[Federal Register Volume 67, Number 201 (Thursday, October 17, 2002)]
[Rules and Regulations]
[Pages 64049-64066]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-26290]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 573 and 577

[Docket No. NHTSA-2001-11107; Notice 2]
RIN 2127-AI28


Motor Vehicle Safety; Reimbursement Prior to Recall

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

ACTION: Final rule.

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SUMMARY: This document adopts a regulation implementing Section 6(b) of 
the Transportation Recall Enhancement, Accountability, and 
Documentation (TREAD) Act. Under this rule, motor vehicle and motor 
vehicle equipment manufacturers will be required to include in their 
programs to remedy a safety-related defect or a noncompliance with a 
Federal motor vehicle safety standard, a plan for reimbursing owners 
for the cost of a remedy incurred within a reasonable time before the 
manufacturer's notification of the defect or noncompliance.

DATES: Effective Date: The effective date of the final rule is January 
15, 2003. Petitions for Reconsideration: Petitions for reconsideration 
of the final rule must be received not later than December 2, 2002.

ADDRESSES: Petitions for reconsideration of the final rule should refer 
to the docket and notice number set forth above and be submitted to 
Administrator, National Highway Traffic Safety Administration, 400 
Seventh Street, SW., Washington, DC 20590, with a copy to Docket 
Management, Room PL-401, 400 Seventh Street, SW., Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: For non-legal issues, contact George 
Person, Office of Defects Investigation, NHTSA, (202) 366-2850. For 
legal issues, contact Andrew J. DiMarsico, Office of Chief Counsel, 
NHTSA, (202) 366-5263.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule
II. Background: The TREAD Act (Pub. L. 106-414)
III. Discussion
    A. Application
    B. Reimbursement Period
    1. Definition of Reasonable Time
    2. End Date for Reimbursement
    C. Reasonable Conditions Allowed
    1. Remedies Performed Outside Warranty Coverage
    2. Nature of the Pre-Notification Remedy
    D. Amount of Reimbursement
    E. How to Obtain Reimbursement
    1. Necessary Documentation
    2. Where Documents are to be Submitted
    3. Cut-Off Date for Reimbursement
    4. When and How a Claimant Receives Reimbursement
    F. Owner Notification
    G. General Plans for Reimbursement
    H. Nonapplication
    I. Effective Date
IV. Regulatory Analyses

I. Summary of Final Rule

    Today's final rule expands manufacturers' programs for remedying 
safety defects and noncompliances in motor vehicles and equipment to 
include reimbursement plans that, at a minimum, cover certain 
expenditures related to the defect or noncompliance incurred before the 
implementation of the recall. The rule requires manufacturers to submit 
to the agency reimbursement plans that satisfy specific requirements 
and to comply with the terms of those plans.
    This final rule adopts, in most respects, the proposals in the 
Notice of Proposed Rulemaking, 66 FR 64078 (December 11, 2001). This 
rule specifies a minimum period for which a manufacturer must provide 
reimbursement to a person who

[[Page 64050]]

incurred costs to obtain a remedy before the manufacturer provided 
notification of a safety-related defect or noncompliance with a Federal 
motor vehicle safety standard (FMVSS) and delineates the conditions 
that a manufacturer must and may place in its reimbursement plan. The 
determination of the starting date for the mandatory reimbursement 
period depends upon what led to the recall. For recalls based upon a 
noncompliance with an FMVSS, the start of the mandatory reimbursement 
period is the date of the observation of a test failure by either the 
manufacturer or NHTSA. For recalls based upon a safety-related defect, 
the start of the reimbursement period is the date NHTSA opens an 
engineering analysis (EA) or one year prior to the date the 
manufacturer submits its notice of a defect to NHTSA pursuant to 49 
U.S.C. 30118(b) or (c) and 49 CFR part 573, whichever is earlier.
    Unlike the start of the reimbursement period, the end date of the 
reimbursement period depends on whether the item being recalled is a 
motor vehicle or replacement equipment. The end date distinguishes 
between a consumer's eligibility for reimbursement and a consumer's 
eligibility for the recall remedy. A consumer would not be eligible for 
reimbursement if he or she paid for the remedy after the end date, and 
would only be able to obtain a free remedy if the consumer followed the 
manufacturer's remedy program. For motor vehicles, the end date is ten 
days after the date the manufacturer mailed the last of its notices to 
owners pursuant to 49 CFR 577.5. For replacement equipment, the end 
date is ten days after the date the manufacturer mailed the last of its 
notices pursuant to 49 CFR 577.5, or 30 days after the conclusion of 
the manufacturer's initial efforts to provide public notice of the 
existence of the defect or noncompliance pursuant to 49 CFR 577.7, 
whichever is later.
    The rule also establishes certain required provisions of 
reimbursement plans. For motor vehicles, reimbursable costs may not be 
less than the lesser of the owner's cost for the remedy or the owner's 
costs for parts, labor, taxes and other miscellaneous fees. For 
replacement equipment, reimbursable costs presumably would be the 
amount paid by the owner to replace the item (including taxes), but the 
manufacturer may limit the amount of reimbursement to the ordinary 
retail price of the defective or noncompliant item that was replaced. 
Manufacturers must also identify the office(s) to which claims for 
reimbursement are to be submitted. The manufacturer must process the 
claim within 60 days. If the manufacturer denies the claim, it must 
provide a clear statement to the owner or purchaser stating the reasons 
for the denial.
    Manufacturers will be required to take certain actions to assure 
that owners or purchasers are appropriately aware of the possibility of 
reimbursement. In recalls where there is a reasonable likelihood that 
some persons may have made expenditures that are eligible for 
reimbursement, the manufacturer would have to include language in each 
owner notification that refers to such possible eligibility and that 
advises how to obtain the details on eligibility for reimbursement and 
how to obtain reimbursement. This could either be an enclosure with the 
owner letter or a reference to a toll-free telephone number. In all 
cases, the manufacturer must make its reimbursement plan available upon 
request, and it will also be available to the public at NHTSA.
    In addition, the final rule identifies the conditions that 
manufacturers may, but are not required to, impose upon reimbursement. 
Apart from the specified conditions, no other conditions or limitations 
are permitted. The reimbursement plan may, with some limitations, 
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. In regard to this permitted 
exclusion, a manufacturer may include an extended warranty offered by 
the manufacturer. However, a manufacturer may not exclude reimbursement 
based upon the existence of a third party's warranty, such as a service 
contract.
    Today's final rule also permits manufacturers to exclude 
reimbursement if the pre-notification remedy was not the same type of 
remedy as the one used in the recall, did not address the defect or 
noncompliance that led to the recall or a manifestation of the defect 
or noncompliance, was not reasonably necessary to correct the defect or 
noncompliance, or if the owner did not provide adequate documentation 
to the manufacturer. Under today's final rule, adequate documentation 
includes the name and address of the person seeking reimbursement; 
identification of the product; identification of the recall; a receipt 
for the remedy for which reimbursement is sought; for replaced 
equipment; proof that the claimant owned the recalled item; and, if the 
remedy was obtained within the time period of a manufacturer's free 
warranty, documentation indicating that the warranty was not honored or 
the warranty repair did not correct the problem addressed by the 
recall.
    Finally, the rule allows manufacturers to submit general 
reimbursement plans to the agency that may be incorporated into the 
Part 573 report by reference rather than providing detailed 
reimbursement plans to the agency for each recall. Under this option, 
manufacturers would provide basic information concerning the 
reimbursement plan, such as the entities authorized to administer 
reimbursement; identify acceptable documentation; and identify the 
manufacturer's notification procedures. Specific information regarding 
a particular recall, such as the identity of the remedy and the dates 
for the reimbursement period, would be submitted in the defect or 
noncompliance report to the agency pursuant to 49 CFR 573.

II. Background

    The Transportation Recall, Enhancement, Accountability, and 
Documentation (TREAD) Act, was enacted on November 1, 2000, Pub. L. 
106-414. 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, except under certain limited 
circumstances, 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

[[Page 64051]]

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 U.S.C. 30118 and 30119 and 49 CFR Part 
577, manufacturers are required to notify owners of defects and 
noncompliances. 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 amended 49 U.S.C. 30120(d) to require 
a manufacturer's remedy program to include a plan for reimbursing an 
owner or purchaser 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. 114 Stat. 1804. 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. 
Ibid.
    On December 11, 2001, we issued a notice of proposed rulemaking 
(NPRM) that would implement this section and solicited comments on the 
ways in which NHTSA may best implement section 6(b) (66 FR 64078).
    In response to the NPRM, we received comments from a variety of 
sources. Motor vehicle manufacturers and associated trade organizations 
who commented were General Motors Corporation (``GM''), Ford Motor 
Company (``Ford'') and the Alliance of Automobile Manufacturers 
(``Alliance''). The tire industry was represented by the Rubber 
Manufacturers Association (``RMA''). Other motor vehicle equipment 
manufacturers and associated trade organizations who commented were the 
Juvenile Products Manufacturers Association, Inc. (``JPMA''), Delphi 
Automotive Systems (``Delphi''), Motor and Equipment Manufacturers 
Association (``MEMA'') and Original Equipment Suppliers Association 
(``OESA''). The National Automobile Dealers Association (``NADA'') also 
commented. We also received comments from Public Citizen (``PC''), 
Consumers Union (``CU''), Consumer Federation of America (``CFA''), the 
Center for Auto Safety (``CFAS'') and Advocates for Highway and Auto 
Safety (``Advocates''). These comments have provided us with several 
insights in developing this final rule.

III. Discussion

A. Application

    In the NPRM, we proposed that the reimbursement rule apply to 
manufacturers as delineated in 49 CFR 573.3 and 49 CFR 577.3. We did 
not receive any comments on the proposed application of this rule. We 
are adopting it as proposed.

