not have an electronic title and odometer
disclosure capability. Again, this vehicle owner would not have a title
on which to make an odometer disclosure unless they obtained a printed
title from their state beforehand.
    NHTSA proposed amending Sec.  580.13(a) and (b), to allow an
individual with a vehicle titled in an electronic title state to use a
power of attorney to sell a vehicle in a paper title state. Based on
the belief that a power of attorney should not be needed when
electronic titles and disclosures were available, the agency limited
their use to the paper format. Commenters observed the NPRM's view a
power of attorney would be useful in interstate transactions from an
electronic title state to a paper state was flawed as the transferor
would still need a paper title to register the vehicle. Most commenters
advocated having both electronic and paper versions of the power of
attorney in jurisdictions with electronic title and odometer systems.
Three commenters noted language in Sec.  580.13(f) stating ``. . . if
the mileage disclosed on the power of attorney form is lower than the
mileage appearing on the title, the power of attorney is void and the
dealer shall not complete the mileage disclosure on the title''
(emphasis added) is erroneous. These commenters noted the dealer does
not complete the disclosure and should be changed to ``transferee.''
Another commenter encouraged amending Sec.  580.13(f), which specifies
that a power of attorney is void if the odometer reading on the power
of attorney is lower than on the title, to accommodate instances where
the disclosure properly reports the odometer reading is known to be in
excess of mechanical limits or is ``not actual.'' This commenter
further asked that this section allow for electronic submission of an
original power of attorney by scanning or imaging and that Sec.  580.16
be amended to specify that a copy of a power of attorney be made
available upon request rather than returned. Other comments noted an
electronic title could be unavailable when subject to an electronic
lien or in the event technical issues in an electronic system made
titles temporarily unavailable. Commenters aligned with lenders asked
the power of attorney be expanded so lenders could perform disclosures
for their clients.
    The agency is adopting several changes to this portion of the final
rule in response to the comments. For clarity, these amendments
required bifurcating the former Sec.  580.13(a) into two paragraphs,
Sec.  580.13(a) and (b), and redesignating the former Sec.  580.13(b)
through (f) as Sec.  580.13(c) through (g). This final rule adds a new
paragraph, Sec.  580.13(h), as explained below.
    Section 580.13(a) now specifies a power of attorney may be either a
paper document, defined as an ``Original power of attorney'' in Sec.
580.3, or may exist in electronic form consistent with the final rule's
definition of ``Electronic power of attorney.'' The restriction on the
use of the power of attorney when the title is lost or is physically
held by a lienholder remains in place for physical or paper titles.
However, either an electronic power of attorney or an original power of
attorney may be used when a paper title is lost or held by a
lienholder. Given the likelihood that electronic title and odometer
disclosure systems will not be implemented across the nation in the
foreseeable future, the final rule provides a power of attorney may be
used if the title in question is electronic. For an electronic title,
the final rule allows use of a power of attorney under two
circumstances. The first is when the electronic title is held or
controlled by a lienholder. In NHTSA's view, this situation is
analogous to that where a paper title is physically held by a
lienholder as the title is not available to the transferor because the
title will only be released when the lien is satisfied. The final rule
also provides a power of attorney may be used when an electronic title
cannot be accessed. The term ``accessed'' is employed here as defined
in Sec.  580.3 and therefore means the power of attorney may be used
only in circumstances where either a transferee or a transferor does
not have the ability to make authorized changes to the electronic
title. In incorporating this provision into the final rule, NHTSA
believes it offers the flexibility required to allow transferors with
electronic titles to sell or trade in vehicles in states without
electronic titles or odometer disclosure systems when the transferor
did not obtain a paper title prior to the transfer.
    NHTSA believes the foregoing changes to Sec.  580.13(a) address the
pre-eminent concerns expressed by most commenters. The final rule
allows both physical and electronic powers of attorney to afford the
flexibility required to facilitate vehicle transfers as states
transition from paper to electronic titling and odometer disclosure.
The agency acknowledges a power of attorney will not, in transactions
where vehicle with an electronic title is transferred in a jurisdiction
without electronic titles, allow the transferee to register and title
the vehicle without obtaining a paper title from the transferor's
state. Nonetheless, that same obstacle exists today in interstate
transactions involving a lost physical title or one that is physically
held by a lienholder.
    This final rule also amends former Sec.  580.13(a) through (e), now
redesignated as Sec.  580.13(b) through (f) to make these sections
consistent with changes implemented elsewhere. Where it appeared, the
term ``state'' is now replaced with ``jurisdiction'' to conform to the
definition added in Sec.  580.3. References to the power of attorney
are also modified by use of the terms ``original'' and ``electronic,''
and the term ``title'' is similarly modified by the terms
``electronic'' or ``physical.'' Because of concerns raised by the
potential for illegible signatures or address information in instances
where a ``pen pad'' or similar device for recording hand written
information electronically may be used, these

