[Federal Register Volume 66, Number 142 (Tuesday, July 24, 2001)]
[Rules and Regulations]
[Pages 38380-38384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18248]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 578

[Docket No. NHTSA-2001-9779]
RIN 2127-AI24


Motor Vehicle Safety: Criminal Penalty Safe Harbor Provision

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

ACTION: Final rule.

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SUMMARY: This final rule implements Section 5(b) of the Transportation 
Recall Enhancement, Accountability, and Documentation (TREAD) Act. 
Section 5(b) added a new section, which provides for criminal liability 
in circumstances where a person violates reporting requirements with 
the intention of misleading the Secretary of Transportation (Secretary) 
with respect to safety-related defects in motor vehicles or motor 
vehicle equipment that have caused death or serious bodily injury. To 
encourage the correction of incorrect or incomplete information that 
was reported or should have been reported to the Secretary, Section 5

[[Page 38381]]

includes a ``safe harbor'' provision that offers protection from 
criminal prosecution to persons who meet certain criteria. To qualify 
for this protection, the person must have lacked knowledge at the time 
of the violation that the violation would result in an accident causing 
death or serious bodily injury, and must correct any improper reports 
or failures to report to the Secretary within a reasonable time. This 
rule establishes what constitutes a ``reasonable time'' and a 
sufficient manner of ``correction,'' for such improper reports and 
failures to report information to the Secretary.

DATES: Effective Date: This final rule is effective August 23, 2001. 
Petitions: Petitions for reconsideration must be received on or before 
September 7, 2001.

ADDRESSES: You may submit petitions for reconsideration in writing to: 
Docket Management, Room PL-401, 400 Seventh Street, SW., Washington, 
DC, 20590. You may also submit your petitions for reconsideration 
electronically by logging onto the Dockets Management System website at 
http://dms.dot.gov. Click on ``Help & Information'' or ``Help/Info'' to 
obtain instructions for filing the document electronically. Regardless 
of how you submit your petition for reconsideration, include the docket 
number of this document on it. You may call Docket Management at 202-
366-9324. You may visit the Docket from 10:00 a.m. to 5:00 p.m., Monday 
through Friday.

FOR FURTHER INFORMATION CONTACT: Steven Cohen, Office of Chief Counsel, 
NCC-10, National Highway Traffic Safety Administration, 400 Seventh 
Street, SW., Washington, DC, 20590, Telephone (202) 366-5263, Fax: 202-
366-3820.

SUPPLEMENTARY INFORMATION:

I. Background

    On November 1, 2000, the TREAD Act, Public Law 106-414, was enacted 
in response, in part, to congressional concerns related to 
manufacturers' inadequate reporting to NHTSA of information regarding 
possible defects in motor vehicles and motor vehicle equipment, 
including tires. The TREAD Act expands 49 U.S.C. 30166, Inspections, 
investigations, and records, and provides for the Secretary to issue 
various rules thereunder. The authority to carry out Chapter 301 of 
Title 49 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.
    Section 5(b) of the TREAD Act, adds a new section, 49 U.S.C. 30170, 
to Chapter 301. Section 30170(a)(1) establishes criminal liability for 
a ``person who violates section 1001 of title 18 with respect to the 
reporting requirements of [49 U.S.C.] section 30166, with the specific 
intention of misleading the Secretary with respect to motor vehicle or 
motor vehicle equipment safety related defects that have caused death 
or serious bodily injury to an individual * * * .'' Section 1001 of 
title 18 provides that whoever ``* * * knowingly and willfully--(1) 
falsifies, conceals, or covers up by any trick, scheme, or device a 
material fact; (2) makes any materially false, fictitious, or 
fraudulent statement or representation; or (3) makes or uses any false 
writing or document knowing the same to contain any materially false, 
fictitious, or fraudulent statement or entry'' in a matter within the 
jurisdiction of the federal government is subject to a fine and 
imprisonment.
    Section 30170(a)(2)(A) contains a ``safe harbor'' provision, which 
states that a

person described in paragraph (1) [of 49 U.S.C. 30170(a)] shall not 
be subject to criminal penalties * * * if (1) at the time of the 
violation, such person does not know that the violation would result 
in an accident causing death or serious bodily injury; and (2) the 
person corrects any improper reports or failure to report within a 
reasonable time.

