[Federal Register Volume 66, Number 238 (Tuesday, December 11, 2001)]
[Proposed Rules]
[Pages 64078-64087]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-30487]



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Part II





Department of Transportation





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National Highway Traffic Safety Administration



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49 CFR Parts 573 and 577



Motor Vehicle Safety; Proposed Rules

  Federal Register / Vol. 66 , No. 238 / Tuesday, December 11, 2001 / 
Proposed Rules  

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 573 and 577

[Docket No. NHTSA-2001-11107]

RIN 2127-AI28


Motor Vehicle Safety; Reimbursement Prior To Recall

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

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to implement Section 6(b) of the 
Transportation Recall Enhancement, Accountability, and Documentation 
(TREAD) Act. Section 6(b) provides that a manufacturer's program to 
remedy a safety-related defect or a noncompliance with a Federal motor 
vehicle safety standard shall include a plan for reimbursing an owner 
for the cost of a remedy incurred within a reasonable time before the 
manufacturer's notification of the defect or noncompliance and 
authorizes the agency to establish what constitutes a reasonable time 
and other conditions for the reimbursement plan.

DATES: Comments: You should submit your comments early enough to ensure 
that Docket Management receives them not later than February 11, 2002.

ADDRESSES: You should mention the docket number of this document in 
your comments, and submit your comments in writing to Docket 
Management, Room PL-401, 400 Seventh Street, SW, Washington, DC 20590. 
You may also submit your comments 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 comments, you should mention the 
docket number of this document in your comments.
    You may call Docket Management at 202-366-9324. You may visit 
Docket Management from 10:00 a.m. to 5:00 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: For non-legal issues, contact Jonathan 
White, Office of Defects Investigation, NHTSA, (202) 366-5226. For 
legal issues, contact Andrew J. DiMarsico, Office of Chief Counsel, 
NHTSA, (202) 366-5263.

SUPPLEMENTARY INFORMATION:

I. 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 responses to defects and noncompliances in 
motor vehicles and motor vehicle equipment. The TREAD Act authorizes 
the Secretary of Transportation (``the Secretary'') to issue various 
rules relating to a manufacturer's notification and remedy program. The 
authority to carry out Chapter 301 of Title 49 of the United States 
Code (``Safety Act''), under which rules directed by the TREAD Act are 
to be issued, has been delegated to NHTSA's Administrator pursuant to 
49 CFR 1.50.
    Under 49 U.S.C. 30118(b), the agency may make a final decision that 
a motor vehicle or replacement equipment contains a defect related to 
motor vehicle safety or does not comply with an applicable Federal 
motor vehicle safety standard. In addition, under 49 U.S.C. 30118(c), a 
manufacturer of a motor vehicle or replacement equipment is required to 
notify the agency if it determines, or in good faith should determine, 
that its vehicles or equipment contain a defect that is related to 
motor vehicle safety or do not comply with an applicable Federal motor 
vehicle safety standard.
    49 U.S.C. 30120(a) provides that when notification of a defect or 
noncompliance is required under section 30118 (b) or (c), the 
manufacturer is required to remedy the defect or noncompliance without 
charge when the vehicle or equipment is presented for remedy. That 
section further specifies that the remedy, at the option of the 
manufacturer, can be either to repair the vehicle or equipment or 
replace it with an identical or reasonably equivalent item or, in the 
case of a vehicle, refund the purchase price less depreciation. The 
Safety Act contains separate remedy provisions applicable to tires. 49 
U.S.C. 30120(b).
    49 U.S.C. 30120(d) requires a manufacturer to file with the 
Secretary a copy of the manufacturer's program for remedying a defect 
or noncompliance. Pursuant to 49 CFR part 577, manufacturers are 
required to notify owners of the remedy program. In order to obtain the 
manufacturer's remedy at no cost, an owner has to act in accordance 
with the provisions in the notice from the manufacturer. Any other way 
of remedying the defect or noncompliance would not be free of charge.
    Before the TREAD Act, section 30120(d) did not require the 
manufacturer to reimburse owners for any costs incurred in remedying 
the defect or noncompliance prior to the notification required under 
sections 30118 and 30119. Manufacturers often reimbursed owners for 
these costs, but not in a uniform way. To the extent that the costs 
were not covered under a warranty program, manufacturers addressed 
these matters under extended warranty programs, ``good will'' programs, 
or in resolution of claims, including lawsuits.
    Section 6(b) of the TREAD Act amends 49 U.S.C. 30120(d) to require 
a manufacturer's remedy program to include a plan for reimbursing an 
owner who incurred the cost of the remedy within a reasonable time in 
advance of the manufacturer's notification under subsection (b) or (c) 
of section 30118. Section 6(b) further authorizes the Secretary to 
prescribe regulations establishing what constitutes a reasonable time 
for purposes of the preceding sentence and other reasonable conditions 
for the reimbursement plan.
    Below is a summary and explanation of the provisions of today's 
proposed rule implementing section 6(b).

II. Discussion

A. Introduction

    Today's proposed rule would require manufacturers to submit 
reimbursement plans to the agency that satisfy specific requirements 
and to comply with the terms of those plans. The proposed rule would 
specify a minimum time period for which a manufacturer must provide 
reimbursement to an owner who incurred costs to obtain a remedy before 
the manufacturer provided notification to NHTSA of a noncompliance with 
a Federal motor vehicle safety standard or of a safety-related defect. 
In addition, this proposed rule would specify other requirements of the 
reimbursement plan and identify permissible conditions and limitations.

B. Who Will Be Required to Comply With the Provisions for a 
Reimbursement Plan?

    The TREAD Act amendments to subsection 30120(d) provide that ``A 
manufacturer's remedy program shall include a plan for reimbursing an 
owner * * * (emphasis added).'' In these amendments, Congress added 
requirements to the pre-existing 30120(d) requirement that a 
manufacturer file with the Secretary a copy of the manufacturer's 
program for remedying a defect or noncompliance. In this context, the 
use of the term

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manufacturer in the amendments indicates that they apply to the same 
manufacturers already regulated by section 30120(d). These 
manufacturers are identified by regulation in the applicability 
sections of 49 CFR parts 573 and 577, 49 CFR 573.3 and 577.3. Thus, we 
are proposing that the rule's requirements apply to manufacturers as 
delineated in sections 573.3 and 577.3.