sections have also been changed to require a printed name and a printed
address.
    NHTSA has also made amendments responding to comments addressing
the former Sec.  580.13(f), now redesignated at Sec.  580.13(g), and
added a new paragraph Sec.  580.13(h). Along with adding the necessary
terms to accommodate electronic and original powers of attorney and
physical and electronic titles to the former Sec.  508.13(f), the final
rule now provides two exceptions to the requirement that mileage shown
to be lower than that disclosed on the title voids the power of
attorney. The two exceptions added reflect two instances where the
mileage on the power of attorney may properly be lower than that shown
on the prior title--when the transferor states that the mileage shown
reflects mileage in excess of the designed mechanical odometer limit or
that the mileage shown does not reflect the actual mileage. This final
rule also removes the word ``dealer'' in this paragraph and replaces it
with the word ``transferee'' for consistency. This final rule also adds
Sec.  508.13(h), allowing states to receive copies of an original power
of attorney in an electronic format after scanning or imaging.
    This final rule also amends Sec. Sec.  580.14 through 580.16 to
allow for the use of both electronic and original powers of attorney,
electronic and physical titles and to replace ``state'' with
``jurisdiction'' consistent with the definitions in Sec.  580.3. As
Sec.  580.14 sets out the requirements of Part B of the power of
attorney and is a counterpart to Part A addressed by Sec.  580.13, the
final rule also adds the requirement transferees provide a printed name
and a printed address in Sec.  580.14(b)(3) and (4). Consistent with
Sec.  580.13(g) of this final rule, Sec.  580.15--establishing the
certification requirements for a person exercising the power of
attorney--is modified to account for situations where a transferor has
indicated mileage exceeds mechanical limits of the odometer or has
stated the odometer does not reflect the actual mileage. Therefore,
Sec.  580.15(a) is revised to relieve the person making the
certification from attesting that the mileage they disclosed (as
authorized by the power of attorney) is greater than that previously
shown in the title or a reassignment document if they disclosed that
the mileage exceeds mechanical limits or the odometer reading does not
reflect the actual mileage. The foregoing change to Sec.  580.15(a)
requires restructuring the remainder of this section for clarity.
Accordingly, Sec.  580.15(b) is redesignated in the final rule as Sec.
580.15(c) and the final sentence of the former Sec.  580.15(a) is now
Sec.  580.15(b). In addition to the redesignation, Sec.  580.15(c) is
also modified to provide an exception to voiding the power of attorney
for mileage inconsistency where the disclosure states the mileage is in
excess of mechanical limits or does not reflect the actual mileage. The
final rule makes another revision for consistency by replacing the term
``purchaser'' with ``transferee'' in Sec.  580.16(b).

L. Exemptions

    NHTSA's NPRM proposed amending Sec.  580.17(a)(3), exempting any
vehicle more than 10 years old from the odometer disclosure
requirements, to raise this exemption to 25 years. Comments submitted
in response to the proposal were consistent in raising concerns about
how such a change would be implemented because many vehicles exempt
under the former rule would no longer qualify, but may have already
been claimed as exempt. Far less consensus existed in consideration of
the wisdom of changing the exemption. Some commenters strongly
supported the proposal, citing the increased age of the vehicle fleet
and providing anecdotal evidence of significant odometer fraud
prosecutions involving older vehicles. One commenter noted some states
do not issue titles for older vehicles, presenting the paradox of
requiring disclosure on a title when no title exists. Out of states
submitting comments, only one indicated any degree of opposition,
citing possible increased data entry costs. Dealers, insurers, and
auctioneers opposing the proposed change to the exemption argued it
would increase disclosure and recordkeeping burdens for transferors,
transferees, and states, without providing any known benefit. Others
also decried the notion this change would provide any benefit,
contending buyers of older cars do not consider mileage as an important
indicator of value, while one commenter noted theft and cloning are
largely restricted to newer and higher value cars.
    After review of the comments and consideration of the available
data, NHTSA is modifying the 25-year exemption proposed in the NPRM to
a period of 20 years. NHTSA notes that it amended the previous 25-year
exemption to a 10-year exemption rule in 1988. (53 FR 29464, August 5,
1988). In the preamble to the 1988 final rule, the agency observed it
was abandoning the 25-year exemption because of evidence derived from
studies conducted in Wisconsin and Iowa that odometer tampering was
disproportionately small as compared to the number of vehicles in that
age group. The agency also observed at the time that many commenters
indicated that the prices for vehicles over ten years old was not
typically based on the odometer reading. Given the low incidence of
odometer tampering and substantial evidence that buyers in 1988 were
not relying on mileage as the primary indicator of condition in
vehicles 10 year old and older than 10 years, NHTSA adopted an
exemption that applied to vehicles 10 years old and older. Id. at
29472. When that final rule was issued in 1988, the average age of
automobiles in use was 7.6 years.\2\ In 2017, almost three decades
later, the average age of light vehicles in use had risen to 11.7
years.\3\
---------------------------------------------------------------------------