This safe harbor applies only to criminal liability related to 49 
U.S.C. 30170(a)(1). Section 30170(a)(2)(B) requires the Secretary to 
``establish by regulation what constitutes a reasonable time for the 
purposes of [49 U.S.C. 30170(a)(2)(A)] and what manner of correction is 
sufficient for the purposes of [49 U.S.C. 30170(a)(2)(A)].''
    On December 26, 2000 NHTSA promulgated an interim final rule on the 
reasonable time and manner of correction provision (65 FR 81414). The 
interim final rule provides violators of 49 U.S.C. 30170 who are 
seeking to qualify for the statute's safe harbor protection with a 
``reasonable time'' period of 21 days, starting on the date of the 
report or the date that the report was due to be sent to or received by 
NHTSA. It also provides that the ``correction'' of an improper report 
or failure to report will be sufficient under the statute's safe harbor 
provision if it satisfies two requirements. First, the violator must 
submit to NHTSA's Chief Counsel a signed and dated document identifying 
(1) each previous improper report, (2) each failure to report for which 
protection is sought, and (3) the specific predicates under which the 
improper or omitted report should have been provided. Second, the 
violator must submit to NHTSA the complete and correct information or, 
if the person cannot do so, provide a detailed description of that 
information and/or the content of those documents and the reason why 
the violator cannot provide them to NHTSA.
    Comments were received from the Tire Association of North America 
(TANA); Lawrence F. Henneberger, on behalf of the Motor and Equipment 
Manufacturers Association (MEMA) and the Original Equipment Suppliers 
Association (OESA); and Michael J. McKale, of Delphi Automotive Systems 
(Delphi), a MEMA and OESA member supporting the comment submitted by 
MEMA and OESA. None of the comments strongly oppose the interim final 
rule. However, various comments suggested that NHTSA define the term 
``violation,'' that the ``reasonable time'' period should begin to toll 
upon discovery of the improper or misleading report, not the date of 
the report to NHTSA or the day it was due to be submitted to NHTSA, and 
that correction submitters be allowed more time, at least 30 days, 
under NHTSA's ``reasonable time'' interpretation. The agency has 
reviewed these comments and addresses them below.

II. Discussion

A. Defining the Term ``Violation''

    The comment from MEMA/OESA, which is supported by Delphi, urges 
NHTSA to define the term ``violation,'' as used in 49 CFR 578.7(a)(1), 
in the rule itself. MEMA/OESA's rationale for this change is that the 
TREAD Act's criminal provision, 49 U.S.C. 30170, includes by reference 
the crime of knowingly and willfully making false statements to a 
Federal authority, as laid out at 18 U.S.C. 1001. It asserts that the 
current format requires motor vehicle industry operatives, some of whom 
have limited levels of legal support, to parse two statutes to 
determine if a criminal ``violation'' may have occurred and, if so, 
whether the ``safe harbor'' provision in TREAD is applicable. MEMA/OESA 
attempts to advance its position by noting that there is no guidance in 
the rule for ``a manufacturer that, through inadvertence or mistake, 
and without the intention to do so, has omitted relevant information 
from a required report to NHTSA which the manufacturer subsequently 
discovers.'' MEMA/OESA recognizes that ``[t]his situation does not 
create criminal exposure,'' but fears that ``the interim safe harbor 
provision, with its references to `any improper (i.e. incorrect, 
incomplete, or misleading)

[[Page 38382]]

report,' could be read to imply that inadvertently `improper' reports 
also raise criminal issues.''
    NHTSA declines to engage in rulemaking with respect to the 
definition of ``violation.'' The elements of such a violation are 
defined by the courts, rather than NHTSA. Consistent with statutory 
direction, the purpose of this rule is limited to establishing by 
regulation what constitutes a ``reasonable time'' and a sufficient 
manner of ``correction'' under 49 U.S.C. 30170(a)(2). The fact that a 
statute or regulation references another statute or regulation does not 
dictate rulemaking or create an excessive burden on those who would 
otherwise submit a false report. Therefore, no definition of 
``violation'' will be added to 49 CFR 578.4.

