[Federal Register Volume 67, Number 78 (Tuesday, April 23, 2002)]
[Rules and Regulations]
[Pages 19693-19698]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-9773]


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

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 573

[Docket No. NHTSA-2002-12111]
RIN 2127-AI30


Motor Vehicle Safety; Prohibitions on Sale or Lease of Defective 
and Noncompliant Motor Vehicles and Items of Motor Vehicle Equipment

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

ACTION: Final rule.

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

SUMMARY: This document implements section 8 of the Transportation 
Recall Enhancement, Accountability, and Documentation Act (TREAD Act) 
and section 2504 of the Intermodal Surface Transportation Efficiency 
Act (ISTEA)

[[Page 19694]]

by adding regulations that limit the sale or lease of noncompliant and 
defective motor vehicles and items of motor vehicle equipment. These 
sections contain complementary provisions that amend federal motor 
vehicle safety laws by limiting the sale or lease of defective and 
noncompliant motor vehicles and equipment.

EFFECTIVE DATE: This final rule will take effect on May 23, 2002.
    Petitions for reconsideration: Any petition for reconsideration of 
this rule must be received by NHTSA no later than June 7, 2002.

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

FOR FURTHER INFORMATION CONTACT: Ms. Enid Rubenstein, Office of Chief 
Counsel, NCC-10, NHTSA. Telephone 202-366-5263.

SUPPLEMENTARY INFORMATION:

Background

    Since the enactment of the National Traffic and Motor Vehicle 
Safety Act in 1966, now codified, as amended, as 49 U.S.C. Chapter 301 
(Safety Act), Federal law has prohibited the sale of new motor vehicles 
and motor vehicle equipment that fail to comply with an applicable 
Federal motor vehicle safety standard (FMVSS). See section 108(a) of 
Public Law 89-563, 80 Stat. 722, codified as 49 U.S.C. 30112(a). 
However, until 1991, the Safety Act did not contain specific provisions 
limiting the sale or lease of defective vehicles and equipment. To 
correct this deficiency, section 2504 of the Intermodal Surface 
Transportation Efficiency Act (``ISTEA''), Public Law 102-240, 105 
Stat. 2081 et seq., amended the Safety Act by adding a new provision, 
which is codified at 49 U.S.C. 30120(i).
    Section 30120(i) states that a dealer who has been provided 
notification from the manufacturer about a safety-related defect or 
noncompliance with a Federal motor vehicle safety standard in a new 
motor vehicle or a new item of motor vehicle equipment in the dealer's 
possession at the time of the notification may not sell or lease the 
vehicle or item of equipment unless the defect or noncompliance is 
remedied as required by section 30120 before delivery under the sale or 
lease, or notification is required by an order under section 30118(b) 
but enforcement of the order is restrained or the order is set aside in 
a civil action to which section 30121(d) applies. Thus, if a court sets 
the order aside, the prohibition will not apply and the sale is 
permissible.\1\
---------------------------------------------------------------------------

    \1\ Section 30118(c) requires manufacturers of motor vehicles or 
equipment to provide notification of safety-related defects or 
noncompliances with motor vehicle safety standards to NHTSA, as well 
as to the owners, purchasers and dealers of the vehicle or 
equipment.
    Section 30118(b) authorizes the Secretary to make a final 
decision that motor vehicles or equipment contain a safety-related 
defect and/or do not comply with an applicable motor vehicle safety 
standard and, in that event, order the manufacturer to give 
notification of the defect or noncompliance to owners, purchasers, 
and dealers of the vehicles or equipment, and order the manufacturer 
to remedy the defect or noncompliance without charge.
    Section 30121 authorizes the Secretary to require a manufacturer 
to issue a provisional notification about an order issued under 
section 30118(b) if the manufacturer contests that order. Section 
30121 also authorizes a court to enjoin enforcement of the 
Secretary's order under section 30118(b) if the court decides that 
failure to notify is reasonable and that the manufacturer has 
demonstrated the likelihood of prevailing on the merits. (A 
manufacturer that fails to issue a provisional notification is 
subject to civil penalties unless a court enjoins enforcement of the 
order under section 30118(b)). See generally Ford Motor Co. v. 
Coleman, (402 F. Supp. 475 (D.D.C. 1975) (3-judge court), aff'd mem. 
425 U.S. 927 (1976).
---------------------------------------------------------------------------