    \2\ Average Age of Automobiles and Trucks, Fed. Highway Admin.,
available at https://www.fhwa.dot.gov/ohim/onh00/line3.htm (last
visited Sept. 13, 2019).
    \3\ America's Cars and Trucks Are Getting Older, Business
Insider (Aug. 22, 2018), available at https://www.businessinsider.com/americas-cars-and-trucks-are-getting-older-2018-8 (last visited Sept. 13, 2019).
---------------------------------------------------------------------------

    The 2017 National Household Travel Survey also validate this trend
of increased vehicles longevity. The survey shows that the average age
of household vehicles increase to 10.1 years for cars and 10.4 for
light trucks/vans (LTVS) from 7.6 and 8.0 years, respectively, in 1990.
In other words, 10 years and older vehicles also have increasingly
comprised a greater proportion of household vehicles. In 2017, about 47
percent of the household cars and 50 percent of the household LTVs were
10 years and older--a significant increase from the respective 30
percent and 32 percent in 1990.\4\ Furthermore, based on the NHTSA
established scrapped rate schedule, the average age of vehicles when
they are scrapped (i.e., age at 50 percent scrappage rate) is about 16
years old for cars and 15 years old for LTVs.
---------------------------------------------------------------------------

    \4\ Table 21 of Summary of Travel Trends, 2017 National
Household Travel Survey, Fed. Highway Admin., July 2018, available
at https://nhts.ornl.gov/assets/2017_nhts_summary_travel_trends.pdf
(last visited Sept. 13, 2019).
---------------------------------------------------------------------------

    In 2008, noting the increasing age of light vehicles in use, the
U.S. Department of Justice (DOJ) requested NHTSA consider review of the
10-year exemption. Among other things, DOJ observed the increasing
numbers of ``exempt'' titles increased opportunities for odometer fraud
while the advent of mileage records in Carfax and similar venues made
such titles more valuable for those engaging in odometer fraud.
Consistent with increases in vehicle age since 1988, the age of
vehicles that have their mileage altered has also increased. An April
2002 NHTSA study, which

examined 11 model years of data, found the rate of odometer fraud began
to rise in the fourth and fifth year of service and then remained
consistently high through years 7 through 10. A 2013 study performed by
a private company, CARFAX, found vehicles 14 to 15 years old were most
susceptible to having had their odometers rolled back.\5\ The increased
longevity of vehicles in years has been matched by change in the number
of miles travelled before a vehicle has reached the end of its useful
life. In the years before NHTSA's 1988 amendment decreasing the
exemption from 25 to 10 years, vehicles that had travelled over 100,000
miles were generally considered to be at or near the end of their
useful lives. Improvements in vehicle quality and advancements in
technology have greatly extended this figure and worked corresponding
changes in the used vehicle market. According to the data Edmonds
provided to NHTSA, the 100,000 miles travelled approximated to that for
an average 8/9 years old vehicles that were sold in 2017. These 8 to 9
years, on an average, would still maintain 87 to 89 percent of its
useful life. Furthermore, not only have vehicles lasted longer, they
also retain a greater proportion of their original manufacturer
suggested retailed price (MSRP). Edmunds data indicated that a 10-year-
old vehicle retained 21 percent of its original MSRP in 2012. In 2017,
the percentage increase to 26 percent.\6\
---------------------------------------------------------------------------

    \5\ Carfax: Odometer Fraud Hits Nearly 200,000 Cars Annually,
available at https://www.carfax.com/press/carfax-odometer-fraud-hits-nearly-200-000-cars-annually (last visited Sept. 13, 2019).
    \6\ Used Vehicle Market Report, Edmunds, Feb. 2017, available at
https://dealers.edmunds.com/static/assets/articles/2017_Feb_Used_Market_Report.pdf (last visited Sept. 13, 2019).
---------------------------------------------------------------------------

