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1

Brands are descriptive labels regarding thestatus of a motor vehicle, such as junk, salvage,and flood vehicles.

2There are currently 13 states participating fullyin NMVTIS: Arizona, Florida, Indiana, Iowa,Kentucky, Massachusetts, New Hampshire, Nevada,Ohio, South Dakota, Virgina, Washington, andWisconsin. Fourteen states are providing regulardata updates to NMVTIS: Alabama, California,Delaware, Georgia, Idaho, Louisiana, Nebraska, NewJersey, New York, North Carolina, Pennsylvnia,Tennesses, Texas, and Wyoming. Ten states areactively taking steps to provide data or participatefully: Arkansas, Michigan, Minnesota, Missouri,Montaina, New Mexico, Oklahoma, South Carolina,Vermont, and West Virginia. See www.NMVTIS.govfor a map of current participation status.

DEPARTMENT OF JUSTICE

28 CFR Part 25

[Docket No. FBI 117; AG Order No. 30422009]

RIN 1110AA30

National Motor Vehicle Title

Information System (NMVTIS)AGENCY: Department of Justice.ACTION: Final rule.

SUMMARY: The National Motor VehicleTitle Information System (NMVTIS) has

been established pursuant to 49 U.S.C.30502 and has the participation, orpartial participation, of at least 36 states.The purpose of NMVTIS is to assist inefforts to prevent the introduction orreintroduction of stolen motor vehiclesinto interstate commerce, protect statesand individual and commercialconsumers from fraud, reduce the use of

stolen vehicles for illicit purposesincluding fundraising for criminalenterprises, and provide consumerprotection from unsafe vehicles. Thisrule implements the NMVTIS reportingrequirements imposed on junk yards,salvage yards, and insurance carrierspursuant to 49 U.S.C. 30504(c). Thisrule also clarifies the process by whichNMVTIS will be funded and clarifiesthe various responsibilities of theoperator of NMVTIS, states, junk yards,salvage yards, and insurance carriersregarding NMVTIS.DATES: Effective Date:This rule is

effective March 2, 2009.FOR FURTHER INFORMATION CONTACT:Alissa Huntoon, 810 7th Street, NW.,Washington, DC 20531, 2026166500,www.NMVTIS.gov.

SUPPLEMENTARY INFORMATION:

Background

The Anti-Car Theft Act of 1992,Public Law No. 102519, 106 Stat. 3384,required the Department ofTransportation (DOT) to establish aninformation system intended to enablestates and others to access automobiletitling information. As part of the Anti-

Car Theft Act of 1992, DOT wasauthorized to designate a third party tooperate the system. Since 1992, theAmerican Association of Motor VehicleAdministrators (AAMVA) has acted inthe capacity of the operator of thesystem. AAMVA is a nonprofit, taxexempt, educational associationrepresenting U.S. and Canadian officialswho are responsible for theadministration and enforcement ofmotor vehicle laws. The requirements ofthe Anti-Car Theft Act of 1992 wereamended by Public Law 103272 and

the Anti-Car Theft Improvements Act of1996, Public Law No. 104152, 110 Stat.1384. The Anti-Car Theft ImprovementsAct of 1996 renamed the automobiletitling system the National MotorVehicle Title Information System andtransferred responsibility forimplementing the system from DOT tothe Department of Justice (DOJ).

Hereinafter, the Anti-Car Theft Act of1992 and the revisions made by PublicLaw 103272 and the Anti-Car TheftImprovements Act of 1996, codified at49 U.S.C. 3050130505, are collectivelyreferred to as the Anti-Car Theft Actorthe Act.

While the overall purpose of the Anti-Car Theft Act is to prevent and deterauto theft, title II of the Act, whichauthorizes NMVTIS, is intended toaddress automobile title fraud.Accordingly, the primary purpose ofNMVTIS is to prevent various types oftheft and fraud by providing an

electronic means for verifying andexchanging title, brand, theft, and otherdata among motor vehicleadministrators, law enforcementofficials, prospective and currentpurchasers (individual or commercial),and insurance carriers.1 Currently, 37states are actively involved withNMVTIS, representing nearly 75% ofthe U.S. motor vehicle population.Specifically, 13 states are participatingfully in NMVTIS, 14 states are regularlyproviding data to the system, and anadditional 10 states are actively takingsteps to provide data or participatefully.2 States that participate fully in the

system provide data to the system on adaily or real-time basis and makeNMVTIS inquiries before issuing a newtitle on a vehicle from out of state andpreferably before every title verification,regardless of its origin or reason.Participating states also pay user fees tosupport the system and the servicesprovided to the state.

In 2006, the Integrated JusticeInformation Systems (IJIS) Institute, anonprofit membership organizationmade up of technology companies, wasasked by Department of Justices Bureau

of Justice Assistance (BJA) to conduct afull review of the NMVTIS systemarchitecture to identify anytechnological barriers to NMVTISimplementation and to determine if anypotential cost savings was availablethrough emerging technology. The IJISInstitute report found that the NMVTISprogram provides an invaluable benefit

to state vehicle administrators and thepublic community as a whole.Advantages of the program includeimproving the state titling process, aswell as providing key information toconsumers and law enforcementagencies. In addition to this study, theGovernment Accountability Office(GAO) also found NMVTIS to hold

benefit potential for states, and a privatecost-benefit study also determined thatNMVTIS could provide benefits in therange of $4 to $11 billion dollarsannually if fully implemented. NMVTISand its benefits to states, law

enforcement, consumers, and othershave been widely touted by motorvehicle or auto-industry organizationsincluding AAMVA and the NationalAutomobile Dealers Association(NADA), by law enforcementorganizations such as the InternationalAssociation of Chiefs of Police and theNational Sheriffs Association, by theNorth American Export Committee(NAEC), and by the InternationalAssociation of Auto Theft Investigators.NMVTISs benefits have also beenrecognized by national consumeradvocacy organizations, and byindustry-affiliated groups including the

National Salvage Vehicle ReportingProgram and many others, as identifiedin the public comments.

NMVTIS is a powerful tool for statetitling agencies. Fully participating statetitling agencies are able to use NMVTISto prevent fraud by verifying the motorvehicle and title information,information on brands applied to amotor vehicle, and information onwhether the motor vehicle has beenreported stolenall prior to the titlingjurisdiction issuing a new title. In orderto perform this check, these states runthe vehicle identification number (VIN)

against a national pointer file, whichprovides the last jurisdiction that issueda title on the motor vehicle and requestsdetails of the motor vehicle from thatjurisdiction. Using a secure connection,states then receive all requiredinformation or the complete title ofrecord from the state of record. Statescan then use this information to verifyinformation on the paper title beingpresented.

Verification of this data allows fullyparticipating states to reduce theissuance of fraudulent titles and reduce

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odometer fraud. Once the inquiringjurisdiction receives the information, astate is able to decide whether to issuea title. For states fully participatingthrough integrated, online access, if anew title is issued, NMVTIS notifies thelast titling jurisdiction that anotherjurisdiction has issued a title. The oldjurisdiction then can inactivate its title

record. This action allows fullyparticipating jurisdictions to identifyand purge inactive titles on a regular

basis and eliminates the need for theseagencies to conduct these processesmanually. This service provides ameasurable benefit to states in terms ofcost savings. In 2007, over 18.4 milliontitle-update transactions were initiatedand over 45 million messages weregenerated via NMVTIS, which allowsstates to work and communicatesecurely and to perform electronic titletransactions between states.

NMVTIS also allows fully

participating states to ensure that brandsare not lost when a motor vehicle travelsfrom state to state. As noted above,

brands are descriptive labels regardingthe status of a motor vehicle. Many

brands, such as a flood vehicle brand,indicate that a motor vehicle may not besafe for use. Unfortunately, motorvehicles with brands on their titles canhave their brands washed (i.e.,removed ) from a title if the motorvehicle is retitled in another state thatdoes not check with the state that issuedthe previous title and with other statesthat may have previously issued titles

on the vehicle to determine if it has anyexisting brands not shown on the papertitle. Because NMVTIS keeps a historyof brands applied by any state to themotor vehicle at any time, it protectsindividual and corporate consumers byhelping ensure full disclosure so thatpurchasers are not defrauded or placedat risk by purchasing an unsafe motorvehicle. Currently, there areapproximately 300,000,000 VINs inNMVTIS with over 40,000,000 brandsincluded. NMVTIS also prevents cleantitle vehicles that are actually a totalloss or salvage from being used to

generate a paper title that is laterattached to a stolen vehicle that iscloned to the destroyed clean titlevehicle. Criminal enterprises seek theseclean title vehicles, which are lowcost to them (because they are destroyedor salvage), because it increases theirreturn when they sell a cloned stolenvehicle. It has been noted that criminalprofits in such a case can more thanquadruple if a clean title vehicle isused for cloning. Even worse, becausethese cloned vehicles are able to get intothe titling systems of the non-

participating states, they often continueto be sold to new and unsuspectingowners. There have been casesinvolving car dealers who hadpurchased stolen cloned vehicles andresold them to individual consumers.NMVTIS also provides protections fromother types of related theft and fraudthat ultimately place lives at risk and

cost states, consumers, and the privatesectors billions of dollars each year. Theproceeds from these illicit activitiessupport additional crime and fraud andeven serious and violent crime. Formore information on the benefits ofNMVTIS, visit www.NMVTIS.gov.