    Section 30120(i) does not prohibit a dealer from offering the 
vehicle or equipment for sale or lease. Thus, the dealer can offer the 
vehicle in the showroom but cannot sell or lease it. In the 1990s, 
NHTSA did not engage in rulemaking with regard to this statutory 
prohibition.
    On November 1, 2000, the TREAD Act, Public Law 106-414, 114 Stat. 
1800, was enacted. The statute was, in part, a response to 
congressional concerns regarding the manner in which various entities 
dealt with defective motor vehicles and motor vehicle equipment, 
including tires. During congressional consideration of the bill that 
eventually was adopted as the TREAD Act, there had been media reports 
that some persons were selling defective Firestone ATX or Wilderness AT 
tires that had been returned to dealers for replacement under an 
ongoing safety recall. The Safety Act did not expressly prohibit such 
actions, since section 30120(i) does not apply to the sale or lease of 
used vehicles or equipment.
    Section 8 of the TREAD Act added a new subsection (j), 
``Prohibition on sales of replaced equipment,'' to 49 U.S.C. 30120, 
effective November 1, 2000. This subsection provides that no person may 
sell or lease any motor vehicle equipment (including a tire) that is 
the subject of a decision under 49 U.S.C. 30118(b) or a notice required 
under 49 U.S.C. 30118(c), for installation on a motor vehicle, in a 
condition that it may be reasonably used for its original purpose. 
Under section 30120(j)(1) and (2), the foregoing prohibition does not 
apply if the defect or noncompliance is remedied as required by 49 
U.S.C. 30120, including implementing regulations, before delivery under 
the sale or lease; or if notification of the defect or noncompliance is 
required under section 30118(b) but enforcement of the order is set 
aside in a civil action to which 49 U.S.C. 30121(d) applies.
    Sections 30120(i) and (j) are complementary provisions. Section 
30120(i), the ISTEA provision, applies only to dealers in new motor 
vehicles and new items of motor vehicle equipment. Section 30120(j), 
the TREAD Act provision, applies to all persons who sell or lease motor 
vehicle equipment for installation on a motor vehicle, in a condition 
that the equipment may reasonably be used for its intended purpose, and 
to both new and used equipment. To implement both statutory 
subsections, we proposed to revise 49 CFR part 573 by adding two 
separate regulatory sections, one (Sec. 573.11) applicable to the sale 
or lease of defective or noncompliant new motor vehicles and new items 
of motor vehicle equipment by dealers (including retailers of new motor 
vehicle equipment) and the other (Sec. 573.12) applicable to the sale 
or lease of defective or noncompliant new and used motor vehicle 
equipment by any person. While sections 30120(i) and (j) do not require 
rulemaking for their effectuation, NHTSA believes that there will be 
two benefits to rulemaking. First, rules will largely reduce, if not 
eliminate, questions relating to the meaning of the prohibitions. 
Second, there are benefits to codifying the prohibitions, which 
complement other rules, in the Code of Federal Regulations.

The New Regulatory Provisions

    In view of the ISTEA and the TREAD Act, we are revising 49 CFR 
573.3(a) by specifying those to whom new Secs. 573.11 and 573.12 apply 
and we are amending 49 CFR part 573 to include, at Secs. 573.11 and 
573.12, the prohibitions established by 49 U.S.C. 30120(i) and (j), 
respectively. These amendments are

[[Page 19695]]

identical to those proposed in the NPRM (66 FR 38247 et seq. (July 23, 
2001), except that we have added a clarification to proposed 
Sec. 573.3(h) to reflect the provision in 49 U.S.C. 30121 that the term 
``dealer'' includes a retailer of motor vehicle equipment and clarified 
the scope of proposed Sec. 573.11.

