[Federal Register Volume 69, Number 156 (Friday, August 13, 2004)]
[Rules and Regulations]
[Pages 50077-50085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18354]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 573

[Docket No. NHTSA-2001-10856; Notice 3]
RIN 2127-AI29


Motor Vehicle Safety; Disposition of Recalled Tires

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

ACTION: Final rule.

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SUMMARY: This document implements section 7 of the Transportation 
Recall Enhancement, Accountability, and Documentation (TREAD) Act by 
adding regulations that provide that a manufacturer's remedy program 
for the replacement of defective or noncompliant tires shall include a 
plan addressing how to prevent, to the extent

[[Page 50078]]

reasonably within the manufacturer's control, the replaced tires from 
being resold for installation on a motor vehicle, and also how to 
limit, to the extent reasonably within the manufacturer's control, the 
disposal of replaced tires in landfills. In addition, pursuant to 
section 7, this rule also requires the manufacturer to include 
information about the implementation of the plan in quarterly reports 
to the Secretary about the progress of notification and remedy 
campaigns.

EFFECTIVE DATE: This final rule will take effect on November 12, 2004.
    Petitions for reconsideration: Any petition for reconsideration of 
this rule must be received by NHTSA no later than September 27, 2004.

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

FOR FURTHER INFORMATION CONTACT: For technical issues: Mr. George 
Person, Office of Defects Investigation, NHTSA. Telephone 202-366-5210. 
For legal issues: Ms. Jennifer Timian, Office of Chief Counsel, NHTSA. 
Telephone 202-366-5263.

SUPPLEMENTARY INFORMATION:

I. Background

    On November 1, 2000, the TREAD Act, Public Law 106-414, 114 Stat. 
1800, was enacted. The statute was, in part, a response to 
congressional concerns regarding the manner in which various entities 
dealt with defective motor vehicles and motor vehicle equipment, 
including tires. During congressional consideration of the bill that 
eventually was adopted as the TREAD Act, there had been media reports 
that some persons were selling defective Firestone ATX or Wilderness AT 
tires that had been returned to dealers for replacement under an 
ongoing safety recall.
    Pre-TREAD Act law, 49 U.S.C. 30120(d), required the manufacturer of 
defective or noncompliant tires to file with the Secretary a copy of 
the manufacturer's program for remedying safety defects and 
noncompliances with Federal motor vehicle safety standards. But section 
30120(d) did not require the manufacturer's program to include a plan 
for the disposition or disposal of recalled tires that were returned by 
the tire owners or purchasers.
    Section 7 of the TREAD Act expanded 49 U.S.C. 30120(d) to require a 
manufacturer's remedy program for tires to include a plan for 
preventing, to the extent reasonably within the manufacturer's control, 
the resale of replaced tires for use on motor vehicles, as well as a 
plan for the disposition of replaced tires other than in landfills, 
particularly through methods such as shredding, crumbling, recycling, 
recovery, or other ``beneficial non-vehicular uses.'' Further, Section 
7 requires the manufacturer to include information about the 
implementation of its plan in quarterly reports that it is required to 
make to the Secretary about the progress of its notification and remedy 
campaigns involving tires.

