[Federal Register Volume 63, Number 190 (Thursday, October 1, 1998)]
[Rules and Regulations]
[Pages 52630-52632]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26263]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 580

[NHTSA-98-4438]
RIN 2127-AG83


Odometer Disclosure Requirements; Exemptions

AGENCY: National Highway Traffic Safety Administration, DOT.

ACTION: Final rule.

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SUMMARY: This document amends an exemption from the odometer disclosure 
requirements for vehicles ``ten years old or older'' to clarify that 
the term ``years'' refers to ``model years.'' 49 CFR 580.17(a)(3). The 
rule also amends the exemption by including a formula for calculating 
the most recent model year to which the exemption applies.
    The agency is taking this action following its consideration of 
comments received from the public on the interim final rule that was 
published in the Federal Register on September 11, 1997. 62 FR 47763, 
Sept. 11, 1997.
    This document is published as a final rule to be effective on its 
publication in the Federal Register.

DATES: This rule is effective October 1, 1998.

FOR FURTHER INFORMATION CONTACT: Eileen Leahy, Office of the Chief 
Counsel, National Highway Traffic Safety Administration, 400 Seventh 
Street, SW, Room 5219, Washington, DC 20590 (Telephone: 202-366-5263).

SUPPLEMENTARY INFORMATION:

Background

    On September 11, 1997, the National Highway Traffic Safety 
Administration (NHTSA) published in the Federal Register an interim 
final rule, 62 FR 47763, that repromulgated the exemptions to the 
odometer disclosure requirements of 49 CFR Part 580 under the new 
authority provided by Section 332 of the Transportation and Related 
Agencies Appropriations Act for Fiscal Year 1997. That notice also 
solicited public comment on the exemptions themselves. In response to 
that notice, the agency received comments from the following entities: 
the State of South Dakota Department of Revenue; the National Auto 
Auction Association (``NAAA''); ADT Automotive, Inc. (``ADT'') (an auto 
auction owner/operator); the Colorado Independent Automobile Dealers 
Association (``CIADA''); the State of Tennessee Department of Safety, 
Titling & Registration Division; the State of Idaho Transportation 
Department; the State of Texas Department of Public Safety; the State 
of Washington Department of Licensing: the Secretary of State of the 
State of Illinois; the Colorado Department of Public Safety; the 
Oklahoma Tax Commission of the State of Oklahoma; the Oregon 
Independent Auto Dealers Association (``OIADA''), the State of Georgia 
Department of Revenue, Motor Vehicle Division; and the State of 
California Department of Motor Vehicles. For convenience, the 
commenters that are state motor vehicle administrators or titling 
agencies will be referred to simply by the name of the state; and state 
agency commenters collectively will be referred to as ``the States'' or 
``the State commenters.''

Discussion

    The comments focused on a single area of concern: the confusion 
that exists about how to apply the exemption for vehicles ``ten years 
old or older.'' 49 CFR 580.17(a)(3). Of the fourteen commenters, seven 
(NAAA, ADT, ID, CIADA, OIADA, Oklahoma and Georgia) expressed the view 
that there was a need to make a change to clear up existing confusion; 
while one (California) stated that changing the wording to ``ten model 
years or older'' instead of ten years old or older would have only a 
minimal impact, and two (Colorado and Washington State) stated that 
changing the language of the regulation would have no impact on their 
operations. Texas opposed changing the number of years from ten. 
Illinois, South Dakota and Tennessee opposed making any change to the 
status quo.
    None of those advocating an amendment suggested a change in the age 
that would qualify a vehicle for the exemption. However, all of them 
expressed a need to clear up confusion about when a vehicle becomes 
``10 years old'' and thus eligible for the exemption from the odometer 
disclosure requirements, either by adding language to the rule, or by 
changing the agency's interpretation setting forth the formula to be 
applied to decide which vehicles are exempt. Three commenters, NAAA, 
ADT and Idaho, supported a change of the wording of the exemption, to 
``10 model years old or older.'' CIADA and OIADA advocated that NHTSA 
revise its interpretation of the exemption, from ``current calendar 
year minus 10 equals the first model year for [which] a vehicle is 
exempt'' to ``current calendar year minus 11 equals the first model 
year for [which] a vehicle is exempt.''
    Two states, Oklahoma and Georgia, suggested that the best means of 
eliminating the confusion that currently exists concerning the coverage 
of the exemption would be to include the method of calculating the 
newest model year to which the exemption would apply in the language of 
the exemption itself, without changing the words now used to describe 
qualifying vehicles: ten years old or older.
    Upon evaluating the comments, NHTSA concludes that the best way to 
ensure that the exemption is understood correctly and applied uniformly 
is to include the method of calculation as part of the exemption, as 
Oklahoma and Georgia suggested. In this way, the means of calculating 
the model year to which the exemption applies will be