Section 573.11  Prohibition on Sale or Lease of New Defective or 
Noncompliant Motor Vehicles and Motor Vehicle Equipment \2\

    Section 573.11, which implements 49 U.S.C. 30120(i), applies to 
dealers, including retailers of motor vehicle equipment, and covers the 
sale and lease of new motor vehicles and motor vehicle equipment. It 
provides that a dealer may not sell or lease defective or noncompliant 
new motor vehicles or items of motor vehicle equipment. By its terms, 
49 U.S.C. 30120(i) applies to new motor vehicles and new items of motor 
vehicle equipment.\3\ Thus, the requirements of 49 CFR 573.11 do not 
apply to used motor vehicles and used equipment.
---------------------------------------------------------------------------

    \2\ The title of section 30120(i) refers to a ``limitation'' on 
the sale or lease of vehicles or equipment, whereas the title of 
section 30120(j) refers to a ``prohibition'' on the sale of replaced 
equipment. In the NPRM, we proposed to use the term ``limitations'' 
to cover both statutory sections. However, throughout the preamble 
to the NPRM, we discussed various ``prohibitions,'' as we have done 
again in the preamble to this rule. Also, in the revised title to 49 
CFR part 573 that we proposed in the NPRM, we used the term 
``prohibitions.'' Therefore, for consistency, we have decided to use 
the term ``prohibitions'' rather than ``limitations'' in both 
sections of the final rule, as well as in the revised title to 49 
CFR part 573.
    \3\ The terms ``dealer,'' ``motor vehicle'' and ``motor vehicle 
equipment'' are defined at 49 U.S.C. 30102(a)(1), (6) and (7).
---------------------------------------------------------------------------

    Several prerequisites must occur in order for the prohibition on 
the sale or lease of new motor vehicles or equipment under section 
30120(i) to apply. First, notification of a defect or noncompliance 
must have been required by an order under section 30118(b) or under 
section 30118(c). Second, a dealer must have been notified of the 
defect or noncompliance. Finally, the dealer must be in possession of 
the vehicle or equipment.
    The regulatory text at Sec. 573.11 reflects two statutory 
exceptions that permit the dealer to sell or lease new motor vehicles 
or equipment items that have been determined to be defective or 
noncompliant. See 49 U.S.C. 30120(i). First, the dealer may sell or 
lease the motor vehicle or item of equipment if the defect or 
noncompliance is remedied as required by section 30120 before delivery 
under the sale or lease. Second, the sale or lease is permissible when 
notification is required by an order under section 30118(b) but 
enforcement of the order is restrained or the order is set aside in a 
civil action to which section 30121(d) applies. Thus, if a court sets 
the order aside, as stated above, the prohibition will not apply and 
the sale is permissible. Finally, section 30120(i) states that it does 
not prohibit a dealer from simply offering the vehicle or equipment for 
sale or lease, without actually selling it.

Section 573.12  Prohibition on Sale or Lease of New or Used Defective 
and Noncompliant Motor Vehicle Equipment

    Section 573.12 of the rule implements 49 U.S.C. 30120(j), which 
provides that ``no person may sell or lease any motor vehicle equipment 
(including a tire), for installation on a motor vehicle, that is the 
subject of a decision under section 30118(b) or a notice required under 
section 30118(c) in a condition that it may be reasonably used for its 
original purpose'' (emphasis added). In this statutory section, 
Congress chose to use the general term ``no person'' as opposed to the 
more restricted categories of ``manufacturer'' and ``dealer'' used in 
section 30120(i) and elsewhere in Chapter 301. In view of the breadth 
of the term ``no person,'' Sec. 573.12 is not limited to persons in 
particular classes or categories. Rather, the rule's prohibition 
applies to the actions of all persons, including individuals and 
business entities such as corporations. The rule clearly applies to 
retailers of equipment, including tires.
    The activities that are covered by 49 CFR 573.12, based on 49 
U.S.C. 30120(j), are selling or leasing, ``for installation on a motor 
vehicle,'' any motor vehicle equipment (including a tire), that is the 
subject of a decision under section 30118(b) or a notice required under 
section 30118(c). Accordingly, the rule will apply to businesses and 
individuals that sell new or used automobile parts, including tires. 
While Sec. 573.12 prohibits the sale or lease of equipment including 
tires for installation on a motor vehicle, it does not prohibit a 
person from selling or leasing a new or used vehicle that is equipped 
with defective or noncompliant equipment or tires.\4\ For example, a 
motor vehicle dealer is not subject to the prohibition of this rule 
except with respect to equipment and tires that the dealer sells or 
leases separately from a vehicle. Similarly, motor vehicle lessors and 
motor vehicle rental companies are not subject to this rule because 
these groups are selling and leasing vehicles, not equipment or tires 
for use on motor vehicles.
---------------------------------------------------------------------------

