[Federal Register Volume 66, Number 141 (Monday, July 23, 2001)]
[Rules and Regulations]
[Pages 38159-38162]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18309]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 573

[Docket No. NHTSA-2001-10145]
RIN 2127-AI23


Motor Vehicle Safety; Reporting the Sale or Lease of Defective or 
Non-Compliant Tires

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

ACTION: Final rule.

-----------------------------------------------------------------------

[[Page 38160]]

SUMMARY: This final rule implements section 3(c) of the Transportation 
Recall Enhancement, Accountability, and Documentation Act (TREAD Act). 
Section 3(c) directed us to issue a final rule by January 30, 2001, 
implementing that Act's requirement of the submission of reports 
concerning sales and leases of defective or noncompliant tires by 
certain persons. Accordingly, we published an interim final rule and 
request for comments in the Federal Register on December 26, 2000 (65 
FR 81409). We are now publishing a final rule requiring any person who 
knowingly and willfully sells or leases for use on a motor vehicle a 
defective tire or a tire not in compliance with applicable safety 
standards and has actual knowledge that the manufacturer of such tire 
has notified its dealers of such defect or noncompliance to report that 
sale or lease to NHTSA. There have been no significant changes to the 
interim final rule.

DATES: Effective date: This rule is effective August 22, 2001.
    Petitions for reconsideration: Any petition for reconsideration of 
this rule must be received by NHTSA no later than September 6, 2001.

ADDRESSES: Petitions for reconsideration may be submitted in writing 
to: Docket Management, Room PL-401, 400 Seventh Street, SW., 
Washington, DC 20590. Petitions for reconsideration may also be 
submitted electronically by logging onto the Docket Management System 
website at http://dms.dot.gov. Click on ``Help & Information'' or 
``Help/Info'' to obtain instructions for filing your petition 
electronically.
    Regardless of how a petition is submitted, the docket number of 
this document should be referenced in that petition.
    You may call Docket Management at 202-366-9324. You may visit the 
Docket from 9 a.m. to 5 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: For non-legal issues, contact Jonathan 
White, Office of Defects Investigation, NHTSA, telephone (202) 366-
5226; for legal issues, contact Jennifer T. Timian, Office of Chief 
Counsel, NHTSA, telephone (202) 366-5263.

SUPPLEMENTARY INFORMATION:

Background

    On November 1, 2000, the TREAD Act, Pub. L. 106-414, was enacted. 
The statute was, in part, a response to congressional concerns related 
to manufacturers' inadequate reporting to NHTSA of information 
regarding possible defects in motor vehicles and motor vehicle 
equipment, with specific reference to tires. The TREAD Act directed the 
Secretary of Transportation (``the Secretary'') to issue various rules 
to improve reporting of information that is or could be related to 
defects and noncompliances with applicable Federal motor vehicle safety 
standards. The authority to carry out Chapter 301 of Title 49 of the 
United States Code, under which the rules directed by the TREAD Act are 
to be issued, has been delegated to NHTSA's Administrator pursuant to 
49 CFR 1.50.
    One of these congressionally mandated rules is found in section 
3(c) of the TREAD Act, which added a new subsection (n) to 49 U.S.C. 
30166. That subsection directs us to issue, within 90 days of 
enactment, a final rule requiring any person who knowingly and 
willfully sells or leases for use on a motor vehicle a defective tire 
or a tire which is not compliant with an applicable tire safety 
standard, with actual knowledge that the manufacturer of such tire has 
notified its dealers of such defect or noncompliance as required under 
49 U.S.C. 30118(c) or as required by an order under 49 U.S.C. 30118(b), 
to report that sale or lease to NHTSA. Under 30166(n)(2), reporting of 
such sales or leases is not required where: (A) prior to delivery of 
any such tire pursuant to a sale or lease, the defect or noncompliance 
is remedied as required under 49 U.S.C. 30120; or (B) notification of 
the defect or noncompliance is required pursuant to an order issued 
under section 30118(b), but enforcement of the order is restrained or 
the order is set aside in a civil action to which 49 U.S.C. 30121(d) 
applies.
    In order to timely implement this statutorily-mandated final rule, 
we published in the Federal Register on December 26, 2000, an interim 
final rule implementing section 3(c) (65 FR 81409). That interim final 
rule amended 49 CFR Part 573 to add a new section 573.10, which 
specified who would be required to comply with this new reporting 
requirement, when such a report would be due to the Agency, and what 
information would be required within such a report.
    With respect to who would be required to comply with this rule, we 
explained that because Congress chose to use the general terms ``any 
person'' to describe who would be expected to report sales or leases of 
defective or noncompliant tires, the rule would not be limited to 
particular classes or categories of persons such as manufacturers or 
dealers.\1\ Rather, the rule would apply to the actions of all persons, 
to include individuals and corporate entities alike. We were careful to 
explain, however, that only those persons who sell or lease a defective 
or noncompliant tire for use on a motor vehicle, as opposed to persons 
who sell or lease a new or used vehicle equipped with a defective or 
noncompliant tire, are covered by the rule. Thus, we explained, motor 
vehicle dealers, lessors and rental companies would not be subject to 
the rule unless, of course, those persons were to sell or lease a 
defective or noncompliant tire separate from a motor vehicle.
---------------------------------------------------------------------------