B. Period for Reimbursement

1. Definition of ``Reasonable Time''
    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. As we pointed out in the NPRM, Congress 
authorized the agency to delineate what it constituted ``reasonable 
time'' for reimbursement purposes. We also noted that the legislative 
history was not helpful in this determination, only suggesting 
something more than immediately prior to recall. We noted that Congress 
intended that the period of reimbursement be limited somewhat by the 
language of ``reasonable time.'' If Congress had intended reimbursement 
to cover all pre-notification remedies, it would have either explicitly 
stated that the period for reimbursement be the same as the statutory 
free remedy period of ten years (five years for tires) after the 
product is bought by the first purchaser (49 U.S.C. 30120(g)) or would 
not have included the limiting term ``reasonable time'' in section 6(b) 
of the TREAD Act. By using the term ``reasonable time,'' Congress meant 
something less than a reimbursement period that would cover ``all'' 
pre-notification remedies.
    In the NPRM, we proposed that the period for mandatory 
reimbursement be specified as an objective, bright-line rule to 
minimize unnecessary complications. We said that bright-line rules 
would be easy to administer. They would eliminate, or at least 
minimize, any disputes about whether an expenditure was made in the 
covered period. They would also allow the agency to remain outside any 
disputes between owners and manufacturers over reimbursement. In 
addition, we proposed to relate the bright-line rules for the period of 
reimbursement to the agency's investigative activities with respect to 
alleged noncompliances and defects. Based upon our investigative 
processes, we proposed objectively determinable time periods for 
reimbursement that differ depending upon whether the recall involves a 
noncompliance or a defect.
    With respect to a noncompliance with a FMVSS, we proposed that the 
period under which reimbursement would be mandatory would begin on the 
date of the initial test failure or the initial observation of a 
possible noncompliance. For noncompliance recalls that are influenced 
by the agency (a recall following an agency investigation), the date of 
the initial test failure will be apparent. With respect to 
noncompliance recalls that are not influenced (i.e., ``uninfluenced'') 
by the agency (a recall initiated solely by a manufacturer), former 49 
CFR 573.5(c)(7) (2001) (as recodified, 49 CFR 573.6(c)(7) \1\) requires 
manufacturers to identify ``the test results or other data'' that led 
to the manufacturer's determination. We proposed an amendment to this 
language to require the manufacturer to specify the date when it first 
identified the possibility that a noncompliance existed.
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    \1\ Section 573.5 was redesignated as Section 573.6 when the 
Early Warning Reporting Rule was published on July 10, 2002. See 67 
FR 45822, 45872.
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    With respect to a recall based upon a safety-related defect, in the 
NPRM we discussed at length the Office of Defects Investigation (ODI) 
investigative process and how ODI attempts to complete the final stage 
of its investigations--engineering analyses (EA)--within one year after 
they are opened. On the basis of that process, we proposed two 
different triggering dates as the beginning of the mandatory 
reimbursement period depending upon the circumstances. The difference 
between the triggering dates depends upon whether the recall was an

[[Page 64052]]

influenced recall or an uninfluenced recall. For uninfluenced recalls, 
we proposed that the reimbursement period would begin one year before 
the date of the manufacturer's submission of a notification of the 
defect to NHTSA pursuant to 49 U.S.C. 30118 and 49 CFR 573.5 (2001). 
For influenced recalls, we proposed that the beginning of the period 
for reimbursement would be the date the agency opens an EA.
    In general, commenters presented divergent views on the issue of 
what is a ``reasonable time'' for the purposes of mandatory 
reimbursement. Manufacturers, while suggesting some slight 
modifications, generally agreed with NHTSA's proposal, while consumer 
advocacy groups disagreed.
    Manufacturers (the Alliance, GM, Ford and JPMA) generally agreed 
with NHTSA's proposal that for defect-based recalls that were 
uninfluenced, the minimum period for reimbursement would begin one year 
before the manufacturer's Part 573 report. They urged NHTSA to adopt 
the same one-year rule for all recalls, including defect recalls 
undertaken after ODI has opened an investigation and all noncompliance 
recalls.
    In our view it would not be reasonable to adopt a reimbursement 
period beginning date of one year before the Part 573 report across the 
board. For example, in the case of a noncompliance with a FMVSS, if the 
failing test were two years before the Part 573 report, the 
manufacturer should not be allowed to avoid reimbursement for the cost 
of the remedy made by owners during the first year after the test. 
Similarly, the fact that some of the agency's complex defect 
investigations require more than a year to complete should not curtail 
manufacturer's reimbursement responsibilities. The manufacturers' 
suggestion could reward recalcitrant manufacturers that delay the 
submission of their Part 573 reports to the agency. Thus, relating the 
time period under which reimbursement must be provided to the agency's 
investigative processes limits or precludes manufacturers from 
manipulating the period of reimbursement. On the other hand, we see no 
reason why the period for reimbursement should ever be longer for 
uninfluenced defect recalls (or for those influenced recalls that did 
not require an EA) than for those in which ODI's defect investigation 
reached the EA stage. Therefore, the final rule provides that for those 
recalls that took place after ODI opened an EA, the start of the 
reimbursement period may be no later than the date of the EA opening or 
one year before the defect notification to the agency, whichever is 
earlier.
    In individual and joint comments, consumer advocacy groups (CFAS, 
PC, CU, CFA and Advocates, collectively ``advocacy groups'') and NADA 
disagreed with NHTSA's proposed approach for determining reasonable 
time. The advocacy groups commented that the agency's proposal for 
reasonable time would be confusing to consumers and would require that 
consumers have a basic knowledge of the statute and NHTSA's internal 
procedures. In addition, they asserted that the proposed rule would 
allow manufacturers to take advantage of the procedure by delaying 
their submission of a Part 573 report until it is favorable to the 
manufacturer to report the defect or noncompliance. Moreover, these 
commenters claimed that the proposed rule would frustrate the intent of 
Congress by penalizing consumers who act judiciously in remedying their 
vehicles prior to a recall, and that the rule is complex, difficult and 
against sound public policy. In general, they asserted that Congress 
intended to maximize reimbursement rights by extending the time frame 
for a free remedy. In their view, the ten-year/five-year time frame 
provided in 49 U.S.C. 30120(g)(1) is the reasonable time period for 
reimbursement of owners who repair defects or noncompliances prior to 
recall.
    The advocacy groups ascribed to Congress an intent that was not 
expressed in the law. In the TREAD Act, Congress did not ``maximize'' 
the reimbursement rights of owners. What Congress did do was create an 
obligation to provide reimbursement for some pre-recall expenditures 
that was not previously in the Safety Act. Congress left it to the 
Secretary to define the minimum period under which such reimbursement 
would be required. This is evident from the TREAD Act itself. The TREAD 
Act states:

    A manufacturer's remedy program shall include a plan for 
reimbursing an owner or purchaser 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. The 
Secretary may prescribe regulations establishing what constitutes a 
reasonable time for purposes of the preceding sentence and other 
reasonable conditions for the reimbursement plan.

Pub. L. No. 106-414, sec. 6(b) (2000).
    As to the time period, Congress did not specify that the 
reimbursement period be the entire statutory period remedy period under 
49 U.S.C. 30120(g). First, if Congress intended that the reimbursement 
period be the same as the ten-year/five-year statutory remedy period, 
it would have explicitly said so. This Congress did not do. Second, as 
we stated in the NPRM and above, Congress used a limiting term to 
describe the length of the reimbursement period. It stated that an 
owner is entitled to reimbursement when he or she remedies the defect 
within a ``reasonable time'' prior to recall, which was meant to be 
longer than initial suggestions during congressional consideration of 
the TREAD Act that it be limited to the period ``immediately'' prior to 
recall. However, by using the term ``reasonable time,'' Congress must 
have intended that the period for reimbursement be less than ten years 
(five years for tires) because that would be ``any time'' prior to 
recall, since manufacturers are not required to provide a free remedy 
for vehicles or equipment older than ten years (five years for tires) 
at the time of a recall.
    Moreover, the advocacy groups' statement that to obtain 
reimbursement under the proposal consumers would need a basic knowledge 
of the Safety Act and NHTSA's implementing regulations is incorrect. 
Consumers would not need to know the Safety Act or NHTSA's applicable 
regulations to obtain reimbursement; manufacturers would. To determine 
their eligibility for reimbursement, consumers would only need to read 
or listen to the information provided to them and follow up on it. 
Under today's rule, manufacturers must provide the specific dates for 
the period of reimbursement in their reimbursement plans and provide 
appropriate notice to consumers.
    Although we agree with the advocacy groups that there may be some 
instances of intentional manufacturer delay in filing a Part 573 
report, delay would not be determinative in the case of noncompliances 
with FMVSSs or in the case of most influenced defect-based recalls, 
because the reimbursement period for these would not be triggered by 
the date of the Part 573 report. If a manufacturer unreasonably delayed 
notifying NHTSA of a defect or a noncompliance, NHTSA could seek civil 
penalties under 49 U.S.C. 30165 for violations of section 30118(c). 
This should deter such potential manipulation, particularly since, in 
most cases, the costs of providing reimbursement for expenditures 
incurred before the opening of an EA or over a year prior to the recall 
are unlikely to be very great.
    Advocates asserted that the agency's ``bright-lines'' are 
irrational since one consumer could be reimbursed if he/she remedied 
the defect on the day of the opening of the EA, while another consumer 
could be denied

[[Page 64053]]

reimbursement if he/she remedied the defect on the day before the 
opening of the EA. However, ``bright-line'' rules commonly have the 
consequence that Advocates complained about. In fact, the ten-year/
five-year statutory remedy period that the advocacy groups suggested 
the agency adopt is a ``bright-line'' rule. Thus, even under the ten-
year/five-year rule, in some cases, there could still theoretically be 
consumers who would be denied reimbursement while others would receive 
it.
    NADA observed that NHTSA should set minimum periods, allowing 
manufacturers the flexibility to set longer periods should they choose 
to do so. We agree. We are setting the requirements listed in this rule 
as a floor, not a ceiling. Thus, the time periods set forth in this 
rule are the minimum requirements. In fact, Ford and GM advised that 
they do not limit, on the basis of time, reimbursement of expenditures 
by owners for pre-notification remedies. While we encourage this 
conduct, it is not specifically required by today's final rule.
    Therefore, based upon the above, the final rule adopts the 
``reasonable time'' periods for mandatory reimbursement that were 
proposed in the NPRM.
2. Reimbursement End Date
    The NPRM proposed two different dates for the end date for the 
eligibility period for reimbursement. For motor vehicles, the proposed 
end date was ten days after the manufacturer mailed the last of its 
initial Part 577 notices to owners. For replacement equipment, the 
proposed end date was 30 days after the conclusion of the 
manufacturer's initial efforts to publicize the existence of the defect 
or noncompliance. These proposed end dates were based upon the TREAD 
Act's language that reimbursement is for costs incurred prior to the 
manufacturer's notification under 49 U.S.C. 30118 and the practical 
difficulties of identifying the date when an individual owner actually 
received notice. We asked for comments whether these end dates were 
appropriate.
    The Alliance and NADA agreed with the proposal to exclude 
reimbursement obligations for costs incurred more than ten days after 
the manufacturer mailed the last of its initial Part 577 notices. 
However, in the case where the notices are mailed to consumers in 
stages, the Alliance recommended that the reimbursement period 
applicable to a specific owner terminate ten days after the initial 
Part 577 notice was sent to that owner.
    RMA recommended that the reimbursement end date for tires should 
not be more than five days after the notification of the recall has 
been sent to tire dealers. RMA asserted that this would minimize the 
likelihood of recalled tires being resold.
    MEMA and OESA recommended that the ``ending date'' for an equipment 
owner's entitlement to reimbursement be changed from 30 days after the 
conclusion of the manufacturer's initial efforts to publicize the 
existence of the defect or noncompliance to:

    Thirty days after the manufacturer has mailed the last of its 
notifications to purchasers pursuant to part 577 of this chapter, 
or, if public notice is required by the Administrator or otherwise 
given by the manufacturer, within 30 days of such publication of the 
existence of the defect or noncompliance.