    \4\ As discussed above, the sale or lease of a new vehicle with 
defective or noncompliant equipment or tires is already prohibited 
by 49 U.S.C. 30120(i) and will be prohibited by 49 CFR 573.11.
---------------------------------------------------------------------------

    49 CFR 573.12 prohibits the selling or leasing of any motor vehicle 
equipment (including a tire), for installation on a motor vehicle, that 
is the subject of a decision under 49 U.S.C. 30118(b) or a notice 
required under 49 U.S.C. 30118(c). In section 30120(j), Congress chose 
to restrict the sale or lease of motor vehicle equipment, without 
limitation. Thus, the prohibition includes all equipment, including 
used equipment as well as new equipment.\5\
---------------------------------------------------------------------------

    \5\ We recognize that the title of section 30120(j) refers to 
``replaced equipment.'' The U.S. Supreme Court has long held that 
the title of a statutory provision cannot overcome the plain and 
unambiguous meaning of the words used in the text of the statute. 
See Knowlton v. Moore, 178 U.S. 41 (1900). Thus, since the language 
of section 30120(j) is not limited, its reach extends to all motor 
vehicle equipment that has been found to be defective or 
noncompliant, regardless of whether it is original equipment or 
replacement equipment, despite the fact that the title of the 
subsection refers only to ``replaced equipment.''
---------------------------------------------------------------------------

    49 U.S.C. 30120(j) prohibits the sale of equipment in a condition 
that it may be reasonably used for its original purpose. Accordingly, 
Sec. 573.12 prohibits only the sale of equipment and tires that are 
still in a condition in which they can be used for the purpose for 
which they were originally intended. Thus, the rule does not apply to 
equipment and tires that have been permanently altered in a way that 
they can no longer be reasonably used for their original purpose. For 
example, a tire that has been drilled with holes for eyebolts may be 
sold for use as part of a playground swing.
    Section 30120(j)(1) provides that the prohibition on the sale of 
equipment applies unless ``the defect or noncompliance is remedied as 
required by this section before delivery under the sale or lease.'' 
Therefore, the equipment may be sold if it has been repaired so that it 
is no longer defective or noncompliant.
    The sale of the equipment will also be allowed if ``notification of 
the defect or noncompliance is required under section 30118(b) but 
enforcement of the order is set aside in a civil action to which 
section 30121(d) applies.'' Under section 30118(b), if it is determined 
that a motor vehicle or replacement equipment contains a defect related 
to motor vehicle safety or does not comply with an applicable motor 
vehicle safety standard, the manufacturer is ordered to give 
notification of the defect or noncompliance under section 30119 to 
owners, purchasers and dealers of the

[[Page 19696]]

vehicle or equipment.\6\ However, if enforcement of the order is 
restrained or the order is set aside by a court, the prohibition in 
section 30120(j) does not apply, and, therefore, the sale of the 
equipment in its unremedied condition is permissible during the period 
when the order is not effective.
---------------------------------------------------------------------------

    \6\ Section 30119 sets out the notification procedures the 
manufacturer must follow.
---------------------------------------------------------------------------

