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Letter to Mr. Ronald Medford, Acting Deputy Administrator, National Highway Traffic Safety Administration


U.S. Senators Judd Gregg and Jeanne Shaheen and Representatives Paul Hodes and Carol Shea-Porter called on the National Highway Traffic Safety Administration (NHTSA) and the Department of Transportation (DOT) to amend the Car Allowance Rebate System program's regulations under the Consumer Assistance to Recycle and Save Act of 2009 (CARS Act) so that those who legally chose not to have auto insurance can participate in the program.

"The Department of Transportation should not be excluding the small percentage of New Hampshire residents who, consistent with state law, chose not to have auto insurance," said the Members of Congress in a joint statement. "The intent of the program is to incentivize consumers to purchase newer model vehicles, and all New Hampshire residents should have an equal opportunity to participate."

New Hampshire is one of two states that do not mandate auto insurance. Under the regulation, the "Cash for Clunkers" program requires consumers to show proof of insurance for one year. Although New Hampshire does not mandate auto insurance, most residents choose coverage. The small portion of New Hampshire residents who are not be able to provide proof of insurance would be unintentionally excluded from the program.

The full text of the letter is below:

Mr. Ronald Medford
Acting Deputy Administrator
National Highway Traffic Safety Administration
1200 New Jersey Avenue, SE
West Building
Washington, DC 20590

Dear Mr. Medford,

It has come to our attention that the National Highway Traffic Safety Administration's final rule for the Car Allowance Rebate System program under the Consumer Assistance to Recycle and Save Act of 2009 (CARS Act) includes a requirement that a consumer seeking to participate in this program demonstrate proof of insurance for a one year period prior to the trade-in of his/her old vehicle. This requirement appears to be inconsistent with the CARS Act's statutory language and we urge to you to quickly correct the final rule in order to ensure that all consumers who are in compliance with their states' relevant insurance laws can participate in this new program.

The CARS Act defines an eligible trade-in vehicle as an automobile or work truck that has been, among other requirements, "continuously insured consistent with the applicable State law and registered to the same owner for a period of not less than 1 year immediately prior to such trade-in." (P.L. 111-32, Title XIII, Sec. 1302(i)(7)(B)). As you know, state laws regarding car insurance vary widely from state to state. In fact, as NHTSA's final rule makes clear, not all states even have a requirement for commercial insurance and "two states have little or no insurance requirements." NHTSA's regulations go on to say that "the agency believes that the Act requires the continuous one-year insurance condition to be met as a threshold matter, with respect to any trade-in vehicle under the program."

Automobile owners who are legally uninsured in their state are likely to have difficulty complying with NHTSA's interpretation of this proof of insurance requirement. Furthermore, NHTSA's interpretation appears to conflict with a plain reading of the statute that requires trade-in vehicles to have been insured consistent with applicable state law. Congress did not intend to wholly exclude consumers in at least two states from participation in this program and residents of Wisconsin and New Hampshire should be permitted to participate in the CARS program if they can demonstrate they are in compliance with applicable state insurance laws.

We urge you to take prompt action to correct this error as the program's $1 billion in funds could be depleted quickly. It is simply unacceptable to exclude law-abiding residents of Wisconsin and New Hampshire from this important program.


Senator Judd Gregg
Senator Jeanne Shaheen
Representative Paul Hodes
Representative Carol Shea-Porter
Senator Russ Feingold
Senator Herb Kohl
Senator Debbie Stabenow
Representative Tammy Baldwin
Representative Steve Kagen
Representative Tom Petri
Representative David Obey
Representative Ron Kind
Representative Gwen Moore
Representative John Dingell
cc: Secretary Ray LaHood

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