[Federal Register Volume 64, Number 65 (Tuesday, April 6, 1999)]
[Proposed Rules]
[Pages 16690-16692]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8140]



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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 578

[Docket No. NHTSA 99-5448]
RIN 2127-AH48


Civil Penalties

AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to adjust certain civil penalties 
authorized for violations of statutes that we enforce. The Federal 
Civil Monetary Penalty Inflation Adjustment Act of 1990, as amended by 
the Debt Collection Improvement Act of 1996, requires us to take this 
action periodically. The largest adjustments would occur in penalties 
for related series of violations of 49 U.S.C. Chapter 301--Motor 
Vehicle Safety, and 49 U.S.C. Chapter 325--Bumper Standards. The 
maximum penalties for violations of Chapters 301 and 325 would be 
increased from $880,000 to $925,000 according to the formulae set forth 
in the statute. Adjustments in two other penalties would be made as 
well. These adjusted penalties would apply to violations occurring on 
or after the effective date of the final rule.

DATES: Date that comments are due: May 21, 1999. Proposed effective 
date: 45 days after publication of final rule in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Taylor Vinson, Office of Chief 
Counsel, NHTSA, telephone (202) 366-5263, facsimile (202) 366-3820, 
electronic mail ``TV[email protected]'', 400 Seventh Street, SW, 
Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

Background

    In order to preserve the remedial impact of civil penalties and to 
foster compliance with the law, the Federal Civil Monetary Penalty 
Inflation Adjustment Act of 1990 ((``Adjustment Act''), 28 U.S.C. 2461 
note, Pub. L. 101-410), as amended by the Debt Collection Improvement 
Act of 1996 (``Collection Act,'' Pub. L. 104-134), requires us and 
other Federal agencies to regularly adjust certain civil penalties for 
inflation. Under these laws, each agency must make an initial 
inflationary adjustment for all applicable civil penalties, and must 
make further adjustments of these penalty amounts at least once every 
four years. The Collection Act limited the initial increase to 10 
percent of the penalty being adjusted.
    Our initial adjustment of civil penalties under these legislative 
authorities was published on February 4, 1997 (62 FR 5167). We 
established 49 CFR Part 578, Civil Penalties, which applies to 
violations that occur on and after March 6, 1997. These adjustments 
resulted in the maximum permissible increases of 10 percent. For 
example, the maximum penalty of $1,000 for each violation of 49 U.S.C. 
30112(a), up to $800,000 for a related series of violations, was 
adjusted to $1,100 and $880,000.
    In accordance with the mandate to make further adjustments of civil 
penalty amounts at least once every four years, we propose to adjust 
some of our penalties now in order to enhance their deterrent effect.

Method of Calculation

    Under the Adjustment Act as amended by the Collection Act, we 
determine the inflation adjustment for each applicable civil penalty by 
increasing the maximum civil penalty amount per violation by the cost-
of-living adjustment, and then applying a rounding factor. Section 5(b) 
of the Adjustment Act defines the ``cost-of-living'' adjustment as:

the percentage (if any) for each civil monetary penalty by which--
    (1) the Consumer Price Index for the month of June of the 
calendar year preceding the adjustment exceeds
    (2) the Consumer Price Index for the month of June of the 
calendar year in which the amount of such civil monetary penalty was 
last set or adjusted pursuant to law.

    Since we plan to make the current adjustment effective before July 
1, 1999, the ``Consumer Price Index (CPI) for the month of June of the 
calendar year preceding the adjustment'' would be the CPI for June 
1998. This figure is 488.2. NHTSA's penalties were initially adjusted 
based on the CPI figure for June 1996. Since the intent of the 
legislation is for agencies to adjust their civil penalties to account 
for increases in inflation in order to preserve their remedial impact, 
we believe that this is realized by adjusting civil penalties according 
to the CPI base upon ``which the amount of such civil monetary penalty 
was last set or adjusted pursuant to law.'' This base was the CPI for 
June 1996. This was 469.5. The factor that we should use in calculating 
the increase, then, is 488.2 divided by 469.5, or 1.0398296. Any 
calculated increase under this adjustment is then subject to a specific 
rounding formula set forth in sec. 5(a) of the Adjustment Act. Under 
the formula:

    Any increase shall be rounded to the nearest--
    (1) Multiple of $10 in the case of penalties less than or equal 
to $100;
    (2) Multiple of $100 in the case of penalties greater than $100 
but less than or equal to $1,000;
    (3) Multiple of $1,000 in the case of penalties greater than 
$1,000 but less than or equal to $10,000;
    (4) Multiple of $5,000 in the case of penalties greater than 
$10,000 but less than or equal to $100,000;
    (5) Multiple of $10,000 in the case of penalties greater than 
$100,000 but less than or equal to $200,000; and
    (6) Multiple of $25,000 in the case of penalties greater than 
$200,000.