Discussion of Comments

On September 22, 2008, theDepartment of Justice published aproposed rule to implement variousrequirements concerning NMVTIS. SeeNational Motor Vehicle TitleInformation System (NMVTIS), 73 FR

54544 (Sept. 22, 2008). The ruleproposed the imposition of reportingrequirements on junk yards, salvageyards, and insurance carriers. Inaddition, the rule clarified the fundingprocess for NMVTIS and theresponsibilities of the operator ofNMVTIS, states, junk yards, salvageyards, and insurance carriers. Thecomments and the Departmentsresponses are discussed below:

1. General Comments

Comment:Several commenterssuggested that NMVTIS will detervarious types of crime and fraud and

suggested that since the passage of theAnti-Car Theft Act, the types of crimeand fraud, as well as the methods, haveevolved. These commenters noted thatthe purpose of NMVTIS remains toaddress these types of crime and fraud.

Response:DOJ agrees that since thepassage of the Anti-Car Theft Act,crimes and crime techniques haveevolved. DOJ, therefore, has updated thestated purpose of NMVTIS to be morereflective of the crime and expansivedirect and indirect fraud NMVTIS wasintended to address and is addressingtoday.

Comment:The American Salvage PoolAssociation (ASPA) commented thatjunk and salvage yards have anexemption for reporting where andwhen a non-stolen verification isobtained under 49 U.S.C. 33110, whichauthorizes a system that has never beenimplemented. The ASPA commentedthat this exemption is telling, however,in linking NMVTIS[s] statutory purposeto theft prevention, as opposed to brandinformation.

Response:In addition to the fact thattitle II of the Anti-Car Theft Act

addresses fraud, it is clear that brandinformation can be directly linked tovehicle theft in addition to fraud. Lawenforcement investigations haverepeatedly shown that clean title totalloss vehicles are a preferred commodityamong car cloning and car theft rings, asthey bring a higher return oninvestment. The Anti-Car Theft Act

exemption, which is in 49 U.S.C. 33111,provides that junk and salvage yards arenot required to report on an automobileif they are issued a verification under 49U.S.C. 33110 stating that the automobileor parts from the automobile are notreported as stolen.

2. Effectiveness

Comment:Several submissionsquestioned the effectiveness of NMVTISin eliminating or preventing fraud andtheft. Several of these commenterssuggested the need for quantitativeproof of the systems effectiveness

before the law should be followed. Atthe same time, however, severalsubmissions recognized the value ofNMVTIS. As one commenter noted,NMVTIS would undoubtedly cut downon the number of rebuilt wreck fraudcases. And the State of TexasDepartment of Transportation noted that[t]he system provides numerousobvious benefits to titling agencies, lawenforcement[,] and vehicle sellers, aswell as consumer protection to the

buying public.Response:The Anti-Car Theft Acts

participation requirements wereestablished based on analyses presented

at the time of the bills introduction andpassing. Further, an extensive cost-

benefit analysis and a GovernmentAccountability Office study both haveindependently determined that NMVTISwill produce a significant public benefitthat greatly exceeds the costs ofimplementing the program. The cost-

benefit study found that the system isonly as effective as the number ofvehicles represented in the system. Non-participating states create loopholeswhere brands can be washed, allowingfurther fraud in any stateparticipatingor not. Discussions with private-vehicle-

history-report providers and ongoinglaw enforcement investigations at thestate, local, and federal levels haveshown that non-participating states aretargeted for exploitation because theirvehicle titling information is notimmediately shared with other statesand because they have no efficientability to inquire with all other statesthat may have previously titled thevehicle.

Feedback from participating statespoints to other positive outcomes of theprogram. One state reports a 17%


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decrease in motor vehicle thefts; anotherreports a 99% recovery rate on vehiclesidentified as stolen; three states haveidentified cloned vehicles by workingtogether, prior to issuing new titles; andanother state reports cracking a car theftring responsible for cloning more than250 cars worth $8 million. Aside fromthese results, it is clear that if all states

comply with the Anti-Car Theft Actrequirements, brand washing in the wayit is most commonly conducted todaywill be eliminated because there is noother way to title a vehicle other thangoing through a state titling process. Thesame goes for vehicle cloning, whichwould be virtually eliminated if everystate participated as required.

Moreover, Experian Automotivereported that in the first six months of2008 alone, there have already beenmore than 185,000 titles that initiallywere branded in one state, and werethen transferred and re-titled in a

second state in a way that resulted in apurportedly clean title. Given all thesefacts, we can be sure that NMVTIS will

be effective in eliminating this type offraud, preventing a significant numberof crimes, and potentially saving thelives of citizens who would otherwisepurchase unsafe vehicles.

In addition to the systemsdocumented value in reducing theft andfraud in protecting consumers, thesystem also has been shown to creategreater efficiencies within the titlingprocess when the inquiry and responseare integrated into the states titling

processes.Comment:NAEC commented thatthe effectiveness [of NMVTIS] can only

be truly measured [when] alljurisdictions are participating, becauseof the holes that are currently in thesystem due to lack of full participation.The State of California Department ofMotor Vehicles seemingly agreed withthis comment when it noted that these

beneficial outcomes can only beachieved when all 50 states and theDistrict of Columbia are participating.The Virginia Department of MotorVehicles commented that the systemprovides a great value to participatingstates, and that value will exponentiallyincrease as each jurisdiction begins fullyparticipating.

Response:DOJ agrees in part withthese assessments. As discussed above,partial participation creates loopholesthat criminal organizations exploit, and,therefore, measuring the full benefit ofa comprehensive NMVTIS is difficultwithout participation by all states.However, NMVTIS provides significant

benefits to participating states evenwhen state participation is not at 100%.

Comment:One commenter asked ifthe information would have muchpractical utility, or whether it wouldonly serve as further documentation ofa market that is only broadly related tosecondary criminal enterprises. Thecommenter further noted that the rulewill only spur increased sophisticationof organized crime. This increased

sophistication must be balanced againstthe proposed benefits from the smallcontraction in the secondary criminalmarket that is assumed to occur underthis rule. One of the benefits of theproposed rule is the documentation ofsalvage pool sales. But this benefit islimited: it will only require criminals togo through more steps, steps that requireincreased organizational skills. Hence,although the rule may push somecriminals out of the market overall (theless sophisticated and organized), it willalso indirectly spur increasedsophistication and organization of the

surviving criminal organizations.Although one of the primary goals ofNMVTIS is theft deterrence, there is nodata to support the conclusion that thisportion of the criminal market will beaffected by the proposed rule.

Response:DOJ disagrees with thesecomments. Substantial evidence,statements, and documentation indicatethat NMVTIS will impact vehicle theftand fraud.

Comment:Several commenters,including law enforcement, consumeradvocates, industry associations, andstate motor vehicle administrators,including Californias, noted that

NMVTIS is needed and will be effectivein addressing the threats of auto theft,cloning, and fraud, and in providingprotection for consumers against fraud.

Response:DOJ agrees with thesecomments and notes that the expected

benefits and positive outcomes ofNMVTIS have been confirmed not only

by government and private research, butalso by multiple representatives of everystakeholder community affected by thesystem, including state titling agencies,state and local law enforcement,consumers, insurance carriers, and junk-or salvage-yard operators.

Comment:The NAEC commented thatlaw enforcement successes to date canvalidate the benefits and costsassociated with NMVTIS and that theNAEC is solid in its belief that NMVTISis a fundamentally sound approach totitle washing, title fraud, vehicletheft[,] and public safety related to thebranding of un-road worthy vehicles inthis Country. The NAEC provided datafrom one state that uses NMVTIS and,as a result, has identified and recoveredhundreds of stolen vehicles. The NAECfurther commented that to suggest that

the system should be cancelleddemonstrates a lack of understanding[of] the magnitude of the vehicle theftproblem in North America and PublicSafety issues surrounding brandedvehicles.

Response:DOJ agrees with theNAECs assessment of NMVTIS.

Comment:The State of Illinois Motor

Vehicle Administration commented thatother services have become availablesince the Anti-Car Theft Act was passedand that NMVTIS should be put onhold while an analysis on the need forNMVTIS can be conducted. The MaineBureau of Motor Vehicles suggested thatNMVTIS was not needed becauseconsumers have other options forchecking vehicle title status prior topurchase.