[[Page 52631]]

readily available to anyone by reading the regulation, without having 
to go to any outside source, such as the agency's interpretation 
letters, for further information. Accordingly, the agency has decided 
to include in section 580.17(a)(3) a statement that the current 
calendar year minus 10 equals the most recent model year that is exempt 
from disclosure requirements.
    After considering all of the comments, the agency has also decided 
to amend section 580.17(a)(3) by changing the words ``vehicles 10 years 
old or older'' to ``vehicles 10 model years old or older.'' Changing 
``year'' to ``model year'' does not effect a change from the applicable 
NHTSA interpretations, which conclude that eligibility for the 
exemption is to be based on a vehicle's model year rather than on its 
actual chronological age based on the time that has elapsed since its 
date of production.
    In the rule as amended today, the formula announced in that 
interpretation remains the same. The formula arrives at the most recent 
model year (i.e, the newest vehicles) to which the exemption applies by 
subtracting ten model years from the current calendar year. For 
example, during calendar year 1998 (i.e., from January 1 through 
December 31, 1998), vehicles with a model year designation of 1988 or 
earlier are exempt from the odometer disclosure requirements: 
1998(current calendar year)--10 = 1988 (most recent model year exempt).
    Some commenters expressed concern that a formula that mixes model 
year and calendar year might be confusing. However, the agency has 
decided, after considering the alternatives, that this method is 
actually easier to apply, because it avoids the need to determine the 
date on which the model year begins (which, as some commenters pointed 
out, can change from year to year, or from manufacturer to 
manufacturer) or to ascertain the date on which an individual vehicle 
was produced. Assigning the current calendar year as the base year 
means that the states do not have to ascertain the beginning dates of 
every manufacturer's model year before calculating whether a particular 
vehicle is ten years old within the meaning of the exemption; using the 
calendar year as the base also makes it easier to administer the 
exemption because it eliminates potential confusion arising from 
variations among the states in which month they use as the beginning 
date of the vehicle registration year. Likewise, making the exemption 
available by whole model year rather than according to the vehicle's 
actual chronological age based on date of production means that states 
and others involved in processing vehicle transfers will not need to 
take the time to ascertain the date a vehicle was produced in order to 
decide whether the exemption applies.
    By making no change in the substance of the exemption, this rule 
also addresses the concerns of several state commenters who opposed 
making any change in the language of the regulation because they 
believe that this would result in a change in the scope of the 
exemption, which would impose burdens in terms of costly changes in 
computer systems, retraining of employees, and re-educating the public. 
To the contrary, by including the formula in the rule, the amendment 
should clear up the apparent confusion about which vehicles are in fact 
entitled to the exemption. Under both the old wording (as elaborated in 
NHTSA's interpretations) and the wording adopted in this rule, model 
year 1988 is the most recent model year that is exempt from odometer 
disclosure during calendar year 1998.
    The only circumstance in which a state would have to make changes 
such as altering the computer system or retraining employees would be 
if the state had not previously been performing the calculation 
correctly. NHTSA believes that there are only three or four states in 
which improper calculation of the exemption is a problem; and that even 
in those states, the erroneous application of the exemption is often 
localized in some Department of Motor Vehicles branch offices rather 
than being statewide. In the latter case, the only action that the 
state would need to take is retraining its employees; no changes to its 
titling system would be necessary. The agency believes that the 
positive impact that the new rule will have--improving the efficiency 
of the process of titling vehicles by eliminating state-to-state 
variation in the applicability of the ten-year-old vehicle exemption--
more than outweighs the small burden that may be incurred by a handful 
of states.
    The agency decided not to adopt the suggestion of CIADA to change 
the calculation from ``current calendar year minus 10'' to ``current 
calendar year minus 11.'' CIADA correctly points out that this change 
would ensure that only vehicles whose chronological age (based on date 
of manufacture) is at least 10 years old are exempt from the disclosure 
requirements. However, the drawback of the CIADA proposal is that it is 
a change from the previous NHTSA interpretation and, as such, would 
require all the states to change their current systems for determining 
which vehicles are exempt. Such a change would, as pointed out above, 
require expenditure of resources for retraining employees, changing 
computer systems and educating the public. It would also be likely to 
continue the confusion that apparently exists about the proper method 
of calculating the exemption. NHTSA concludes that the benefit to be 
realized from requiring disclosure for a relatively small population of 
additional vehicles is small and is far outweighed by the costs that 
would be incurred by the states in implementing this proposal.
    Finally, the agency acknowledges the concerns of a number of the 
state commenters who opposed adding the words ``model year'' to the 
exemption. The major concerns expressed about this change were that it 
would create, rather than reduce, confusion about how to apply the 
exemption; and that it would require states, even those who are 
properly applying the current exemption according to NHTSA's 
interpretation, to make costly expenditures to re-educate their staff 
and the public and to change their computer systems. As one commenter 
said, this appears to penalize those states that were applying the 
exemption properly.
    In response to these expressions of concern, NHTSA wishes to 
reiterate that the changes it is making today will not require those 
states that are already applying the exemption properly to alter their 
current approach. The purpose of this rule is to make clear the law 
that was already in effect for those who have not understood it 
correctly. The addition of the words ``model year'' to the exemption 
simply makes explicit in the wording of the exemption itself that which 
was already implied (as evidenced by NHTSA's interpretation): that the 
determination of whether a vehicle is exempt is to be based on the 
model year of the vehicle rather than its chronological age. Contrary 
to the fears expressed by some commenters, this approach does not 
require a state titling office, or anyone else involved in the transfer 
of a motor vehicle, to ascertain the vehicle's actual date of 
manufacture to determine whether it is exempt.