C. What Constitutes a ''Reasonable Time'' in Advance of the 
Manufacturer's Notice of Noncompliance or of a Safety-Related Defect?

    Under section 6(b) of the TREAD Act, manufacturers need only 
provide reimbursement for costs incurred within a ``reasonable time'' 
in advance of notification. Thus, not all pre-notification remedies are 
covered under this provision. The legislative history does not provide 
further direction. An earlier version of this provision would have 
required reimbursement for ``parts replaced immediately prior to 
recall.'' See H.R. Rep. No. 106-954 at 6 (2000). However, this language 
was not adopted. Instead, Congress used the term ``reasonable time,'' 
which is more extensive than ``immediately prior to recall,'' and 
authorized the agency to delineate what constitutes a reasonable time.
    The agency believes that there should be objective, bright-line 
rules for determining reasonable times that apply across the board, as 
opposed to provisions that would require case-by-case factual 
determinations. Bright-line rules can be applied by manufacturers, 
without determinations by NHTSA and with relative certainty and ease. 
They will likely result in fewer disputes and complaints--which the 
agency does not have the resources to address. In contrast, case-by-
case determinations of what is ``reasonable'' under particular 
circumstances are likely to involve knotty questions of what the 
manufacturer knew at various times and what a ``reasonable'' consumer 
would have done at various times. These can be difficult to resolve, 
and their resolution would be likely to delay the reimbursement 
program--a result which is not supported by the legislation.
    We believe that bright-line rules for determining reasonable times 
will ordinarily allow manufacturers to administer the pre-notification 
remedy reimbursement program without NHTSA's involvement. Under today's 
proposal, there would be no agency involvement in the resolution of 
disputes between manufacturers and owners. Except for review of the 
manufacturer's remedy program, NHTSA will remain outside of the process 
because the agency simply does not have the resources to address 
individual reimbursement disputes. We seek comments on ways to minimize 
disputes.
    We further believe that the determination of a reasonable time 
should be related to the statutory concerns underlying the remedy of 
noncompliances with Federal motor vehicle safety standards and safety-
related defects and, where applicable, to the agency's investigative 
activities with respect to alleged noncompliances and defects.
    NHTSA's Office of Vehicle Safety Compliance (OVSC) conducts 
investigations to determine if motor vehicles or motor vehicle 
equipment meet the Federal motor vehicle safety standards codified in 
49 CFR part 571. An important element of this program is examination or 
testing of a vehicle or item of motor vehicle equipment. If the 
agency's examination or testing indicates a possible noncompliance, the 
agency advises the manufacturer. The testing or examination is a 
critical event. If the manufacturer does not rebut the prima facie 
noncompliance shown in NHTSA observations or testing, it will 
ordinarily determine that a noncompliance exists, file a report under 
49 CFR part 573, and then conduct a recall. If the manufacturer does 
not do so, the agency will conduct an investigation and proceed, if 
appropriate, to a determination of noncompliance. Alternatively, a 
noncompliance determination may be based on a manufacturer's testing or 
observation.
    NHTSA's Office of Defects Investigations (ODI) conducts 
investigations to determine if a motor vehicle or item of motor vehicle 
equipment contains a safety-related defect. A safety defect 
investigation may involve several major phases. First, information is 
gathered from consumer reports, complaints and letters that are 
received by NHTSA through its Auto Safety Hotline (a telephone 
hotline), website, or written communications. Pursuant to section 3(b) 
of the TREAD Act, ODI will be able to consider other forms of early 
warning information. Based upon the available information, ODI may open 
a defect investigation.
    In most cases, the initial phase of such an investigation is known 
as a Preliminary Evaluation (PE). During a PE, the manufacturer is 
contacted and required to provide information and other materials to 
ODI that are then reviewed and analyzed. PEs are generally resolved 
within four months, either by a manufacturer recall, an ODI decision to 
close the investigation, or by upgrading the investigation to an 
engineering analysis (EA). Engineering analyses may also be opened on 
the basis of recall queries (RQ) or service queries (SQ). During an EA, 
ODI obtains additional information from the manufacturer pertaining to 
the alleged problem. ODI may also undertake engineering studies and 
surveys, and it often performs tests on the vehicle or equipment at 
issue. The goal is to complete an engineering analysis within one year. 
If a potential safety-related defect is identified by ODI at the 
conclusion of the EA, and the manufacturer does not agree to conduct a 
recall to address it, the agency may proceed to a formal defect 
determination, which is accompanied by a recall order.
    Some defect and noncompliance recalls are initiated by 
manufacturers under 49 U.S.C. 30118(c) after NHTSA has opened an 
investigation or other inquiry (we refer to these as influenced 
recalls). Others are initiated by manufacturers on their own, in the 
absence of any NHTSA involvement (we refer to these as uninfluenced 
recalls). Relatively few recalls are ordered by NHTSA under 49 U.S.C. 
30118(b).
    We are proposing to base our definition of ``reasonable time'' for 
purposes of section 6(b) of the TREAD Act on the above-described 
processes. With respect to a noncompliance with a Federal motor vehicle 
safety standard, we propose that the period that is reasonable for 
reimbursement purposes begins on the date of the initial test failure 
or the initial observation of a possible noncompliance. For 
noncompliance recalls that are influenced by OVSC, the date of the 
initial test failure will be apparent. With respect to noncompliance 
recalls that are not influenced by OVSC, 49 CFR 573.5(c)(7) requires 
manufacturers to identify ``the test results or other data'' that led 
to the manufacturer's determination. We are proposing an amendment to 
this language to require the manufacturer to specify the date when it 
first identified the possibility that a noncompliance existed.
    With respect to influenced defect recalls, we believe that the 
opening of an EA by ODI is a relevant stage for the beginning of the 
reimbursement period. At this stage, there is sufficient concern about 
the matter within ODI that the investigation has been upgraded from a 
preliminary stage. NHTSA seeks to resolve the investigation within one 
year of the opening of the EA, by either a determination that a safety-
related defect exists or the closure of the investigation. Some 
investigations will take less time, while some