They reasoned that public notices have only been required of 
replacement equipment manufacturers when their products are marketed 
through identifiable consumer channels, such as chain or volume retail 
operations. According to MEMA and OESA, in previous recalls, if NHTSA 
did not require manufacturers to publicize the existence of a safety 
defect, the replacement part manufacturers made the requisite statutory 
notice by means of a letter to the most recent purchaser known to the 
manufacturer. Furthermore, in some situations, such as involving 
aftermarket distribution of heavy vehicle equipment and sales of 
equipment to the commercial markets, the agency has not called for 
public notice.
    The advocacy groups criticized our ten-day end date proposal. They 
suggested that the reimbursement end date should be based upon the ten-
year/five-year requirement already in the statute. They reasoned that 
the mailing date of a manufacturer's notice and the concluding date of 
a manufacturer's efforts to publicize a defect or noncompliance are 
irrelevant to an owner's right to be reimbursed for repairs made prior 
to a safety recall. They also argued that consumers who had the remedy 
performed prior to the recall should be entitled to reimbursement no 
matter when they receive notice of the recall.
    The approach recommended by the Alliance for staged recalls 
presents some practical problems. The adoption of a single end date 
reduces potential confusion, such as could arise if an owner loses the 
notification letter, or if there is a dispute about whether a letter 
was actually received. Thus, in the case of motor vehicles, we believe 
ten days after the date of the last mailing of the manufacturer's 
letters notifying consumers that the remedy is available pursuant to 49 
CFR 577.5 is the appropriate end to the reimbursement period. 
Manufacturers can predict this date.
    RMA correctly recognized the importance of preventing the resale of 
recalled tires, but we do not believe that setting the end date for the 
reimbursement five days after tire dealers receive the notification of 
the recall will further this objective or would be a reasonable 
reimbursement condition. A tire manufacturer will normally notify its 
dealers of a defect or noncompliance before the manufacturer notifies 
owners of the recall. Thus, tire dealers will be on notice not to sell 
the recalled tires, be they new or used. Therefore, the end date for 
reimbursement purposes will have no or at most little effect on whether 
a recalled tire is sold by a dealer. Further, the RMA's proposal could 
inappropriately lead to a cut-off date before owners are notified.
    We believe that the advocacy groups' comment on the end date missed 
the point that we were making. Under the statute, reimbursement is only 
required for expenditures made prior to notification of the recall. If 
an owner has received notification of a defect or a noncompliance under 
which a free remedy is offered, it is reasonable to require the owner 
to utilize the remedy offered by the manufacturer rather than expend 
funds to independently obtain a different remedy.
    In the case of motor vehicle equipment, we agree with MEMA and OESA 
that in some cases there is no public notice of a defect or 
noncompliance. In that case, the mailing of the notices to owners by 
the manufacturer should control, as with motor vehicles. However, to be 
consistent with our approach with respect to vehicles, we are setting 
ten days after the equipment manufacturer has mailed the last of its 
notifications to purchasers pursuant to 49 CFR 577.5 as the appropriate 
end date. Where public notice is required by the Administrator or 
otherwise given by the manufacturer, we are retaining the 30-day period 
proposed in the NPRM. For those recalls with both individual and public 
notice, the latter of the two dates would end the reimbursement period.

C. Reasonable Conditions Allowed in the Reimbursement Plan

    In the NPRM, we noted that section 6(b) of the TREAD Act did not 
specify in detail what is to be included in a manufacturer's 
reimbursement plan. Rather, the section stated, ``The Secretary may 
prescribe regulations establishing * * * reasonable

[[Page 64054]]

conditions for the reimbursement plan.'' In the NPRM, we proposed to 
allow manufacturers to include certain conditions or limitations in 
their reimbursement plans, but no others. We also noted that 
manufacturers could impose less stringent restrictions on reimbursement 
if they chose to.
    We proposed several permissible conditions in the NPRM that related 
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 to obtain reimbursement. A 
discussion of these conditions and how they will be implemented in the 
final rule follows.
1. Remedies Performed Outside the Period of Free Warranty Coverage
    We proposed that one condition a manufacturer may include in its 
reimbursement plan is that the pre-notification remedy must have been 
performed or obtained after the conclusion of a manufacturer's warranty 
that would have covered the repair at no cost to the consumer. We noted 
in the NPRM that 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. As we stated 
in the NPRM, we wanted to avoid creating a program that would duplicate 
the manufacturer's warranty program. We said the purpose of the 
reimbursement plan is to provide a program that includes reasonable 
conditions, to reimburse an owner who had to incur costs to obtain a 
repair or replacement of the product before notification that a defect 
or noncompliance exists. Therefore, we proposed that manufacturers 
could provide in their reimbursement plan that consumers would not be 
eligible for reimbursement if they 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.
    However, we noted that the warranty availability exclusion would 
not be absolute. In particular, if a consumer had presented the vehicle 
or equipment to a person authorized to perform warranty work and that 
person had concluded that the problem or repair was not covered under 
the warranty, or the repair did not remedy the problem, the consumer 
would have to be reimbursed for the reasonable costs of a remedy that 
was subsequently obtained at a facility that was not an authorized 
warranty service provider.
    In general, the proposal to allow the warranty exclusion condition 
in the reimbursement plan was well received. The Alliance agreed with 
this ``common sense approach.'' Some comments, while not against this 
approach, recommended that NHTSA consider other approaches to address 
the particular needs of a specific product.
    JPMA advised that the child restraint industry does not have a 
standard warranty coverage that is comparable to the auto industry's 
basic warranties. It claimed that manufacturers of child restraints 
merge their warranty claims and consumer complaints into one database 
so it is difficult to distinguish between the two. Thus, JPMA 
recommended that NHTSA create a different exclusion for child restraint 
manufacturers, wherein a consumer would be eligible for reimbursement 
for remedies obtained from a source other than the manufacturer only if 
the consumer first sought assistance from the child restraint 
manufacturer, and was refused. JPMA claimed this is necessary to ensure 
that child restraint manufacturers are offered the same opportunity to 
remedy the problem within the company's own consumer affairs policies 
as vehicle manufacturers.
    We disagree with JPMA that we created an ``opportunity'' for motor 
vehicle manufacturers with this warranty exception. The purpose of the 
warranty exclusion was to avoid duplication by making customers take 
advantage of whatever warranty the manufacturer offered. If the 
manufacturer has no express warranty, then it cannot place this 
condition in its remedy plan. Moreover, in the motor vehicle context, 
the general parameters of warranties are often understood and owners 
commonly bring vehicles to franchised dealers, which are often 
relatively close by, for repair work. The same does not apply to child 
restraints. Therefore, we decline to incorporate JPMA's recommendation.
    NADA advised that most pre-announcement recall-related repairs are 
covered under original manufacturers' warranties, in which case 
customers are effectively reimbursed. In addition, NADA stated that 
other customers and repairs are covered under extended warranties or 
service contracts. It suggested that regardless of the source of 
coverage, all pre-announcement repairs that could have been covered by 
an original warranty, an extended warranty, or a service contract 
should be excluded from reimbursement under this rule. Lastly, it 
suggested any direct cash outlays by the customer, such as a 
deductible, should be eligible for reimbursement.
    We disagree with this approach. We are limiting the warranty 
exclusion to the manufacturer's original warranty and any extended 
warranty subsequently offered by the manufacturer, including those 
purchased by the first owner and those provided by the manufacturer at 
no charge. Service contracts offered by dealers and other entities are 
not warranties between the manufacturer and the owner of the vehicle. 
The manufacturer is not a party to those service contracts. Service 
contracts can complicate the reimbursement process with questions over 
what is covered, who can perform repairs, qualifications over coverage, 
and deductibles. These complications can lead to disputes with 
manufacturers over something the manufacturer did not offer. Indeed, 
the manufacturers did not suggest extending the exclusion of warranty 
coverage to service contracts. The manufacturer should not benefit from 
a service contract, for reimbursement purposes, when it is not a party 
to it. For extended warranties, we would require the manufacturer to 
have provided the owner with written notice of the terms of the 
extended warranty coverage in order for the manufacturer to exclude any 
repairs that could have been made under the warranty from 
reimbursement.
    Therefore, in regard to remedies performed within the period of 
free warranty coverage, today's final rule is essentially the same as 
proposed in the NPRM. The exclusion of repairs that would have been 
covered by a warranty only applies to the coverage provided by the 
manufacturer's warranties that the manufacturer provided in writing, 
either at the time of sale or by a subsequent notice. We note that this 
is consistent with the Early Warning Reporting Rule (67 FR 45822, July 
10, 2002) under which manufacturers are not required to report claims 
paid on service contracts by dealers as warranty claims. We are also 
adopting a definition of warranty that is the same as in the Early 
Warning Reporting Rule. See 49 CFR 579.4(c) and 67 FR 45822, 45877 
(July 10, 2002). Finally, we note that the warranty exclusion only 
applies where the manufacturer would pay in full, as opposed to 
providing an adjustment or credit and requiring some payment by the 
consumer. To make this clear, we have added the clause ``without any 
payment by the consumer'' to section 573.13(d)(1).