Response:While other fee-basedoptions for checking vehicle title statusare available for consumers, the abilityof consumers to check NMVTIS forvehicle title status is required by federallaw and a federal court order. Whenfully implemented, NMVTIS willprovide assurances that no other optioncan providecomplete and timelyinformation on all vehicles in the U.S.The Anti-Car Theft Act provided noflexibility for states, insurance carriers,or junk or salvage yards to filterinformation shared with NMVTIS; thusNMVTIS will be the most-reliablesource of information once fullyimplemented. Several providers ofvehicle history information have agreedto make NMVTIS data available as away of enhancing their products,

demonstrating that NMVTIS does haveunique value. DOJ is not in a positionto put NMVTIS on hold, as recentlitigation was based on the complaintthat DOJ had waited too long to issueNMVTIS regulations. A court hasordered DOJ to publish these regulations

by January 30, 2009. See Public Citizen,Inc. v. Mukasey, No. 3:08cv00833MHP, 2008 WL 4532540 (N.D. Cal. Oct.9, 2008).

Comment:One commenter noted thatit is beyond the scope of the NMVTISregulations to reform the process bywhich insurers assign title designations;

however having the sales reported in atimely fashion, and by includingappropriate identification of bothinternational, domestic (out of state) anddomestic (in state) buyers, it will helpthe Law Enforcement Community in itseffort to control crime and protect thepublic.

Response:It is beyond the scope ofNMVTIS and DOJs intentions to alterinsurance carrier policies andprocedures in terms of titledesignations. While transfers of vehiclesfrom insurance carriers to others would


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likely be captured in the NMVTISreporting process due to subsequentreporting by junk and salvage yards, itis unlikely that the names of buyers will

be reported or captured in the systembecause this is not a required data field.Requiring the name of such buyers is ofsignificant value to law enforcement forpreventing and investigating automobile

theft and fraud. Additionally, as ispointed out elsewhere in thesecomments, establishing a chain ofpossession or custody is important foreffective and efficient law enforcementinvestigations.

Comment:One commenter noted that[a]ccording to Experian Automotive,(PR Newswire August 25, 2008Experian, Schaumburg, IL), in the first6 months of 2008 alone, there havealready been more than 185,000 titlesthat initially were branded in the firststate, and were then transferred and re-titled in a second state in a way that

resulted in a clean title. This situationcannot be addressed without muchstronger controls and full reporting.There is a great deal of abuse of the titlesystem and we regularly observeseverely damaged units that have beengiven clean title designations to vehiclesthat have massive damage. As a result,criminals regularly buy these vehiclesfor the paper, and steal a like vehicleand engage in cloning or VINswapping.

Response:Once all states comply withthe law, NMVTIS will protect againstthese types of abuses by creating a brandhistory (a record of the various brands

associated with a particular VIN) forevery vehicle, which will prevent afuture title-issuing agent from beingunaware of a vehicles brand history andwill eliminate the possibility of avehicle being titled in more than onestate (a common occurrence today).

Comment:Maine Bureau of MotorVehicles commented that Mainealready has procedures in place tocheck for stolen status prior to issuinga title and for carrying forward out-of-state brands.

Response:NMVTIS is designed toprovide more than a simple stolen-

vehicle check. Further, neither carryingforward out-of-state brands based onpaper titles presented, nor checking thepaper documentation against a third-party data provider, eliminates brandwashing. Washed brands may notappear on paper or in third-partydatabases. Because states are required toreport title transactions to NMVTIS andto check NMVTIS prior to issuing a newtitle, NMVTIS is the only system thatcan eliminate such brand washing whenfully implemented. No state, exceptthose participating in NMVTIS when

fully implemented, has any ability tofully verify brand histories and carryforward out-of-state brands withoutmanually contacting every state and theDistrict of Columbia prior to issuing anew title.

Comment:One commenter noted thatthe benefits of NMVTIS are also notillogical simply because concrete figures

do not exist concerning its limitedimplementation. Given NMVTIS[s][implementation] status, any figuresoutlining the benefits would provehighly conservative even if found. It isnot difficult to imagine though thatillegal reselling of salvaged vehiclestakes advantage [of] reporting gaps bymoving across state lines. Statisticsconcerning such operations are well-documented even if the benefits ofNMVTIS are not. Being able to verifythe success and results of NMVTIS thusdepends critically on the provision ofinformation from all states.

Response:DOJ agrees with thiscomment.Comment:The Missouri Department

of Revenue commented that the systemis only as good as the number ofjurisdictions participating, and in lightof current participation levels, the stateis expending resources for data that maynot be inclusive or accurate.

Response:As of December 2008,NMVTIS includes nearly 75% of theU.S. vehicle population. At the sametime, several states are actively workingtowards participation in NMVTIS,which will take NMVTIS closer to 100%participation. With the inclusion of

insurance and junk- and salvage-yardinformation, and given that many statesreport to NMVTIS in real time,NMVTIS is likely to be as inclusive asany vehicle title history databaseavailable, even before 100% stateparticipation. As for accuracy, thesystem currently includes only datafrom state motor vehicleadministrations, and DOJ is aware of noerrors in NMVTIS. As stated in this rule,procedures and safeguards will be putinto place to ensure identification andcorrection of any errors identified. Non-participating states, on the other hand,

are expending their resources based onfraudulent information when they issuetitles in many situations.

3. Need and Purpose

Comment:One commenter asked Towhat extent is consumer protection andthe prevention of fraud in the secondarycar market domestically andinternationally a high priority for theagency?

Response:The prevention of fraudthat affects U.S. citizens, whether it behere or abroad, and consumer protection

are priorities for DOJ and for NMVTIS.DOJs Strategic Plan includes in itssecond goal Strategic Objective 2.5:Combat public and corporatecorruption, fraud, economic crime, andcybercrime. U.S. Department of JusticeStrategic Plan, Fiscal Years 20072012.

Comment:One commenter noted thatstates often sell their vehicle history

records to private, third-partyorganizations who then resell the data.The commenter requested that the finalrule spell out that the states own thedata and that the operator of the systemmay not resell the data to otherproviders without authorization of thestates.

Response:While NMVTIS maycontain a subset of data on vehiclestitled within the U.S., it does notinclude all of the information a statemotor vehicle administration maypossess. DOJ agrees that the state-maintained vehicle history databases arethe province of the states, and that theintent of the Anti-Car Theft Act was notto create a database of information for

bulk resale. The operator of the system,therefore, will not resell the NMVTISdatabase in its entirety to anyone. Twokey goals of the Anti-Car Theft Act,however, are consumer access to thedata and a self-funded system. For thesereasons, the operator will be allowed tocharge consumers for use.

Comment:The State of Illinois motorvehicle administration questioned howNMVTIS will interface with lawenforcement data systems within thestate that are used to identify and flag

stolen vehicles.Response:NMVTIS is not expected to

interface with law enforcementsystems within the state. Information inNMVTIS related to a vehicles theftstatus or history emanates from one oftwo placesstate brands and the theftfile of the National Insurance CrimeBureau (NICB), which is derived fromthe FBIs National Crime InformationCenter (NCIC). Law enforcementsystems will be able to link or connectto the NMVTIS law enforcement accesssite, however, which will include allNMVTIS information without

restriction. NCIC will always be theprimary repository of active theft filesfor law enforcement. Stolen vehicleinformation in NMVTIS is providedonly for state titling purposes for thosestates that cannot access NCIC or state-

based law enforcement systems.

4. Prospective Purchaser Inquiries

Comment:The Idaho TransportationDepartment commented that theproposed rules included several dataelements in the requirement forprospective-purchaser inquiry responses


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or consumer access reports that wouldeffectively eliminate the need for anactual state record to be requested by aconsumer or prospective purchaser,thereby reducing state revenues realizedfrom the sale of motor vehicle records.

Response:At a minimum, NMVTISwill provide the following pieces ofinformation in response to an inquiry, if

that data is present in NMVTIS: (a) Thecurrent state of title; (b) the brandhistory of the vehicle; (c) the latestreported odometer reading; and (d)information about the vehicles reportedappearance in the inventory of acovered junk or salvage yard or on anyinsurance carrier determination of totalloss related to that vehicle. There areseveral reasons, however, why states arelikely to continue to experience demandfor their full title records. First, statesoften possess additional informationthat is not anticipated to be withinNMVTIS but that is of interest to many

purchasers. This information mayinclude ownership information, lien-holder information, registrationinformation, safety-inspection data, andother details that the states may have

but are not required to report toNMVTIS. Second, by providingconsumers with the current state of title,NMVTIS actually serves as a nationwidepointer that will result in an increase inrequests for state records. And DOJ willdirect the operator to ensure that allconsumer access portal providersprovide consumers with a link to thestates site or to the states designatedvehicle history report access point,

enabling consumers to purchase the fullstate record. Third, states are eligible to

become portal providers, therebycapturing an opportunity to increaserevenues by providing access toNMVTIS data and to the states recordsfor a state-determined fee.

Comment:The State of NevadaDepartment of Motor Vehiclescommented that Nevada will not allowthe unauthorized release of the title datawe send to NMVTIS. Nevada statuteslimit what data can be released and towhom. Will AAMVA have thecapability and assume the responsibility

of prescreening those who want toaccess Nevada title data to ensure thedisclosure complies with Nevadastatutes? Will AAMVA have thecapability of collecting and forwardingthe fees currently charged for accessingand receiving Nevadas title recordswithout Nevada becoming a thirdparty?