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investigations will take longer than one year after the opening of an 
EA.
    Circumstances surrounding uninfluenced defect recalls are different 
from influenced recalls. There is no readily identifiable event 
comparable to the opening of an EA that may be used for the beginning 
of the period for reimbursement. Nonetheless, on the whole, we believe 
that the pre-notification time period for uninfluenced recalls should 
be comparable to that for influenced recalls. Based on NHTSA's goal of 
one year for resolving EAs, we are proposing that the time period for 
uninfluenced recalls should begin one year before the date of the 
manufacturer's Part 573 notice.
    On this basis, we are proposing that the ``reasonable time'' for 
purposes of section 6(b) in regard to safety-related defects runs from 
the date an EA was opened or, if an EA was not opened, one year before 
the date of the manufacturer's submission a notification to NHTSA 
pursuant to 49 U.S.C. 30118 and 49 CFR 573.5.
    The final question is when does the period of ``reasonable time'' 
end. The Act refers to costs incurred in advance of the manufacturer's 
notification under subsection (b) or (c) of section 30118. Those 
subsections refer to notices to owners, purchasers and dealers, as well 
as to NHTSA. In concept, the period should end when the owner receives 
notice from the manufacturer under 49 CFR part 577. After the owner 
receives notice, the owner should act in accordance with the provisions 
in the notice from the manufacturer, and if he or she acts otherwise, 
he or she should not be reimbursed under a reimbursement rule. However, 
there are several practical difficulties with this conceptual approach. 
First, the date on which an owner actually receives notice of the 
recall is not known by the manufacturer. Thus, an actual notice rule 
could result in a potentially open-ended reimbursement period if the 
owner alleged that he or she did not receive a notice. In view of these 
concerns, we propose the following end dates for the period of 
reimbursement, regardless of whether the notice is predicated upon a 
safety-related defect or a noncompliance with a Federal motor vehicle 
safety standard. For motor vehicles, the end date would be ten days 
after the manufacturer mailed the last of its initial Part 577 notices 
(to allow for mail delivery). This is based on the general 
effectiveness of mailings of Part 577 notices regarding vehicles and 
the recognition that in large recalls the notices are not all mailed at 
the same time.
    Our approach to replacement equipment would be different from that 
for motor vehicles because of the difficulties inherent in notifying 
owners of replacement equipment. In contrast to motor vehicles, which 
are registered by the states, replacement equipment is not registered 
by a governmental entity. Even in the case of child restraints, for 
which NHTSA requires manufacturers to maintain a database of consumers 
who choose to register their seats, only approximately 30 percent of 
purchasers return the registration cards to the manufacturer, and many 
restraints are transferred from the original owner to subsequent owners 
who do not register the seats. For these reasons, we usually require 
manufacturers of replacement equipment to publicize the existence of 
safety defects and noncompliances through press releases, 
advertisements, website notices, notices in stores that sell the items, 
etc. Accordingly, for replacement equipment, we are proposing that the 
end date of the reimbursement period would be the 30 days after the 
conclusion of the manufacturer's initial efforts to publicize the 
existence of the defect or noncompliance.
    We seek comments on whether other triggers or time periods would be 
more appropriate.

D. What ``Reasonable Conditions'' May Be Established by a Reimbursement 
Plan?

    Section 6(b) of the TREAD Act does not specify in detail what must 
be included in a manufacturer's reimbursement plan. Rather, the section 
states, ``The Secretary may prescribe regulations establishing * * * 
reasonable conditions for the reimbursement plan.'' We are proposing 
regulations that would allow manufacturers to include certain 
provisions limiting reimbursement in the plan. However, manufacturers 
may impose less stringent restrictions on reimbursement if they choose 
to. To assure that manufacturers do not unduly restrict reimbursement, 
we are proposing to preclude other conditions.
    As discussed below, we are proposing several permissible conditions 
which, generally stated, relate to: (1) the availability of free 
warranty coverage, (2) the nature of the pre-notice repair or 
replacement and its relationship to the defect or noncompliance; (3) 
the amount of the reimbursement, and (4) the provision of suitable 
documentation for reimbursement. The plan could not include other 
conditions, except, based on comments, possibly some relating to fraud. 
These conditions are discussed in detail below.
1. Remedies Performed Outside the Period of Free Remedy Warranty 
Coverage
    One condition that a manufacturer may include in its reimbursement 
program under today's proposal is that the pre-notification remedy must 
have been performed or obtained after the conclusion of any warranty 
that would have covered the repair at no cost to the consumer. Many 
repairs to address conditions that are subsequently determined to 
constitute a safety defect are within the coverage provided by the 
manufacturer's warranty program. The purpose of the reimbursement plan 
is not to create a duplicate of the manufacturer's warranty program. 
The purpose is to provide a system, that includes reasonable 
conditions, to reimburse an owner who has incurred costs to obtain a 
repair or replacement of the product before notification that a defect 
or noncompliance exits.
    Under a typical warranty program, the manufacturer (through its 
dealers) will perform the necessary repairs or take other appropriate 
action at no cost to the owner. This creates an incentive for an owner 
to return his or her vehicle or equipment promptly to a franchised 
dealer or other authorized establishment to remedy any problems, 
including potential safety-related problems, while covered under the 
warranty program. The warranty program also provides information to the 
manufacturer that it can consider regarding the performance of its 
product and that might be reported to NHTSA under the ``early warning'' 
regulation to be adopted under section 3(b) of the TREAD Act, 49 U.S.C. 
30166(m). Under today's proposal, manufacturers could provide in their 
remedy program that consumers who could have obtained a free remedy 
from a franchised dealer or other authorized entity through the 
manufacturer's warranty program, but had repairs performed elsewhere, 
would not be eligible for reimbursement.
    This exclusion from the reimbursement program would not be 
absolute. In particular, if an owner presented the vehicle or equipment 
to a person authorized to perform warranty work and that person 
concluded that the problem or repair was not covered under the 
warranty, or the repair did not remedy the problem, an owner would have 
to be reimbursed for the reasonable costs of a remedy that was 
subsequently obtained at a facility that is not an authorized warranty 
service provider.
    We seek comments on whether other exclusions related to warranty 
coverage are warranted.