    Additional considerations supporting changing the exemption include
the relative ease with which modern odometers may be rolled back and
the significant increases in market value that may be gained through
such fraud. Mechanical odometers have vanished from the market and have
been controlled by microprocessor driven digital displays. As the
microprocessors controlling the odometer display are also employed in
service of anti-theft devices and other functions, they may be accessed
by specialized software through the vehicle's diagnostic port. This
specialized software, which may be used to reset, repair or correct
information in the module controlling the odometer and other systems in
the instrument cluster can also be employed to remove mileage from the
odometer display in minutes. Given the improved corrosion resistance
and improved quality of exterior finishes on contemporary vehicles,
resetting an odometer display to remove 100,000 miles from the mileage
shown can significantly alter the market value of a car, often by many
thousands of dollars. For those inclined to commit odometer fraud, the
profit that can be gained from a single transaction can far exceed the
investment in software and time needed to change the odometer display.
Therefore, NHTSA's view is that the increased age of vehicles, the
changes in the used car market prompted by vehicle longevity, the
relative ease with which modern odometers may be rolled back and the
known trends in odometer fraud support extending the exemption to 20
years.
    Implementation of any change in the exemption caused many
commenters to voice concern as the NPRM proposal did not account for
vehicles subject to the prior exemption in the regulatory text. The
final rule addresses this issue by stating the 20-year exemption
applies only to vehicles manufactured after the 2010 model year,
ensuring previously exempt vehicles are not captured by the new rule.
    The agency believes the costs associated with changing the
exemption will be negligible and more than offset by the benefits
gained from protecting consumers from odometer fraud. Although one
state and several commenters associated with dealers and auctioneers
cited additional data entry and recordkeeping costs associated with
modifying the extension, the exact nature and source of these costs was
not described in the comments.
    Approximately 40 million used car sales occurred in the United
States in 2018. Vehicles over 10 years old accounted for approximately
3 to 4 percent of retail sales by franchised new car dealers \7\ and 12
percent of sales by independent dealers.\8\ Many older vehicles are
sold through private sales or at wholesale auctions.\9\ Private used
car sales accounted for approximately 28 percent of 2017 used car sales
or slightly less than 11 million sales.\10\ Franchised dealers were
responsible for approximately 37 percent of the used car sales while
independent dealers accounted for approximately 34 percent of these
sales.\11\ Wholesale auctions, which are an important source of used
cars inventory for dealers, sold approximately 10 million cars in
2018.\12\ Given that approximately 4 and 12 percent of used car sales
respectively involving franchised and independent dealers involve
vehicles over 10 years old, the change in the exemption will impose
some additional costs on these dealers which can be quantified with a
degree of certainty. These additional costs will stem from having to
complete odometer disclosure forms for vehicles which, because of their
age, had the mileage blank on the title marked with the word ``exempt''
while leaving the remainder of the form blank. In instances where the
vehicle's paper title is not available because it is lost or held by
lienholders, a transferor will have to employ the power of attorney
form dictated by part 580 and the transferee will have to either
complete the odometer disclosure on the title when it is obtained or
execute Part B of the power of attorney in a subsequent transaction.
This is most likely to arise when a consumer transfers a vehicle to a
dealer either as a trade-in or in an outright sale. NHTSA believes that
it is unlikely that the change in the exemption will involve execution
of a both a power of attorney and the odometer disclosure statement in
transactions involving private sales and wholesale auctions. In both
private sales and auction sales, odometer disclosures are almost always
made on the vehicle's title and do not involve the use of a power of
attorney. Private sales are more likely to involve vehicles that are
not subject to a lien and where the seller has the title in their
possession. Buyers in private sales are also more likely to insist on
having the title itself available at the time the transfer is
completed. Similarly, auction sales also rarely involve vehicles for
which the title is not available. As these are wholesale transactions
where the auctioneer is acting as the agent on behalf of a seller that
is a business entity, the vehicle title is available at the time of
sale.
---------------------------------------------------------------------------

    \7\ Used Vehicle Outlook 2019, Edmunds, available at https://static.ed.edmunds-media.com/unversioned/img/industry-center/insights/2019-used-vehicle-outlook-report-final.pdf (last visited
Sept. 13, 2019).
    \8\ NIADA 2018 Used Car Industry Report, National Independent
Auto Dealers Association, available at https://www.niada.com/uploads/dynamic_areas/ei5l4ZznCkTc8GyrBKd6/34/UCIR_2018_Web.pdf?
(last visited Sept. 13, 2019).
    \9\ Used Vehicle Market Report, Edmunds, Feb. 2017, available at
https://dealers.edmunds.com/static/assets/articles/2017_Feb_Used_Market_Report.pdf (last visited Sept. 13, 2019).
    \10\ Charles Chesbrough, The Used Vehicle Market: Bumps On The
Road Ahead, available at https://www.chicagofed.org/~/media/others/
events/2017/automotive-outlook-symposium/chesbrough-06022017-pdf.pdf
(lasted visited Sept. 13, 2019).
    \11\ Id.
    \12\ Auction Industry Survey For the Year Ended Dec. 31, 2018,
available at https://www.naaa.com/pdfs/AuctionIndustrySurveySummary_2018.pdf (last visited Sept. 13, 2019).
---------------------------------------------------------------------------

    The change in the exemption period made by this final rule will
also impose some additional recordkeeping costs.