B. When To Start the ``Reasonable Time'' Clock

    TANA commented that the ``reasonable time'' period to correct any 
improper reports or failures to report to NHTSA should run ``from the 
date of discovery of the improper report, not the date the report was 
due'' because ``[i]t could be weeks or months before an individual 
discovers a mistake or omission in a report.'' TANA also notes that the 
Environmental Protection Agency (EPA)'s Audit Policy, which NHTSA cited 
in the interim final rule for the criminal penalty safe harbor 
provision, uses ``discovery'' to start the clock it uses when deciding 
whether a violator qualifies for the EPA's limited safe harbor 
protections. TANA argues that ``if NHTSA is truly basing this interim 
final rule on the framework adopted by EPA's regulations, the same 
terminology and time frame should be utilized.''
    NHTSA did not base the interim final rule on the framework adopted 
by EPA's audit policy, published at 65 FR 19618 (April 11, 2000), 
although NHTSA did utilize EPA's time frame. EPA's audit policy and 
NHTSA's Criminal Penalty Safe Harbor rule generally deal with different 
kinds of underlying violations. EPA's policy focuses on civil 
penalties. In general, EPA may seek or impose civil penalties for 
environmental violations on a ``strict liability'' basis. The violator 
need not have any knowledge of the violations. Since the violator may 
not have known of the violation, EPA's policy provides an open window 
for reporting by allowing disclosure within a stated time period after 
the entity discovered that a violation occurred. In a criminal 
prosecution context, EPA's policy may be applied in making a ``no 
recommendation for criminal prosecution.'' However, EPA's incentive has 
limited applicability in this context and ``will not be available, for 
example, where corporate officials are consciously involved in or 
willfully blind to violations, or conceal or condone noncompliance'' or 
where the violation(s) cause serious harm to human health or the 
environment. 65 FR at 19620, 19623, 19625. Finally, EPA's policy was 
developed, in part, to promote self auditing, which would detect 
violations.
    In contrast to the EPA's policy, the TREAD Act's safe harbor 
provision was written to apply to criminal activities, including 
willful concealment. The violator will have known about the violation, 
because the TREAD Act criminal provision includes the predicate 
violation of 18 U.S.C. 1001, which has a ``knowingly and willfully'' 
standard. Thus, there is no need or basis for a discovery element. 
Accordingly, the time period will run from date of the improper report 
to NHTSA or the date of the failure to report to NHTSA.

C. Changing the Time Period From 21 Days to 30 or More Days

    MEMA/OESA, supported by Delphi, also proposes increasing the 
``reasonable time'' period from 21 days to ``at least 30 calendar 
days,'' especially since the interim final rule requires that NHTSA be 
in receipt of the correction submission by the end of the 21 days. 
MEMA/OESA's rationale for this change is that there are ``wide 
disparities in size, sophistication and legal support among motor 
vehicle and vehicle parts manufacturers,'' and it may take extra time 
for a smaller industry participant to consult with corporate or 
individual counsel about the implications of submitting the corrected 
information and admitting a felony violation. MEMA/OESA recognizes that 
21 days may be reasonable time to make a correction where there is only 
limited civil penalty exposure (e.g., the EPA's Audit Policy is used 
only to determine civil penalties based on the gravity of the 
violation, not penalties based on the violator's economic benefit and/
or any criminal penalties), but it argues that at least 30 calendar 
days are required in situations involving criminal liability exposure, 
as here. MEMA/OESA urges that 49 CFR 578.7(b) be amended accordingly.
    In adopting the 21-day time period in the interim final rule, NHTSA 
considered its own rules and experiences with the current motor vehicle 
and motor vehicle equipment defects program, as well as comparable safe 
harbor policies used by other federal agencies, to delineate what 
constitutes a ``reasonable time'' in a safe harbor rule that requires a 
person to correct any improper reports or failure to report. NHTSA 
attempted to reach a balance that still satisfied the agency's motor 
vehicle safety mission under Chapter 301 by minimizing the time that 
NHTSA is performing its safety responsibilities using an incorrect or 
incomplete factual record. We sought a time period that would be short 
enough to address public safety concerns and to generate an urgency in 
the violator designed to compel potential correctors to come forward 
before the time period expires, and yet not be so short as to 
discourage corrective actions that otherwise would have been taken or 
be unusable in real world situations.
    Even though we do not agree with all of MEMA/OESA's reasoning, 
NHTSA has decided to adopt MEMA/OESA's request to increase the 21-day 
period to 30 days. Based on our experiences and the EPA's reported 
experiences under its Audit Policy, we believe that 21 days ordinarily 
would be a sufficient time for violators to correct their improper 
actions. Nonetheless, we are willing to make reasonable accommodations 
in light of concerns of small businesses, and the requested nine 
additional days would not significantly undercut the agency's ability 
to perform its public safety mission. Therefore, the ``reasonable 
time'' period for corrections of improper reports or failures to report 
will be not more than thirty (30) calendar days after the date of the 
report to the agency or the failure to report, as the case may be.