[[Page 64055]]

2. The Nature of the Pre-Notification Remedy
    In the NPRM, we proposed several conditions that a manufacturer may 
impose in the reimbursement plan regarding the nature of the pre-
notification remedies that would be eligible for reimbursement.
    First, we proposed that a manufacturer would be permitted to limit 
reimbursement to remedies that addressed the noncompliance or defect. 
With all recalls, the defect or noncompliance is described in Part 573 
information reports and in notifications to owners. See 49 CFR 
573.6(c)(5), (c)(8)(i); 49 CFR 577.5(e). We reasoned that manufacturers 
should not be required to pay for repairs that did not address the 
problems addressed by the recall.
    A second condition we proposed was that a manufacturer could limit 
the extent of repairs to those that were reasonably necessary to 
correct the underlying problem. In the NPRM, we provided an example of 
a failed ignition switch to illustrate that 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, we pointed out that a manufacturer could not 
provide that a repair would have to be identical to the recall remedy. 
We noted that in many instances the part used in the recall would not 
have been available before the recall. In those circumstances, the pre-
recall repair would necessarily have involved the installation of a 
part that was different from the remedy part, and the manufacturer 
could not refuse reimbursement on that basis.
    Additionally, the NPRM stated that 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. 
We noted for example an owner who replaced an item of original 
equipment that had failed with the same part. We said that 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 the pre-recall 
repair.
    Lastly, we proposed in the NPRM that a manufacturer of a motor 
vehicle could limit reimbursement to costs incurred for the same type 
of remedy as selected by the manufacturer. This was due to the Act's 
scheme that permits the manufacturer to choose the remedy, in the first 
instance. The general categories of remedies are set forth in 49 U.S.C. 
30120(a)(1). Thus, for example, a manufacturer would not have to pay 
for the replacement of a vehicle when the remedy offered by the 
manufacturer as part of the recall was to repair the vehicle.
    We proposed that replacement equipment be treated differently in 
this regard than motor vehicles. Due to differences in the costs of 
vehicles and replacement equipment, and the limited ability to repair 
most equipment items, replacement equipment is usually replaced in its 
entirety by the consumer when the item of equipment is broken, while a 
motor vehicle is almost always repaired. In light of those 
circumstances, we proposed that replacement equipment manufacturers 
would have to reimburse an owner for the cost of a replacement 
following a relevant failure of an equipment item subject to the 
recall, regardless of the recall remedy subsequently selected by the 
manufacturer. However, the owner would not also be entitled to the 
recall remedy with respect to the original item, since the owner would 
have been made whole by reimbursement for the cost of the new item 
(unless, of course, the owner had purchased the same defective item as 
the replacement).
    The Alliance commented that manufacturers should not pay for work 
beyond that which was needed to address the defect or noncompliance. GM 
commented that when an original equipment part is replaced, and then a 
subsequent recall remedy uses a different part, the original equipment 
part must have failed in order for a customer to obtain a remedy that 
includes reimbursement for the original part and the recall remedy. GM 
claimed that the proposed rule would not require the original equipment 
part to be defective in order to obtain both the recall remedy and 
reimbursement for replacing the original part.
    With regard to these points, in general, we agree that 
manufacturers should pay only for work that was performed to remedy 
what was later determined to be a noncompliance or defect. However, the 
original part need not have ``failed'' in order for the owner to be 
reimbursed. If it was appropriate to inspect, adjust, repair or replace 
the original part or system in order to correct a performance problem, 
the manufacturer must reimburse the owner for that work. In addition, 
if the consumer replaced an item of equipment while an investigation 
was open, reimbursement would be warranted. Indeed, this very situation 
was a basis for the TREAD Act. In that situation, consumers replaced 
certain Firestone Wilderness AT tires with other tires before 
Bridgestone/Firestone's August, 2000 recall. The reimbursement 
provision was intended to assure that manufacturers provided 
reimbursement in situations such as this. To obtain reimbursement, one 
need not wait until a tire or other part begins to separate or 
otherwise fails. The regulatory language in section 573.13(d)(2) 
requires reimbursement in these circumstances. However, if the original 
assembly is replaced in light of characteristics that would not be 
within the scope of the defect, such as normal wear, then the 
manufacturer does not have to reimburse the owner for the cost of that 
work. These concerns were adequately addressed in the NPRM; therefore, 
we are adopting the rule as proposed.
    Consistent with the proposal, the final rule permits manufacturers 
to set conditions in their reimbursement plans that may exclude 
reimbursement if the pre-notification remedy was not the same type of 
remedy (repair, replacement or refund of purchase price) as the recall 
remedy, did not address the defect or noncompliance that led to the 
recall, or was not reasonably necessary to correct the problem 
addressed by the recall. However, the final rule precludes a 
manufacturer's reimbursement plan from requiring that the pre-
notification remedy be identical to the remedy elected by the 
manufacturer.
    We discussed the possibility of allowing additional conditions 
applicable to child restraints due to the unique situations that may 
arise when children outgrow their child restraints. We suggested that 
it could be inappropriate for an owner of a recalled child restraint to 
receive reimbursement for the cost of replacing a restraint when the 
original restraint did not manifest the problem that was the subject of 
the recall, but was replaced due to the growth of a child. We suggested 
that it might be appropriate to allow child restraint manufacturers to 
identify situations where reimbursement would not be appropriate, as 
long as we could assure that manufacturers do not deny reimbursement 
where it is warranted. We identified three possible conditions. The 
first was to allow reimbursement to be conditioned on whether an owner 
registered the restraint with the child restraint manufacturer. The 
second condition was to allow a requirement that the receipt for the 
purchase of a replacement child restraint indicate that it is a model 
comparable to the original restraint. The last possible condition was 
to allow the manufacturer to require the owner of the recalled child 
restraint

[[Page 64056]]

to return it to the manufacturer or otherwise prove it had been 
destroyed in order to obtain reimbursement. We asked for comments on 
the practical applications of those approaches.
    JPMA asserted that all the conditions on reimbursement identified 
in the NPRM should be adopted regarding child restraints. According to 
JPMA, prior registration is vital to reimbursement. JPMA commented that 
prior registration of the defective or noncompliant restraint would 
help assure that the claimant was the actual owner, because he or she 
would have registered the restraint before there was any reason to 
think that reimbursement would be available in the future. JPMA 
contended that a receipt is necessary, but insufficient on its own, to 
show that the replacement child restraint is the same type as the one 
replaced. According to JPMA, a receipt plus the registration card would 
be sufficient. Finally, JPMA noted that the return of the defective 
child restraint is a good alternative for consumers who cannot meet the 
combination of the first two conditions, and should be available as a 
fall back provision.
    PC, CU, CFAU, and CFA jointly commented that when determining the 
proper way to handle the replacement of defective child restraints, the 
principal goal of a recall or of a reimbursement--to give a refund for, 
or repair or replace a defective product--must be considered. To 
facilitate the removal of recalled child seats from the marketplace and 
to encourage the repair or replacement of defective seats, the advocacy 
groups argued that reimbursement should only be predicated on proof of 
ownership and replacement of the defective restraint. They argued that 
the intent of the owner replacing the restraint should not be a 
determining factor. According to the advocacy groups, the goal should 
be the replacement or repair of the defective restraint. In their view, 
the agency's concern with preventing fraud should not supercede that 
goal.
    Notwithstanding JPMA's comments, we have concluded that the first 
and third conditions on which we requested comments in the NPRM would 
unduly limit reimbursement. With regard to registration, under 49 CFR 
Part 588, child restraint manufacturers are required to keep 
registration forms submitted by owners so they can notify owners of any 
defect or noncompliance. NHTSA is undertaking an evaluation of child 
safety seat registration, which has not been completed. As part of that 
evaluation, we have conducted a survey, which estimates that the 
registration rate for child restraints is currently about 27 percent. 
Although we would like the rate to be higher, since registration 
facilitates notification of child restraint owners, this low rate makes 
it unreasonable to require an owner to have returned a registration 
card to the manufacturer of the recalled restraint as a predicate to 
reimbursement. With respect to the third possible condition, as a 
practical matter, an owner of a broken child restraint who still needs 
to use the restraint to transport a child will normally replace it 
rather than get it repaired. The broken child restraint will most 
likely be discarded. The chances of the owner keeping a broken child 
seat in anticipation of a future recall are low. Thus, we will not make 
this an allowable condition.
    We have concluded, however, that reimbursement can be limited to 
the cost of purchasing a child restraint of the same type (e.g., rear-
facing, booster) as the restraint covered by the recall. For example, 
if a rear-facing infant seat was replaced by a toddler seat, it is 
reasonable to assume that the purchase was made because the child 
outgrew the restraint, rather than because the infant seat had broken 
due to a defect. In this rule, we will utilize the same three ``types'' 
of child restraints established in the Early Warning Reporting Rule. 
Under that rule, in the context of a child restraint system, we defined 
``type'' to mean the category of child restraint system selected from 
one of the following: rear-facing infant seat, booster seat, or other. 
See 49 CFR 579.4. In today's rule, we are also including definitions of 
rear-facing infant seat, booster seat, or other child restraint, that 
are consistent with those in the Early Warning Reporting Rule.
    Following issuance of the Early Warning Reporting Rule, we noticed 
that there was an inconsistency between the definition of ``rear-facing 
infant seat'' in the preamble and the definition that appeared in the 
regulatory text. See 67 FR at 45834. The definition in the preamble 
included the phrase ``and is designed to hold children up to 20 
pounds,'' while the regulatory text did not. Based upon our experience 
in conducting defect investigations and monitoring defect recalls, our 
objective in the Early Warning Reporting Rule was to differentiate 
those child restraints that are commonly used as infant carriers 
outside a vehicle. Several models of this type of child restraint have 
been recalled based on defective handles. The definition in Section 
579.4(c) could have been read to extend beyond those restraints to 
include convertible child restraints (i.e., those that can be used both 
in a rear-facing position with relatively small children and in a 
forward-facing position with children up to about 40 pounds), which are 
not also used as infant carriers. We added the 20-pound limit to 
exclude the larger, convertible restraints. However, upon further 
consideration, we have concluded that the 20-pound weight limit in the 
preamble version is too restrictive, since some manufacturers of rear-
facing, non-convertible child restraints now recommend their use with 
children up to 22 pounds or more.
    To address these two matters, we have decided to take a different 
approach. The definition of ``rear-facing infant seat'' that we are 
adopting in this rule (and that we intend to adopt as part of our 
pending reconsideration of the Early Warning Reporting Rule) is ``a 
child restraint system that is designed to position a child to face 
only in the direction opposite to the normal direction of travel of the 
motor vehicle.'' Therefore, it will not include convertible child 
restraints. ``Booster seat'' means, as defined in S4 of FMVSS No. 213, 
``either a backless child restraint system or a belt-positioning 
seat;'' and ``other'' encompasses ``all other child restraint systems 
not included in the first two categories.''
    We also believe it reasonable to allow equipment manufacturers to 
require that an individual seeking reimbursement for a replaced item 
provide proof that he or she, or a relative, owned the recalled item. 
For example, if the spouse or the original owner purchased the 
replacement, reimbursement would be required, if other conditions were 
met. We note that the advocacy groups supported such a condition in 
their comments. The filing of a registration card with the 
manufacturer, a copy of a registration card, or an invoice or receipt 
showing purchase of the recalled equipment item would be sufficient 
proof that the claimant had owned the item. This is addressed in 
section 573.13(d)(4)(vi).

D. Amount of Reimbursement

    In the NPRM, we proposed requirements related to the amount of 
reimbursement to be provided. For vehicles, we stated that since most 
recalls involve repair (which could include the replacement of one or 
more parts), the most likely scenario would be that reimbursement will 
be for the costs incurred by the owner to repair or replace the 
component or system covered by the defect or noncompliance 
determination. We noted that the Act authorizes two other types of 
remedy for defects and noncompliances in motor vehicles--replacement 
and refund.