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2. The Nature of the Pre-notification Remedy
    We are proposing conditions that a manufacturer may impose in the 
reimbursement plan on those pre-notification remedies that would be 
eligible for reimbursement under the manufacturer's plan. We are using 
the term eligible as a shorthand characterization that the pre-
notification remedy would satisfy the technical conditions for 
reimbursement, which are addressed below.
    First, a manufacturer would be permitted to limit reimbursement to 
remedies that addressed the noncompliance or defect. The defect or 
noncompliance is described in part 573 information reports and in 
notifications to owners. See 49 CFR 573.5(c)(5), (c)(8)(i); 49 CFR 
577.5(e). The rationale for this condition is straightforward: 
manufacturers should not be required to pay for repairs that did not 
address the problems addressed by the recall.
    As a second condition, a manufacturer could limit the extent of 
repairs that are eligible to those that were reasonably necessary to 
correct the underlying problem. For example, if the defect was a 
failing ignition switch, under today's proposal the manufacturer would 
not have to pay for a replacement of a steering column unit that 
included the switch, unless that was the only pre-notification repair 
available to the owner.
    However, a manufacturer could not provide that to be eligible a 
repair would have to be identical to the recall remedy. In many 
instances, the part used in the recall would not have been available 
before the recall. In these circumstances, the pre-recall repair would 
necessarily have involved the installation of a part that was different 
from the remedy part. In fact, prior to a recall, repair facilities 
often replace inadequate original equipment parts with replacement 
parts that are identical to the original parts. If those parts were 
defective or otherwise contributed to defective performance, they would 
be redesigned for purposes of the recall. Another alternative remedy 
sometimes employed by manufacturers is a specially designed repair kit. 
These, too, are not available before the recall.
    Additionally, the reimbursement program could not preclude a 
vehicle owner from obtaining both the recall remedy free of charge and 
reimbursement for past expenses, where otherwise allowed. For example, 
assume that an owner replaced an item of original equipment with the 
same part. If the recall remedy is to install a new part made of a 
material with better properties than the original part, the owner would 
be entitled to the free recall remedy and to be reimbursed for the cost 
of pre-recall repair.
    Third, the manufacturer of a vehicle could limit reimbursement to 
costs incurred for the same type of remedy as selected by the 
manufacturer. The general categories of remedies are set forth in 49 
U.S.C. 30120(a)(1). For vehicles, this includes repair, replacement of 
the vehicle with an identical or reasonably equivalent vehicle, or 
refunding the purchase price less depreciation. Under 49 U.S.C. 
30120(a)(1)(A), manufacturers are permitted to choose the remedy. (If 
the remedy is found to be inadequate, NHTSA may order an alternate 
remedy. 49 U.S.C. 30120(e)).
    For vehicles, if the manufacturer's remedy was a repair, the 
manufacturer could limit the scope of reimbursement to pre-notification 
repairs, and not provide reimbursement for the cost of replacement of 
the vehicle. Since almost all vehicle recalls involve some form of 
repair, typically the costs to be covered under the reimbursement plan 
would be for repairs that addressed the defect or noncompliance. 
Ordinarily this involves parts, associated labor, miscellaneous fees 
(e.g., disposal of waste) and taxes.
    Today's proposal treats replacement equipment differently from 
motor vehicles with regard to the relationship between the recall 
remedy and the pre-notice remedy. To begin, problems with vehicles and 
equipment are addressed differently by owners and businesses. Almost 
without exception, both recall remedies for defects and noncompliance 
in vehicles and pre-recall actions taken by consumers to address 
vehicle problems involve repair. That is not the case for replacement 
equipment. Although many equipment recalls involve replacement of the 
defective or noncompliant item, some do not. Yet owners who experience 
pre-recall problems with replacement equipment will ordinarily replace 
the equipment rather than have it repaired. In part, this stems from 
the cost of the items and the availability, effectiveness, and 
acceptability of repair. Vehicles are very expensive, and repair is the 
ordinary solution to a problem. On the other hand, many items of 
replacement equipment are not expensive, and repairs may not be 
available.
    For example, noncompliant and defective tires, lighting equipment, 
motorcycle helmets, and brake hoses generally are replaced, not 
repaired. For child seats, sometimes repair kits are developed for 
recalls. However, these repair kits ordinarily are not available during 
most or all of the pre-recall period that is relevant under today's 
proposal. Even if a repair kit were available, an owner who experienced 
a problem might reasonably elect not to have the seat repaired. For 
example, assume that the handle locking mechanism on an infant 
restraint failed, creating a potential for the infant to fall out of 
the restraint. Ordinarily, the owner would not be able to repair it, 
but instead would purchase a different child seat. In light of 
circumstances such as these, we believe it reasonable to require the 
manufacturer to reimburse an owner for the cost of a replacement that 
he or she had obtained prior to the defect determination, regardless of 
the recall remedy (e.g., in the above example, a handle locking 
mechanism repair kit). However, the owner would not also be entitled to 
the recall remedy, since the owner would have been made whole by 
reimbursement for the new seat.
    We believe that additional conditions may be warranted for child 
seats. Consider the following example. An owner of an infant child seat 
covered by a defect recall may have previously purchased a convertible 
seat because his or her child outgrew the infant seat, rather than 
replacing the seat because of a problem with the handle. We believe 
that the manufacturer should not be required to reimburse such an owner 
for the cost of the second seat. However, we are not sure of the best 
way to allow manufacturers to identify situations like this in which 
reimbursement would not be appropriate, yet to assure that 
manufacturers do not deny reimbursement where it is warranted. Thus, we 
seek comment on possible conditions on pre-notification reimbursement 
in connection with child seats. These include, but are not limited to, 
whether to allow reimbursement to be conditioned on whether an owner 
registered the seat with the child seat manufacturer, whether the 
receipt indicating the purchase of a replacement seat must indicate 
that it is a model comparable to the original seat, and whether to 
require the owner of a defective seat to return it to the manufacturer 
or otherwise prove it has been destroyed in order to obtain 
reimbursement. We also seek comments on the practical applications of 
this proposal.