Response:Neither NMVTIS nor theoperator will be releasing any statesvehicle title records. The informationthat will be shared via NMVTIS is nota states vehicle title record and is

generated from the index maintained byNMVTIS, with limited information onthe identified vehicle, as authorized anddirected by the Anti-Car Theft Act. Thisfederal statute provides the necessaryauthorization and direction concerningwhat information will be shared, how itwill be shared, and to whom it can beshared. After providing the NMVTIS

information in response to a consumerinquiry, NMVTIS, through the third-party portal providers, will offerconsumers the ability to be directed tothe state of records Web site in order topurchase the states full vehicle titlerecord from the current state of record.Once that handoff occurs, anydecision by consumers to purchase thestates title record will be governed byapplicable state statutes, policies, andprocesses, and by the states vehicle-history-report providers policies andprocesses. NMVTIS prospectivepurchaser inquiry was designed in this

way in an effort to point consumers tostate Web sites for state vehicle titlehistories from that state should they bedesired and available, thus enablingconsumers to purchase the full recordand generating revenues for the states.

Comment:Several motor vehicleadministration agencies and otherorganizations commented that ifpersonal information is released byNMVTIS to non-governmentorganizations, it may be in conflict withthe provisions of the Drivers PrivacyProtection Act of 1994 (DPPA). Severalof these commenters recommended thatthis information only be available to law

enforcement or governmentorganizations, while others indicatedthat they would be prohibited fromsharing personal information withprospective purchasers.

Response:According to the DPPA, 18U.S.C. 2721(b)(2), permitted uses ofinformation protected by the DPPAinclude [f]or use in connection withmatters of motor vehicle or driver safetyand theft; motor vehicle emissions;motor vehicle product alterations,recalls, or advisories; performancemonitoring of motor vehicles, motorvehicle parts and dealers; motor vehicle

market research activities, includingsurvey research; and removal of non-owner records from the original ownerrecords of motor vehiclemanufacturers. In addition, 18 U.S.C.2721(b)(3) provides additionalauthorizations [f]or use in the normalcourse of business by a legitimate

business or its agents, employees, [or]contractors. These exceptions includesufficient authorization for states toprovide access to personal identifyinginformation, and many commentersagreed. Nonetheless, NMVTIS includes

personal information primarily for thebenefit of law enforcement agencies,including governmental regulatory andcompliance-monitoring agencies thatmay not have immediate access to suchdata or to state motor vehicle-historyfiles. NMVTIS will not provide personalinformation in the NMVTIS central fileto individual prospective purchasers

and may not provide access to any othertype of user without securing DOJapproval of such access.

Comment:Several commenters,notably from the consumer-advocacycommunity, encouraged DOJ tominimize, to the greatest extentpossible[,] any cost to consumers foraccessing the data base.

Response:By statute, the feesNMVTIS charges will not be more thanthe costs of operating the system.Although NMVTIS does not controlwhat portal providers will charge forconsumer access to the data, by makingthat data available to all potential portalproviders at the same price, it will bedifficult for any provider to charge toohigh a premium for access to that data.

Comment:One commenter noted thatNMVTIS will make it possible for usersto understand either what a state-issued

brand (i.e., statement of the condition orprior use of a vehicle) means or towhich state they need to go tounderstand the brands meaning. Evenif in some circumstances NMVTIS cansay nothing more than branded injurisdiction X, at least the NMVTIS userwill know which [state] jurisdiction toconsult.

Response:Because neither the Anti-Car Theft Act nor NMVTIS createsuniversal brands, DOJ will direct theNMVTIS operator to ensure thatconsumer-access portal providersprovide a link to brand definitions andany available related explanations, sothat consumers can be aware of how

brands may be defined. One ofNMVTISs benefits is that it willidentify which states have branded avehicle, informing consumers of whichjurisdiction to consult for furtherinformation.

Comment:The State of Alaska

commented that neither DOJ nor theNMVTIS operator should be permittedto discount transaction fees for volumepurchasers. This commenter stated thatnot discounting the price will maximizerevenue collected to offset NMVTISoperational costs, resulting in reducedrates charged to the states.

Response:The volume discountsestablished by the current operator have

been more effective in securingconsumer-access portal providers thanthe non-discounted rates. DOJ willcontinue to monitor the fee structure to


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ensure that it is effective in securingparticipating providers withoutincreasing reliance on state fees. Feesgenerated through the portal providerswill offset the financial impact on states.

Comment:One commenter noted thatthe NMVTIS prospective-purchaserinquiry is redundant of similar servicesthat already exist.

Response:A significant number ofconsumer advocacy, law enforcement,and other organizations submittedcomments arguing that NMVTISsprospective-purchaser inquiry is notredundant with existing services. Forexample, NMVTIS receives certain statedata more frequently than some of thethird-party databases, and the dataNMVTIS receives includes informationthat some of the third-party databasesdo not have.

Comment:The Institute of ScrapRecycling Industries, Inc. (ISRI) arguedthat the law does not give DOJ theauthority to expand NMVTIS datacollection to further the interests of aparticular group of stakeholders. TheISRI expressed concern that certainstakeholders would promise smooth andeasy implementation of the rule if DOJwere to demand collection of additionaldata for NMVTIS.

Response:No individual or entity hasmade such claims or promises, and DOJhas not expanded the scope of data to

be collected beyond that which wasintended or demonstrated to benecessary to accomplish the programsgoals as set forth in statute.

5. PrivacyComment:One commenter noted that

[t]here are provisions in law in regardsto privacy of individual identity that donot appear to be satisfactorily addressedin this document. Another commenternoted that it will not send any names toNMVTIS because names do not validatea title and because of concerns overcompliance with the DPPA. TheVirginia Department of Motor Vehiclescommented that NMVTIS was intendedas a pointer system, and it is notnecessary for that pointer system toinclude all data fields, particularly

private information. AAMVA alsorecommended against requiring ownername in the NMVTIS central file forprivacy and cost reasons.

Response:DOJ takes these concernsvery seriously and agrees that privacyinterests must be protected. Whilenames may not be needed to validate atitle, names are relevant and necessaryfrom a law enforcement perspective,and in certain other situations. Toensure the protection of privacy,however, DOJ has amended the rule toprovide that no privacy fields shall be

available without DOJ approval to anyNMVTIS user, other than state-titling,law enforcement, or other governmentagency. Additionally, the operator shallensure that no individual prospectivepurchaser has access to any personalinformation. DOJ will require that theoperator of NMVTIS have an approvedprivacy policy in place that describes

how the operator will ensure adequateprivacy protections, consistent with theDPPA and other relevant statutes.

Comment:NAEC noted that dataprivacy fields should be available forlaw enforcement purposes.

Response:DOJ agrees with thiscomment.

Comment:The Automotive RecyclersAssociation (ARA) and ISRI bothemphasized that confidential businessinformation, such as the number andtype of automobiles processed byindividual junk and salvage yards in agiven period of time, the sources ofthose vehicles, and related information,should not be released to the public orother data providers.

Response:The operator will notdisseminate this type of information toany non-governmental entity orindividual, and this information willnot be available to prospectivepurchasers. DOJ will closely monitorthis aspect of the system to ensure thataccess to sensitive or personal data onlyproceeds with DOJ approval.

Comment:Several commentersrequested clarification in the final ruleon any liability or immunity forproviding data to NMVTIS as the Anti-Car Theft Act requires.

Response:The Anti-Car Theft Actgrants certain immunity for thosereporting data to the system. The scopeof this immunity is described in the Actat 49 U.S.C. 30502(f) and does notrequire clarification.

Comment:Several commentersrecommended maintaining provisionsfor accessing personal information toqualified DPPA commercial consumers,so that entities that currently work withthe states to access this informationcould continue to do so, which would

benefit the states and NMVTIS.Response:Providing continued access

to these entities may facilitate effectiveand efficient service to the states, butsuch access may only occur with DOJapproval, and may also requirecompliance with state application andcertification processes and procedures.In most cases, these entities will onlyuse NMVTIS as a pointer to connectwith and access the states data,including personal information, if thestate provides for that access.

6. Timely Reporting

Comment:Several commenters,including several national consumer-advocacy organizations, requested thatdispositions by insurance, junk, orsalvage sales to other entities bereported at the time of the sale andinclude the identity of the buyer, which

would support law enforcementinvestigations into fraud and theft. TheNational Salvage Vehicle ReportingProgram also commented that salvagepools should be required to report saleswithin one business day of the sale inorder to reduce fraud and theft.

Response:The reporting ofdispositional information is critical andneeds to be timely, but the DOJ cannotrequire that the reporting be anythingother than monthly in accordance withthe requirements of the Anti-Car TheftAct. DOJ has added a requirement forsuch entities to report the name of theprimary buyer of such vehicles.