Response to Comments

    We received three comments on the NPRM, including one from a trade 
association (the National Automobile Dealers Association (``NADA'')) 
and two from consumer groups (Advocates for Highway and Auto Safety 
(``Advocates'') and Public Citizen). We did not receive any comments 
from manufacturers.
    The comments were generally supportive of the proposed regulations. 
They are summarized below.
    (1) Advocates fully supported the NPRM and urged its adoption, 
without any suggested revisions.
    (2) NADA supported the issuance of the rule but suggested a number 
of substantive and editorial changes. The principal substantive change 
suggested was, in essence, to make both new Sec. 573.11 and Sec. 573.12 
duplicate each other, by providing in both that there is no limitation 
on the sale or lease of defective or noncompliant motor vehicles or 
motor vehicle equipment unless the dealer has received actual notice of 
the defect or noncompliance from the manufacturer. Although NADA 
acknowledged that statutory subsections (i) and (j) differ from each 
other in that subsection (i) requires such notice whereas (j) does not, 
the association nevertheless requested that NHTSA use its discretion to 
extend subsection (i)'s notice condition to subsection (j), on grounds 
that this would create ``fairness'' to dealers.
    We have decided against making NADA's proposed change. Under the 
ordinary rules of statutory construction, Congress is presumed to have 
intended the effects of linguistic differences between statutory 
provisions. See 2A Sutherland, Statutory Construction (6th Ed. Singer, 
2000) at Sec. 46.06: ``In like manner, where the legislature has 
carefully employed a term in one place and excluded it in another, it 
should not be implied where excluded.'' This is particularly true 
where, as here, the statutory provision that contains the notice 
requirement (in this case, subsection (i)), was enacted several years 
before the statutory provision that does not contain the notice 
requirement (in this case, subsection (j)). Congress clearly knew how 
to draft a notice requirement when it wanted to include one: it did so 
in 1991 in enacting subsection (i), but it did not do so nine years 
later when it enacted subsection (j).
    In addition, under the ordinary rules of statutory construction, 
statutes are to be read to effectuate all of their provisions: ``It is 
an elementary rule of construction that effect must be given, if 
possible, to every word, clause and sentence of a statute.'' 2A 
Sutherland, supra, at Sec. 46.06, citing United States v. Menasche, 348 
U.S. 528 (1955); Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (1995). 
If we followed NADA's suggestion and ignored the differences between 
subsections (i) and (j) with respect to notice, the regulation would 
not be consistent with this rule of construction and would fail to 
effectuate subsection (j), which by its terms does not require notice 
from the manufacturer.
    NADA also disputed ``any suggestion'' (in the preamble to the NPRM) 
that the section 30120(i) restriction applies to new motor vehicles or 
equipment not in the dealer's possession at the time of notification. 
NADA claimed that (1) vehicles that have already been delivered and are 
no longer in a dealer's possession; (2) vehicles that have been sold 
but not yet left the dealer's possession prior to the dealer's receipt 
of notification; and (3) vehicles that the dealer has not yet received 
when it receives notification from the manufacturer are not subject to 
section 30120(i).
    We agree with some of NADA's comments, but not others. With respect 
to the first, the vehicles or equipment that have already been 
delivered to purchasers are beyond the coverage of this statutory 
section, which applies only to items ``in the dealer's possession,'' 
and in any event will be covered by a notification from the 
manufacturer to the owner. In the second situation posited by NADA, the 
delivery to the purchaser has not occurred. The dealer, who has 
possession of the vehicle or equipment, must bring it into compliance 
or remedy the defect before it is delivered to the purchaser. Requiring 
the dealer to carry out the remedy before delivering the vehicle to the 
purchaser will both implement the statutory text and effectuate the 
underlying statutory purpose. In these circumstances, there is no valid 
reason to excuse the dealer from remedying the defect or noncompliance 
in such vehicles and thereby permit the dealer to deliver unsafe 
vehicles to purchasers.
    NADA's third category is more problematic. Section 30120((i) states 
that it applies when the manufacturer ``has provided * * * notification 
about a new * * * vehicle or * * * item of * * * equipment in the 
dealer's possession at the time of notification * * * .'' NADA pointed 
out that the preamble and proposed regulatory text in the NPRM raised 
issues about the meaning of this phrase. The statutory text requires 
possession, which in our view includes both actual and constructive 
possession. Although we would expect that dealers would remedy vehicles 
and equipment that are the subject of notice but not yet in the 
dealer's actual or constructive possession at the time of notification, 
the statutory language of section 30120(i) does not impose such a 
requirement. Accordingly, we have modified the proposed text of 
Sec. 573.11(a) to state explicitly that the prohibition applies to 
vehicles or equipment in the dealer's actual or constructive possession 
at the time of the manufacturer's notification. However, we note that 
manufacturers normally include ``stop sale'' or ``stop delivery'' 
instructions in their notifications to dealers of defects and 
noncompliances, and, as noted earlier, 49 U.S.C. 30112(a) contains an 
independent prohibition against the sale of noncompliant vehicles or 
equipment. Moreover, state consumer protection and tort laws may impose 
additional duties on dealers.
    NADA also requested that proposed Sec. 573.12 be modified to add a 
new subsection specifying that the prohibition does not apply if ``(a) 
person * * * did not possess the motor vehicle equipment at the time of 
such notice.'' We have not made NADA's suggested modification because, 
as explained earlier in this preamble, we have concluded that the 
requirement for manufacturer notification does not apply to 
Sec. 573.12.
    In addition, NADA proposed to add a new section to Sec. 573.12, 
stating that the prohibition does not apply to any item of equipment 
that has been installed in a new or used motor vehicle. As indicated 
above, we do not believe that this subsection is necessary. As we 
stated in the preamble to the NPRM, it is clear from the text of 
Sec. 573.12(a) of the proposed rule, which specifically prohibits 
selling or leasing ``any new or used item of motor vehicle equipment * 
* * for installation on a motor vehicle,'' that the section does not 
apply to equipment that already has been installed. NADA made a similar 
suggestion with regard to our rule regarding reporting the sale or 
lease of defective or noncompliant tires, 49 CFR 573.10. As in that 
rule (see 66 FR 38161,