    \1\ We also explained that the interim final rule would be 
applicable to both new and used tires.
---------------------------------------------------------------------------

    Additionally, we explained that to be covered under section 573.10, 
the person must have actual knowledge that the manufacturer of the tire 
at issue had notified its dealers of the defect or noncompliance. We 
added, however, that a person need not have received notification 
directly from the manufacturer, but that a person's actual knowledge 
that the notification was made to dealers would be sufficient to invoke 
the reporting requirement under this section.
    Lastly, we explained that the principle of respondent superior 
applied to this rule, such that employers, principals and other persons 
who are legally accountable for the actions of their employees or 
agents are required to report any covered sales or leases that their 
employees or agents cause while acting within the scope of their 
employment. We noted, however, that only one report per covered sale or 
lease is required, such that either an employee or his/her employer 
could file a report pursuant to section 573.10.
    With regard to the timing of reports required under section 573.10, 
we provided that such reports would be due to NHTSA no more than five 
working days after the person to whom the tire was sold or leased took 
possession of the tire. We explained that a five-day rule was chosen 
because it would be consistent with 49 CFR 573.5, which requires defect 
and noncompliance information reports to be submitted within a five-day 
time frame.
    In terms of what information will be required in a report submitted 
pursuant to section 573.10, we set forth seven categories of 
information: (1) A statement that the report was being provided 
pursuant to section 573.10 regarding the sale or lease of a defective 
or noncompliant tire; (2) the name, address and telephone number of the 
person who purchased or leased the tire; (3) the name of the 
manufacturer of the tire; (4) the tire's brand name, model name, and 
size; (5) the tire's DOT

[[Page 38161]]

identification number; (6) the date of sale or lease; and (7) the name, 
address and telephone number of the seller or lessor. We additionally 
noted that each report must be dated and signed with the name of the 
person printed or typed below the signature, together with the official 
position of the individual signing the report where such a report is 
filed on behalf of a corporation.
    In our publication of the interim final rule we solicited the 
public's comments concerning this rule. We received three comments to 
our interim final rule. Those comments and our responses, organized by 
subject matter, follow.

Comments

Comments Relating to the Scope of Section 573.10

    The National Automobile Dealers Association (NADA) commented that 
our rule should be amended to contain language specifying that it does 
not apply to the sale or lease of a new or used motor vehicle which is 
equipped with a tire that is defective or noncompliant. NADA suggested 
that such an amendment would clarify the rule's application to only 
those persons who sell or lease a defective or noncompliant tire ``for 
use on a motor vehicle,'' as specified in section 3(c) of the TREAD 
Act, and implemented in our interim final rule.
    We believe the phrase ``for use on a motor vehicle'' in the statute 
is sufficient to explain that section 573.10 does not apply to sales or 
leases of motor vehicles that are equipped with one or more defective 
or noncompliant tires. Thus, we do not believe that a specific 
provision within section 573.10 to further clarify the rule's 
application is necessary. The rule will remain unchanged in this 
regard. However, in this context, we note that the sale of a new 
vehicle equipped with a defective or noncompliant tire new tire is 
prohibited by 49 U.S.C. 30120(i).
    The Rubber Manufacturers Associations (RMA) asked that we consider 
requiring commercial entities to report sales or leases of used motor 
vehicles equipped with defective or noncompliant tires. We do not agree 
that such a requirement should be added to 49 CFR 573.10 for several 
reasons.
    Section 3(c) does not apply to persons who sell or lease new or 
used motor vehicles that come equipped with defective or noncompliant 
tires. Rather, Congress specified in section 3(c) that it covers sales 
and leases of defective or noncompliant tires ``for use on a motor 
vehicle.'' An extension of our rule to sales and leases of vehicles by 
commercial entities would, therefore, be contrary to the terminology 
used within section 3(c).
    Furthermore, extending the rule's application in this manner to 
only commercial entities would also be contradictory to the language 
and intent of section 3(c). As discussed in the preamble to the interim 
final rule, Congress chose to use the general terms ``any person,'' as 
opposed to the more restricted categories of ``manufacturer'' and 
``dealer'' used elsewhere within 49 U.S.C. Chapter 301, in describing 
who was to be subject to the reporting requirement. Our application of 
this final rule to sales and leases by commercial entities alone and 
not to other groups, therefore, would be inconsistent with the 
statutory language.
    We are, however, amending the applicability section of Part 573 
(e.g., section 573.3(a)) to assure that there is no misunderstanding 
that section 573.10 applies to all persons and not simply to 
manufacturers. As published today, sections 573.3(a) and (g) make clear 
(although we do not believe that there was any doubt otherwise) that 
section 573.10 applies to all persons.