II. The New Regulatory Provisions

    In order to implement section 7's new requirements, we are amending 
our regulations governing ``Defect Notification,'' 49 CFR part 573, at 
sections 573.6 and 573.7. These amendments are somewhat different from 
those we originally proposed in our December 18, 2001, Notice of 
Proposed Rulemaking (NPRM) on Disposition of Recalled Tires (66 FR 
65165), primarily based upon comments we received in response to the 
NPRM and to the Supplemental Notice of Proposed Rulemaking (``SNPRM'') 
that we issued on July 26, 2002 (67 FR 48852). We are retaining the 
proposed regulatory structure that requires creation of manufacturers' 
plans for all tire safety recalls, regardless of size; prompt 
incapacitation of all returned recalled tires by retail outlets; and 
``exceptions'' reporting, by tire dealers under the manufacturers' 
control to manufacturers, and then by manufacturers in the quarterly 
reports required by 49 CFR 573.7. However, in response to the comments, 
we are modifying the mechanisms for disposing of recalled tires and the 
contents of the proposed reports. The subsection numbers in the 
regulatory have been redesignated, as a result of the issuance of our 
Early Warning Reporting rule. See 67 FR 45872 (July 10, 2002), and we 
are using the resulting new section numbers in the regulatory text. 
Also, we have reorganized some of the subsections to improve their 
clarity.
    In the NPRM, we proposed requirements for both manufacturers and 
tire dealers. We proposed to require manufacturers that conduct tire 
recalls to submit programs and file reports with us about their plans 
for incapacitating and disposing of recalled tires that addressed three 
major concerns: (1) Ways of assuring that entities replacing the tires 
are aware of the legal prohibitions on the sale of defective or 
noncompliant tires; (2) mechanisms to impair recalled tires so that 
they cannot be used on a vehicle; and (3) the disposition of recalled 
tires, consistent with applicable laws and in ways that minimize their 
deposit in landfills. The manufacturers would have to implement those 
plans. In addition, we proposed to require that tire dealers render 
returned recalled tires unsuitable for use on the day the tires are 
removed from the vehicle or from stock, and then dispose of them in 
accordance with manufacturers' plans and applicable laws, in ways that 
minimize the deposit of the tires in landfills. We also proposed to 
require ``exceptions reporting,'' by manufacturer-controlled tire 
outlets to manufacturers monthly, and by manufacturers to NHTSA in 
quarterly reports, to identify aggregate numbers of recalled tires that 
have not been rendered unsuitable for reuse or that have been disposed 
of in violation of applicable state and local requirements, and that 
describe failures by tire outlets to act in accordance with 
manufacturers' directions for disposing of recalled tires, including an 
identification of the outlets in question. We sought comments on the 
reporting burdens. Subsequently, in the SNPRM, we sought comments on an 
alternative proposal by the Rubber Manufacturers Association (RMA) 
that, among other things, would have restricted the applicability of 
the final rule to those recalls that involve more than 10,000 tires and 
that would not have required ``exceptions reporting'' by manufacturers 
to NHTSA.
    After considering the comments on the NPRM and the SNPRM, we have 
decided to retain the basic outlines of the notification and reporting 
requirements for manufacturers and for tire outlets that we originally 
proposed. We also have concluded that, under section 7 of TREAD, the 
notification and reporting requirements in Sec. Sec.  573.6(c)(9) and 
573.7(b)(7), set out below, must apply to all remedy programs involving 
the replacement of tires, rather than only to those remedy programs 
involving 10,000 or more tires, as suggested by RMA. However, in 
response to RMA's suggestions, we are modifying the notification 
requirement proposed for Sec.  573.6(c)(9) to permit

[[Page 50079]]

manufacturers a choice of notifying retail outlets of the contents of 
their programs for the disposition of recalled tires either annually or 
for each tire recall that they conduct, and we have decided to permit 
permanent disposition of the returned recalled tires by either the 
manufacturer (normally but not necessarily from one or more central 
locations) or the retail outlets, at the manufacturer's option.
    We are retaining the requirement that manufacturers notify retail 
outlets that they own, franchise or authorize to replace tires of the 
statutory prohibition on the resale or reintroduction into commerce of 
returned recalled tires. If the manufacturer elects to dispose of 
returned recalled tires from one or more central locations and requires 
retail outlets to send recalled tires to those locations promptly, we 
are not requiring the manufacturer to notify retail outlets of the 
requirement to dispose of the tires in accordance with applicable state 
and local regulations. If the manufacturer elects to have the retailers 
dispose of the returned recalled tires, we are requiring the 
manufacturers to notify the retail outlets of that requirement. 
However, because state and local requirements vary, we are not 
requiring manufacturers to advise the retail outlets of the particular 
requirements that are applicable in the jurisdictions in which they are 
operating.
    For safety reasons, we have decided to retain a requirement for 
prompt incapacitation of returned recalled tires by retail outlets and 
others under the manufacturer's control that receive such tires from 
consumers, regardless of whether the retail outlets return the recalled 
tires to the manufacturer for disposition or dispose of the recalled 
tires themselves. However, we have modified the proposed requirement to 
permit retail outlets to incapacitate recalled tires within 24 hours of 
receipt rather than by the close of business on the day of receipt.
    Finally, we have decided to retain the requirement for ``exceptions 
reporting,'' from retail outlets under the manufacturers'' control to 
manufacturers and from manufacturers to NHTSA, of deviations from the 
manufacturer's plan and/or failures to destroy returned recalled tires 
within the specified timeframe. In response to a suggestion by RMA, we 
are modifying the requirement by permitting retail outlets to report 
any such deviations to manufacturers either on a monthly basis or 
within 30 days of the occurrence of the deviation.