Comment:ARA and ISRI commentedthat junk- and salvage-yard operatorshave an interest in reporting efficiencyand recommended that such entities bepermitted to report the ultimateintended disposition of the vehicle atthe time of initial reporting. ASPA alsoreported that requiring an entity tocontinuously report that a vehicle is inits inventory is inefficient and pointless.

Response:In cases where the ultimatedisposition is known with certainty,junk- and salvage-yard operators nowwill be permitted to report dispositionin their initial report. The reporting

entity is responsible for ensuring thatthe vehicle is disposed of in the mannerreported or for filing an updated reportto account for a different disposition. Inresponse to concerns of reportinginefficiency, DOJ notes that entitiesreport once when the vehicle enters theinventory and are only required toreport again on that vehicle if they needto update the record. Should thedisposition be known at the time ofinitial reporting (e.g., sale), the entitywould only be reporting once on eachvehicle.

Comment:One state motor vehicle

administration and other commentersasked that insurance carriers reportmore frequently. That state motorvehicle administration noted that if avehicle is damaged on the 5th day of themonth and the insurance carrier hasalready sent [its] file for the month, thestate will not know of the damage untilthe following months update. Severalcommenters representing nearly everystakeholder group noted that it wasimportant for the reporting intoNMVTIS to be timely, ideally in realtime. Experian Automotive commented


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that a monthly reporting requirementwould be slower than the currentindustry practice for insurers.

Response:The 16-year-old language ofthe Anti-Car Theft Act is no longerconsistent with business practices in anelectronic age. Nonetheless, thelanguage of the Anti-Car Theft Actprovides no flexibility with regard to

this reporting requirement. DOJ doesstrongly encourage, however, that allreporters provide data to the system asquickly as possible, preferably within 24hours of acquisition, determination, orother reporting trigger. DOJ expects tohighlight such reporting efficiencies andstakeholder participation on its officialNMVTIS site, www.NMVTIS.gov.

7. Third-Party Reporting and ReportingExceptions

Comment:Two commenters arguedthat an exception allowing junk- andsalvage-yard reporting to occur througha state titling agency was flawed. One ofthese commenters suggested that alljunk and salvage yards should berequired to report directly into NMVTIS.The NADA also commented thatallowing this exemption would onlyserve to create a loophole, particularlyin cases of conflicting definitions amongthe states and between states and theAnti-Car Theft Act. Instead, NADAsuggested allowing an exemption incases where an insurance carrier reportsto a third party that has no definitionalrestrictions, such as the NICB, that cantransmit the information to NMVTISwithout concern for conflicting

definitions.Response:While DOJ will take stepsto ensure data integrity and quality, itwould be unreasonable to prevent third-party reporting. Ultimately, insurancecarriers and junk and salvage yards areresponsible for their compliance withthe Act, including the reporting ofrequired information. These reportersmust ensure that they are compliantwith the reporting requirements forevery vehicle handled. If such reporterscannot be certain of a third partysability to provide the requiredinformation into NMVTIS, the reporter

must report through a different third-party provider. Additionally, certainstates require this reporting, andtherefore, a duplicate reporting structurewould continue to exist even if DOJ didnot allow junk or salvage yards to reportthrough states. For purposes ofclarification, however, the Anti-CarTheft Act does not provide a specificexemption for insurance carriers toreport through states, as it does for junk-and salvage-yard operators. Instead, DOJhas provided an exemption forinsurance carriers to report to NMVTIS

through an identified third party that isapproved by the system operator. DOJand the operator have attempted toidentify potential third parties that canreport to NMVTIS who already receivethis type of information from insurancecarriers and junk- and salvage-yardoperators.

Comment:ARA commented that

pursuant to the Act, junk and salvageyard operators are not required to reporton a vehicle when they are issued averification stating that the automobileor parts from the automobile are notreported as stolen. ARA argued againstthe exemptions implement on thegrounds that the exemption iscompletely unworkable without timelimits on the verification and othercontrols, and because the exemptioncreates a significant loophole thatcould foster additional illegal activity.

Response:Pursuant to the Anti-CarTheft Act, a junk or salvage yard that isissued a verification under 49 U.S.C.33110 stating that an automobile orparts from that automobile are notreported as stolen is not required toreport to NMVTIS. Therefore, theDepartment has retained this exemptionfrom NMVTIS reporting in theseregulations.

Comment:The ARA commented thatit appreciates attempts to exemptreporting by junk and salvage yards thatalready report to a third-partyorganization that is sharing itsinformation with NMVTIS. The ARAfurther commented, however, that yardsnot currently participating with a

cooperating third party will need aseparate reporting mechanism that islabor efficient and economical in orderto report NMVTIS information.

Response:DOJ agrees. The operatorwill designate at least three third-partyorganizations that have expressed awillingness to share with NMVTISinformation that they receive frominsurers and junk and salvage yards. Inaddition, DOJ will endeavor to identifya reporting mechanism that is sectorand stakeholder neutral. Third-partyproviders need to be identified who willprovide the information to the

stakeholders or allow such third-partyproviders to charge a nominal fee forcollecting and reporting the informationon behalf of junk and salvage yards. DOJhopes to identify providers that do notcharge fees, but this is difficult withsector-or stakeholder-neutral providers.

Comment:Several state motor vehicleadministrations commented on thethird-party exemptions provided in theproposed rule. One state motor vehicleadministration commented that itcurrently has some but not all of theinformation required for junk and

salvage reporting. The state suggestedthat it does not have the resourcesavailable to accept and report all of theinformation required from junk andsalvage yards. Another state motorvehicle administration made a similarpoint and stated that the requirementseffectively establish an inefficient dual-reporting requirement. Another

suggested that the phrase or cause to beprovided on its behalf be clarified sothat it is clear that states do not have aresponsibility to report insurance, junk,or salvage information to NMVTIS on

behalf of these organizations. The Stateof New York commented that it receivesreports from junk and salvage yards inpaper, that it does not process all of thereports received, and that the processingtime may be beyond the reportingtimeframes required of junk and salvageyards. Another asked that entitiesreporting to states as their chosenmethod of compliance be required to

certify that they are meeting theirreporting requirements by reporting to aspecific state or states.

Response:A states willingness tomake such alterations to accommodatethird-party reporting is strictlyvoluntary. Junk and salvage yards instates that cannot accommodate third-party reporting as required by the Anti-Car Theft Act and the rules will haveother options for compliance reporting.While DOJ is committed to avoidinginefficient processes, DOJ is not able toeliminate data fields for the sake ofefficiency alone and is not willing toimpose additional requirements on the

states to expand data collection andreporting on behalf of junk- and salvage-yard operators.

Comment:ASPA commented thatwhile the proposed rule allows states toshare junk and salvage information withNMVTIS, the inclusion of this data instate title information systems would be

based on the states definition ofsalvage and junk vehicles. ASPAquestioned how the state would reportdata that it may not have because thatstate does not require submission of thatdata.

Response:The rule requires that junk-

and salvage-yard reporting by orthrough states must include all of thedata that junk- and salvage-yardoperators are required to report. Statedefinitions of salvage or junk donot alter a junk-or salvage-yardoperators responsibility to reportvehicles in its inventory. If junk- andsalvage-yard operators are not reportingall of the required data to the state, orthe state is not able to report all of thedata to NMVTIS as required of the yard,the junk or salvage yard must reportindependently of the state.


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Comment:ASPA contended that theprovisions of the proposed rule withregard to the direct-reportingexemptions for junk or salvage yardsthat already report inventories to thestates appear to conflict with thewording of the statute that ASPAdescribed as only requir[ing] thereporting of acquisition of such

vehicles.Response:The Act specifically spells

out what information is to be reportedby junk and salvage yards and requiresjunk and salvage yards to report morethan the mere acquisition of the vehicle.

8. Total Loss Definition/Fair SalvageValue

Comment:One commenter expressedconcern at the reference to fair salvagevalue. Any vehicle with a high salvagevalue will be totaled with a lowerdamage appraisal, and any vehicle witha low salvage value will be totaled witha high damage appraisal. Thecommenter noted that withoutuniformity as to the assignment of thesalvage declaration, consumerprotection cannot be guaranteed. Thecommenter argued for a more uniformdefinition of total loss that is not driven

by the salvage value, noting that [t]hisproposed market assessment of thevehicle value can either make or breakthe rule. Others commented positivelyon the use of a value-based definition.

Response:DOJ used this referencebecause it was required by the Anti-CarTheft Act. DOJ understands that thereare different ways or bases for

determining total loss, and that differentstakeholders may argue for differentstandards based on their interests.

Comment:Nationwide MutualInsurance Company commented thatCongress specifically granted the DOJauthority to collect information frominsurers on vehicles that such insurershave obtained possession of anddetermined to be junk automobiles orsalvage automobiles. Nationwidefurther commented that [i]t is notlogical that declaring a vehicle a totalloss should trigger reporting of the totalloss automobiles as salvage and/or junk.

The determination of [a] vehicle as atotal loss can be based upon othereconomic considerations not reflectivesolely on the actual cost of reporting thevehicle. Therefore, we assert that theinclusion of total loss information in theproposed rule is inconsistent with ourunderstanding of the intent of thestatute.