Dealers are required to retain copies of executed odometer disclosure
statements for a period of five years. As noted above, this may either
involve retaining a copy of the executed odometer disclosure on the
back of a title or a copy of both the power of attorney form and the
odometer disclosure on the back of the title made under the authority
given by the power of attorney.

M. Miscellaneous Amendments

    The NPRM proposed various amendments updating the agency's address,
removing obsolete text, and conforming the petition for alternative
disclosure schemes requirements to the other proposed amendments. These
included inserting a new address in Sec. Sec.  580.10(b)(2) and
580.11(b)(2), deleting the text in Sec.  580.12 and amending Sec.
580.11(a). A single commenter supported these proposed amendments. This
final rule adopts these amendments as proposed in the final rule.

N. Other Comments

    Several commenters proposed amendments not offered in the NPRM. One
commenter suggested the term ``his'' used in various sections of part
580 be changed to be gender neutral and that ``purchasers'' in Sec.
580.2 be changed to ``transferees'' because not all transfers of
ownership requiring an odometer disclosure are the result of a purchase
and ``purchaser'' is not defined in part 580. This commenter also
proposed changing ``at the time the lessors transfer the vehicle'' in
Sec.  580.2 to ``at the time the lessees return possession of the
vehicle to the lessors'' to more accurately fix the time when a lessee
must make disclosure. The final rule adopts these changes.
    Commenters also asked for clarification on when a power of attorney
may be used in conjunction with odometer disclosure by third parties
such as lienholders, title services, and auctions. NHTSA observes the
definition of both ``transferor'' and ``transferee'' in Sec.  580.3
includes not just the owner and the buyer but also an agent acting on
their behalf. Such an agent may include an individual or entity
appointed by a general or limited power of attorney. If, however, that
agent is representing an owner in a situation where the special power
of attorney set forth in Sec.  580.13 may be used, that agent must make
the odometer disclosure on the secure special power of attorney
specified in that section.
    Several commenters requested NHTSA implement provisions providing
lenders with the ability to make odometer disclosures through the
special power of attorney in Sec.  580.13 as well as requiring the
mileage on disclosures be transmitted electronically to lenders. NHTSA
does not believe expanding the scope of permissible users of the
special power of attorney to be desirable because limiting the use of
these documents reduces the opportunity for fraud. The agency also
declines to require mileage disclosures to be transmitted
electronically to lenders as such a requirement is inconsistent with
the purposes of part 580.
    Comments were also submitted supporting provisions to address ``end
of life'' of vehicle title processing. These commenters suggested
special electronic processes be implemented to facilitate transfers of
vehicles that are scrapped or have been declared to be a total loss.
NHTSA acknowledges the desirability of streamlining the process of
transferring vehicles to recyclers as well as transfers for vehicles
that have been declared to be a total loss. The agency does not,
however, believe it should take further action other than fostering the
development of electronic title and odometer disclosures through
issuing this final rule.
    The NSVRP urged NHTSA to make whatever changes were needed to
ensure odometer readings were reported to the correct jurisdiction at
every transfer, including dealer-to-dealer transfers. NHTSA concurs in
the goal of having odometer mileage accurately reported at every
opportunity and believes the implementation of electronic title and
odometer disclosure systems will do much to achieve that goal. As this
final rule eliminates reassignment documents in states with electronic
odometer disclosure systems, mileage will be reported more frequently
when these systems are implemented. The agency is not requiring such
reporting where paper documents are used absent further analysis of the
burdens that would be imposed and the benefits what would accrue.
    Auctioneer representative NAAA stated U.S. Customs and Border
Protection (CBP) regulations require vehicles to be exported with the
original or certified copy of the title. This commenter fears CBP may
not be prepared to work with electronic titles, and delays in issuing
paper titles may harm vehicle exporters. NHTSA believes this final rule
will not result in titles becoming more difficult to obtain.
    Two commenters addressed the petition process for approval of
odometer disclosure schemes, expressing concern about the effect the
NPRM would have on the continued existence of the petition process. One
commenter requested NHTSA establish rules for rescinding prior grants
and that this final rule declare that it did not invalidate any
previously granted petition. NHTSA did not propose eliminating the
petition process in the NPRM, and this final rule does not make any
changes to that process. The agency also does not agree there is a need
to craft rules of general applicability for rescinding prior grants of
any petitions for approval of alternative disclosure requirements.
Historically, NHTSA has received few of these petitions and has, thus
far, not encountered any situation calling for a rescinding a prior
grant. To the extent any conflict exists between the requirements of
this final rule and a previously granted petition, NHTSA expects the
final rule to be controlling authority that must be followed. In making
this statement, however, it is the agency's belief the provisions of
this final rule are not inconsistent with any of its prior
determinations approving alternative odometer disclosure schemes.