Regulatory Analyses and Notices

1. Executive Order 12866 and DOT Regulatory Policies and Procedures

    NHTSA considered the impact of this rulemaking action under 
Executive Order 12866 and the Department of Transportation's regulatory 
policies and procedures. This rulemaking was not reviewed under 
Executive Order 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 a 
safe harbor for criminal sanctions associated with a criminal provision 
that NHTSA does not expect to be invoked often.

2. Regulatory Flexibility Act

    We have also considered the impact of this notice under the 
Regulatory Flexibility Act. I certify that this rule

[[Page 38383]]

will have no significant economic impact on a substantial number of 
small entities. As stated above, this provision only involves a safe 
harbor for criminal penalties which NHTSA does not expect to be invoked 
often.

3. National Environmental Policy Act

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

4. Paperwork Reduction Act

    NHTSA has determined that this imposes new collection of 
information burdens within meaning of the Paperwork Reduction Act of 
1995 (PRA). NHTSA began the process of requesting a 3-year clearance 
for this collection when we published the interim final rule in the 
Federal Register (65 FR 81414), and provided a 60-day public comment 
period for the issues listed in OMB regulations 5 CFR 1320.8(d)(i)-
(iv). Concurrently, pursuant to 5 CFR 1320.13, Emergency Processing, 
NHTSA asked the Office of Management and Budget (OMB) for a temporary 
emergency clearance for this collection. This emergency PRA approval 
was granted on January 25, 2001 and is effective through June 30, 2001. 
Because no PRA-related comments were received by NHTSA or OMB, NHTSA 
has submitted a 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 defines terms in a 
safe harbor provision for criminal penalties for a person who acts with 
the specific intention of misleading the Secretary regarding safety 
defects in motor vehicles or motor vehicle equipment, 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 are required 
by 49 U.S.C. 30166 to provide information to NHTSA.

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 (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 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.

Plain Language

    Executive Order 12866 and the President's memorandum of June 1, 
1998, require each agency to write all rules in plain language. 
Application of the principles of plain language includes consideration 
of the following questions:

--Have we organized the material to suit the public's needs?
--Are the requirements in the rule clearly stated?
--Does the rule contain technical language or jargon that is not clear?
--Would a different format (grouping and order of sections, use of 
headings, paragraphing) make the rule easier to understand?
--Would more (but shorter) sections be better?
--What else could we do to make the rule easier to understand?
    If you have any responses to these questions, please include them 
in your comments.

Submission of Petitions

How Can I Influence NHTSA's Thinking on This Rule?

    In developing this rule, we tried to address the public comments 
and anticipated concerns of all our stakeholders. We welcome your views 
on all aspects of this rule. If you believe that NHTSA should 
reconsider any aspect of this rule, please follow the suggestions 
below:
    Explain your views and reasoning as clearly as possible.
     Provide solid information to support your views.
     If you estimate potential numbers of reports or costs, 
explain how you arrived at the estimate.
     Tell us which parts of the rule you support, as well as 
those with which you disagree.
     Provide specific examples to illustrate your concerns.
     Offer specific alternatives.
     Refer your comments to specific sections of the rule, such 
as the units or page numbers of the preamble, or the regulatory 
sections.
     Be sure to include the name, date, and docket number with 
your petition.

How Do I Prepare and Submit a Petition?

    Your petition must be written and in English. To ensure that it is 
correctly filed in the Docket, please include the docket number of this 
document in your petition.
    Your petition must not be more than 15 pages long. (49 CFR 553.21). 
We established this limit to encourage you to write your primary 
comments in a concise fashion. However, you may attach necessary 
additional documents to your comments. There is no limit on the length 
of the attachments.
    Please submit two copies of your comments, including the 
attachments, to Docket Management at the address given above under 
ADDRESSES.
    Petition may also be submitted to the docket electronically by 
logging onto the Dockets Management System website at http://dms.dot.gov. Click on ``Help & Information'' or ``Help/Info'' to obtain 
instructions for filing the document electronically.