Response:DOJ disagrees. DOJ ismandated to require reporting ofsalvage vehicles, which DOJ hasdetermined to include those vehiclesdetermined to be a total loss. DOJ

recognizes that, in certaincircumstances, the decision to declare avehicle a total loss may be based onother determinations, such as the factthat a vehicle has been stolen. Toaddress this issue, insurance carriers arestrongly encouraged to include withtotal loss reporting the primary reasonfor the determination. Doing so not only

would provide a better position forinsurance carriers, but it also wouldallow the consumer to be aware of thespecific circumstances for thedetermination. DOJ does not agree thatobtained should be defined in such alimited way to include only ownership.

Comment:Nationwide MutualInsurance Company commented thatDOJ should clarify the definitions ofjunk and salvage by requiring insurersto report on those automobiles titled asjunk or salvage under the laws ofthe state where the insurer obtains titleto the motor vehicle.

Response:DOJ disagrees and notesthat not even half of the states requiresuch titles or brands (see Texasscomment below). Such a definition,therefore, would create a significantloophole that would be counter to theconsumer-protection intentions of theAnti-Car Theft Act.

Comment:The State of TexasDepartment of Transportationcommented that Total loss is not aterm used in Texas salvage motorvehicle law and has no bearing onwhether a vehicle is determined to be asalvage vehicle. A vehicle can be

considered a total loss by an insurancecompany, but not be branded as salvagebecause the vehicle does not meet thedefinition of salvage in the title state.* * * Use of this term could beproblematic if NMVTIS shows a vehicleas a total loss and the Texas recordsindicate nothing.

Response:The requirement forinsurance carriers to report total lossinformation is put in place for exactlythis reasonvehicles that are salvagemay not be branded as salvage by manystates. To resolve this discrepancy,NMVTIS blends reported information

from multiple sources so thatprospective purchasers are aware of thevehicles true history and can avoid

being defrauded and placed in an unsafevehicle. The presence of total lossinformation in the absence of a statesalvage brand will need to be explained

by portal providers, so that prospectivepurchasers (and others) are aware ofwhat the apparent discrepancy means,and how it occurs. DOJ does not expectstates to take any action based on thisinformation that is not authorized instate law and does not believe that it

was the intention of the Anti-Car TheftAct to require them to do so.

Comment:Several insurance-relatedassociations commented that [t]hestatute requires that insurers report junkand salvage automobiles, yet theregulation would require reporting oftotal losses, a term that would includesome automobiles that are not junk or

salvage. It is axiomatic that a regulationcannot expand the limits of a statute,and especially if in doing so, theregulation imposes added burdens andcosts. Not only is such expansioninconsistent with the underlying statute

but there is also nothing in the Courtsorder in Public Citizen et al. v. MichaelMukaseythat mandates or authorizesany such expansion of the statutorydefinition of automobiles to bereported.

These commenters further noted thatthe statutory definitions of junk andsalvage in 49 U.S.C. 30501 are not used

by most state or insurance carriers. Toenable consistency with the existingstate laws and data systems and therebyto expeditiously implement NMVTIS,we request that the last sentence ofSection 25.55(a) be amended to read inthe final regulation: An insurancecarrier shall report on any automobilethat it has determined to be a junk orsalvage automobile under the law of theapplicable jurisdiction. This approachmakes sense because since the Congressenacted this statute in 1992, most stateshave defined the meaning of junk orsalvage. These state laws represent the

best understanding of these terms today.

Requiring their use by regulation wouldimplement the spirit of the law in apractical way. Data reported by insurersin this manner will also be consistentwith data reported by the states.

Opposing this view, consumer-advocate litigators commented that[t]he Insurers comment that anyexpansion via regulation of thecategories of automobiles for whichreporting is mandated * * * would beunauthorized. * * * However, they donot suggest that it is outside the scopeof the Departments authority to provideconstruction for such terms in the

statutes. It is obviously the duty and theprovince of the Department to use itsbroad discretion in construing theseterms. The consumer-advocatelitigators further commented that therules enabling of electronic reportingthrough third parties that may alreadyhave access to the data addresses theneed for reporting in the least-

burdensome and least-costly fashion.These commenters further argued that[t]he Insurers take issue with theDepartments proposal to provide that avehicle treated as a total loss is deemed


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a salvage vehicle. However, it issquarely with the Departmentsprovince to make the determination thatthe fact that a vehicle has been treatedas a total loss indeed is evidence that itis a salvage vehicle, and that bothlegally and practically the vehicle is asalvage vehicle. Similarly, it isnecessary, in carrying out the clear

protective purposes of the statutes, thatthis construction be given to theseterms. * * * The Insurers next proposeamending the last line of 25.55(a) tostate An insurance carrier shall reporton any automobile that it hasdetermined to be a junk or salvageautomobile under the law of theapplicable jurisdiction. Such a changewould incorporate the limitation theyseek of disregarding total loss vehicles.It also appears to be an attempt torequire that state definitions of junk orsalvage be substitutedfor thedefinitions in the statutes, rather than

additional to and supplementary ofthem. That would be entirely improper,of course, defeating the central purposeof providing a national definition ofsalvage that sets afloorfor reporting,not a ceiling. These commentersfurther noted the extraordinarypatchwork of state laws regarding titlebrands and even the terms used forlabeling salvage or total loss vehicles.The uniform minimal reportingstandard provided by the NMVTISstatutes is of critical importance.

Response:DOJ agrees that it possessesauthority and responsibility to provide

the definition of these terms.Additionally, in order to meet therequirements of the Act with regard toproviding prospective purchasers withthe information needed to make aninformed purchase decision, and inorder to inform state titleadministrations and law enforcement ofthat vehicles history, full disclosure oftotal-loss information is neededregardless of a states action or inactionon that vehicle.

Comment:Several insurance-relatedorganizations and associationscommented that [s]ection 25.55(a)

states that the insurer must reportautomobiles that it has obtainedpossession ofandhas decided are junkautomobiles or salvage automobiles.The term possession is not clear. To beworkable, possession should beconstrued as the titled owner asrepresented on the certificate of title,

because insurers would only be able toreport on those automobiles to whichthey are titled owners. Otherwise, theydo not record possession ofautomobiles and could not reportthem.

The insurance-related organizationsfurther commented that [r]eplacingpossession in the regulation withtitled owner would also be workableand consistent with the remainder of thesentence which requires that insurersmust report automobiles which theypossess andhave decided they are junkor salvage automobiles. Both the

possession and decision aremanifested by re-titling, which isreportable by insurers in an efficientmanner. Therefore, the language wouldread, a report that contains aninventory of all automobiles of thecurrent model year or any of the fourprior model years, that the carrierduring the past month is the titledowner and has decided are junkautomobiles or salvage automobiles.

Opposing this view, severalconsumer-advocate litigatorscommented that while the term is notclear and needs construction in

furtherance of the protective purposes ofthe statute, they disagreed with theinsurers proposed substitution of isthe titled owner of for has obtainedpossession of in section 25.55(a). Thesecommenters further noted that the effectof the insurers comments would be toeliminate any reporting requirement ofsalvage vehicles by insurance carrierswhatsoever for all but those vehiclesthat they do in fact actually title in theirname. There are innumerable reasonswhy, and methods by which, they maylegally in many instances not obtaintitles to salvage vehicles in their namesunder the existing hole-laden patchwork

of state laws. In addition, if this changewere made, and if they blatantlyviolated a state law by failing to get asalvage title issued in their names, theywould appear not to be in violation ofthe federal law by not reporting toNMVTIS, because they would not have

been the titled owner. The oppositeconstruction of possession is crucial.In fact, the very example they provideof a salvage vehicle that comes into theirpossession but that they do not titleshows how NMVTIS shouldwork to beeffective: They should report suchvehicles. If there are multiple reports on

the same vehicle, there is no harm done;but if such salvage vehicles are notreported, there is every harm done.Other consumer advocates commentedthat possession should be defined toinclude both actual and constructivepossession and should includeexercising control over an automobiledirectly or indirectly.

Response:Limiting insurancereporting to those vehicles owned byinsurance companies would create alarge loophole through which total-lossor salvage vehicles would remain under

clean title. Such a loophole wasclearly not intended to exist underNMVTIS, and in order to provideconsumer protection against fraud,insurance carriers must be required toreport on all vehicles that theydetermine to be a total loss.

