[Federal Register Volume 64, Number 134 (Wednesday, July 14, 1999)]
[Rules and Regulations]
[Pages 37876-37878]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17807]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 578

[Docket No. NHTSA 99-5448; Notice 2]
RIN 2127-AH48


Civil Penalties

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

ACTION: Final rule.

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SUMMARY: This document adjusts 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 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 are increased from $880,000 to 
$925,000 according to the formulae set forth in the statute. 
Adjustments in two other penalties are made as well.

DATES: Effective Date: August 13, 1999.
    Applicability Date: These adjusted penalties apply to violations 
occurring on or after August 13, 1999.

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. Sec. 
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. 
Sec. 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, on April 6, 1999, we 
proposed to adjust some of our penalties now in order to enhance their 
deterrent effect (64 FR 16690). We received no comments on this 
proposal.

Method of Calculation

    Under the Adjustment Act as amended by the Collection Act, we 
determine the inflation adjustment for each applicable civil penalty by

[[Page 37877]]

increasing the maximum civil penalty amount per violation by the cost-
of-living adjustment, and then applying a rounding factor. Sec. 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 the current adjustment is effective before July 1, 1999, the 
``Consumer Price Index [CPI] for the month of June of the calendar year 
preceding the adjustment'' is the CPI for June 1998. This figure is 
488.2. NHTSA's penalties were initially adjusted based on the CPI 
figure for June 1996. Because 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 are using 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 concluded that application of the formulae permit 
some of our penalties to be increased at this time. We are doing so 
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 (codified in 1994 
as 49 U.S.C. Chapter 301--Motor Vehicle Safety).

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 Sec. 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 are amending 49 CFR Sec. 
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 Sec. 5(a)(6) of the Adjustment Act 
permit raises to the nearest multiple of $25,000 where the penalty 
exceeds $200,000. Sec. 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 are adjusting 
the penalty to this amount.

Violations of Safety and Bumper Requirements

    Both 49 CFR Sec. 578.6(a) and 49 CFR Sec. 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. Sec. 5(a)(6) permits a rounding to the nearest multiple of 
$25,000, which is $925,000, and we are adjusting the penalties to this 
amount.

Effective Date

    The amendments are effective August 13, 1999 and the adjusted 
penalties apply to violations of pertinent statutes and regulations 
occurring on and after that date.

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 rule under the 
Regulatory Flexibility Act. I certify that this rule will 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. Sec. 605(b)). The 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.

[[Page 37878]]

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 will 
not be significantly affected as the price of motor vehicles ought not 
to change as the result of this rule. As explained above, this action 
is limited to the 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 will 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 (Public Law 
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 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 rule does not have a retroactive or preemptive effect. 
Judicial review of a rule 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.

Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (Public Law 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 will 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, Penalties, Tires.

    In consideration of the foregoing, 49 CFR part 578 is amended as 
follows:

PART 578--CIVIL PENALTIES

    1. The authority citation for 49 CFR part 578 is revised to read as 
follows:

    Authority: 49 U.S.C. 30165, 30505, 32308, 32309, 32507, 32709, 
32710, 32912, and 33115; Pub. L. 101-410, 104 Stat. 890; Pub. L. 
104-134, 110 Stat. 1372; delegation of authority at 49 CFR 1.50.

    2. Section 578.6 is amended by revising the last sentence in 
paragraphs (a) and (d) and revising paragraphs (c)(2) and (f)(2) 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. * * *
    (2) The maximum civil penalty under this paragraph (c) 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: July 8, 1999.
Ricardo Martinez,
Administrator.
[FR Doc. 99-17807 Filed 7-13-99; 8:45 am]
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