Penalties That We Are Increasing

    Upon review, we have concluded that application of the formulae 
permit some of our penalties to be increased at this time. We are 
proposing this action before the passage of four years in order to 
enhance the deterrent effect of these penalties because of their 
importance to our enforcement programs. Even with these increases, 
these penalties appear less than adequate as a full deterrent to 
violations of the statutes that we enforce. For example, the maximum 
penalty for a related series of violations under the National Traffic 
and Motor Vehicle Safety Act of 1966 as amended in 1974 was $800,000. 
It would have increased more than threefold, to $2.45 million, in June 
1996 if adjusted for inflation. However, the adjustment was capped at 
$880,000. Further, under this aggregate penalty ceiling, on a per 
vehicle basis the maximum penalty amounts to less than one dollar per 
vehicle where a substantial fleet was in violation of the Safety Act.
    Odometer tampering and disclosure. As shown above, sec. 5(a)(3) of 
the amended Adjustment Act permits an increase rounded ``to the nearest 
multiple of $1,000'' for penalties between $1,000 and $10,000. Under 49 
CFR 578.6(f)(2), a penalty of $1,650 may be imposed (the original 
penalty was $1,500). A figure of $1,716 results when the inflation 
factor is applied. The nearest multiple of $1,000 is $2,000. Therefore, 
we propose to amend 49 CFR 578.6(f)(2) so that a person who violates a 
requirement on odometer tampering and disclosure, with intent to 
defraud, will now be liable for three times the actual damages or 
$2,000, whichever is greater.
    Consumer information. The rounding provisions of section 5(a)(6) of 
the Adjustment Act permit raises to the nearest multiple of $25,000 
where the penalty exceeds $200,000. Section

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578.6(d) establishes a maximum penalty of $440,000 (originally 
$400,000) for a related series of violations of consumer information 
regarding crashworthiness and damage susceptibility. The inflation 
factor applied to $440,000 gives $457,525. As the nearest $25,000 
multiple is $450,000, we propose adjusting the penalty to this amount.
    Violations of safety and bumper requirements. Both 49 CFR 578.6(a) 
and 49 CFR 578.6(c)(2) establish a maximum penalty of $880,000 
(originally $800,000) for related series of violations of Chapter 301--
Motor Vehicle Safety, and Chapter 325--Bumper Standards. Multiplying 
this figure by the inflation factor gives $915,050. Section 5(a)(6) 
permits a rounding to the nearest multiple of $25,000, which is 
$925,000, and we are proposing adjusting the penalties to this amount.

Effective Date

    These amendments would be effective 45 days after publication in 
the Federal Register and would apply to violations of pertinent 
statutes and regulations occurring on and after that date.

Request for Comments

    Interested persons are invited to submit comments on the proposal 
and other approaches to adjustment of penalties for inflation. It is 
requested that two copies be submitted.
    All comments must not exceed 15 pages in length. (49 CFR 553.21). 
Necessary attachments may be appended to these submissions without 
regard to the 15-page limit. This limitation is intended to encourage 
commenters to detail their primary arguments in a concise fashion.
    If a commenter wishes to submit certain information under a claim 
of confidentiality, three copies of the complete submission, including 
purportedly confidential business information, should be submitted to 
the Chief Counsel, NHTSA, at the street address given above, and seven 
copies from which the purportedly confidential information has been 
deleted should be submitted to the Docket Section. A request for 
confidentiality should be accompanied by a cover letter setting forth 
the information specified in the agency's confidential business 
information regulation. 49 CFR part 512.
    All comments received before the close of business on the comment 
closing date indicated above for the proposal will be considered, and 
will be available for examination in the docket at the above address 
both before and after that date. To the extent possible, comments filed 
after the closing date will also be considered. Comments received too 
late for consideration in regard to the final rule will be considered 
as suggestions for further rulemaking action. Comments on the proposal 
will be available for inspection in the docket. The NHTSA will continue 
to file relevant information as it becomes available in the docket 
after the closing date, and it is recommended that interested persons 
continue to examine the docket for new material.
    Those persons desiring to be notified upon receipt of their 
comments in the rules docket should enclose a self-addressed, stamped 
postcard in the envelope with their comments. Upon receiving the 
comments, the docket supervisor will return the postcard by mail.

Rulemaking Analyses and Notices

Executive Order 12866 and DOT Regulatory Policies and Procedures

    We have considered the impact of this rulemaking action under E.O. 
12866 and the Department of Transportation's regulatory policies and 
procedures. This rulemaking document was not reviewed under E.O. 12866, 
``Regulatory Planning and Review.'' This action is limited to the 
adoption of adjustments of civil penalties under statutes that the 
agency enforces, and has been determined to be not ``significant'' 
under the Department of Transportation's regulatory policies and 
procedures.