How Can I Be Sure That My Petition Was Received?

    If you wish Docket Management to notify you upon its receipt of 
your petition, enclose a self-addressed, stamped postcard in the 
envelope containing your petition. Upon receiving your petition, Docket 
Management will return the postcard by mail.

How Do I Submit Confidential Business Information?

    If you wish to submit any information under a claim of 
confidentiality, you should submit copies of your complete submission, 
including the information you claim to be confidential business 
information, to the Chief Counsel (NCC-30), NHTSA, at the address given 
above under FOR FURTHER INFORMATION CONTACT. In addition, you should 
submit two copies, from which you have deleted the claimed confidential

[[Page 38384]]

business information, to Docket Management at the address given above 
under ADDRESSES. When you send a comment containing information claimed 
to be confidential business information, you should include a cover 
letter setting forth the information specified in our confidential 
business information regulation. (49 CFR Part 512.)

Will the Agency Consider Late Petitions?

    We will consider all petitions that Docket Management receives 
before the close of business on the closing date indicated above under 
DATES. To the extent possible, we will also consider petitions that 
Docket Management receives after that date. If Docket Management 
receives a petition late, we will consider that petition as an informal 
suggestion for future rulemaking action.

How Can I Read the Petitions Submitted by Other People and Other 
Materials Relevant to This Rulemaking?

    You may view the materials in the docket for this rulemaking on the 
Internet. These materials include the written comments submitted by 
other interested persons and the preliminary regulatory evaluation 
prepared by this agency. You may read them at the address given above 
under ADDRESSES. The hours of the Docket are indicated above in the 
same location.
    You may also see the comments and materials on the Internet. To 
read them on the Internet, take the following steps:

(1) Go to the Docket Management System (DMS) Web page of the Department 
of Transportation (http://dms.dot.gov/).
(2) On that page, click on ``search.''
(3) On the next page (http://dms.dot.gov/search/), type in the four-
digit docket number shown at the beginning of this document. Example: 
If the docket number were ``NHTSA-2000-1234,'' you would type ``1234.'' 
After typing the docket number, click on ``search.''
(4) On the next page, which contains docket summary information for the 
materials in the docket you selected, click on the desired comments. 
You may download the comments.

    Please note that even after the comment closing date, we will 
continue to file relevant information in the Docket as it becomes 
available. Further, some people may submit late comments.

List of Subjects in 49 CFR Part 578

    Motor vehicle safety, Penalties, Reporting and recordkeeping 
requirements.

    Accordingly, the interim final rule amending 49 CFR Part 578, which 
was published at 65 FR 81414 on December 26, 2000, is adopted as a 
final rule with the following changes:

PART 578--CIVIL AND CRIMINAL PENALTIES

    1. The authority citation for part 578 continues to read as:

    Authority: Pub. L. 101-410, Pub. L. 104-134, Pub. L. 106-414, 49 
U.S.C. 30165, 49 U.S.C. 30170, 30505, 32308, 32309, 32507, 32709, 
32710, 32912, and 33115; delegation of authority at 49 CFR 1.50.

    2. Amend Sec. 578.7 by revising paragraph (b) to read as follows:


Sec. 578.7  Criminal safe harbor provision.

* * * * *
    (b) Reasonable time. A correction is considered to have been 
performed within a reasonable time if the person seeking protection 
from criminal liability makes the correction to any improper (i.e., 
incorrect, incomplete, or misleading) report not more than thirty (30) 
calendar days after the date of the report to the agency and corrects 
any failure to report not more than thirty (30) calendar days after the 
report was due to be sent to or received by the agency, as the case may 
be, pursuant to 49 U.S.C. 30166, including a regulation, requirement, 
request or order issued thereunder. In order to meet these reasonable 
time requirements, all submissions required by this section must be 
received by NHTSA within the time period specified in this paragraph, 
and not merely mailed or otherwise sent within that time period.
* * * * *

    Issued on: July 17, 2001.
L. Robert Shelton,
Executive Director.
[FR Doc. 01-18248 Filed 7-23-01; 8:45 am]
BILLING CODE 4910-59-P