Statutory Authority

    The agency published the interim final rule under the authority of 
Section 332 of the Department of Transportation and Related Agencies 
Appropriations Act for Fiscal Year 1997, P.L. 104-205. Section 332 
provided that funds provided by the Act could be used for the purpose 
of permitting exemptions from the odometer disclosure requirements of 
Part 580.

[[Page 52632]]

    Subsequently, Congress addressed the issue of exemptions more 
completely in the Transportation Equity Act for the 21st Century, P.L. 
105-178 (TEA 21). To resolve any lingering uncertainties about the 
validity of exemptions issued under Part 580, Section 7105(b) of TEA 21 
amended Section 32705(a) of title 49, United States Code, by adding the 
following new paragraph:

    (5) The Secretary may exempt such classes or categories of 
vehicles as the Secretary deems appropriate from these requirements. 
Until such time as the Secretary amends or modifies the regulations 
set forth in 49 CFR 580.6, such regulations shall have full force 
and effect.

    In making final the transition from section 580.6 to section 
580.17, which was initiated by the interim final rule, the agency's 
repromulgation of the exemptions implements the provisions of paragraph 
32705(a)(5). The amendments relating to ``model years,'' and to the 
method for calculating the most recent model year to which an exemption 
applies, are made under the authority provided by the paragraph to 
amend or modify exemptions.

Federalism Assessment

    The agency has analyzed this rule in accordance with the principles 
and criteria contained in Executive Order 12612 and has determined that 
the rule does not have sufficient federalism implications to warrant 
the preparation of a Federalism Assessment. The final rule merely 
clarifies the scope of the existing exemption from the odometer 
disclosure requirements, and does not alter the effect on the states of 
existing statutory or regulatory requirements.

Rulemaking Analyses

A. Executive Order 12886 and DOT Regulatory Policies and Procedures

    NHTSA has analyzed this rule and determined that it is neither 
``major'' nor ``significant'' within the meaning of Executive Order 
12866 or of Department of Transportation regulatory policies and 
procedures. Because the agency estimates that this rule would not have 
a significant impact, it has not prepared a regulatory evaluation.

B. Regulatory Flexibility Act

    The agency has also considered the effects of this action under the 
Regulatory Flexibility Act. I certify that this action will not have 
substantial economic impact on a substantial number of small entities. 
Because it merely clarifies an existing exemption from agency 
regulations, it does not affect the impact of those regulations on 
small businesses.

C. National Environmental Policy Act

    The agency has analyzed this rule under the National Environmental 
Policy Act and determined that it will not have a significant impact on 
the human environment. Accordingly, it has not prepared an 
environmental impact statement.

D. Paperwork Reduction Act

    The final rule is not a collection of information as that term is 
defined by OMB in 5 CFR part 1320. It clarifies one of the existing 
exemptions to the odometer disclosure requirements in 49 CFR part 580. 
That exemption does not require the collection of any information. The 
information collection requirements established by part 580 have been 
approved by OMB (OMB 2127-0047).

E. Civil Justice Reform Act

    This rule will not have any retroactive effect. States may not 
adopt laws on disconnecting, altering or tampering with an odometer 
with intent to defraud that are inconsistent with 49 U.S.C. Chapter 
327. 49 U.S.C. Chapter 327 does not exempt persons from complying with 
disconnecting, altering or tampering with an odometer with an intent to 
defraud. Agency regulations issued under 49 U.S.C. Chapter 327 are 
subject to judicial review pursuant to 5 U.S.C. 704. There is no 
requirement for a petition for reconsideration or other administrative 
proceeding before a party may file a suit in court challenging 
regulations promulgated under Chapter 327.

List of Subjects in 49 CFR Part 580

    Consumer protection, Motor vehicles, Odometers.

    In consideration of the foregoing, the interim rule amending 49 CFR 
part 580 that was published at 62 FR 47763 on September 11, 1998, is 
adopted as a final rule with the following change:

PART 580--ODOMETER DISCLOSURE REQUIREMENTS

    1. Revise the authority citation for Part 580 to read as follows:

    Authority: 49 U.S.C. 32705; delegation of authority at 49 CFR 
1.50(f) and 501.8(e)(1).

    2. Amend Sec. 580.17 to revise paragraph (a)(3) to read as follows:


Sec. 580.17  Exemptions.

* * * * *
    (a) * * *
    (3) A vehicle that was manufactured in a model year beginning at 
least ten years before January 1 of the calendar year in which the 
transfer occurs; or

    Example to paragraph (a)(3): For vehicle transfers occurring 
during calendar year 1998, model year 1988 or older vehicles are 
exempt.
* * * * *
    Issued on: September 24, 1998.
Ricardo Martinez,
Administrator.
[FR Doc. 98-26263 Filed 9-30-98; 8:45 am]
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