I

103D CONGRESS

1ST SESSION H. R. 3713

To amend the Motor Vehicle Information and Cost Savings Act to establish

certain safeguards for the protection of purchasers with respect to the

sale of motor vehicles that are salvage or have been damaged, to require

inspection of salvage vehicles that have been repaired in order to prevent

the sale of unsafe vehicles or vehicles with stolen parts, and for other

purposes.

IN THE HOUSE OF REPRESENTATIVES

NOVEMBER 22, 1993

Mr. WHEAT introduced the following bill; which was referred to the Committee

on Energy and Commerce

A BILL

To amend the Motor Vehicle Information and Cost Savings

Act to establish certain safeguards for the protection

of purchasers with respect to the sale of motor vehicles

that are salvage or have been damaged, to require inspection of salvage vehicles that have been repaired in order

to prevent the sale of unsafe vehicles or vehicles with

stolen parts, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND REFERENCE.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Salvage Vehicle Title Reform and Highway Safety Act’’.
2

•HR 3713 IH

1 (b) REFERENCE.—Whenever in this Act an amend2 ment or repeal is expressed in terms of an amendment

3 to, or repeal of, a section or other provision, the reference

4 shall be considered to be made to a section or other provi5 sion of the Motor Vehicle Information and Cost Savings

6 Act.

7 SEC. 2. RESTRUCTURE.

8 Title IV (15 U.S.C. 1981–1991) is amended—

9 (1) by amending the title heading to read as

10 follows:

11 ‘‘TITLE IV—ODOMETER AND DAMAGED

12 VEHICLE REQUIREMENTS’’,

13 (2) by inserting after the title heading the fol14 lowing:

15 ‘‘PART A—FINDINGS AND PURPOSE AND DEFINITIONS’’

16 (3) by redesignating sections 403 through 408

17 as sections 405 through 410, respectively, by redes18 ignating sections 409 through 416 as sections 425

19 through 432, respectively, by repealing sections 419

20 and 420 and by redesignating sections 417 and 418

21 as sections 435 and 436, respectively.

22 (4) by inserting after section 402 the following:

23 ‘‘PART B—ODOMETER REQUIREMENTS’’,

24 (5) by inserting after section 410 (as so redes25 ignated) the following:
3

•HR 3713 IH

1 ‘‘PART C— SALVAGE AND DAMAGED VEHICLE

2 REQUIREMENTS’’,

3 (6) by inserting after section 420 (added by

4 section 5) the following:

5 ‘‘PART D—ENFORCEMENT’’,

6 (7) by inserting after section 432 (as so redes7 ignated) the following:

8 ‘‘PART E—MISCELLANEOUS’’, and

9 (8) in section 427(a)(2) (as so redesignated), by

10 striking out ‘‘409’’ and inserting in lieu thereof

11 ‘‘425’’, in section 431 (as so redesignated), by strik12 ing out ‘‘414’’ each place it appears and inserting in

13 lieu thereof ‘‘430’’, and in section 432 (as so redes14 ignated), by striking out ‘‘414’’ and inserting in lieu

15 thereof ‘‘430’’.

16 SEC. 3. FINDINGS AND PURPOSE.

17 Section 401 (15 U.S.C. 1981) is amended—

18 (1) by striking out ‘‘The Congress’’ and insert19 ing in lieu thereof ‘‘(a)(1) For purposes of part B,

20 the Congress’’,

21 (2) by inserting after the first sentence the fol22 lowing:

23 ‘‘(2) For purposes of part C, the Congress finds

24 that—
4

•HR 3713 IH

1 ‘‘(A) the salvage and damage history of a motor

2 vehicle is important in assisting a purchaser to de3 termine its safety, value, and reliability;

4 ‘‘(B) the rebuilding of salvage vehicles bears re5 semblance in principle to the manufacture of motor

6 vehicles and as such requires oversight to prevent

7 the sale and operation on the nation’s highways of

8 unsafe rebuilt motor vehicles;

9 ‘‘(C) the switching of parts and vehicle identi10 fication numbers between salvage vehicles and stolen

11 motor vehicles is an important means of profitable

12 disposal of stolen motor vehicles; and

13 ‘‘(D) purchasers of motor vehicles are entitled

14 to information with respect to the salvage and dam15 age history of motor vehicles.’’; and

16 (3) by amending the last sentence to read as

17 follows:

18 ‘‘(b)(1) It is the purpose of part B to prohibit tam19 pering with odometers on motor vehicles and to establish

20 certain safeguards for the protection of purchasers with

21 respect to the sale of motor vehicles having altered or reset

22 odometers.