Comment:Several insurance-relatedorganizations and associations

commented that [s]ection 25.55(b) setsforth the mandatory data elements. We

believe that applying the followinginterpretations will allow a reportingsystem to be put in place that complieswith all aspects of the statute, includingthe least burdensome and costlydirective and that can reasonably meetthe Courts deadline in Public Citizen etal. v. Mukasey.

a. VIN. This can be reported.b. The date on which the automobile

was obtained or designated as a junk orsalvage automobile. Again, interpretingthis requirement to mean the date onwhich the automobile was re-titledjunk or salvage comports with legaland practical considerations and would

be most cost effective.c. The name of the individual or

entity from whom the automobile wasobtained or who possessed it when theautomobile was designated as a junk orsalvage automobile. Again, as set forthabove, the only cost effective way forinsurers to meet this obligation is toconstrue it to mean the name of theinsurer when the automobile was re-titled. Providing the name of theindividual or entity from whom theautomobile was obtained does not

provide useful information to lawenforcement or consumers.

d. The name of the owner of theautomobile at the time of the filing ofthe report. In most instances, this will

be the buyer of the salvage or junkautomobile, or the insurance companywhen the insurance company retainsownership, for instance to crush a junkvehicle.

Opposing this view, severalconsumer-advocate litigatorscommented that the insurers suggestthat the regulations should provide thatthey do nothave to report the name of

the person from whom a salvage vehiclewas obtained. This is directly contraryto 49 U.S.C. 30504(b)(3). The ownershiptrail of all of these vehicles is critical forlaw enforcement and consumerinvestigative purposes, and Congressnoted that by writing it into law.

The consumer-advocate litigatorsfurther commented that [t]he Insurersalso suggest that the owner of theautomobile at the time of the filing ofthe report would normally be the buyerof the salvage vehicle, and would only

be the insurance carrier if it retained


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ownership to crush a vehicle. I submitthat it is important that both the buyerand the insurance carrier be identifiedunder the regulations.

Response:DOJ agrees with thecomments of the consumer-advocacyorganizations and has retained the total-loss reporting requirements that wereincluded in the proposed rule.

Comment:Several commenters,including the NADA, ARA, ExperianAutomotive, the National SalvageVehicle Reporting Program, insuranceservices organizations, consumeradvocate attorneys, and others,expressed strong support for DOJsmodernization and clarification oflanguage found in the Anti-Car TheftAct related to salvage and junk vehicles,to include within this the requirementto report on all total loss vehicles,including those recognized by the stateand those not recognized by the state

but determined a total loss by aninsurance carrier. Several of thesecommenters also pointed out that manytotal-loss vehicles do not receive salvage

brands due to varied and unreliablestate definitions and criteria. Relying onstate definitions of salvage, therefore,would be highly inconsistent, wouldperpetuate fraud and theft, and wouldfail to accomplish the objective.Comments submitted by Amica MutualInsurance Co. underscore the need tocollect total loss data. Such dataprovides additional consumerprotection, potentially decreasesfraudulent activity, and reduces thenumber of unsafe vehicles in the

marketplace.Response:DOJ agrees with these

comments.Comment:The NADA, ARA, National

Salvage Vehicle Reporting Program,several national consumer-advocacyorganizations, and other organizationscommented that the proposed rules failto require insurance carriers to report allvehicles that they declare a total loss,including those retained by insureds.Often, individuals who retainpossession of their total loss vehiclecan avoid disclosure, or they may notapply for salvage titles. The NADA

commented that the final rule should berevised to eliminate the concept ofpossession and instead focus on thoseinsured motor vehicles that theinsurance company declares, or theapplicable jurisdiction defines, to be atotal loss.

Response:DOJ disagrees that theproposed rule puts such a limitation inplace. DOJ requires that insurancecarriers who declare a vehicle a totalloss and allow the insured to retain thevehicle must still be required to reportsuch declarations.

Comment:The NADA commentedthat total loss should be defined

broadly to capture all total-loss vehicles.The final rule should not define totalloss in Section 25.52, but rather shoulddefine total loss motor vehicle as thosemotor vehicles determined to be a totalloss under the laws of the applicablejurisdictions and those designated as a

total loss by each insurance companyunder the terms of its policies.

Response:DOJ appreciates thisclarification and agrees that total lossincludes all total-loss vehicles.

Comment:ASPA commented that[w]hen an automobile is classified as atotal loss by an insurance company, itdoes not necessarily mean that theautomobile is a salvage automobile. Onpage 54546 of the Federal Register, inSection 2 Insurance Carriers, theexplanation of the Proposed Ruleexpands the definition of salvageautomobiles when it states: Forpurposes of clarification, theDepartment of Justice has determinedthat this definition [salvageautomobiles] includes all automobilesfound to be a total loss under the lawsof the applicable jurisdiction ordesignated as a total loss by theinsurance carrier under the terms of itspolicies.

In common usage, salvage is notsynonymous with total loss. There aremany circumstances in which aninsurance company may declare avehicle a total loss, but the vehicledoes not meet the salvage definition ofthe relevant state. If a stolen vehicle is

not recovered quickly, the insured maybe paid for the missing vehicle. If thevehicle is later recovered in a largelyundamaged condition, the vehicle,although a total loss due to its laterecovery, may not meet the relevantsalvage definition and, often, is sold bythe insurer with a clear (i.e., not

branded) title. The definition in theProposed Rule lumps this undamagedtheft recovery into the salvagedefinition, thus devaluing the vehicleand, again, creating confusion about theapplicability of the laws of the relevantstate.

ASPA further commented that[m]ore generally, pursuant to 49 U.S.C.30501(7), salvage automobile is clearlydefined as an automobile that isdamaged by collision, fire, flood,accident, trespass, or other event, to theextent that its fair salvage value plus thecost of repairing the automobile for legaloperation on public streets, roads, andhighways would be more than the fairmarket value of the automobileimmediately before the event thatcaused the damage. This definition is

both clear and unambiguous on its face

and, therefore, requires noclarification.

In the Proposed Rule, the DOJ isattempting to expand the definition ofsalvage automobile [f]or purposes ofclarification to include automobilesdetermined to be a total loss under thelaw of the applicable jurisdiction ordesignated as a total loss by the insurer

under the terms of its policies. Wecontend that this significant expansionof the definition is not necessary, andthat the proposed definition actuallycontradicts accepted custom and usagewithin the insurance and salvageindustries.

The DOJs proposed amendment tothe definition of salvage automobilewould subject many clear titleautomobiles to the reportingrequirements of NMVTIS. This isproblematic, and is clearly not whatCongress envisioned when it created thedefinition for salvage automobile. InChevron U.S.A., Inc. v. NaturalResources Defense Council, Inc., 467U.S. 837 (1984), the Court implementeda two-part analysis to determine theappropriate standard of review towardsa government agency that attempts toamend statutory language. Here, sincethe current definition of salvageautomobile is not ambiguous, theproposed clarification by the DOJ isnot based on a permissible constructionof the statute and should not beallowed.

Response:DOJ disagrees. Total-lossvehicles are just thata total lossatthe time the determination is made.

Total-loss vehicles fall within thedefinition of salvage and must bereported. In response to othercomments, DOJ notes that insurancecarriers are strongly encouraged by thefinal rule to report to NMVTIS theprimary reason for the determination oftotal loss, addressing this commentersconcerns specifically and providingmuch-improved disclosure forconsumers.

Comment:One submission argues forthe necessity of all states to adhere tothe Uniform Certificate of Title Act. Ifthe state has a different definition of a

Salvage vehicle the branding nowbecomes an arbitrary issue.Response:The Uniform Certificate of

Title Act and the benefits of uniformtitling procedures aside, the Anti-CarTheft Act does not require States toadopt standard brand labels ordefinitions. NMVTIS has a process inplace to record each states unique

brand label and to relate it to one of the78 brand types used in the NMVTISdatabase. The states brand labels anddefinitions remain unchanged inNMVTIS.


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9. Chain of Custody/Names of ThoseWho Provided/Those Who Purchased

Comment:One commenter noted that[t]he reporting requirement of the junkand salvage yards may need somechange. There are many different routesfor a vehicle to come into a yard, veryoften it is not by the owner of recordor the titled owner. A more definitiveapproach to recording the informationof the entity placing the vehicle into thesalvage yard should be taken, moreidentifying information regarding theentity placing the vehicle into thesalvage yard should be captured. * * *How does the system handle this in amanner that will notify the title State ofa cancel record and provide a bona-fidechain of events leading to the yard?

Response:The reporting requirementfor junk and salvage yards applies toevery vehicle regardless of what routeit took into the yard or who brought inthe vehicle. Further, it is the

responsibility of the junk or salvageyard to provide, among other data, thename of the individual or entity fromwhom the automobile was obtained.The NMVITIS reporting requirementsdo not affect existing state-levelrequirements for junk- and salvage-yardoperators to provide states with a noticeof title or record cancellation and anydata fields required in suchnotifications. NMVTIS will not issuesuch notifications to states, but stateswill be able to view the reportedsalvage- or junk-yard status of anyvehicle at any time. With the

cumulative vehicle histories constructedin NMVTIS, states and law enforcementcan identify the chain of events withreliability once there is full systemparticipation.