[[Page 64057]]

Historically, these types of remedies have been extremely rare.
    In the case of repair, we proposed that the amount of reimbursement 
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. The proposed rule also limited costs of 
parts to the manufacturer's list retail price for authorized parts. 
However, the proposed rule did not allow any limitation on associated 
costs, such as taxes or disposal of wastes. The proposed rule also 
stated that not all costs of repairs of vehicles would have to be 
reimbursed. Custom-designed replacement parts or repairs other than 
that related to the recall in one service visit would not be covered by 
the proposed rule.
    In instances where a manufacturer offered a vehicle repurchase or 
replacement remedy, we proposed that the owner would only be eligible 
for reimbursement of the costs associated with the pre-notification 
repairs. If the owner continued to own the vehicle, he or she would 
also be entitled to have the vehicle repurchased or replaced under the 
recall. We noted 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 
that were incurred while he or she owned the vehicle.
    With regard to replacement equipment, as noted in the NPRM and 
above, replacement is the most common recall remedy. 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, labor, if any, and taxes. The 
NPRM proposed that 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.
    Finally, the NPRM stated that manufacturers would not be 
responsible to customers for reimbursement for consequential injuries 
and damages such as personal injuries, property damage, rental 
vehicles, or missed employment. The NPRM stated that the proposed rule 
would not affect an aggrieved party's right to bring a civil action for 
any consequential damages that resulted from the problem that was 
remedied by the owner.
    We received only a few comments on the amount of reimbursement. The 
Alliance agreed with NHTSA's view on reimbursement for consequential 
injuries or damages.
    NADA suggested that the rule require manufacturers to reimburse 
actual labor, parts, or ``menu'' repair costs, plus associated costs 
(taxes, waste disposal fees, etc.) incurred directly by customers to 
address defects or noncompliances and not allow manufacturers to place 
a limitation upon reimbursement. NADA further asserted that the rule 
should state that dealerships are entitled to reimbursement for the 
cost of any covered pre-announcement repairs made at no cost to the 
customer as a matter of dealership policy. NADA also observed that 
dealers should be reimbursed for any extraordinary, unbillable costs 
they incur directly due to pre-announcement repairs, such as special 
tool purchases. We agree with some of NADA's comments regarding the 
costs of reimbursement. We agree that a manufacturer should be required 
to reimburse actual labor, parts, and other repair costs, plus 
associated costs incurred directly by customers. We believe the final 
rule addresses NADA's concerns in this regard.
    We disagree with NADA regarding its suggestions that under this 
rule dealerships should be eligible for reimbursement of pre-
announcement repairs made at no cost to the customer as a matter of 
dealership policy and that dealers should be reimbursed for any 
extraordinary, unbillable costs they incur directly due to pre-
announcement repairs. Section 6(b) of the TREAD Act specifically 
addressed reimbursing owners and purchasers, not dealers. In any event, 
the Act already requires that manufacturers provide fair reimbursement 
to dealers for providing a remedy without charge as part of a recall. 
49 U.S.C. 30120(f). Reimbursement for costs made as a result of repairs 
done as a matter of dealership policy or any extraordinary costs 
incurred are matters between the dealer and the manufacturer. The final 
rule does not, and is not intended to, require manufacturers to 
reimburse dealers for costs that are a result of remedies performed as 
a matter of dealership policy.
    Therefore, this aspect of the final rule remains essentially the 
same as we proposed in the NPRM. Reimbursement is required only for 
those costs that were reasonably related to the repairs that addressed 
the problem that was ultimately determined to constitute a safety-
related defect or noncompliance. Manufacturers would not have to 
provide reimbursement for consequential injuries and damages such as 
personal injuries, property damages, rental vehicles, or missed 
employment. Again, similar to the NPRM, the final 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.

E. How To Obtain Reimbursement

1. Documentation Necessary To Obtain Reimbursement
    In the NPRM, we proposed that manufacturers may require a person 
seeking reimbursement to present documentation that shows: (1) The name 
and mailing address of the claimant;\2\ (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 (TIN) 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 claimant to separately identify the costs that are eligible 
for reimbursement); and (5) if the claimant seeks reimbursement for 
costs incurred 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 another facility. The 
manufacturer could provide that, to receive reimbursement, costs must 
be itemized by parts and labor on a receipt. See 66 FR 64082, 64086.
---------------------------------------------------------------------------

    \2\ In the discussion in the preamble of the NPRM we discussed 
the operation of the reimbursement plan in terms of the ``owner,'' 
but in the proposed regulatory text of the NPRM we referred to 
reimbursement of ``owners and purchasers'' (e.g., proposed Sec.  
573.5(c)(8)), to ``owners'' (e.g., proposed Sec.  573.13(d)(4)), and 
``claimants'' (e.g., proposed Sec.  573.13(g)(2)). In today's rule, 
we are generally using the term ``claimant,'' which refers to the 
person submitting a claim for reimbursement. We are defining a 
claimant as a person who seeks reimbursement for the costs of a pre-
notification remedy for which he or she paid.
---------------------------------------------------------------------------

    We proposed those documentation provisions in light of the 
objective of ensuring, reasonably effectively, that the

[[Page 64058]]

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. We requested comments on 
appropriate documentation provisions, including any reasonable 
provisions related to prevention of fraud. Additionally, we requested 
comments on whether a receipt will provide sufficient information to a 
manufacturer to determine if the remedy addressed the defect and 
whether it was reasonable, and, if not, what other information would be 
appropriate.
    GM commented that under its current procedures it requires owners 
to provide the repair order, proof of payment, and proof of ownership 
of the vehicle at the time the repair was made. The Alliance 
recommended that one condition that NHTSA should consider is that the 
person claiming reimbursement prove that s/he was the owner of the 
vehicle at the time the repair cost was incurred, rather than just the 
owner at the time of the recall. According to the Alliance, this would 
prevent manufacturers from reimbursing two people for one repair. It 
claimed the proof required should be the receipt.
    NADA added that it is reasonable for NHTSA to require that ``proper 
receipts'' support reimbursement. It also commented that there should 
be no provision requiring itemization of receipts because some receipts 
will not be itemized. We are unsure what NADA meant by ``proper 
receipts'' since it did not define the term, but we believe that it is 
appropriate to allow manufacturers to require itemization. If not 
required, the manufacturer might have to reimburse costs that were not 
directly related to the repair of the defect or noncompliance. If 
necessary, the claimant could obtain a supplemental statement from the 
repair or other facility.
    We do not agree with comments recommending that we limit 
reimbursement to owners. Section 6(b) of the TREAD Act refers in part 
to purchasers who incurred the cost of the remedy. In general, the 
manufacturer should reimburse the person who paid to have the pre-
notification repairs performed or who paid for a replacement. In most 
situations, the owner of the motor vehicle or replacement equipment 
will be the person who incurred the pre-notification repair or 
replacement costs. However, in other situations, other persons will 
have paid for the repair or replacement (e.g., a lessee or a relative 
of the owner). In still other cases, the owner of a vehicle at the time 
of the repair will have sold it prior to the announcement of the 
recall.
    In light of these considerations, we have decided that the approach 
advocated by GM and the Alliance is too restrictive in the context of 
vehicle recalls. The rule provides for reimbursement of claimants--
those who paid for the pre-notification remedy. The rule further avoids 
duplicate reimbursements by not providing a separate right to owners 
who did not incur the cost of the remedy. In addition, we believe that 
for vehicles duplicate and/or fraudulent claims can be prevented by 
requiring the claimant to submit an invoice or receipt showing the VIN 
and an identification of the owner of the recalled vehicle at the time 
that the pre-notification remedy was obtained. Manufacturers will be 
able to cross check on this basis. Also, the rule provides that 
manufacturers are not required to provide reimbursement based on 
fraudulent claims. For example, if someone presents a duplicate claim 
or one based on a doctored receipt, the manufacturer would not be 
required to pay it.
    Equipment items present a more difficult issue, since there is no 
unique VIN, and any purchaser of an equipment item similar to one that 
had been recalled could allege that he or she had previously owned (and 
discarded) a recalled item that had failed due to the defect. 
Therefore, consistent with the approach described in Section II.C of 
this notice, for equipment items we will allow manufacturers to limit 
reimbursement to individuals who can demonstrate that they or a 
relative owned the recalled item. Moreover as we discussed above, child 
restraints would have to be replaced with the same type of restraint.
    In the context of recalled tires, RMA recommended that we require a 
claimant to produce an invoice or a copy of the tire registration card 
for the recalled tire. While these are both sufficient methods to 
demonstrate ownership, we believe that they are not exclusive. For 
example, a consumer would not have either of these documents if the 
tire that was replaced had been installed on his or her vehicle at the 
time the vehicle was purchased. Tire manufacturers could not reject 
valid documentation demonstrating that a claimant had replaced a 
recalled tire that was on a vehicle that he or she or a relative owned.
    Receipts for repairs of vehicles often summarize the customer's 
concern or request and provide part-by-part and labor itemization. This 
level of detail does not appear on all repair receipts. As long as the 
receipt indicates that the repair addressed the problem that was 
addressed by the recall and the claimant can satisfy the other 
conditions in the reimbursement plan, reimbursement must be provided by 
the manufacturer.
2. Where Documents Are To Be Submitted
    In the NPRM, we proposed that the documentation had to be submitted 
directly to the manufacturer. However, based upon our review of the 
comments, we have reconsidered our approach.
    Manufacturers asserted that they should not be required to handle 
reimbursement themselves because it would be too costly. The Alliance 
commented that manufacturers should not be required to provide 
resources to handle reimbursement functions that are already being 
handled well at dealerships that are authorized to process the 
reimbursement. The Alliance recommended that the regulation permit 
manufacturers to manage the reimbursement program through dealers and 
not require manufacturers to handle the reimbursement themselves. GM 
concurred with the Alliance's recommendation and commented that by 
allowing dealers to handle reimbursement, a customer has face-to-face 
contact with a manufacturer's representative that can answer questions 
and provide information. GM stated that this method is preferable to 
exchanging letters or telephone calls to resolve problems as proposed 
in the NPRM. GM added that its system of reimbursement through dealers 
is quick, efficient and satisfactory to its customers. Ford echoed 
these comments.
    On the other hand, NADA contended that the rule should provide that 
any manufacturer using dealers to assist with reimbursement claims 
should be required to reimburse those dealers for the fair and 
reasonable administrative costs they incur. As a general proposition, 
we agree that dealers should be reimbursed for such costs, but do not 
believe that this issue needs to be addressed in this rule, since it is 
already covered by 49 U.S.C. 30120(f).
    The statute refers to manufacturers' reimbursement plans. 
Accordingly, we believe that the obligation to assure adequate 
reimbursement under this rule rests with manufacturers. Nonetheless, we 
will permit manufacturers to use franchised dealers or other authorized 
facilities to reimburse owners under their reimbursement plans in the 
final rule if the franchised dealers or other authorized facilities 
have agreed to do so. The costs of processing

