Ohio District Court Dismisses Challenge to Two Titling Requirements for Imports of Canadian Autos

The U.S. District Court for the Southern District of Ohio denied, in part, and declared moot, in part, a Michigan-based car importer's challenge to two titling requirements imposed by the state of Ohio, in an Aug. 3 opinion. Judge Edmund Sargus found the challenge to a bond release letter requirement to be moot given the requirement was already lifted and that the claim against in-state inspection requirements fails since the regulation does not discriminate against out-of-state interests.

In October 2015, the Ohio Bureau of Motor Vehicles (BMV) declared that automobile imports from Canada and other foreign countries must include several different documents. One of these required documents was an Original Bond Release Letter from the National Highway Traffic Safety Administration that was mandated if the vehicle was a "Box 3" automobile -- otherwise known as a pre-owned vehicle from Canada. The requirement ensured that the Federal Motor Vehicle Safety Standards had been or would be met.

This requirement was imposed due to a huge spike in the volume of title applications for imported vehicles from Canada to Ohio during which county clerks had been receiving varying types of documents for title applications. So, the BMV clarified. Also, due to the uptick, NHTSA said it couldn't issue bond release letters within the typical 30-day period in which they're granted. So, the BMV rescinded its bond release letter requirement in December 2016. Too little, too late for Blue Water Importers, which filed its challenge in the Ohio district court, alleging that it lost two clients as a result of the bond release letter requirement.

"These facts paint a picture of state officials attempting in good faith to comply with NHTSA guidance," Sargus said. "Blue Water has not suffered harm as a result of that policy since the BMV rescinded that policy in December of 2016. ... In the end, rendering an opinion on the constitutionality of a policy discontinued over four-and-a-half years ago -- with no indication that such policy is at all likely to recur -- would be nothing more than an advisory opinion. And federal courts 'do not render advisory opinions.'"

The other titling requirement is a physical vehicle inspection requirement for an applicant wanting a certificate of title for a used vehicle brought into Ohio from out of state. Blue Water challenged this piece of regulation under the dormant Commerce Clause of the U.S. Constitution, stating that the requirement violates the negative implication of the Commerce Clause. This negative implication supposedly "denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce." The U.S. Court of Appeals for the 6th Circuit established a two-step test for dormant Commerce Clause challenges to see if they have merit. To proceed, a dormant Commerce Clause challenge must either determine whether the state statute directly regulates or discriminates against interstate commerce or whether its effect is to favor in-state economic interests.

Sargus found that the inspection requirement does not discriminate against out-of-state interests. "The statute makes no distinction between in-state or out-of-state applicants," the judge said. "An Ohio dealer seeking to sell a Canadian imported used vehicle in Ohio would have to arrange for a physical inspection in Ohio and pay the fee, the same as a dealer from Michigan or a dealer from Canada. And that requirement is no more burdensome on the Michigan seller than it is on the Ohio seller: both must pay the $5-per-car fee and deal with the time and expense associated with obtaining the inspection in state."

(Blue Water Importers, Inc., et al. v. Thomas J. Stickrath, Director of the Ohio Department of Public Safety, et al., S.D. Ohio # 20-1893, dated 08/03/21, Judge Sargus. Attorneys: Erica Eversman for Blue Water; Brian Honen of Ohio Attorney General's Office for defendant Thomas Stickrath)