[[Page 19697]]

July 23, 2001), we do not believe that such a clarification is 
necessary.
    (3) Public Citizen did not oppose the proposed regulation, but 
argued that its text revealed ``gaps'' in the scope of the underlying 
statute and urged the agency to seek further legislative amendments 
during the forthcoming reauthorization process. Public Citizen's 
suggested amendments would (1) extend 49 U.S.C. 30120(i) to used motor 
vehicles and motor vehicle equipment and (2) extend 49 U.S.C. 30120(j) 
to those who lease or rent motor vehicles. Public Citizen did not argue 
that we should extend the regulation in the face of admittedly absent 
statutory authority. Because a comment on an NPRM is not an appropriate 
mechanism for submitting a legislative proposal, we are not responding 
here to the substance of Public Citizen's suggestion.

Regulatory Analyses and Notices

1. E.O. 12866 and DOT Regulatory Policies and Procedures

    This final rule has not been reviewed under E.O. 12866, 
``Regulatory Planning and Review.'' After considering the impacts of 
this rulemaking action, we have determined that the action is not 
``significant'' within the meaning of the Department of Transportation 
regulatory policies and procedures. There are statutory prohibitions in 
place and these rules, which essentially incorporate the statutory 
prohibitions, will not increase the burdens on those covered by those 
prohibitions. The impact of this rule will be so minimal as not to 
warrant preparation of a full regulatory evaluation because these 
provisions only involve prohibitions on sales of defective and 
noncompliant vehicles and equipment, which are rare even absent the 
rule. In light of the statutory provisions, this action does not 
involve a substantial public interest or controversy. The rulemaking 
action will not have a substantial impact on any transportation safety 
program or on state and local governments.

2. Regulatory Flexibility Act

    We have also considered the effects of this action in relation to 
the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). I certify that 
this rule will have no significant economic impact on a substantial 
number of small entities. The impact of this rule is expected to be so 
minimal as not to warrant preparation of a full regulatory flexibility 
analysis because this provision only involves prohibitions on sales or 
leases of vehicles or equipment that have been determined to be 
defective or noncompliant. The incidence of covered sales and leases 
would be small even absent this rule. Moreover, although many dealers 
are small entities, another provision of the Safety Act requires 
manufacturers (or distributors) to reimburse dealers both for the value 
of the dealer's labor in installing replacement parts and for a 
prorated portion of the manufacturer's or distributor's selling price, 
for remedying defective or noncompliant vehicles or equipment prior to 
sale. See 49 U.S.C. 30116.
    Governmental jurisdictions will not be affected by this rule.

3. E.O. 13132 (Federalism)

    E.O. 13132 requires NHTSA 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. 
E.O. 13132 defines the term ``policies that have federalism 
implications'' 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.'' Under E.O. 
13132, NHTSA may not issue a regulation that has federalism 
implications, that imposes substantial direct compliance costs, and 
that is not required by statute, unless the Federal Government provides 
the funds necessary to pay the direct compliance costs incurred by 
State and local governments, or NHTSA consults with State and local 
officials early in the process of developing the regulation.
    The rule will not 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 as specified in E.O. 13132. Thus, the requirements of 
section 6 of the E.O. do not apply to this rule.

