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Why 'Cash for Clunkers' legislation is stuck in low gear

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When Congress considers creating a new program, consensus on broad goals often conceals dissonant agendas. Working out the details can strain coalitions.

Such has been the case with two end-of-life vehicle programs, which vary widely, depending on how much importance is assigned to aiding U.S.-based automakers.

Take the idea of paying owners of aged, polluting cars and trucks to scrap them and buy environmentally friendlier replacements. Good for car sales, good for fuel efficiency and good for shredder activity.

Or take the law mandating a nationwide log of defunct vehicles that have been taken off the road to become used parts and scrap. A centralized roster of decommissioned vehicle identification numbers (VINs) is viewed as making it harder for bad guys to disguise stolen cars with fake IDs or to resurrect flooded cars after a hurricane, but the divisive element has been which players should pay the costs and put out the effort.

The "Cash for Clunkers" idea comes in several congressional versions. One bill, which has an explicit "Buy American" element but with gradations to allow for North American Free-Trade Agreement solidarity, has a three-tier formula for subsidizing purchases of new passenger cars. To be eligible, the vehicle must meet the criteria specified in one of the following three tiers

•?Assembled in the United States and gets 30 miles per gallon or better? $5,000 to the motorist ditching an older vehicle.

•?Assembled in Canada or Mexico and gets 30 miles per gallon or better? $4,000.

•?Assembled in the United States and gets from 27 up to (not quite) 30 miles per gallon? $4,000.

Other Clunker bills don't discriminate against vehicles from overseas.

A different dividing line is whether vouchers for replacement vehicles might go toward buying used cars which score high on fuel efficiency.

A company that sells used cars on the Internet lobbied for its merchandise to be eligible for subsidies under Cash for Clunkers legislation. "There are tens of thousands of used cars now sitting on dealer lots that meet the fuel-efficiency targets in the legislative proposals," according to Car Max Inc., based in Richmond, Va.

Which Cash for Clunkers version might prevail and whether the concept will make it through Congress remains to be seen. In any of its forms, Cash for Clunkers would boost metal intake at shredders, at least for the first year or so.

Another program still being designed--and promising to create even greater dissonance among stakeholders--is the National Motor Vehicle Title Information System (NMVTIS). Until this year, "national" was a misnomer.

The NMVTIS is "a repository of information on salvage vehicles, including those vehicles determined to be a total loss," according to the Justice Department. The agency oversees the system but doesn't pay for its routine expenses.

What's to dislike about being able to check whether a suspicious vehicle identification number belongs to a truck shredded two years ago or to a car that was under water during Hurricane Katrina and labeled a total loss by its insurer?

Capitol Hill finished mandated the nationwide database in its Anti-Car Theft Act of 1992. Four years later, Congress decided the Transportation Department was too slow developing the program and shifted responsibility to the Justice Department.

Who should pay for the outsourced system, and the size of the fees to cover its costs, was left unspecified. The result is a mix of payments from states, data filers and data users.

On a voluntary basis, the NMVTIS has been pooling and updating information from 27 state governments, some insurers and a car dismantling chain, LKQ Corp. As the 50-state version gets started, the plan is for several competing contractors to funnel data from dismantlers, shredders and others to the NMVTIS, collecting fees from both respondents and data users.

The Justice Department, faced with a court order, finally issued the program's regulations in January 2009, as required under the 1992 law.

Operating the central database, at least for now, is the American Association of Motor Vehicle Administrators, an association of state (and Canadian provincial) officials. The group has said it might give notice in August that it will exit that responsibility.

Designing the data intake fields and procedures was assigned to the National Salvage Vehicle Reporting Program, a non-profit consultancy. Howard Nusbaum is the group's unsalaried administrator, remaining on the payroll of his employer, Chicago-based LKQ.

Gregg Marcucci, the vehicle acquisitions manager of SA Recycling LLC, said recently that all the data he has begun reporting electronically to NMVTIS he also has provided for many years in hard copy format to the state of California, which converts it to digital. For the NMVTIS, "they're telling us we have to report it again and now we have to pay for it, to boot," he said.

Scrap industry leaders say they would have lobbied intensively against filer fees during the rulemaking had they not been assured by the Justice Department that such fees weren't planned.

"At this time, (the Justice Department) is not in favor (of filer fees) because of the increased financial burden it would place on junk and salvage yards and insurance carriers and the disincentive it would impose on their reporting of data," the Justice Department said in January in the actual rulemaking document.

But the fees happened anyway.
PAUL SCHAFFER


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