E. Amount of Reimbursement

    Beyond the general considerations addressed above regarding 
remedies for which reimbursement must be provided, we are proposing 
requirements related to the amount of reimbursement to be provided.
    For vehicles, almost without exception, the reimbursement will be

[[Page 64082]]

for the costs incurred by the owner to repair or replace the component 
or system implicated in the defect or noncompliance determination. 
While there are two other statutorily-authorized types of remedy for 
defects and noncompliances in motor vehicles--replacement and refund--
in practice these types of remedies are extremely rare. Ordinarily, the 
amount of reimbursement for a repair could not be less than the lesser 
of (a) the amount actually paid by the owner for an eligible remedy, or 
(b) the cost of parts for an eligible remedy, labor at local labor 
rates, miscellaneous fees such as disposal of wastes, and taxes. Costs 
for parts may be limited to the manufacturer's list retail price for 
authorized parts. Any associated costs, such as taxes or disposal of 
wastes may not be limited. This proposed rule does not address, and 
under this proposed rule manufacturers would not have to provide, 
reimbursement for consequential injuries and damages such as personal 
injuries, property damages, rental vehicles, or missed employment. 
However, the proposed rule would not affect an aggrieved party's right 
to bring a civil action for any consequential damages that may arise as 
a result of the problem that was remedied by the owner.
    Not all costs of repairs of vehicles would have to be reimbursed. 
For example, if a custom-designed replacement part was machined and 
installed, the cost of the custom-designed replacement part would not 
be reasonable and therefore would not have to be reimbursed. In 
instances where there are multiple repairs in one service visit, only 
those repairs that addressed the problem that was ultimately determined 
to constitute a safety-related defect or noncompliance would be 
reimbursable.
    Even if a vehicle repurchase or replacement remedy is offered by 
the manufacturer, the owner would only be eligible for reimbursement of 
the costs associated with the pre-notification repairs. Of course, if 
the owner continues to own the vehicle, he or she would also be 
entitled to repurchase or replacement. We note that even if an 
individual had sold the vehicle prior to being notified of the recall, 
he or she would be eligible to be reimbursed for any repair costs 
related to the defect or noncompliance.
    With regard to replacement equipment, as noted above, replacement 
is a very common remedy prior to notice. The amount of reimbursement 
ordinarily would be based upon the amount paid by the owner for the 
replacement item, as indicated on a receipt, up to the total of the 
retail price of the item, plus taxes. In some instances, labor would 
also be included. In cases in which the owner purchased a brand or 
model different from the equipment that was the subject of the recall, 
the manufacturer would be permitted to limit the amount of 
reimbursement to the ordinary retail price of the defective or 
noncompliant model that was replaced, plus taxes.

F. How To Obtain Reimbursement

1. What Documentation Must the Owner Submit in Order To Obtain 
Reimbursement?
    We are proposing to allow manufacturers to establish certain 
requirements with respect to requests for reimbursement for pre-
notification remediation of a defect or noncompliance in motor vehicles 
or motor vehicle equipment. Manufacturers may require an owner to 
present documentation that shows: (1) The name and mailing address of 
the owner; (2) product identification information, which means (a) for 
vehicles, the vehicle make, model year (MY) and model as well as the 
vehicle identification number (VIN), (b) for replacement equipment 
other than tires, a description of the equipment, including model and 
size as appropriate, and, (c) for tires, the model, size, and DOT 
number of the replaced tire(s); (3) identification of the recall 
(either the NHTSA recall number or the manufacturer's recall number); 
(4) a receipt (an original or a copy) that provides the amount of 
reimbursement sought; for repairs, this would include a breakdown of 
the amounts for parts, labor, other costs and taxes; for replacements, 
this would include the cost of the replacement item and associated 
taxes (where the receipt covers work other than to address the defect 
or noncompliance, the manufacturer may require the owner to separately 
identify the costs that are eligible for reimbursement); and (5) if the 
owner seeks reimbursement for costs within the warranty period, 
documentation to support either the denial of a repair under warranty 
or of the failure of a warranty repair followed by a repair at a non-
franchised or unauthorized facility.
    The manufacturer could provide that, to receive reimbursement, 
costs must be itemized by parts and labor on a proper receipt. We have 
selected these documentation provisions to ensure, reasonably 
effectively, that the vehicle or equipment is covered by a recall, that 
the reimbursement sought is related to the defect or noncompliance and 
not to other expenses, that multiple claims for the same work are not 
presented, and that the reimbursable costs are identified. Ordinarily, 
further requirements, such as requiring the owner to preserve or 
present the defective or noncompliant parts to the manufacturer, would 
be impracticable and unduly burdensome on the owner. We request 
comments on appropriate reimbursement provisions, including any 
reasonable provisions related to prevention of fraud. Additionally, we 
request comments on whether a receipt will provide sufficient 
information to a manufacturer to determine if the owner's remedy 
addressed the defect and whether it was reasonable. If not, what other 
information would be appropriate?
2. To Whom Must the Documentation Be Submitted?
    The manufacturer must identify the office, including its address, 
to which the documentation is to be submitted.
3. May the Manufacturer Establish a Cut-Off Date for Reimbursement 
Claims?
    We believe that there should be some limit on the ability of a 
manufacturer to establish a cut-off date for submission of claims for 
reimbursement. One approach is to base the minimum time frame on the 
period during which the recall campaign is subject to quarterly 
reporting pursuant to 49 CFR 573.6. That section requires each 
manufacturer that conducts a defect or noncompliance campaign to 
provide a quarterly report to NHTSA for six consecutive calendar 
quarters beginning with the quarter in which the campaign was 
initiated. Another approach is to set a fixed period applicable to all 
recalls; e.g., 90 days after the end of the reimbursement period, as 
defined above. This approach would require manufacturers to identify 
the outside end date for the submission of claims for reimbursement in 
the part 577 letter to owners. This outside end date would not be based 
upon 90 days from the date the letter is sent to each individual owner, 
rather the outside end date would be based upon the date the 
manufacturer reasonably believes the notification campaign would be 
completed. Thus, the outside end date for the submission of claims for 
reimbursement would be 90 days from the date of the last notification 
letter sent to owners under part 577. We are proposing the latter 
approach, but would like to receive comments on whether a different 
period would be more appropriate.

[[Page 64083]]

4. When and How Must an Owner Receive Reimbursement?
    We are proposing to require manufacturers to act upon reimbursement 
claims within a reasonable time from the date a complete claim is 
received. We have tentatively decided that this period should be 60 
days. The action may either be a grant or a denial of the claim for 
reimbursement.
    In the event that a manufacturer receives a claim for reimbursement 
for a pre-notification remedy that contains deficient documentation, 
the manufacturer would be required to advise the claimant within 30 
days that his or her claim is deficient and provide an explanation of 
the documents that are needed to make the claim complete and that such 
supplemental documents must be submitted within an additional 30 days. 
If the owner does not provide the required information within that 30 
day period, the manufacturer may deny the claim.
    If the manufacturer determines that a claim for reimbursement will 
not be paid in full, it must clearly advise the owner, in plain 
language, the reasons for the denial. NHTSA will not mediate, 
adjudicate, or otherwise review any disputes between manufacturers and 
consumers regarding eligibility for, or the amount of, reimbursement.