[[Page 64059]]

reimbursement claims would have to be worked out between manufacturers 
and dealers and any other authorized entities. If the manufacturer does 
not have authorized dealers or facilities, it must designate the 
office(s) that will administer claims for reimbursement. In addition, 
there must be a mechanism for mailing requests for reimbursement to the 
manufacturer or its designee. Some people live a substantial distance 
from a franchised dealer or authorized facility and others cannot 
conveniently visit such an entity. It would not be reasonable to make 
them travel to a dealer to obtain reimbursement. Furthermore, 
manufacturers must make the reimbursement plans available to the public 
upon request. The final rule will reflect these changes.
3. Cut-Off Date for Reimbursement Claims
    In the NPRM, we proposed to allow (but not require) manufacturers 
to establish a cut-off date for reimbursement claims. We identified two 
possible approaches. The first was based on the period during which the 
recall campaign is subject to quarterly reporting pursuant to 49 CFR 
573.6 (2001). 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. The second approach was to set a 
fixed period applicable to all recalls; e.g., 90 days after the end of 
the reimbursement period. Manufacturers would have to identify the 
deadline for the submission of claims for reimbursement in their remedy 
plans. We proposed that the outside end date for the submission of 
claims for reimbursement be 90 days from the date of the last 
notification letter sent to owners under Part 577, but asked for 
comments on whether a different period would be more appropriate.
    We did not receive many comments on this particular condition. JPMA 
asserted that the cut-off date after which a consumer cannot obtain 
reimbursement should be shortened from 90 days until 45 or 60 days. 
JPMA claimed that a manufacturer needed to ``close the books'' on the 
reimbursement process. NADA suggested that the time for submitting 
claims should be limited only by the ten-year/five-year limitation set 
out in 49 U.S.C. 30120(g). The advocacy groups agreed with NADA. 
However, section 30120(g) has no relevance to this issue; it applies 
retrospectively from the date of the defect or noncompliance 
determination, and has no applicability to future events.
    Ford and GM did not suggest a specific cut-off date, but implied 
that they did not restrict reimbursement on the basis of when a claim 
was submitted.
    Based upon these comments, we have reconsidered our position. We 
believe a claim for reimbursement should be treated the same as a claim 
for a free remedy under a recall. Under the Safety Act, once a recall 
is announced, an owner is entitled to a free remedy. He or she is not 
required to submit his vehicle or replacement equipment to the 
manufacturer's franchised dealer or authorized facility within 90 days 
in order to receive the free remedy. Moreover, at least two major 
vehicle manufacturers do not currently impose any such limits. 
Therefore, under today's final rule, manufacturers will not be allowed 
to establish a cut-off date for the submission of reimbursement claims.
4. When and How a Claimant Receives Reimbursement
    In the NPRM, we proposed to require manufacturers to act upon 
reimbursement claims within a reasonable time from the date a complete 
claim is submitted. We proposed a period of 60 days and said the 
manufacturer must either grant or deny the claim for reimbursement 
within that period.
    We also suggested reasonable times for notification by 
manufacturers that claims were incomplete. We proposed that 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, provide an explanation of the 
documents that are needed to make the claim complete, and state that 
such supplemental documents must be submitted within an additional 30 
days. We proposed that if the claimant did not provide the required 
information within that 30-day period, the manufacturer could deny the 
claim.
    We also proposed that if the manufacturer determines that a claim 
for reimbursement will not be paid in full, it must clearly advise the 
claimant, in plain language, of the reasons for the denial.
    The comments focused on increasing the time period manufacturers 
have in responding to a deficient reimbursement claim. MEMA and OESA, 
the Alliance, GM and Delphi suggested that the 30-day deficiency notice 
and claimant resubmission periods in the proposed rule should both be 
increased to 60 days to provide both consumers and manufacturers 
reasonable time to act on such deficient claims for reimbursement. 
Based upon the comments, we are extending the 30-day periods proposed 
in the NPRM to 60 days.
    RMA suggested that the manufacturer's time to act upon a request 
for reimbursement should begin after the manufacturer received the 
claim, rather than from the date the claimant mailed the claim. The 
NPRM used the term ``submitted.'' We had meant for that term to refer 
to the date the claim was received by the manufacturer, and we will 
clarify that in the final rule.
    Although the NPRM did not explicitly discuss the form that 
reimbursement must take, we are adding a clarifying provision to 
require manufacturers to provide reimbursement in the form of a check 
or cash from the manufacturer's office, authorized dealer, or facility 
that is designated by the manufacturer to administer the reimbursement 
plan.

F. Owner Notification

    We stated in the NPRM, and continue to believe, that the inclusion 
of a reimbursement plan in a manufacturer's remedy program would have 
little effect unless consumers were aware of their right to obtain such 
reimbursement. We proposed to require manufacturers to include 
information about the availability of reimbursement for the costs of 
pre-notification remedies in the notification to owners required under 
49 CFR part 577 and identified several possible approaches. One 
approach was to require manufacturers to include a copy of the complete 
plan in each notification sent to owners. A second approach was to 
require manufacturers to describe their reimbursement plans using their 
own language, and a third approach would require particular language 
that manufacturers would have to use in their owner notifications.
    Letters from manufacturers to owners of defective or noncompliant 
vehicles and equipment emphasize the importance of remedying their 
vehicle or equipment. It is important that owners are not distracted 
from this central objective. We were concerned that a great deal of 
detail regarding reimbursement in the main body of the owner 
notification could obscure the safety-critical information about the 
defect or noncompliance itself. Moreover, as a practical matter, the 
reimbursement provision would be irrelevant to most recipients because 
only a small fraction of consumers would have expended funds for repair

[[Page 64060]]

or replacement of the recalled product. Thus, we proposed that the 
owner notification letter contain a limited amount of information 
regarding the manufacturer's reimbursement plan. The notification would 
have to explain that reimbursement was available, specify the 
reimbursement period, and identify ways that consumers could timely 
obtain information about the reimbursement program.
    To assure that manufacturers' reimbursement plans were available to 
owners, we proposed that the notification would have to identify an 
Internet Web site address maintained by the manufacturer where the plan 
applicable to the recall in question was to be found, and would have to 
state that the plan could be obtained by calling the manufacturer at a 
specified (toll-free) telephone number or by writing to the 
manufacturer at a specified address. (We also proposed to require each 
manufacturer to specify the date by which the owner would have to 
request the plan in order to receive it in time to complete the claim 
for reimbursement in a timely manner, but this issue is now moot, since 
we have decided to prohibit manufacturers from limiting the period in 
which reimbursement claims may be filed.)
    We requested comments on whether this proposal provided owners with 
adequate information about the possibility of reimbursement for the 
cost of pre-recall remedies, and whether the proposal could be 
improved. We also sought comment on whether this or the other 
identified approaches were reasonable ways to advise owners of the 
possible availability of and requirements for reimbursement; i.e., 
would the reader understand how to obtain reimbursement? We also sought 
comments concerning alternatives that might be preferable to those 
approaches identified in the NPRM with the reasons for, and information 
relating to, any alternatives. Finally, we sought comments on whether a 
Web site and a toll-free telephone number would provide consumers with 
sufficient, clear information.
    The majority of commenters (the Alliance, GM, Ford, MEMA & OESA, 
and JPMA) disagreed with the ``boilerplate'' language we proposed for 
the Part 577 notifications. They argued that the language we proposed 
is difficult to read and stylistically inconsistent with many 
manufacturers' Part 577 notifications. GM also argued that notification 
regarding possible reimbursement is unnecessary for many recalls, such 
as label errors, noncompliances that can only be detected with 
measuring devices or disassembly of the vehicle, and safety defects or 
noncompliances that have no effect other than on occupant protection in 
a crash. GM alleged that in these types of recalls, an owner would be 
confused by a letter that has information regarding reimbursement when, 
in fact, reimbursement was not available.
    In addition, the Alliance and GM observed that, pursuant to 49 CFR 
573.5(c)(10) (2001), NHTSA has the opportunity to review every Part 577 
owner notification before it is mailed to owners and to require 
appropriate modifications to the language. They argued that NHTSA can 
decide if a manufacturer's notification needs to include language 
regarding reimbursement and whether the language proposed by the 
manufacturer is adequate. The Alliance commented that ``one-size fits 
all'' language would not work because the owner notification should be 
tailored to the facts of each recall. Thus, they suggested that, as 
with other aspects of owner notification, language regarding 
reimbursement should be developed by the manufacturer, subject to NHTSA 
review.
    Ford was the only commenter that provided a specific alternative to 
the NPRM's proposed Part 577 language. Ford contended that the proposed 
language would confuse many customers because it had a ``readability'' 
index at a 12th grade level. As an alternative, Ford recommended the 
following:

    If you paid to have this service done before the date of this 
letter, Ford is offering a full refund. For the refund, please give 
your paid original receipt to your dealer. To avoid delays, do not 
send receipts to Ford Motor Company.

Ford claimed that its recommendation has a readability index of the 6th 
or 7th grade and would be easier to understand than NHTSA's proposed 
language. Ford also asserted that an owner could obtain the 
manufacturer's complete reimbursement plan from an authorized dealer. 
Ford also suggested that rather than specifying language that must be 
included in owner letters, the final rule list the types of information 
that must be included. It noted that in cases where it is appropriate 
to include language about reimbursement, ODI can review the 
manufacturer's draft owner letter pursuant to section 573.5(c)(10).
    Based upon our consideration of the comments, and our experience in 
reviewing manufacturers' owner notifications under section 573.5(c)(10) 
(recently renumbered as section 573.6(c)(10)), we are making some 
adjustments to our proposal. See 49 CFR 577.11. First, we have decided 
that manufacturers will not be required to include any reference to 
reimbursement in owner notifications for recalls where there is no 
reasonable possibility that anyone would be eligible for reimbursement. 
As suggested by GM, these include recalls to correct labeling errors. 
However, we do not agree with GM's suggestion to exclude recalls 
involving occupant protection in crashes, since owners may well replace 
defective components that perform that function, such as seat belt 
retractors and buckles and air bags. In addition, we are not adopting 
GM's suggestion to exclude all recalls that address noncompliances that 
can only be detected with a measuring device or disassembly of the 
vehicle. GM's comment is conclusory and does not explain the range of 
noncompliances that would be covered by its recommendation. Moreover, 
while it may not be possible to prove the existence of a noncompliance 
with a FMVSS without testing using a measuring device, it may be 
possible to sense an irregular condition that the owner may decide to 
remedy. The owner should be reimbursed if it turns out that a part or 
system that was replaced or repaired did not comply with a standard.
    Second, we will not require vehicle manufacturers to refer to 
reimbursement in an owner notification if we conclude that all of the 
vehicles covered by the recall are clearly covered by a manufacturer's 
original warranty. For example, if a manufacturer offers a three year/
36,000 mile warranty on a particular vehicle model, and that model is 
the subject of a recall that commences one month after the first 
covered vehicle was manufactured, one would expect that all of the 
recalled vehicles would still be covered by the manufacturer's 
warranty, so the manufacturer would not have to provide any 
reimbursement under this rule (except under extraordinary circumstances 
in which a repair under warranty was refused or inadequate). However, 
if some of the vehicles were two years old at the time a defect is 
determined to exist, the owner notification would have to include 
reimbursement language, since it is likely that at least some two-year-
old vehicles would have been driven over 36,000 miles. (We have decided 
that if it is likely that any of the vehicles covered by the recall 
would be outside the manufacturer's warranty coverage, all owners would 
have to be advised of the potential for reimbursement, since it would 
be too difficult to administer a system in which different owners 
received different letters, and such a