23 ‘‘(2) It is the purpose of part C to establish certain

24 safeguards with respect to the sale of motor vehicles that

25 are salvage or have been damaged and to require inspec-
5

•HR 3713 IH

1 tion of salvage vehicles that have been repaired in order

2 to prevent the sale of unsafe vehicles or vehicles incor3 porating stolen parts.’’.

4 SEC. 4. DEFINITIONS.

5 Section 402 (15 U.S.C. 1982) is amended by adding

6 at the end the following:

7 ‘‘(9) The term ‘motor vehicle’ means a motor

8 vehicle as defined in section 2(15) but it does not in9 clude—

10 ‘‘(A) a motor vehicle that is more than 25

11 years old;

12 ‘‘(B) a motor vehicle that is not self-pro13 pelled; or

14 ‘‘(C) a motor vehicle sold directly by the

15 manufacturer to any agency of the United

16 States in conformity with contractual specifica17 tions for as long as the motor vehicle is owned

18 by the United States.

19 ‘‘(10) The term ‘actual cost’ when used in con20 nection with motor vehicle repairs means the price

21 paid for repairs or the fair market value of the re22 pairs needed to return a motor vehicle to its

23 undamaged condition, whichever is greater.

24 ‘‘(11) The term ‘salvage vehicle’ means a motor

25 vehicle that has been damaged and that meets or at
6

•HR 3713 IH

1 any time in the past has met either of the following

2 criteria:

3 ‘‘(A) An insurance company has deter4 mined that it is economically impractical to re5 pair the damaged motor vehicle and has made

6 with respect to the motor vehicle an agreed set7 tlement with the insured or claimant.

8 ‘‘(B) The estimated or the actual cost of

9 repairing the damaged motor vehicle, whichever

10 is greater, exceeds 65 percent of the fair mar11 ket value of the motor vehicle immediately be12 fore it was damaged.’’.

13 SEC. 5. DISCLOSURE REQUIREMENTS.

14 Title IV (15 U.S.C. 1981-1991) is amended by in15 serting after the heading for part C (as added by section

16 2(5)) the following:

17 ‘‘SEC. 415. (a)(1) Not later than 180 days after the

18 date of the enactment of this part, the Secretary shall pre19 scribe rules requiring any transferor to give the following

20 written and notarized disclosure to the transferee in con21 nection with the transfer of ownership of a motor vehicle:

22 ‘‘(A) Whether the motor vehicle is a salvage

23 vehicle.
7

•HR 3713 IH

1 ‘‘(B) Whether the motor vehicle has on any oc2 casion during or before the time that it was owned

3 by the transferor suffered major damage.

4 ‘‘(C) The nature and the amount of damage

5 sustained on each occasion referred to in subpara6 graph (B), the year the damage was sustained, and

7 the identity of the person who owned the motor vehi8 cle at the time of the damage.

9 ‘‘(2) The rules under paragraph (1) shall prescribe

10 the manner in which the information shall be disclosed and

11 shall be retained and shall require that the original of the

12 disclosure shall be attached to the title of such motor vehi13 cle, except that if the title conforms to the requirements

14 of section 416(b), the disclosure shall be placed on the

15 title.

16 ‘‘(3) The rules under paragraph (1) shall also provide

17 a definition of the term ‘major damage’. The Secretary

18 shall provide such definition after consultation with rep19 resentatives of law enforcement agencies, the States, in20 dustry, and consumers. In establishing such definition the

21 Secretary shall give priority to making the definition sim22 ple and readily understandable to ordinary consumers and

23 to ensuring coverage of damage that may significantly af24 fect the safety or value of a vehicle and shall give consider-
8

•HR 3713 IH

1 ation to the costs or the amount of effort required to pro2 vide disclosure of damage.

