News, Trends & Reports from the Automotive Recyclers Association

Nov 1, 2020 | Industry

Currently, NMVTIS faces the problem that there are still too many entities of all types that are not meeting their legally required reporting obligations. In order to achieve greater reporting compliance, there needs to be NMVTIS enforcement at both the federal and state level.

Emil Nusbaum to AAMVA

ARA Represents Automotive Recyclers at the American Association of Motor Vehicle Administrators Third Stakeholder Meeting for NMVTIS

On November 10, 2020, the American Association of Motor Vehicle Administrators (AAMVA) hosted the third stakeholder meeting for the National Motor Vehicle Title Information System (NMVTIS). The meeting focused on NMVTIS’s Junk/Salvage and Insurance (Total Loss) Reporting Program.

NMVTIS is the federal program that supports reporting on junk/salvage vehicles by junk salvage reporting entities such as insurance companies, automotive recyclers, and scrap metal processors. It is also the system used by state motor vehicle departments for sharing vehicle title and branding information with each other as well as with the public. As an important stakeholder representing the automotive recycling industry, ARA’s Executive Director, Sandy Blalock, was invited to present at the meeting.

ARA’s presentation focused on how automotive recyclers have been integral to the success of the NMVTIS program while noting that further enforcement by DOJ and state law enforcement agencies will be necessary to the continued success of NMVTIS.

Over the last several years, ARA has worked to educate its member-base on the need to adhere to the NMVTIS reporting requirements. At this time, the Association is proud to say that most if not all of our members have acquired NMVTIS reporting numbers and are submitting the federally required information. If you or any recycling facility would like help or have any questions relating to NMVTIS and the reporting requirements, please do not hesitate to contact either Emil Nusbaum at emil@a-r-a.org or Sandy Blalock at sandy@a-r-a.org. Alternatively, feel free to call ARA’s main office at (571) 208-0428.

NMVTIS Stakeholder Meeting Questions and Answers

Along with ARA’s participation in the webinar, stakeholders representing AAMVA, DOJ, and state law enforcement agencies also made presentations. Emil Nusbaum, Director of Government Relations for ARA, participated in the webinar’s question and answer session. Here is a summary of ARA’s question and answer session.

Q: What types of entities are not complying?

A: Unfortunately, some required parties of all entity types are not currently complying with their legal requirements to report under federal law. This noncompliance can take the form of required parties not registering with NMVTIS and subsequently not reporting any vehicles into NMVTIS. In other cases, noncompliance can take the form where parties that are registered with NMVTIS only report on some of the vehicles for which they are obligated to report. The Automotive Recyclers Association (ARA) would like to see all legally required entities reporting into the NMVTIS program. For years, ARA has been educating our members on the need to adhere to NMVTIS reporting requirements. ARA is proud to say that most if not all of our members have acquired NMVTIS numbers and are submitting the required information.

As opposed to asking the question as to what types of entities are not currently reporting, the better question is how do we achieve greater compliance from those already obligated to report? Currently, NMVTIS faces the problem that there are still too many entities of all types that are not meeting their legally required reporting obligations.

In order to achieve greater reporting compliance, there needs to be NMVTIS enforcement at both the federal and state level. ARA has worked alongside the Department of Justice, Bureau of Justice Assistance to encourage greater NMVTIS enforcement. Due to a lack of enforcement resources at the federal level, the best solution to enhance NMVTIS compliance would come from state department of motor vehicles and law enforcement agencies. In order to do this, ARA continues to encourage state departments of motor vehicles and law enforcement agencies to incorporate NMVTIS compliance as an obligation under state law – including the ability to collect fines for NMVTIS violations.

Q: We consumer advocates are regularly seeing salvage cars sold through salvage auctions (like Copart) disclosed only as “to be determined” in the NMVTIS reports. Does ARA share consumers’ concerns about this sort of incomplete and ambiguous “disclosure?”

A: The question highlights some of the intricacies and issues related to the inconsistencies of state branding laws. Part of the rationale behind the creation of the NMVTIS program was to provide consistent federal definitions for “junk automobile” and “salvage automobile” (28 C.F.R. § 25.52) to help prevent fraud and anti-consumer practices that come as a result of inconsistent state branding laws.

Under current law, an NMVTIS reporting entity (such as a salvage auction) is required to report an initial disposition and final disposition for a vehicle – unless the reporting entity is certain of the vehicle’s final disposition at the time of acquisition in which case, only a final disposition report needs to be submitted. Therefore, in cases where a car sold through a salvage auction only has a “to be determined” disposition in a NMVTIS report, the salvage auction has not yet reported the final disposition (which they can do up to 30 days after their sale of the vehicle).

The confusion in the question raised above is due to consumers not understanding that if a vehicle has an accompanying junk/salvage insurance (JSI) report in NMVTIS, then the JSI reporting entity had deemed the vehicle to meet the federal definition of “junk automobile” and “salvage automobile.” Therefore, even if a vehicle only has a “to be determined” disposition in its NMVTIS report, the vehicle has automatically been determined by the JSI reporting entity to be a “junk automobile” or “salvage automobile” under the federal definition.

In order to avoid the aforementioned confusion on the part of consumers, ARA makes the following recommendation to AAMVA. AAMVA should direct all public portal providers to include a statement on all NMVTIS reports explaining that if a JSI reporting entity has reported a vehicle into an NMVTIS report, that this means the reporting entity determined that the vehicle has met the federal definitions of either “junk automobile” or “salvage automobile.” By including this information into NMVTIS reports, consumers will better understand the meaning of the NMVTIS report.

Q: What are ARA’s specific concerns regarding Safe Harbor? When you say that entities are “over” or “under” reporting, are you referring to the damage thresholds for reporting?

A: ARA’s specific concerns regarding the Safe Harbor provision, which was posted on vehiclehistory.gov in September 2017, stem from the fact that the provision allowed for the government to fine entities for over-reporting vehicles into NMVTIS. After the Safe Harbor provision was initially published, automotive recyclers already reporting into NMVTIS became concerned that they would become subject to fines if they had over-reported a vehicle (even in cases where the automotive recycler made their best effort to comply with the law).

However, upon a careful reading of the Safe Harbor provision, the problem of over-reporting appears to primarily involve, “cases involving junk or salvage auctions” when the auction does not own a vehicle – but reports on the vehicle anyway. So long as this is in fact the intent of the over-reporting penalty in the Safe Harbor provision, ARA has no issue with the provision. However, ARA opposes any other interpretation that would put automotive recyclers at risk for over-reporting penalties after having made a good-faith effort at complying.

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Massachusetts Right to Repair

On November 20th, the Alliance for Automotive Innovation filed a lawsuit in federal court challenging the right to repair law that would provide expanded access to vehicle data. In their lawsuit, the automakers claim that the new law poses cybersecurity and vehicle safety risks and that the short time line for implementation will be impossible to comply with. The right to repair initiative set a date that model year 2022 vehicles would have to include open access to telematic systems. However, the automakers claim that complying with the 2022 requirement is impossible since model 2022 vehicles will begin being sold in January 2021. LKQ Corp., Auto Care Association, and the CAR Coalition are all working on trying to get the Massachusetts right to repair language nationalized through federal legislation. It will be worth watching whether or not the Court will grant an extension to implementing the new right to repair law.

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