Regulatory Flexibility Act

    We have also considered the impacts of this notice under the 
Regulatory Flexibility Act. I certify that this proposed rule would 
have no significant economic impact on a substantial number of small 
entities. The following is my statement providing the factual basis for 
the certification (5 U.S.C. 605(b)). The proposed amendments primarily 
affect manufacturers of motor vehicles. Manufacturers of motor vehicles 
are generally not small businesses within the meaning of the Regulatory 
Flexibility Act.
    The Small Business Administration's regulations define a small 
business in part as a business entity ``which operates primarily within 
the United States.'' (13 CFR 121.105(a)) SBA's size standards are 
organized according to Standard Industrial Classification Codes (SIC), 
SIC Code 3711 ``Motor Vehicles and Passenger Car Bodies'' has a small 
business size standard of 1,000 employees or fewer.
    For manufacturers of passenger cars and light trucks, NHTSA 
estimates there are at most five small manufacturers of passenger cars 
in the U.S. Since each manufacturer serves a niche market, often 
specializing in replicas of ``classic'' cars, production for each 
manufacturer is fewer than 100 cars per year. Thus, there are at most 
500 cars manufactured per year by U.S. small businesses.
    In contrast, in 1999, there are approximately nine large 
manufacturers producing passenger cars, and light trucks in the U.S. 
Total U.S. manufacturing production per year is approximately 15 to 15 
and a half million passenger cars and light trucks per year. We do not 
believe small businesses manufacture even 0.1 percent of total U.S. 
passenger car and light truck production per year.
    Further, small organizations and governmental jurisdictions would 
not be significantly affected as the price of motor vehicles ought not 
to change as the result of this proposed rule. As explained above, this 
action is limited to the proposed adoption of a statutory directive, 
and has been determined to be not ``significant'' under the Department 
of Transportation's regulatory policies and procedures.
    Finally, this action would not affect our civil penalty policy 
under the Small Business Regulatory Enforcement Fairness Act (62 FR 
37115, July 10, 1997). We shall continue to consider the 
appropriateness of the penalty to the size of the business charged.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1980 (Pub. L. 96-
511), we state that there are no requirements for information 
collection associated with this rulemaking action.

National Environmental Policy Act

    We have also analyzed this rulemaking action under the National 
Environmental Policy Act and determined that it has no significant 
impact on the human environment.

Executive Order 12612 (Federalism)

    We have analyzed this proposed rule in accordance with the 
principles and criteria contained in E.O. 12612, and have determined 
that it has no significant federalism implications to warrant the 
preparation of a Federalism Assessment.

Civil Justice Reform

    This proposed rule does not have a retroactive or preemptive 
effect. Judicial review of a rule based on this proposal may be 
obtained pursuant to 5 U.S.C. 702. That section does not require that a 
petition for reconsideration be filed prior to seeking judicial review.

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Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires 
agencies to prepare a written assessment of the cost, benefits and 
other effects of proposed or final rules that include a Federal mandate 
likely to result in the expenditure by State, local, or tribal 
governments, in the aggregate, or by the private sector, of more than 
$100 million annually. Because this rule would not have a $100 million 
effect, no Unfunded Mandates assessment will be prepared.

List of Subjects in 49 CFR Part 578

    Imports, Motor vehicle safety, Motor vehicles, Rubber and Rubber 
Products, Tires, Penalties.

PART 578--CIVIL PENALTIES

    1. The authority citation for 49 CFR Part 578 would continue to 
read as follows:

    Authority: Pub. L. 101-410, Pub. L. 104-134, 49 U.S.C. 30165, 
30505, 32308, 32309, 32507, 32709, 32710, 32912, and 33115; 
delegation of authority at 49 CFR 1.50.

    2. Section 578.6 would be amended by revising the last sentence in 
paragraphs (a) and (d), revising paragraphs (c)(2) and (f)(2), and 
republishing the headings of paragraphs (a), (c), (d), and (f) to read 
as follows:


Sec. 578.6  Civil penalties for violations of specified provisions of 
Title 49 of the United States Code.

    (a) Motor Vehicle Safety. * * * The maximum civil penalty under 
this paragraph for a related series of violations is $925,000.
* * * * *
    (c) Bumper standards. (1) * * *
    (2) The maximum civil penalty under this paragraph for a related 
series of violations is $925,000.
    (d) Consumer information regarding crashworthiness and damage 
susceptibility. * * * The maximum penalty under this paragraph for a 
related series of violations is $450,000.
* * * * *
    (f) Odometer tampering and disclosure. * * *
    (2) A person that violates 49 U.S.C. Chapter 327 or a regulation 
prescribed or order issued thereunder, with intent to defraud, is 
liable for three times the actual damages or $2,000, whichever is 
greater.

    Issued on: March 29, 1999.
Kenneth N. Weinstein,
Associate Administrator for Safety Assurance.
[FR Doc. 99-8140 Filed 4-5-99; 8:45 am]
BILLING CODE 4910-59-P