3 ‘‘(b)(1) In the case of any leased motor vehicle, the

4 rules under subsection (a) shall require the lessee of the

5 motor vehicle to make the disclosure required by such

6 rules to the lessor of the motor vehicle before the lessor

7 transfers ownership of the leased motor vehicle.

8 ‘‘(2) Under such rules the lessor of a leased motor

9 vehicle shall provide written notice to the lessee regard10 ing—

11 ‘‘(A) such salvage and damage history disclo12 sure requirement, and

13 ‘‘(B) the penalties for failure to comply with

14 such requirement.

15 ‘‘(3) The lessor shall retain the disclosures made by

16 any lessee with respect to any motor vehicle under para17 graph (1) for a period of at least 4 years following the

18 date the lessor transfers ownership of such motor vehicle.

19 ‘‘(4) If the lessor transfers ownership of any leased

20 motor vehicle without obtaining possession of such motor

21 vehicle, the lessor may, in making the disclosure required

22 by subsection (a), indicate the information disclosed by the

23 lessee under paragraph (1) unless the lessor has reason

24 to believe that such disclosure by the lessee does not re25 flect the actual salvage and damage history of the vehicle.
9

•HR 3713 IH

1 ‘‘(c) No transferor, lessor, or lessee of a leased motor

2 vehicle shall violate any rule promulgated under subsection

3 (a) or give a false statement to a transferee or lessor, as

4 the case may be, in making any disclosure required by

5 such rule.

6 ‘‘(d) No transferee who, for purposes of resale, ac7 quires ownership of a motor vehicle—

8 ‘‘(1) shall fail to obtain, in connection with the

9 transfer, any written disclosure required to be given

10 to the transferee under the rules promulgated under

11 subsection (a), or

12 ‘‘(2) shall accept any disclosure if such disclo13 sure is incomplete.

14 ‘‘MOTOR VEHICLE SALES

15 ‘‘SEC. 416. (a) A dealer or distributor who sells a

16 motor vehicle to a person who in good faith purchases the

17 motor vehicle for purposes other than resale shall—

18 ‘‘(1) show the original or a copy of—

19 ‘‘(A) the motor vehicle title, and

20 ‘‘(B) any disclosure required to be made

21 with respect to such motor vehicle under section

22 415(a),

23 to the purchaser before the sale, and

24 ‘‘(2) provide the title and such disclosures, in25 cluding copies of the title or such disclosure, to the

26 purchaser at the time of the sale.
10

•HR 3713 IH

1 ‘‘(b) If any motor vehicle is sold at an auction, the

2 auction company which conducts such auction shall estab3 lish and maintain for a period of at least 4 years following

4 the date of such sale records showing whether any disclo5 sure made in accordance with section 415(a) indicates

6 whether the motor vehicle was salvage or had been

7 damaged.

8 ‘‘TITLE REQUIREMENTS

9 ‘‘SEC. 417. (a) Not later than 90 days after the date

10 of the enactment of this part, the Secretary shall prescribe

11 rules requiring that any motor vehicle the ownership of

12 which is transferred may not be licensed for use in any

13 State unless—

14 ‘‘(1) the transferee in submitting an application

15 to a State for the title upon which such license will

16 be issued includes with such application both the ex17 isting title or manufacturer’s statement of origin

18 and any disclosure made by a transferor under sec19 tion 415(a) that has been delivered to the transferee,

20 and

21 ‘‘(2) the title issued by the State to such trans22 feree following such transfer shows on its face in

23 conspicuous and plain wording—

24 ‘‘(A) whether any ‘salvage’, ‘rebuilt’, ‘re25 constructed’, ‘flood damaged’, ‘junk’, or similar

26 label or indication was shown on the title sur-
11

•HR 3713 IH

1 rendered by the transferee to the State or on

2 any title previously issued for the motor vehicle;

3 ‘‘(B) the substance of all such labels and

4 indications;

5 ‘‘(C) the name of any State previously is6 suing a title for the motor vehicle showing such

7 a label or indication; and

8 ‘‘(D) whether any disclosure pursuant to

9 section 415(a) or other documentation received

10 by such State has shown that the motor vehicle

11 is a salvage vehicle or has suffered damage as

12 described in section 415(a)(1)(B).