O. New Technologies

    NHTSA intends for this final rule to accommodate emerging
technologies such as blockchain that states may wish to use for
recording electronic titles, making odometer disclosures, and
authenticating electronic signatures. As was discussed previously, we
cannot foresee all future security and authentication applications that
states may wish to use to facilitate electronic odometer disclosures
and title transactions. We intend for this final rule to be technology
neutral. States can use any application for electronic odometer
disclosure or title transactions so long as the application provides
for NIST Level 2 assurance or equivalent and otherwise complies with
the requirements of part 580.

IV. Effective Date

    The NPRM did not propose a date on which the amendments offered by
NHTSA would become effective. NHTSA has determined the amendments
provided below shall become effective on December 31, 2019. The agency
is issuing this final rule in response to a Congressional directive
that NHTSA issue regulations allowing states to implement electronic
odometer disclosure systems without having to petition NHTSA for
approval. After thorough review of the comments and consideration of
existing electronic odometer disclosure systems, the agency believes
almost all of the states with

such systems currently will meet the new requirements. However, NHTSA
notes that states whose systems may need to be modified to meet the new
requirements will need to time to make any changes needed to comply
with this rule, NHTSA has established an effective date that allows
sufficient time to for states to ensure compliance.

V. Costs and Benefits

    The estimated annual costs of the final rule considers the total
labor cost for filling the mileage in odometer disclosures when
ownership is transferred for 11 to 19 years old used vehicles, the cost
for computer storage for these disclosure records, and the processing
time for filing these records. The estimated benefits of the final rule
primarily are measured by the annual consumer loss from the odometer
fraud that can be eliminated by the exemption requirement of the final
rule. Allowing e-odometer filing is expected to be more efficient for a
paper form of odometer system and thus has the benefits of paper
reduction and the decrease of record processing and management time.
The agency presently is unable to quantify the efficacy impact of E-
odometer, therefore, its benefit is not included. The estimated costs
and benefits are expressed in 2018 dollars. Please see the accompanying
cost and benefit analysis for a detailed discussion.
    This final rule, except for the amendment modifying the exemption
for vehicles of a certain age from the odometer disclosure
requirements, establishes rules intended to accommodate electronic
odometer disclosures in the event states or other jurisdictions seek to
adopt such systems. The agency has carefully reviewed previous
petitions for approval of such systems, the requirements of federal
odometer disclosure law, past rulemaking actions, and the comments
provided in response to the NPRM with a goal toward crafting
regulations that will continue to protect against odometer fraud while
providing sufficient latitude for jurisdictions to either retain or
develop electronic title and odometer disclosure schemes. The agency
believes the final rule will not require the small number of
jurisdictions with electronic odometer systems to make significant
changes to comply with the new rules, and NHTSA will work with those
jurisdictions to facilitate compliance. Specifically, the final rule
requires the security of the electronic systems that are comparable to
the practice of the current state security requirements and to that
recommended by the task force sponsored by the American Association of
Motor Vehicle Administrators.\13\ Therefore, the agency believes the
final rule would not impose costs to states for the implementation of
security requirement of the e-odometer systems.
---------------------------------------------------------------------------

    \13\ Roadmap to Electronic Odometer Disclosure Guidance Document
from the E-Odometer Task Force, March 2018, American Association of
Motor Vehicle Administrators.
---------------------------------------------------------------------------