Comment:One commenter noted thatstolen designations or notificationssometimes are not made when a vehicleis first reported stolen. In theseinstances, the commenter suggested thatlaw enforcement may receive a falsenegative response on a stolen check dueto this delay. The commenter suggestedthat the system provide a notification tolaw enforcement officers filing a report

on a stolen vehicle that a prior stop andstolen check was made on thevehicle, providing notification and aninvestigative lead to the reporting officerof where the vehicle was stopped andwho made the stolen inquiry. Anothercommenter noted that stolen-vehicleinformation is not required to be inNMVTIS, and nothing in the regulationsrequires a state to check NCIC beforeissuing a title.

Response:NMVTIS is not intended orexpected to replace the information orservices available to law enforcement

through NCIC. NCIC is and will remainthe primary system used and reliedupon by local law enforcement to checkthe stolen status of a vehicle.NMVTISs capturing of stolen statusand history information is to informstate titling agencies and others whomay not have access to NCIC that avehicle was at one time reported as

stolen. Stolen vehicle information isincluded in NMVTIS via NICB so thatstates that do not have access to NCICcan be apprised of a vehiclesquestionable status before issuing a newtitle.

Comment:The National Auto AuctionAssociation commented that NMVTISshould include lien holder names andlicense plate numbers for variousreasons.

Response:While DOJ will authorizethe operator to seek additionalinformation for NMVTIS as may benecessary to accomplish program goals,

DOJ will not require these data fields tobe included in NMVTIS.Comment:The National Auto Auction

Association commented that DOJ shouldclarify in the final rule whether datamaintained in the NMVTIS central fileis to be considered the official legalrecord of a jurisdictions data.

Response:The official record for anyvehicle will be determined by the state.However, NMVTIS is expected to be areliable source of title information thatusers can rely on to make decisions.

10. Brand Definitions

Comment:One commenter asked,

[h]ow is the branding proceduredetermined? Is there a preexistingnational standard for what brands existand how a vehicle is classified undersuch brands or is the determinationmade on a state-by-state basis? If thestandard is national (which would makesense given the national objective),maybe a list of definitions of theapplicable brands should be placed inthe rules definition section. Anothercommenter noted that the developmentof standardized definitions and brandsfor all states would be extremely

beneficial in ensuring that the intent of

NMVTIS is fully recognized. Severalstate motor vehicle administrationspointed out that the definitions ofsalvage and total loss in theproposed rule are different from statedefinitions. Another commenter notedthat to add information based on thedefinitions in the proposed rule willconflict with State definitions of brands,compromise the integrity of theNMVTIS database, and reduce the valueof the information in the database.

Response:NMVTIS does not affectstate branding procedures, and the Anti-

Car Theft Act did not require a nationalstandard for branding. Althoughdiffering definitions may createcomplexity in deciphering a vehicles

brand history, NMVTIS will accept anyofficial state brand and will share that

brand with other states, thereby relatingthat brand to a brand type or NMVTISBrand. Users of NMVTIS will notice

state brands as well as a separatecategory for insurance, junk, and salvageinformation, if any is available. Thedifferences in these reporting streamsalso will be defined so that users willknow if a vehicle has been or is a junkor salvage automobile by virtue of astate brand indicating such, or by aninsurers determination that the vehiclewas a total loss. Consumers and othersalso will be advised if a vehicle has

been in the possession of a junk orsalvage yard. Information is reported bymultiple data sources and is reported ina segregated fashion with links for

explanations.Comment:ASPA provided thefollowing example as evidence of theproblems that would be created by theproposed rule: Michigans salvage lawcovers current model year passengervehicles and those of the preceding fivemodel years. Therefore, a 2002passenger motor vehicle does not

become a salvage vehicle or a scrapvehicle in Michigan, regardless of thefact that the vehicle has been damagedand totaled by an insurance carrier. Inthis situation, Michigan, when reportingto NMVTIS, presumably would notinclude the car in the states branded

title submissions. An insurance carrierreporting to NMVTIS presumably wouldnot include the car because it is outsideof the age limitations applicable toinsurance carriers. However, a salvageyard or junk yard, using the definitionsin the Proposed Rule, presumablywould report the vehicle as a salvageautomobile or a junk automobile,when reporting to NMVTIS. So, for astate or other inquirer of NMVTIS,NMVTIS will show that the vehicle hasa salvage or junk history. This occursregardless of the fact that the relevantstate did not deem the vehicle salvage

or scrap.Response:This comment offers anexcellent example of how NMVTISreporting will fill the holes thatcurrently allow salvage or junk vehiclesto remain unbranded, creatingopportunities for theft and consumerfraud.

11. Brand Washing

Comment:One commenter asked ifbrand information is already collectedby states, how exactly would brandwashing occur? If the retitling state


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checks the title of the previous statewouldnt that information be includedwith the title? Another commenterrecommended that NMVTIS retain aprior states brand history even when astate does not accept a previous states

brand.Response:Brand histories or

designations are not always carried

forward by the states. Retitling states donot necessarily check with the previousstates before issuing a new title. In somestates, the paper title from the previousstate of record is accepted as the basisfor the new title to be issued. Becauseof the reliance in some states on papertitles as evidence of prior titling history,and because not all states check withthe prior states of record, brand washingoccurs regularly. NMVTIS will create anationwide brand history for everyvehicle, requiring that all states checkwith NMVTIS rather than simplyrelying on paper documentation. Brand

washing will be significantly reduced, ifnot eliminated. A states decision not toacknowledge a prior states brandingwill not affect the NMVTIS brandhistory.

12. Self Insurers Included in theDefinition

Comment:Several commentersexpressed disappointment that selfinsurers were left out of the rule. Onecommenter noted that the definitionsshould encompass a self insurer, be ita municipality, lease company, or largecorporation, and that this is a currenthole in the system.

Response:DOJ agrees that the Anti-Car Theft Acts definition of insurancecarrier includes entities thatunderwrite their own insurance, such ascertain rental car companies. Thedefinition, however, excludes anyorganization that does not underwriteits own insurance.

13. Salvage Automobile Defined

Comment:One commentator notedthat the definition of a salvageautomobile should also include anyautomobile that an insurance companyhas taken ownership of in settlement of

a claim and any vehicle that a state hasissued a title to an insurer for. Anothercommenter noted that [t]heresponsibilities of the insurance carriersshould include, in the area of thereporting, if the insurance companyobtained a title from the state in theirname, the state in which they obtainedit and the type of title. Severalconsumer-advocacy organizationscommented that every automobileobtained by a salvage yard or junk yardthat the salvage yard or junk yardknows, or has reason to know, has come

from an insurance carrier, or from anyperson or entity in connection with theresolution of insurance claims, should

be deemed as a salvage automobile orjunk automobile and must be reportedas such. These commenters suggestedthat the rules should provide for apresumption that any automobileobtained or sold by a salvage or junk

yard, and that has known unrepairedwreck or flood damage, is either asalvage automobile or junk automobile,and that such a vehicle must be reportedas such. Similarly, the rules shouldinclude a presumption that anyautomobile obtained or sold by a salvageyard or junk yard, without knowledge asto the automobiles physical condition,is either a salvage automobile or junkautomobile, and must be reported assuch. This would prevent salvage yardsor junk yards from maintaining anempty head to avoid compliance. Thecommenters suggested that these

presumptions (as to automobiles notobtained from insurers) can beovercome if and only if the salvage orjunk yard has qualified appraisalpersonnel employees or others actingsolely on its behalf, entirelyindependent of any other persons orentities, perform a good-faith physicaland value appraisal of the automobileand determine that the automobile doesnot meet the definition of salvage orjunk.

Response:Based on the proposedrule, a salvage auto is defined as anautomobile that is damaged by collision,fire, flood, accident, trespass, or other

event, to the extent that its fair salvagevalue plus the cost of repairing theautomobile for legal operation on publicstreets, roads, and highways would bemore than the fair market value of theautomobile immediately before theevent that caused the damage. 49U.S.C. 30501(7).

For purposes of clarification, theDepartment of Justice has determinedthat this definition includes allautomobiles found to be a total lossunder the laws of the applicablejurisdiction or designated as a total loss

by the insurance carrier under the terms

of its policies. By definition, this wouldmean that every automobile obtained bya salvage yard or junk yard that thesalvage yard or junk yard knows, or hasreason to know, has come from aninsurance carrier, or from any person orentity in connection with the resolutionof insurance claims, should be deemedas a salvage automobile or junkautomobile and must be reported assuch. DOJ does not agree that anyautomobile with unknown damage orany automobile obtained withoutknowledge of its physical condition

should be considered a junk or salvageautomobile. DOJ agrees that a junk orsalvage yard may be excepted fromreporting any vehicle that a qualifiedindependent appraiser determines doesnot meet the definition of a salvage orjunk automobile. This determination bythe appraiser must be in writing andmade after performing a good-faith

physical and value appraisal. Althoughnot required, the Departmentrecommends that junk and salvage yardsretain the reports and written appraisalsfor a period of ten years from the dateof the report. Additionally, a salvageauction or salvage pool that does nothandle any vehicles from or on behalfof insurance carriers is categoricallyexempted from this rule until such timeas they may handle a vehicle from aninsurance carrier.

Comment:One commenter noted thatthe lack of common terms willun

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