4. National Environmental Policy Act

    We have analyzed this action for purposes of the National 
Environmental Policy Act, 42 U.S.C. 4321. The action will not have a 
significant effect upon the environment.

5. Civil Justice Reform

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

6. Paperwork Reduction Act

    NHTSA has determined that this notice will not impose a new 
collection of information burden within the meaning of the Paperwork 
Reduction Act of 1995, 44 U.S.C. 3502.

7. Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 
48) requires agencies to prepare a written assessment of the cost, 
benefits, and other effects of proposed or final rules that include a 
Federal mandate likely to result in the expenditure by state, local, or 
tribal governments, in the aggregate, or by the private sector, of more 
that $100 million annually. Because a final rule based on this proposal 
will not have an effect of $100 million, no Unfunded Mandates 
assessment has been prepared.

List of Subjects in 49 CFR Part 573

    Defects, Motor vehicle safety, Noncompliance, Reporting and 
recordkeeping requirements, Tires.


    In consideration of the foregoing, NHTSA is amending 49 CFR part 
573 as set forth below.

PART 573--REQUIREMENTS AND PROHIBITIONS APPLICABLE TO SAFETY DEFECT 
AND NONCOMPLIANCE RECALLS

    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. Revise the heading of part 573 to read as set forth above.

    3. In Sec. 573.3, revise paragraph (a) and add paragraphs (h) and 
(i) to read as follows:


Sec. 573.3  Application.

    (a) Except as provided in paragraphs (g), (h), and (i) of this 
section, this part applies to manufacturers of complete motor vehicles, 
incomplete motor vehicles, and motor vehicle original and replacement 
equipment, with respect to all vehicles and equipment that have been 
transported beyond the direct control of the manufacturer.
* * * * *
    (h) The provisions of Sec. 573.11 apply to dealers, including 
retailers of motor vehicle equipment.
    (i) The provisions of Sec. 573.12 apply to all persons.

    4. Add Sec. 573.11 to read as follows:

[[Page 19698]]

Sec. 573.11  Prohibition on sale or lease of new defective and 
noncompliant motor vehicles and items of replacement equipment.

    (a) If notification is required by an order under 49 U.S.C. 
30118(b) or is required under 49 U.S.C. 30118(c) and the manufacturer 
has provided to a dealer (including retailers of motor vehicle 
equipment) notification about a new motor vehicle or new item of 
replacement equipment in the dealer's possession, including actual and 
constructive possession, at the time of notification that contains a 
defect related to motor vehicle safety or does not comply with an 
applicable motor vehicle safety standard issued under 49 CFR part 571, 
the dealer may sell or lease the motor vehicle or item of replacement 
equipment only if:
    (1) The defect or noncompliance is remedied as required by 49 
U.S.C. 30120 before delivery under the sale or lease; or
    (2) When the notification is required by an order under 49 U.S.C. 
30118(b), enforcement of the order is restrained or the order is set 
aside in a civil action to which 49 U.S.C. 30121(d) applies.
    (b) Paragraph (a) of this section does not prohibit a dealer from 
offering the vehicle or equipment for sale or lease, provided that the 
dealer does not sell or lease it.

    5. Add Sec. 573.12 to read as follows:


Sec. 573.12  Prohibition on sale or lease of new and used defective and 
noncompliant motor vehicle equipment.

    (a) Subject to Sec. 573.12(b), no person may sell or lease any new 
or used item of motor vehicle equipment (including a tire) as defined 
by 49 U.S.C. 30102(a)(7), for installation on a motor vehicle, that is 
the subject of a decision under 49 U.S.C. 30118(b) or a notice required 
under 49 U.S.C. 30118(c), in a condition that it may be reasonably used 
for its original purpose.
    (b) Paragraph (a) of this section is not applicable where:
    (1) The defect or noncompliance is remedied as required under 49 
U.S.C. 30120 before delivery under the sale or lease;
    (2) Notification of the defect or noncompliance is required by an 
order under 49 U.S.C. 30118(b), but enforcement of the order is 
restrained or the order is set aside in a civil action to which 49 
U.S.C. 30121(d) applies.

    Issued on: April 16, 2002.
Jeffrey W. Runge,
Administrator.
[FR Doc. 02-9773 Filed 4-22-02; 8:45 am]
BILLING CODE 4910-59-P