13 In determining whether any title was previously issued for

14 a motor vehicle with such label or indication as described

15 in subparagraph (A) or whether any disclosure or docu16 mentation as described in subparagraph (D) has been re17 ceived, a State shall make use of all information that is

18 both available to such State and retrievable without sub19 stantial labor or delay.

20 ‘‘(b) Not later than 180 days after the date of the

21 enactment of this part, the Secretary shall prescribe rules

22 requiring that any motor vehicle, the ownership of which

is transferred after 21 23 ⁄2 years after the date of the enact24 ment of this part, may not be licensed for use in any State
12

•HR 3713 IH

1 unless the title which is issued by such State to the trans2 feree—

3 ‘‘(1) indicates all disclosures required to be

4 made for such motor vehicle under section 415(a);

5 ‘‘(2) contains a space for the transferee to pro6 vide such disclosures in the event of a future trans7 fer of ownership and for the transferee to sign and

8 date such disclosures before a notary; and

9 ‘‘(3) contains on its face a written statement, in

10 addition to any statement required by subsection

11 (a)(2), reciting in conspicuous and plain wording the

12 substance of any disclosure under section 415(a)

13 that has been delivered to the State or passed on to

14 the State on the face of previous titles.

15 ‘‘(c) The rule promulgated under subsection (b) shall

16 require each State—

17 ‘‘(1) to maintain copies of—

18 ‘‘(A) all motor vehicle titles and title appli19 cations, and

20 ‘‘(B) all disclosures required to be made

21 under section 415(a) which are delivered to the

22 State,

23 as part of the title history for motor vehicles for a

24 period of at least 10 years from the date such docu25 ments are received, and
13

•HR 3713 IH

1 ‘‘(2) to make a complete copy of the title his2 tory for any motor vehicle available, upon written re3 quest, within 21 days of the request for a fee to any

4 person who provides to the State the vehicle identi5 fication number of such motor vehicle.

6 The fee under paragraph (2) shall be a reasonable charge

7 but not more than the actual cost of making a copy of

8 a title history. A State may require a person requesting

9 a title history under paragraph (2) to certify that the title

10 history is requested for reasons related to the purposes

11 of this part.

12 ‘‘SETTLEMENTS

13 ‘‘SEC. 418. Whenever an insurance company makes

14 a settlement on a motor vehicle as a result of major dam15 age, the insurance company shall give notice to the motor

16 vehicle’s owner at the time of the settlement of the disclo17 sure requirements of section 415.

18 ‘‘SALVAGE VEHICLES

19 ‘‘SEC. 419. (a) Not later than 180 days after the date

20 of the enactment of this part, the Secretary shall prescribe

21 rules requiring that any salvage vehicle, the ownership of

22 which is transferred after one year after such date of en23 actment, may not be licensed for use in any State unless

24 after being repaired the salvage vehicle has been inspected,

25 by a person licensed by the State where the inspection is

26 performed under a program approved by the Secretary,
14

•HR 3713 IH

1 to check for safety defects and, beginning February 1,

2 1996, to check for stolen parts. Such rule shall provide—

3 ‘‘(1) the minimum safety standards for repaired

4 salvage vehicles,

5 ‘‘(2) the minimum steps and inquiry to be un6 dertaken during any such inspection,

7 ‘‘(3) that such inspections shall be at the ex8 pense of the owners of the salvage vehicles,

9 ‘‘(4) the manner in which information relating

10 to inspections shall be retained,

11 ‘‘(5) the minimum requirements for any person

12 to be licensed as an inspector,

13 ‘‘(6) the manner in which information relating

14 to licensing of inspectors shall be retained,

15 ‘‘(7) that any program for inspection shall be

16 subject to the continuing review and approval of the

17 Secretary, and

18 ‘‘(8) that any inspector licensed by any State

19 shall be subject to section 430(b) to the same extent

20 as a dealer or distributor.