[[Page 64061]]

scenario could lead to consumer confusion.)
    For those recalls where there is a reasonable possibility that some 
consumers will be entitled to reimbursement, the main body of the owner 
notification must include a concise reference to the right to 
reimbursement for the cost of repair or replacement, along with a 
description of where consumers who believe they may be entitled to such 
reimbursement can obtain further information about reimbursement. 
However, if a manufacturer has information leads it to believe that no 
individual would be eligible to receive reimbursement in connection 
with a particular recall (for example, if the recall involved a 
noncompliance or a defect that could not have been remedied prior to 
the manufacturer's recall campaign because there was no repair or 
replacement available), it may request us, in writing, to exempt it 
from notifying the public of the possibility of reimbursement. Such a 
request would have to be submitted at or before the time the 
manufacturer provides us with a draft of its owner notification letter 
pursuant to section 573.6(c)(10), together with supporting information, 
views, and arguments. If we find that no one would be eligible for 
reimbursement under this rule, the notification provisions of section 
577.11 would not apply. This is addressed in section 577.11(e).
    Rather than require all manufacturers to utilize identical 
language, we will allow each manufacturer to use its own words, subject 
to our review. This process has worked with respect to other aspects of 
owner notifications, which we review under section 573.6(c)(10), and we 
believe it that it will work in the reimbursement context as well. We 
are amending section 573.6(c)(10) to explicitly require that the 
manufacturer submit reimbursement provisions, including attachments, 
for NHTSA's review under that section. However, if a manufacturer 
submits a notice that does not meet the requirements of today's rule 
and NHTSA's staff does not note the deficiency in their review, a 
manufacturer may not subsequently attempt to justify the failure on the 
basis that it relied on the agency review.
    With respect to our proposal regarding how supplemental information 
would be made available, several manufacturers (the Alliance, GM, Ford, 
MEMA and OESA) opposed our proposal to require information about 
reimbursement on a special website and through a toll-free telephone 
number. They argued that such requirements would increase costs due to 
the set up, monitoring, and staffing of these services. The Alliance 
argued that NHTSA should not mandate that a manufacturer host a special 
website since NHTSA's regulations now allow individual manufacturers to 
decide how to conduct a recall (except for a limited amount of required 
language in the Part 577 letter). Furthermore, the Alliance claimed 
that NHTSA did not provide justification for such a requirement, nor 
did it provide any estimated costs involved in setting up and 
maintaining a website and toll-free telephone line. In addition, MEMA 
and OESA noted that some small manufacturers do not have toll-free 
numbers or even an Internet presence and suggested that this be 
optional.
    Based on these comments, we are not at this time requiring 
manufacturers to maintain information about reimbursement on an 
Internet Web site. Rather, we are allowing two options. First, a 
manufacturer may utilize a toll-free telephone number (with or without 
a corresponding Internet Web site) through which consumers could obtain 
the needed information. There would have to be TTY capability for the 
use of hearing-impaired consumers. Alternatively, the manufacturer 
could include a separate enclosure with its owner notification letter 
that would set forth all of the required information.
    For notifications of equipment recalls that are in a form other 
than a letter to a specific owner or purchaser (e.g., a placard in a 
retail outlet or an advertisement in a magazine), the manufacturer 
would not be able to utilize the second option. However, to avoid 
imposing a significant financial burden on those small manufacturers of 
motor vehicle equipment that do not otherwise maintain a toll-free 
telephone number for the use of consumers, we have decided that public 
(non-letter) notifications by such manufacturers may refer consumers to 
a regular (non-toll-free) telephone number with TTY capability, as long 
as they also specify a mailing address at which owners can obtain the 
relevant supplemental information.
    The supplemental information must describe all of the relevant 
components of the manufacturer's reimbursement plan, as specified in 
today's final rule. Thus, it must identify the vehicles and equipment 
covered by the recall, identify the type of remedy eligible for 
reimbursement, identify any limits on the period in which the repair or 
replacement must have occurred, identify any restrictions on 
eligibility that the manufacturer is imposing, specify all necessary 
documentation that must be submitted, and explain how to and where to 
submit or mail a claim. This is consistent with some manufacturers' 
practices. For example, we have placed in the docket for this 
rulemaking a document that Mazda Motor Corporation utilized in a recent 
campaign that describes its reimbursement plan.

G. General Plans for Reimbursement

    In the NPRM, we proposed 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. We also proposed that the 
manufacturer would have to update such plans at least every two years 
to provide the agency consumers with current information.
    GM suggested that NHTSA permit manufacturers to submit 
reimbursement plans in advance and then to include information about 
approved plans in owner's manuals or warranty documents GM provides to 
its customers. In GM's view, owner notification would be simpler under 
this approach because the letter would simply refer the owner to his or 
her owner's manual or warranty documents.
    Based on those comments, we have concluded that manufacturers will 
have the option of filing a general reimbursement plan with the agency 
every two years rather than submitting a plan with each Part 573 
report. The general reimbursement plan must set forth the general 
procedures for reimbursement. Information specific to a particular 
recall (e.g., any cut-off dates established by the manufacturer) would 
be submitted with the Part 573 report.
    We are not requiring manufacturers to incorporate the general 
reimbursement plan in each vehicle's owner's manual or in warranty 
papers, but they have the option of doing so.

H. Nonapplication

    In the NPRM, we proposed that 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

[[Page 64062]]

issued under section 49 U.S.C. 30118(b). We did not receive any 
comments on this proposal and accordingly adopt it in the final rule.

I. Effective Date

    Although the NPRM did not propose a date after the final rule was 
published, GM contended that, unless ``major changes'' are made to the 
rule, it estimates it would require six months to make the necessary 
preparations. However, GM did not provide an explanation on what 
constituted ``major changes.'' From GM's other comments, we infer 
``major changes'' to mean that NHTSA permit manufacturers to utilize 
their franchised dealers for the reimbursement process. We do not 
believe that six months is necessary. GM already has a reimbursement 
program. Moreover, GM has recognized in its comments that reimbursement 
plans would not be required for most recalls because they are within 
the warranty period.
    This rule does not impose significant new administrative burdens. 
It allows manufacturers flexibility to utilize their dealers to process 
reimbursement claims. In addition, manufacturers have options in 
notifying consumers and will not have to set up any Internet Web sites. 
Nevertheless, we have decided to provide a somewhat longer period than 
we proposed in the NPRM. The rule will become effective 90 days after 
its publication in the Federal Register and will apply to all recalls 
for which Part 573 reports are submitted to the agency after that date.

IV. Regulatory Analyses

A. Regulatory Policies and Procedures

    Executive Order 12866, ``Regulatory Planning and Review'' (58 FR 
51735, October 4, 1993) provides for making determinations whether a 
regulatory action is ``significant'' and therefore subject to Office of 
Management and Budget (OMB) review and to the requirements of the 
Executive Order. The Order defines as ``significant action'' as one 
that is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local or Tribal government or communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    We have considered the impact of this final 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 recall-related repairs 
prior to a manufacturer's 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 for uninfluenced recalls from the past year 
indicates that manufacturers generally have not received many 
complaints from owners about the problem prior to making a defect 
determination, and rarely, if ever, do they receive complaints prior to 
a noncompliance determination. Second, most manufacturers already 
provide voluntary reimbursement for pre-recall repairs, at least under 
some circumstances.
    Generally, vehicle manufacturers offer a warranty program that 
covers at least 36 months or 36,000 miles. History indicates that most 
recalls occur within the period of coverage under warranty programs. In 
2000, vehicle manufacturers conducted 476 recalls. Of these, only 102 
(approximately 20%) occurred more than 36 months after the date the 
oldest covered vehicle was sold. And in almost all of those recalls, 
only a small number of the covered vehicles were outside the warranty 
period (based on the number of months following sale at the time of the 
determination). For 2001, the relevant numbers were 411 and 104, or 
approximately 25 percent.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) 
requires agencies to evaluate the potential effects of their proposed 
and final rules on small businesses, small organizations, and small 
governmental jurisdictions. Business entities are defined as small by 
standard industry classification for the purposes of receiving Small 
Business Administration (SBA) assistance.
    We have 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). We are preparing a notice for publication 
in the Federal Register requesting public comment on our estimate of 
those burdens.

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

[[Page 64063]]

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 rulemaking 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 final 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 (Pub. 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?

    We believe that this final rule meets the requirements of E.O. 
12866 regarding plain language.

List of Subjects in 49 CFR Parts 573 and 577

    Motor vehicle safety, defect, noncompliance, tire, reimbursement, 
reporting and recordkeeping requirements.


    In consideration of the foregoing, NHTSA amends 49 CFR parts 573 
and 577 as set forth below.

PART 573--DEFECT AND NONCOMPLIANCE REPORTS

    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.


    2-3. Section 573.6 is amended by revising paragraphs (c)(7), 
(c)(8)(i), and (c)(10) to read as follows:


Sec.  573.6  Defect and noncompliance information report.

* * * * *
    (c) * * *
    (7) In the case of a noncompliance, the test results and other 
information that the manufacturer considered in determining the 
existence of the noncompliance. The manufacturer shall identify the 
date of each test and observation that indicated that a noncompliance 
might or did 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 of this part. A manufacturer's 
plan may incorporate by reference a general reimbursement plan it 
previously submitted to NHTSA, together with information specific to 
the individual recall. Information required by Sec.  573.13 that is not 
in a general reimbursement plan shall be submitted in the 
manufacturer's report to NHTSA under this section. If a manufacturer 
submits one or more general reimbursement plans, the manufacturer shall 
update each plan every two years, in accordance with Sec.  573.13. The 
manufacturer's remedy program and reimbursement plans will be available 
for inspection by the public at NHTSA headquarters.
* * * * *
    (10) Except as authorized by the Administrator, the manufacturer 
shall submit a copy of its proposed owner notification letter, 
including any provisions and attachments related to reimbursement, to 
the Office of Defects Investigation (``ODI'') no fewer than five 
Federal Government business days before it intends to begin mailing it 
to owners. Submission shall be made by any means which permits the 
manufacturer to verify promptly that the copy of the proposed letter 
was in fact received by ODI and the date it was received by ODI.
* * * * *

    4. Section 573.13 is added to read as follows:


Sec.  573.13  Reimbursement for pre-notification remedies.