Comment Concerning Section 573.10's Relationship to Petitions for 
Inconsequentiality

    The RMA asked that we clarify our rule with respect to tires for 
which a manufacturer has filed a petition for exemption from the recall 
requirements of 49 U.S.C. Chapter 301 on the basis that a defect or 
noncompliance is inconsequential to motor vehicle safety pursuant to 49 
U.S.C. 30118(d) and 30120(h). In particular, RMA requested we consider 
tolling section 573.10's reporting requirement until such a petition is 
ruled upon, and consider an exemption of that reporting requirement 
where the agency makes a determination of inconsequentiality.
    A reading of section 573.10 together with another of its 
counterpart regulations, section 573.5(c)(8)(iii), demonstrates that a 
distinct tolling provision or exemption to take into consideration 
petitions for determinations of inconsequentiality is not necessary. 
Accordingly, we have decided not to add the suggested provisions to 
section 573.10. Our explanation follows.
    As set forth in section 573.10, one prerequisite to the application 
of this reporting requirement is that the person have actual knowledge 
that the manufacturer of the tire sold or leased has notified its 
dealers of the defect or noncompliance. Such a notification would not 
be issued during the pendency of the agency's consideration of a timely 
inconsequentiality petition. Under 49 CFR 573.5(c)(8)(iii), where a 
manufacturer has filed a timely\2\ petition for a determination of 
inconsequential defect or noncompliance, that manufacturer's 
notification concerning the defect or noncompliance at issue is not 
required unless and until the agency denies that petition. Thus, where 
a manufacturer has not issued a notification to its dealers concerning 
a defect or noncompliance--such as in the circumstance where a tire 
manufacturer has petitioned for a finding of inconsequentiality and is 
awaiting a final determination from the agency--section 573.10's 
reporting requirement is not applicable.\3\
---------------------------------------------------------------------------

    \2\ The deadlines for filing such petitions are discussed in 49 
CFR 573.5(c)(8)(iv).
    \3\ The same would hold true if a petition were granted. This 
final rule's reporting requirements would be inapplicable in that 
situation because the tire manufacturer would not notify its dealers 
of an inconsequential defect or noncompliance.
---------------------------------------------------------------------------

Comment Suggesting Educational Outreach to Small Businesses and 
Individual Retailers

    The Specialty Equipment Market Association (SEMA) commented that 
because our rule extends to all persons, including individuals and 
small businesses, there may be hardships in informing the individual 
salesperson or small business as to our rule and its application to 
their conduct. SEMA suggested that comprehensive and ongoing efforts be 
made to notify and educate companies and individuals involved in the 
sale or lease of tires as to the rule's purpose, requirements, 
application and penalties for non-compliance. SEMA did not offer 
suggestions or descriptions as to what kinds of efforts it felt we 
should undertake that would be helpful in providing effective and 
comprehensive information to the individual salesperson or small 
retailer. SEMA stated it was taking steps to educate its members of 
their obligations under the TREAD Act, which would include 49 CFR 
573.10.
    We do not agree that a comprehensive and ongoing educational 
campaign directed at small businesses and individual tire retailers is 
necessary with respect to today's final rule. To begin, this is not a 
matter to be addressed in a rule. Even if it were, this rule is not 
complex and is consistent with ordinary judgment relating to the 
intentional sale of defective or noncompliant tires--conduct which is 
prohibited pursuant to 49 U.S.C. 30120(i) and (j). In addition, while 
this rule applies to all persons, its

[[Page 38162]]

application is limited to persons who both knowingly and willfully sell 
or lease a defective or noncompliant tire, and have actual knowledge 
that the manufacturer of that tire notified its dealers of the defect 
or noncompliance. Under this rule, a very limited number of individuals 
would be obligated to file reports. In the interim final rule we stated 
that we expect to receive fewer than ten reports of such incidents a 
year, and no one suggested that this estimate was erroneous. Under 
these limited circumstances, we do not believe a government-directed 
educational campaign directed at small businesses and individual tire 
retailers is appropriate.