    This final rule also alters the previous exemption from odometer
disclosure for vehicles that are 10 years old to make it applicable to
vehicles 20 years old. This new exemption will apply to vehicles
manufactured in the 2010 model year and later and, unlike the remainder
of the provisions of this final rule, will be applicable to all vehicle
transfers and odometer disclosures regardless of whether the
disclosures are made on paper or electronically.
    The increased quality and longevity of vehicles dictates half of
vehicles now in use are more than 11 years old, and, with the average
age at scrapping of 15 years, these vehicles are prime targets for
odometer fraud. It is the agency's belief the aggregate cost of
odometer fraud to purchasers of vehicles in the 10 to 20-year age range
is substantial. Balanced against that cost, the burdens imposed by
raising the exemption age are minimal. An odometer disclosure is one of
many steps involved in transferring ownership of a vehicle. When a
vehicle is old enough to be exempt from the disclosure requirements,
the seller may choose to simply place the word ``exempt'' in the space
where the odometer mileage would be entered. In such a case, the buyer
and seller do not need to fill in the remainder of the disclosure form
or sign it. However, whether made on the title or on a separate
document when it is permissible to do so, the claim that the vehicle is
exempt or the odometer mileage is recorded and processed by a state
when the vehicle is registered. The odometer disclosure is also just
one part of the larger process of transferring ownership in which the
various participants are executing or processing documents and
retaining copies as records. States will be maintaining these records
regardless of whether the vehicle is exempt from odometer disclosure.
Car dealerships also generally preserve all transaction records for at
least five years, for tax and audit purposes. As such, the agency
believes that the final rule would not have additional costs on
computer and physical storage for states and car dealerships. The final
rule also is not expected to increase the record processing burden to
states and car dealerships. Therefore, the only cost from the final
rule would be the labor cost for the time that is needed for recording
the mileage from ``exempt'' to the actual mileage, for inspection to
ensure accuracy, time to sign the statement and to provide the name and
address information.
    Based on the NIADA Used Car Industry Report (NIADA report),\14\
there were 41.4 million used cars sold in 2017. Examining the data in
the NIADA report, the data provided by Edmonds, and Polk vehicle
registrations, the agency estimated that 10.4 million vehicles sold
annually were between 10 and 19 years old. This represents the whole 10
model years (MY) of vehicles that would be affected by the extended
exemption requirement of this final rule in the 10th (2019) and later
years. During the first effective year of the final rule, i.e., 2020,
only one MY of vehicles, 2010 MY (i.e., age 10) will be affected. One
more additional MY vehicles will be added each year between the 2nd to
the 9th effective years of the final rule. Afterwards, i.e., the 10th
effective year and later, a whole 10 MYs of vehicles will be affected
each year.
---------------------------------------------------------------------------

    \14\ NIADA 2018 Used Car Industry Report, National Independent
Auto Dealers Association, available at https://www.niada.com/uploads/dynamic_areas/ei5l4ZznCkTc8GyrBKd6/34/UCIR_2018_Web.pdf?
(last visited Sept. 13, 2019).
---------------------------------------------------------------------------

    The number of odometer disclosures for the affected vehicles would
depend on the retained sources. Private party transactions (i.e.,
individual to individual) will require one odometer disclosure assuming
that the disclosure conforms to the current individual state
regulations for vehicles 0 to 9 years old. By contrast, vehicles sold
through dealers will involve at least two disclosures due to the
wholesale level when vehicles are passed among dealers. With the lack
of the statistics on how many times a used vehicle would be wholesaled
before its retail purchase, the agency assumes a total of 5 disclosure
transactions per retailed vehicle.
    Using several data sources (Polk registration data, NIADA report,
and Edmonds), the agency estimated that the total number of affected
vehicles is about 1.4 million in 2020 when only one MY of vehicles
would be affected. With one additional MY of vehicles affected each
progressing year, the volume as expected will be gradually increased
until reaching the maximum of 10.5 million units in 2029 and later
years (2028+) when 10 MYs of vehicles (i.e., 10 to 19 years old) were
included. Derived from the same data source, the agency estimated that
40.3 percent were from private party sales and 59.7

percent from car dealerships (franchised and independent). Therefore,
there will be 4.9 million disclosures (=1.4 million * 0.403 * 1 + 1.4
million * 0.597 * 5) for 2020 and 35.4 million annual disclosures (=
10.5 million * 0.403 * 1 + 1.4 million * 0.597 * 5) for 2029+ years.
The agency estimated that it will take 15 seconds to fill the actual
mileage per disclosure and the average hourly labor cost in 2018 is
$36.39.\15\ Multiplying time in hours by the total disclosures and
hourly labor cost derived the total cost of the final rule. The total
cost of the change to the age-based exemption in the final rule is
estimated to be from the minimum of $0.7 million in 2020 to the maximum
of $5.4 million for 2029+ years.
---------------------------------------------------------------------------

    \15\ Average of first three Quarters of 2018. Series Id:
CMU1010000000000D (C); Series Title: All Civilian Total compensation
for All occupations; Cost per hour worked as of March 18, 2019,
Bureau of Labor Statistics, https://data.bls.gov/cgi-bin/dsrv.
---------------------------------------------------------------------------

    Table 1 summarizes the affected MYs, the number of affected
vehicles, the total number of mileage disclosures, and the total costs
from 2020. Note that the first part of the table shows the affected MYs
and their corresponding age for each effective calendar year. The last
column ``2029+'' indicates that 2029 and later, 10 MYs of vehicles will
be affected by this final rule but with rolling one MY forwards each
year. In other words, affected vehicles are MYs 2010-2019 for 2029, MYs
2011-2020 for 2030, and so on so forth.