21 ‘‘(b) The fact that a motor vehicle has been inspected

22 under subsection (a) shall not be admissible as evidence

23 in any legal proceeding for the purpose of showing—

24 ‘‘(1) that the motor vehicle was in fact safe or

25 did not contain stolen parts, or
15

•HR 3713 IH

1 ‘‘(2) that any person reasonably believed that

2 the motor vehicle was safe or did not contain stolen

3 parts.

4 ‘‘CONSPIRACY

5 ‘‘SEC. 420. No person shall conspire with any other

6 person to violate section 415, 416, 417, 418, or 419.’’.

7 SEC. 6. CONFORMING AMENDMENTS.

8 (a) PRIVATE CIVIL ACTION.—Subsection (a) of sec9 tion 425 (as so redesignated) (15 U.S.C. 1989) is amend10 ed to read as follows:

11 ‘‘(a) Any person who, with intent to defraud, violates

12 or participates in violating any requirement imposed under

13 part B or C shall be liable—

14 ‘‘(1) jointly and severally with any other such

15 violator for actual damages sustained;

16 ‘‘(2) separately and individually for twice the

17 actual damages, punitive damages, or $5,000, which18 ever is greater; and

19 ‘‘(3) in the case of any successful action to en20 force the foregoing liability jointly and severally with

21 any other such attorney fees as determined by the

22 court.

23 The failure of a dealer, distributor, or lessor to exercise

24 reasonable care in confirming the accuracy of any disclo25 sure it receives or gives under section 410 or 415 shall
16

•HR 3713 IH

1 be prima facie evidence of an intent to defraud on claims

2 relating to a violation of the requirements of this part.’’.

3 (b) PREEMPTION.—Section 436 (as so redesignated)

4 (15 U.S.C. 1991) is amended by striking out ‘‘or’’ at the

5 end of paragraph (1), by redesignating paragraph (2) as

6 paragraph (3), and by inserting after paragraph (1) the

7 following:

8 ‘‘(2) annul, alter, or affect the laws of any

9 State with respect to the disclosure of salvage or

10 damage history of a motor vehicle or with respect to

11 the inspection of a motor vehicle, or’’.

12 (c) TECHNICAL AMENDMENTS.—

13 (1) SECTION 410(b).—Subsection (b) of section

14 410 (as so redesignated) (15 U.S.C. 1988) is

15 amended—

16 (A) by striking ‘‘transferor’’ and inserting

17 ‘‘transferor of a motor vehicle or lessor or lessee

18 of a leased motor vehicle’’; and

19 (B) by striking ‘‘to a transferee’’ and in20 serting ‘‘to a transferee or lessor, as the case

21 may be,’’.

22 (2) SECTION 410(c).—Subsection (c) of section

23 410 (as so redesignated) (15 U.S.C. 1988) is

24 amended—
17

•HR 3713 IH

1 (A) by striking ‘‘shall accept’’ and insert2 ing ‘‘shall fail to obtain, in connection with the

3 transfer,’’;

4 (B) by striking ‘‘required by’’ and insert5 ing ‘‘required to be given to the transferee

6 under’’;

7 (C) by striking ‘‘under this section’’ and

8 inserting ‘‘under subsection (a)’’; and

9 (D) by striking ‘‘if such disclosure’’ and in10 serting ‘‘or shall accept any disclosure if such

11 disclosure’’.

12 (3) SECTION 410(e).—Subsection (e) of section

13 410 (19 U.S.C. 1988) is amended—

14 (A) in paragraph (1), by striking ‘‘rules’’

15 and inserting ‘‘rules’’ and by striking ‘‘upon

16 the’’ and inserting ‘‘before the’’; and

17 (B) in paragraph (4), by striking ‘‘on the

18 title’’ and by striking ‘‘For purposes of this sec19 tion, if’’ and inserting ‘‘If’’.

Æ

HR 3713 IH——2