Regulatory Analyses and Notices

1. 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 was not reviewed under E.O. 12866, 
``Regulatory Planning and Review.'' This rulemaking is not considered 
``significant'' under the Department of Transportation's regulatory 
policies and procedures. The impacts of this rule are expected to be so 
minimal as not to warrant preparation of a full regulatory evaluation 
because this provision only involves reporting and the incidence of 
covered sales and leases of defective or noncompliant tires is expected 
to be small.

2. Regulatory Flexibility Act

    We have also considered the impacts of this notice under the 
Regulatory Flexibility Act. I certify that this rule will have no 
significant economic impact on a substantial number of small entities. 
The impacts of this rule are expected to be so minimal as not to 
warrant preparation of a full regulatory evaluation because this 
provision only involves reporting and the incidence of covered sales 
and leases of defective or noncompliant tires is expected to be small.

3. National Environmental Policy Act

    We have analyzed this proposal under the National Environmental 
Policy Act and determined that it will not have any significant impact 
on the quality of the human environment.

4. Paperwork Reduction Act

    NHTSA has determined that this final rule will impose new 
collection of information burdens within meaning of the Paperwork 
Reduction Act of 1995 (PRA). Pursuant to 5 CFR 1320.13 Emergency 
processing, NHTSA asked for, and received, approval from OMB for a 
temporary emergency clearance for this collection. In the interim final 
rule, NHTSA began the process of requesting a 3-year clearance for this 
collection. In that interim final rule we also requested comments from 
the public on this new collection of information burden. No comments 
were received. NHTSA has submitted its request for a 3-year clearance 
for this collection to OMB.

5. Executive Order 13132 (Federalism)

    Executive Order 13132 on ``Federalism'' requires us to develop an 
accountable process to ensure ``meaningful and timely input'' by State 
and local officials in the development of ``regulatory policies that 
have federalism implications.'' The Executive Order defines this phrase 
to include regulations ``that have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government.'' This rule, which requires the reporting 
of knowing and willful sales or leases of defective or noncompliant 
tires where the person selling or leasing the tire has actual knowledge 
that the manufacturer of such a tire has notified its dealers of that 
defect or noncompliance pursuant to either section 30118(c) or 30118(b) 
of the Safety Act, will not have substantial direct effect on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, as specified in Executive Order 13132. 
This rule making does not have those implications because it applies to 
those persons who sell or lease defective or noncompliant tires, and 
not to the States or local governments.

6. Civil Justice Reform

    This rule does not have a retroactive or preemptive effect. 
Judicial review of the 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.

7. Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (P.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 tribunal 
governments, in the aggregate, or by the private sector, of more than 
$100 million annually. Because this rule will not have a $100 million 
annual effect, no Unfunded Mandates assessment is necessary and one 
will not be prepared.

Final Rule

    Accordingly, the interim final rule amending 49 CFR part 573 which 
was published at 65 FR 81409 on December 26, 2000, is adopted as final 
with the following changes:
    1. The authority citation for part 573 continues to read as 
follows:

    Authority: 49 U.S.C. 30102-103, 30112, 30117-121, 30166-167; 
delegation of authority at 49 CFR 1.50.

    2. Section 573.3 is amended by revising paragraph (a) and adding 
paragraph (g) to read as follows:


Sec. 573.3  Application.

    (a) Except as provided in paragraph (g) of this section, this part 
applies to manufacturers of complete motor vehicles, incomplete motor 
vehicles, and motor vehicle original and replacement equipment, with 
respect to all vehicles and equipment that have been transported beyond 
the direct control of the manufacturer.
* * * * *
    (g) The provisions of Sec. 573.10 apply to all persons.
* * * * *

    Issued on: July 18, 2001.
L. Robert Shelton,
Executive Director.
[FR Doc. 01-18309 Filed 7-20-01; 8:45 am]
BILLING CODE 4910-59-U