                                                        Table 1--Estimated Cost of the Final Rule
                                                                   [Affected vehicles]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Calendar year
                          Model year                           -----------------------------------------------------------------------------------------
                                                                  2020     2021     2022     2023     2024     2025     2026     2027     2028    2029+
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010..........................................................       10       11       12       13       14       15       16       17       18       19
2011..........................................................  .......       10       11       12       13       14       15       16       17       18
2012..........................................................  .......  .......       10       11       12       13       14       15       16       17
2013..........................................................  .......  .......  .......       10       11       12       13       14       15       16
2014..........................................................  .......  .......  .......  .......       10       11       12       13       14       15
2015..........................................................  .......  .......  .......  .......  .......       10       11       12       13       14
2016..........................................................  .......  .......  .......  .......  .......  .......       10       11       12       13
2017..........................................................  .......  .......  .......  .......  .......  .......  .......       10       11       12
2018..........................................................  .......  .......  .......  .......  .......  .......  .......  .......       10       11
2019..........................................................  .......  .......  .......  .......  .......  .......  .......  .......  .......       10
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                     Cost Estimates
                                                                    [In 2018 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  2020     2021     2022     2023     2024     2025     2026     2027     2028    2029-
--------------------------------------------------------------------------------------------------------------------------------------------------------
Units Sold (in Million).......................................      1.4      2.8      4.2      5.5      6.6      7.7      8.6      9.3      9.9     10.5
Number of Transac-tions (in Million)..........................      4.9      9.6     14.2     18.5      22.     26.0     29.0     31.5     33.7     35.4
Labor Hours (in 1000).........................................     20.2     40.1     59.1     77.1     93.6    108.1    120.8    131.3    140.3    147.5
Labor Costs (in Million)......................................     $0.7     $1.5     $2.2     $2.7     $3.4     $3.9     $4.4     $4.8     $5.1     $5.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The benefit of the final rule as stated earlier is measured by the
consumer cost from odometer fraud that can be eliminated due to the
final rule. Based on the 2013 Carfax study,\16\ there are about 190,000
cases of odometer fraud (or rollbacks) with an annual loss of $761
million indicating an average of $4,000 loss per case. The study also
stated that 60 percent of rollbacks occurred in vehicles 11 to 19 years
old and the average rollback is about 50,000 miles.
---------------------------------------------------------------------------

    \16\ Odometer Fraud 2013, Carfax, available at https://cfx-wp-images.s3.amazonaws.com/2017/11/odometer_fraud_infographic.jpg (last
visited Sept. 13, 2019).
---------------------------------------------------------------------------

    These are the available rollback statistics and fraud monetary loss
that the agency used as starting points for benefit estimates.
Specifically, the fraud loss was adjusted from 2013 economics to 2018
economics. Therefore, the fraud loss is estimated to be $820 million in
2018 dollars. The 60 percent rollback rate is used as the rate for all
affected vehicles (i.e., 10-19 years old) because of the lack of annual
rollback information by individual age. This implies that during the
full effective calendar year where 10 MYs of vehicles will be affected,
rollbacks for these 10 MYs of vehicles account for 60 percent of all
rollbacks of that calendar year. The agency believes that the impact on
fraud loss will be reduced disproportionally with increased age given
the same rollback miles. To reflect this, the agency used the overall
annual fraud loss of $820 million as the base and estimated the
proportion each age of vehicles' contributing to this loss. To achieve
this, the agency first developed a regression model describing the
relationship between retail price and vehicle mileage using data
provided by Edmonds. The 50,000 miles was treated as the average
rollback miles and was used in the regression model to project the
retail price when mileage is increased by 50,000 miles for all age of
vehicles. The average price difference is the retail price difference
between a vehicle with a specific mileage level and with that mileage
increased by 50,000 miles. The Edmonds data used in the regression
model only reflects dealership transactions which tend to involve
younger used vehicles. The model projected price difference thus might
not account for the relative occurrence of each age of vehicles in the
annual used car market. To address these issues, the projected price
difference for individual vehicle age was indexed relative to that of
age 0 (i.e., ratio of price difference of individual age to that of
Year 0). The relative indexes were then weighted by the vehicle age
factors to account for the occurrence of each vehicle age. The age
factors were developed using 2013 to 2018 Polk vehicle registration
data. Thus, in 2020, there are about 15,700 rollbacks in vehicles 10-19