G. How Is the Owner Notified of the Reimbursement Plan?

    The inclusion of a reimbursement plan in a manufacturer's remedy 
program would have little effect unless owners were aware of their 
right to obtain such reimbursement. Therefore, we believe that 
manufacturers must include certain information about the availability 
of reimbursement for the costs of pre-notification remedies in the 
notification to owners required under 49 CFR part 577.
    There are several possible approaches to this issue. We could 
require manufacturers to include a copy of the plan in each 
notification sent to owners. Alternatively, we could amend part 577 to 
require manufacturers to describe their reimbursement plans in some 
detail or we could actually mandate particular language that 
manufacturers would have to use in their owner notifications. In view 
of the detail needed to fully describe the circumstances under which 
reimbursement would or would not be allowed, the amount of information 
included under each of these alternatives could exceed the safety-
critical information about the defect or noncompliance itself. We are 
concerned that a lengthy description of the reimbursement program would 
run the risk of detracting from an owner's awareness of the need to 
have the remedy work performed. This imbalance in individual notices 
would be exacerbated by the inapplicability of the reimbursement 
provisions to the vast majority of owners, who ordinarily would not 
have incurred reimbursement expenditures. Therefore, we are proposing 
that the part 577 owner notification letter would need to identify the 
possibility of reimbursement for costs incurred to remedy problems 
related to the recall between certain dates, specify the date by which 
the owner must submit a claim for reimbursement, and identify ways that 
owners who may be eligible can review or timely obtain a copy of the 
manufacturer's reimbursement plan. (Although, as stated above, the 
actual end date of the period for reimbursement would not be tied to 
any given owner's receipt of a part 577 letter, to avoid confusion, we 
are proposing that the manufacturer would provide the date of receipt 
of the part 577 letter to identify the period in question.) To assure 
that those plans are available to owners, we are proposing that the 
part 577 letter would have to identify an Internet Website address 
maintained by the manufacturer where the plan applicable to the recall 
in question can be found, and would have to state that the plan could 
also be obtained by calling the manufacturer at a specified (toll-free) 
telephone number or by writing to the manufacturer at a specified 
address, and specify the date by which the owner would have to request 
the plan in order to receive it in time to complete the request for 
reimbursement. We request comment on whether this approach will provide 
owners with adequate information about the possibility of reimbursement 
for the cost of pre-recall remedies, and whether the specific language 
that we have proposed can be improved. Additionally, we seek comment 
whether this approach is a reasonable way to advise vehicle owners of 
the possible availability of and requirements for reimbursement; i.e., 
will the owner understand how to obtain reimbursement if this approach 
is chosen and be able to timely submit a complete reimbursement claim. 
We also ask for comments concerning alternatives that might be 
preferable to the proposal with the reasons for, and information 
relating to, any alternatives. We also seek comments on whether a 
Website and a toll-free telephone number will provide owners with 
sufficient, clear information.

H. Nonapplication

    To be consistent with the statutory limitation found in 49 U.S.C. 
30120(g), the requirement that reimbursement for a pre-notification 
remedy be provided to an owner does not apply if, in the case of a 
motor vehicle or replacement equipment, it was bought by the first 
purchaser more than 10 calendar years, or in the case of a tire, 
including an original equipment tire, it was bought by the first 
purchaser more than 5 calendar years, before notice is given under 49 
U.S.C. 30118(c) or an order is issued under section 49 U.S.C. 30118(b).

I. General Plans for Reimbursement

    We are proposing to allow manufacturers to submit to the agency one 
or more general reimbursement plans that could be incorporated by 
reference into any recalls associated with their products, rather than 
submitting a separate reimbursement plan for each recall. The 
reimbursement plan would remain on file with the agency and be 
available to consumers for their review. Under this proposal, the 
manufacturer would have to update such plans at least every two years 
to provide consumers with current information. If this proposal were 
adopted, manufacturers would not have to submit a separate 
reimbursement plan to NHTSA for each recall. We seek comments on 
whether this proposal is workable.

III. Regulatory Analyses and Notices

A. Executive Order 12866 and DOT Regulatory Policies and Procedures

    We have considered the impact of this proposed 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 
reimbursement of eligible expenses to owners who paid to remedy a 
defect or noncompliance prior to the recall notification.
    We estimate that the additional economic impact of this rule upon 
manufacturers will be small. First, although we cannot precisely 
estimate the number of owners who have made related repairs prior to a 
manufacturer's

[[Page 64084]]

defect or noncompliance determination, we believe the number is 
relatively small. One indicator would be the number of complaints 
received by the manufacturer. Our review of a sample of part 573 
reports from the past year indicates that manufacturers often have not 
received many complaints from owners about the problem prior to making 
a defect or noncompliance determination. Second, most manufacturers 
already provide reimbursement for pre-recall repairs under warranty 
programs and some other circumstances. Finally, one of the conditions 
that manufacturers may establish under today's proposed rule is that 
the pre-notification purchase or repair must be outside of the warranty 
period. Generally, manufacturers offer a warranty program that covers a 
period of 36 months or 36,000 miles. History indicates that most 
recalls occur within the period of coverage under warranty programs. In 
2000, there were 672 recalls conducted by vehicle and equipment 
manufacturers. Of these, only 41 (approximately 6%) occurred after the 
expiration of the period of coverage offered by the manufacturer under 
its warranty program. Conversely, the remaining 94% occurred within 36 
months which is the most common warranty period.

B. Regulatory Flexibility Act

    We have also considered the impacts of this notice under the 
Regulatory Flexibility Act. For the reasons discussed above under E.O. 
12866 and the DOT Policies and Procedures, I certify that this proposed 
rule would not have a 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 motor vehicle and 
equipment manufacturers that have submitted defect or noncompliance 
reports. The majority of recalls are not initiated by small entities. 
The primary impact of this rule will be felt by the major vehicle 
manufacturers. Even this impact will be minor since it only involves 
owners of vehicles and motor vehicle equipment who have paid to remedy 
a defect or noncompliance prior to recall in a manner that warrants 
reimbursement under the rule. This number is expected to be small for 
the reasons stated in the prior section of this notice.

C. 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.

D. Paperwork Reduction Act

    NHTSA has determined that this proposed rule will impose new 
collection of information burdens within meaning of the Paperwork 
Reduction Act of 1995 (PRA).