    (a) Pursuant to 49 U.S.C. 30120(d) and Sec.  573.6(c)(8)(i) of this 
part, this section specifies requirements for a manufacturer's plan 
(including general reimbursement plans submitted pursuant to Sec.  
573.6(c)(8)(i)) to reimburse owners and purchasers for costs incurred 
for remedies in advance of the manufacturer's notification of safety-
related defects and noncompliance with Federal motor vehicle safety 
standards under subsection (b) or (c) of 49 U.S.C. 30118.
    (b) Definitions. The following definitions apply to this section:
    (1) Booster seat means either a backless child restraint system or 
a belt-positioning seat.
    (2) Claimant means a person who seeks reimbursement for the costs 
of a pre-notification remedy for which he or she paid.
    (3) Pre-notification remedy means a remedy that is performed on 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.
    (4) Other child restraint system means all child restraint systems 
as defined in 49 CFR 571.213 S4 not included within the categories of 
rear-facing infant seat or booster seat.
    (5) Rear-facing infant seat means a child restraint system that is 
designed to position a child to face only in the direction opposite to 
the normal direction of travel of the motor vehicle.
    (6) Warranty means a warranty as defined in Sec.  579.4(c) of this 
chapter.

[[Page 64064]]

    (c) The manufacturer's plan shall specify a period for 
reimbursement, as follows:
    (1) The beginning date shall be no later than a date based on the 
underlying basis for the recall 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 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, or one year before the date of the manufacturer's notification 
to NHTSA pursuant to Sec.  573.6 of this part, whichever is earlier.
    (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.  
573.6 of this part.
    (2) The ending date shall be no earlier than:
    (i) For motor vehicles, 10 calendar days after 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, 10 calendar days after the date on 
which the manufacturer mailed the last of its notifications to owners 
pursuant to part 577 of this chapter (where applicable) or 30 days 
after the conclusion of the manufacturer's initial efforts to provide 
public notice of the existence of the defect or noncompliance pursuant 
to Sec.  577.7, whichever is later.
    (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 original or extended 
warranty would have provided for a free repair of the problem addressed 
by the recall, without any payment by the consumer unless a franchised 
dealer or authorized representative of the manufacturer denied warranty 
coverage or the repair made under warranty did not remedy the problem 
addressed by the recall. The exclusion based on an extended warranty 
may be applied only when the manufacturer provided written notice of 
the terms of the extended warranty to owners.
    (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 defect 
or noncompliance; or
    (C) If the pre-notification remedy was not reasonably necessary to 
correct the defect or noncompliance that led to the recall or a 
manifestation of the defect or noncompliance.
    (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 defect 
or noncompliance;
    (B) If the pre-notification remedy was not reasonably necessary to 
correct the defect or noncompliance that led to the recall or a 
manifestation of the defect and noncompliance; or
    (C) In the case of a child restraint system that was replaced, if 
the replacement child restraint is not the same type (i.e., rear-facing 
infant seat, booster seat, or other child restraint system) as the 
restraint that was the subject 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 claimant did not 
submit adequate documentation to the manufacturer at an address or 
location designated pursuant to Sec.  573.13(f). The plan may require, 
at most, that the following documentation be submitted:
    (i) Name and mailing address of the claimant;
    (ii) Identification of the product that was recalled:
    (A) For motor vehicles, the vehicle make, model, model year, and 
vehicle identification number of the vehicle;
    (B) For replacement equipment other than child restraint systems 
and tires, a description of the equipment, including model and size as 
appropriate;
    (C) For child restraint systems, a description of the restraint, 
including the type (rear-facing infant seat, booster seat, or other 
child restraint system) and the model; or
    (D) For tires, the model and size;
    (iii) Identification of the recall (either the NHTSA recall number 
or the manufacturer's recall number);
    (iv) Identification of the owner or purchaser of the recalled motor 
vehicle or replacement equipment at the time that the pre-notification 
remedy was obtained;
    (v) 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 indicate that the repair addressed the 
defect or noncompliance that led to the recall or a manifestation of 
the defect or noncompliance, and state the total amount paid for the 
repair of that problem. Itemization of a receipt of the amount for 
parts, labor, other costs and taxes, may not be required unless it is 
unclear on the face of the receipt that the repair for which 
reimbursement is sought addressed only the pre-notification remedy 
relating to the pertinent defect or noncompliance or manifestation 
thereof.
    (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 identify the item and state the total amount paid for 
the item that replaced the defective or noncompliant item;
    (vi) In the case of items of replacement equipment that were 
replaced, documentation that the claimant or a relative thereof (with 
relationship stated) owned the recalled item. Such documentation could 
consist of:
    (A) An invoice or receipt showing purchase of the recalled item of 
replacement equipment;
    (B) If the claimant sent a registration card for a recalled child 
restraint system or tire to the manufacturer, a statement to that 
effect;
    (C) A copy of the registration card for the recalled child 
restraint system or tire; or
    (D) Documentation demonstrating that the claimant had replaced a 
recalled tire that was on a vehicle that he, she, or a relative owned; 
and
    (vii) 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 original or extended warranty program, 
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

[[Page 64065]]

reimbursed for a pre-notification remedy.
    (1) For motor vehicles:
    (i) 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, including, but not limited to, taxes or 
disposal of wastes, may not be limited.
    (2) For replacement equipment:
    (i) The amount of reimbursement ordinarily would be the amount paid 
by the owner for the replacement item.
    (ii) In cases in which the owner purchased a brand or model 
different from the item of motor vehicle equipment that was the subject 
of the recall, the manufacturer may limit the amount of reimbursement 
to the retail list price of the defective or noncompliant item that was 
replaced, plus taxes.
    (iii) If the item of motor vehicle equipment was repaired, the 
provisions of paragraph (e)(1) of this section apply.
    (f) The manufacturer's plan shall identify an address to which 
claimants may mail reimbursement clams and may identify franchised 
dealer(s) and authorized facilities to which claims for reimbursement 
may be submitted directly.
    (g) The manufacturer (either directly or through its designated 
dealer or facility) shall act upon requests for reimbursement as 
follows:
    (1) The manufacturer shall act upon a claim for reimbursement 
within 60 days of its receipt. If the manufacturer denies the claim, 
the manufacturer must send a notice to the claimant within 60 days of 
receipt of the claim that includes a clear, concise statement of the 
reasons for the denial.
    (2) If a claim for reimbursement is incomplete when originally 
submitted, the manufacturer shall advise the claimant within 60 days of 
receipt of the claim of the documentation that is needed and offer an 
opportunity to resubmit the claim with complete documentation.
    (h) Reimbursement shall be in the form of a check or cash from the 
manufacturer or a designated dealer or facility.
    (i) The manufacturer shall make its reimbursement plan available to 
the public upon request.
    (j) 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.
    (k) Each manufacturer shall implement each plan for reimbursement 
in accordance with this section and the terms of the plan.
    (l) Nothing in this section requires that a manufacturer provide 
reimbursement in connection with a fraudulent claim for reimbursement.
    (m) A manufacturer's plan may provide that it will not apply to 
recalls based solely on noncompliant or defective labels.
    (n) 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 of a tire, this period shall be 5 calendar 
years.

PART 577--DEFECT AND NONCOMPLIANCE NOTIFICATION

    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 is amended by adding Sec.  577.11 to read as follows:


Sec.  577.11  Reimbursement notification.

    (a) Except as otherwise provided in paragraph (e) of this section, 
when a manufacturer of motor vehicles or replacement equipment is 
required to provide notice in accordance with Sec. Sec.  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 
Sec. Sec.  573.6(c)(8)(i) and 573.13 of this chapter.
    (b) The manufacturer's notification shall include a statement, 
following the items required by Sec.  577.5 or Sec.  577.6, that
    (1) Refers to the possible eligibility for reimbursement for the 
cost of repair or replacement; and
    (2) Describes how a consumer may obtain information about 
reimbursement from the manufacturer;
    (c) The information referred to in Sec.  577.11(b)(2) of this part 
shall be provided in one of the following ways:
    (1) In an enclosure to the notification under Sec.  577.5 or Sec.  
577.6 that provides the information described in Sec.  577.11(d), 
consistent with the manufacturer's reimbursement plan; or
    (2) Through a toll-free telephone number (with TTY capability) 
identified in the notification that provides the information described 
in Sec.  577.11(d), consistent with the manufacturer's reimbursement 
plan.
    (3) For notifications of defects or noncompliances in item of motor 
vehicle equipment that are in a form other than a letter to a specific 
owner or purchaser, if the manufacturer does not otherwise maintain a 
toll-free telephone number for the use of consumers, the manufacturer 
may refer claimants to a non-toll-free telephone number (with TTY 
capability) if it also specifies a mailing address at which owners can 
obtain the relevant information regarding the manufacturer's 
reimbursement plan.
    (d) The information to be provided under paragraph (c) of this 
section must:
    (1) Identify the vehicle and/or equipment that is the subject of 
the recall and the underlying problem;
    (2) State that the manufacturer has a program for reimbursing pre-
notification remedies and identify the type of remedy eligible for 
reimbursement;
    (3) Identify any limits on the time period in which the repair or 
replacement of the recalled vehicle or equipment must have occurred;
    (4) Identify any restrictions on eligibility for reimbursement that 
the manufacturer is imposing (as limited by Sec.  573.13 (d) of this 
chapter);
    (5) Specify all necessary documentation that must be submitted to 
obtain reimbursement;
    (6) Explain how to submit a claim for reimbursement of a pre-
notification remedy; and
    (7) Identify the office and address of the manufacturer where a 
claim can be submitted by mail and any authorized dealers or facilities 
where a claimant may submit a claim for reimbursement.
    (e) The manufacturer is not required to provide notification 
regarding reimbursement under this section if NHTSA finds, based upon a 
written request by a manufacturer accompanied by supporting 
information, views, and arguments, that all covered vehicles are under 
warranty or that no person would be eligible for reimbursement under 
Sec.  573.13 of this chapter.


[[Page 64066]]


    Issued on: October 8, 2002.
Jeffrey W. Runge,
Administrator.
[FR Doc. 02-26290 Filed 10-16-02; 8:45 am]
BILLING CODE 4910-59-P