E. 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 E.O. 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 proposed rule, which would require that 
manufacturers include a reimbursement plan in their remedy program for 
owners who have remedied a defect or noncompliance prior to a recall 
notification under either section 30118(b) or 30118(c) of the Safety 
Act, will not have a 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 E.O. 13132. This rule making does not have 
those implications because it applies only to manufacturers who are 
required to file a remedy plan under sections 30118(b) or 30118(c), and 
not to the States or local governments.

F. Civil Justice Reform

    This proposed rule would 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.

G. 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 would not have a $100 million 
annual effect, no Unfunded Mandates assessment is necessary and one 
will not be prepared.

H. 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?
--Could we improve clarity by adding tables, lists, or diagrams?
--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 on this rule.

IV. Submission of Comments

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

    In developing this interim final rule, we tried to address the 
anticipated concerns of all our stakeholders. Your comments will help 
us improve this rule. We invite you to provide different views on it, 
new approaches we have not considered, new data, how this rule may 
affect you, or other relevant information. Your comments will be most 
effective if you 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 or 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 
comments.

B. How Do I Prepare and Submit Comments?

    Your comments must be written and in English. To ensure that your

[[Page 64085]]

comments are correctly filed in the Docket, please include the docket 
number of this document in your comments.
    Your comments 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.
    Comments 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.

C. How Can I Be Sure That My Comments Were Received?

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

D. How Do I Submit Confidential Business Information?

    If you wish to submit any information under a claim of 
confidentiality, you should submit three 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 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.)

E. Will the Agency Consider Late Comments?

    We will consider all comments that Docket Management receives 
before the close of business on the comment closing date indicated 
above under DATES. To the extent possible, we will also consider 
comments that Docket Management receives after that date. If Docket 
Management receives a comment too late for us to consider it in 
developing a final rule (assuming that one is issued), we will consider 
that comment as an informal suggestion for future rulemaking action.

F. How Can I Read the Comments 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. Accordingly, 
we recommend that you periodically check the Docket for new material.

List of Subjects in 49 CFR Parts 573 and 577

    Motor vehicle safety, Reporting and record keeping requirements, 
Tires.
    In consideration of the foregoing, NHTSA proposes to amend 49 CFR 
part 573 and part 577 as set forth below.

PART 573--DEFECT AND NONCOMPLIANCE REPORTS--[AMENDED]

    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. Part 573.5 would be amended by revising paragraphs (c)(7) and 
(c)(8)(i) to read as follows:


Sec. 573.5  Defect and noncompliance information report.

* * * * *
    (c) * * *
    (7) In the case of a noncompliance, the test results or other data 
on the basis of which the manufacturer determined the existence of the 
noncompliance. The manufacturer shall identify the date of each test 
and observation that indicated that a noncompliance might exist.
    (8)(i) A description of the manufacturer's program for remedying 
the defect or noncompliance. This program shall include a plan for 
reimbursing an owner or purchaser who incurred costs to obtain a remedy 
for the problem addressed by the recall within a reasonable time in 
advance of the manufacturer's notification of owners, purchasers and 
dealers, in accordance with Sec. 573.13. A manufacturer may incorporate 
by reference one or more comprehensive reimbursement plans submitted to 
NHTSA for its entire product line rather than submitting a complete, 
separate plan for each individual recall. If a manufacturer submits one 
or more comprehensive plans, the manufacturer shall update each plan 
every two years. The manufacturer's program will be available for 
inspection in the public docket, Room 5109 Nassif Building, 400 Seventh 
St., SW., Washington, DC 20590.
* * * * *
    3. Part 573 would be amended by adding Sec. 573.13 to read as 
follows:
* * * * *


Sec. 573.13  Reimbursement for pre-notification remedies.

    (a) Pursuant to 49 U.S.C. 30120(d) and Sec. 573.5(c)(8)(i), this 
section specifies requirements for a manufacturer's plan to reimburse 
owners for costs incurred for remedies in advance of the manufacturer's 
notification under subsections (b) or (c) of 49 U.S.C. 30118.
    (b) For purposes of this section, ``pre-notification remedy'' means 
a remedy that is obtained by an owner of a motor vehicle or item of 
replacement equipment for a problem subsequently addressed by a 
notification under subsection (b) or (c) of 49 U.S.C. 30118 and that is 
obtained during the period for reimbursement specified in paragraph (c) 
of this section.
    (c) The manufacturer's plan shall specify a period for 
reimbursement, as follows:
    (1) The beginning date shall be no later than a date determined as 
follows:
    (i) For a noncompliance with a Federal motor vehicle safety 
standard, the date shall be the date of the first test or observation 
by either NHTSA or the

[[Page 64086]]

manufacturer indicating that a noncompliance may exist.
    (ii) For a safety-related defect that is determined to exist 
following the opening of an Engineering Analysis (EA) by NHTSA's Office 
of Defects Investigation (ODI), the date shall be the date the EA was 
opened.
    (iii) For a safety-related defect that is determined to exist in 
the absence of the opening of an EA, the date shall be one year before 
the date of the manufacturer's notification to NHTSA pursuant to 
Sec. 573.5.
    (2) The ending date shall be no sooner than:
    (i) For motor vehicles, 10 calendar days following the date on 
which the manufacturer mailed the last of its notifications to owners 
pursuant to part 577 of this chapter.
    (ii) For replacement equipment, 30 days after the conclusion of the 
manufacturer's initial efforts to publicize the existence of the defect 
or noncompliance.
    (d) The manufacturer's plan shall provide for reimbursement of 
costs for pre-notification remedies, subject to the conditions 
established in the plan. The following conditions and no others may be 
established in the plan.
    (1) The plan may exclude reimbursement for costs incurred within 
the period during which the manufacturer's warranty would have provided 
for a free repair of the problem addressed by the recall, unless a 
franchised dealer or authorized representative of the manufacturer 
denied warranty coverage or the repair did not remedy the problem 
addressed by the recall.
    (2)(i) For a motor vehicle, the plan may exclude reimbursement:
    (A) If the pre-notification remedy was not of the same type 
(repair, replacement, or refund of purchase price) as the recall 
remedy:
    (B) If the pre-notification remedy did not address the defect or 
noncompliance that led to the recall or a manifestation of the recall; 
or
    (C) If the pre-notification remedy was not reasonably necessary to 
correct the defect or noncompliance or the manifestation of the recall.
    (ii) However, the plan may not require that the pre-notification 
remedy be identical to the remedy elected by the manufacturer pursuant 
to 49 U.S.C. 30120(a)(1)(A).
    (3)(i) For replacement equipment, the plan may exclude 
reimbursement:
    (A) If the pre-notification remedy did not address the defect or 
noncompliance that led to the recall or a manifestation of the recall; 
or
    (B) If the pre-notification remedy was not reasonably necessary to 
correct the defect or noncompliance or the manifestation of the recall.
    (ii) However, the plan may not require that the pre-notification 
remedy be identical to the remedy elected by the manufacturer pursuant 
to 49 U.S.C. 30120(a)(1)(B).
    (4) The plan may exclude reimbursement if the owner did not submit 
adequate documentation to the manufacturer at a designated address 
within ninety (90) days of the end of the period for reimbursement. The 
plan may require, at most, the following documentation:
    (i) Name and mailing address of the claimant;
    (ii) Identification of the product:
    (A) For motor vehicles, the vehicle make, model, model year, and 
the vehicle identification number;
    (B) For replacement equipment other than tires, a description of 
the equipment, including model and size as appropriate; or
    (C) For tires, the model, size, and the DOT number;
    (iii) Identification of the recall (either the NHTSA recall number 
or the manufacturer's recall number);
    (iv) A receipt for the pre-notification remedy, which may be an 
original or copy:
    (A) If the reimbursement sought is for a repair, the manufacturer 
may require that the receipt state the total amount paid for the repair 
of the problem addressed by the recall, including a breakdown of the 
amount for parts, labor, other costs and taxes; and
    (B) If the reimbursement sought is for the replacement of a vehicle 
part or an item of replacement equipment, the manufacturer may require 
that the receipt state the total amount paid for the item that replaced 
the defective or noncompliant items; and
    (v) If the pre-notification remedy was obtained at a time when the 
vehicle or equipment could have been repaired or replaced at no charge 
under a manufacturer's warranty program, the manufacturer may require 
the owner to provide documentation indicating that the manufacturer's 
dealer or authorized facility either refused to remedy the problem 
addressed by the recall under the warranty or that the warranty repair 
did not correct the problem addressed by the recall.
    (e) The manufacturer's plan shall specify the amount of costs to be 
reimbursed for a pre-notification remedy.
    (1)(i) For motor vehicles, the amount of reimbursement shall not be 
less than the lesser of:
    (A) The amount paid by the owner for the remedy; or
    (B) The cost of parts for the remedy, plus associated labor at 
local labor rates, miscellaneous fees such as disposal of waste, and 
taxes. Costs for parts may be limited to the manufacturer's list retail 
price for authorized parts.
    (ii) Any associated costs, such as taxes or disposal of wastes may 
not be limited.
    (2) For replacement equipment, the amount of reimbursement 
ordinarily would be the amount paid by the owner for the replacement 
item, including taxes. In cases in which the owner purchased a brand or 
model different from the equipment that was the subject of the recall, 
the manufacturer may limit the amount of reimbursement to the ordinary 
retail price of the defective or noncompliant item that was replaced, 
plus taxes. If the equipment was repaired, the provisions of paragraph 
(e)(1) of this section apply.
    (f) The manufacturer's plan shall identify the office or individual 
to whom claims for reimbursement shall be submitted.
    (g) The manufacturer shall act on requests for reimbursement as 
follows:
    (1) The manufacturer shall act upon a claim for reimbursement 
within 60 days of its submission. If the manufacturer denies the claim, 
the manufacturer must send a notice to the claimant within 60 days of 
submission that includes a clear, concise statement of the reasons for 
the denial.
    (2) If a claim is incomplete when originally submitted, the 
manufacturer shall advise the claimant within 30 days of the submission 
the documentation that is needed and offer an opportunity to resubmit 
the claim with completed documentation. If the owner does not do so 
within 30 days thereafter, the manufacturer may deny the claim.
    (h) Any disputes over the denial in whole or in part of a claim for 
reimbursement shall be resolved between the claimant and the 
manufacturer. NHTSA will not mediate or resolve any disputes regarding 
eligibility for, or the amount of, reimbursement.
    (i) The manufacturer shall implement each plan for reimbursement 
under this section in accordance with its terms.
    (j) The requirement that reimbursement for a pre-notification 
remedy be provided to an owner does not apply if, in the case of a 
motor vehicle or replacement equipment other than a tire, it was bought 
by the first purchaser more than 10 calendar years before notice is 
given under 49 U.S.C. 30118(c) or an order is issued under section 49 
U.S.C. 30118(b). In the case

[[Page 64087]]

of a tire, this period shall be 5 calendar years.
* * * * *

PART 577--DEFECT AND NONCOMPLIANCE NOTIFICATION--[AMENDED]

    1. The authority citation for Part 577 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. Part 577 would be amended by adding Sec. 577.11 to read as 
follows:


Sec. 577.11  Reimbursement notification.

    (a) When a manufacturer of motor vehicles or replacement equipment 
is required to provide notice in accordance with Secs. 577.5 or 577.6, 
in addition to complying with other sections of this part, the 
manufacturer shall notify owners that they may be eligible to receive 
reimbursement for the cost of obtaining a pre-notification remedy of a 
problem associated with a defect or noncompliance consistent with the 
manufacturer's reimbursement plan submitted to NHTSA pursuant to 
Secs. 573.5(c)(8)(i) and 573.13 of this chapter.
    (b) The manufacturer's notification shall include the following 
language, with the information described in brackets filled in fully 
and appropriately: ``If you paid to obtain a remedy for the problem 
covered by this recall between [the beginning of the period for 
reimbursement identified in the plan] and the date you received this 
letter, you may be eligible to have some or all of those costs 
reimbursed. To see whether you are eligible for such reimbursement, you 
can review or obtain [manufacturer's] reimbursement plan at [the 
specific Internet address (Uniform Resource Locator) for the plan 
applicable to the recall], by calling [manufacturer] at [the 
manufacturer's toll-free telephone number], or by writing to 
[manufacturer] at [address]. All claims for reimbursement must be 
submitted no later than [90 days after the end of the period for 
reimbursement].''
* * * * *

    Issued on: December 5, 2001.
Kenneth N. Weinstein,
Associate Administrator for Safety Assurance.
[FR Doc. 01-30487 Filed 12-10-01; 8:45 am]
BILLING CODE 4910-59-P