III. Discussion of Comments and Issues Raised Therein

    We received five comments on the NPRM, including three from trade 
associations (the Rubber Manufacturers Association (``RMA'')) (two 
comments), the National Solid Waste Management Association (``NSWMA'') 
and the National Automobile Dealers Association (``NADA'')) and one 
from a vehicle manufacturer (Ford Motor Company (``Ford'')) that 
recently conducted a number of recalls of tires manufactured by other 
companies that were installed on its vehicles. RMA's second comment on 
the NPRM was filed after we met with RMA representatives on March 26, 
2002. (That meeting was documented in a memorandum that we docketed on 
April 1, 2002, and resulted in our publication of the SNPRM.) We 
received six comments on the SNPRM, from three trade associations: RMA 
(two comments), NADA, and the Tire Industry Association (``TIA''), and 
one consumer advocacy group, Advocates for Highway and Auto Safety 
(``Advocates'') (two comments). The second comments filed by both RMA 
and Advocates are responses to comments filed by others.
    The comments are discussed below. Because the same issues were 
discussed in both sets of comments, we have organized our discussion by 
issue rather than chronologically or by commenter.

A. Contents of Manufacturers' Notices

    We proposed that, for each tire recall, manufacturers include 
language notifying all entities that are authorized to replace the 
recalled tires of the prohibitions and notifications in the Safety Act 
as they apply to recalled tires, specifically including the ban on the 
sale of new defective or noncompliant tires (49 U.S.C. 30120(i), see 
also 49 CFR 573.11); the prohibition on the sale of new and used 
defective and noncompliant tires (49 U.S.C. 30120(j), see also 49 CFR 
573.12; and the duty to notify NHTSA of any knowing and willful sale of 
a new or used recalled tire for use on a motor vehicle (49 U.S.C. 
30166(n), see also 49 CFR 573.10). The manufacturer was to provide 
informational materials on the prohibitions to all authorized 
replacement outlets. For those outlets that are company-owned or 
otherwise subject to the control of the manufacturer, the manufacturer 
was also to provide written direction to the person in charge of each 
outlet to comply with the law and to notify all employees involved in 
replacing, handling or disposing of recalled tires of the requirements.
    RMA stated that there was no statutory requirement for 
manufacturers to make these notifications, but acknowledged that 
manufacturers could include such notifications in the materials they 
provide to dealers. NADA stated that ``perhaps'' manufacturer 
instructions should reference these prohibitions. Both RMA and NADA 
argued that retailers who are adequately compensated by manufacturers 
for properly handling recalled tires would have an economic incentive 
for complying with the requirements.
    We have decided to retain the proposed notification requirements, 
and to require that they be furnished to retail outlets either annually 
or for each individual tire recall that a manufacturer conducts. The 
requirements further the safety objectives of section 7 of the TREAD 
Act, which broadly refers to preventing replaced tires from being 
resold, and manufacturers have acknowledged that they are feasible. 
Given that manufacturers must already notify dealers of decisions to 
conduct safety recalls and of procedures for implementing a remedy, it 
will not be difficult to add to those notices short instructions that 
satisfy these requirements.
    We are also retaining the proposed requirement that manufacturers 
notify all of their retail outlets about the means for altering 
recalled tires to prevent their re-use and about the need to dispose of 
recalled tires in environmentally sound manner. Again, given that 
manufacturers must already notify retail outlets of decisions to 
conduct tire safety recalls, it will not be difficult to add to those 
notices short instructions regarding compliance with the prevention of 
resale and the environmental aspects of section 7 of the TREAD Act.
    Based on our consideration of RMA's request, we are modifying the 
proposed notifications to permit manufacturers to select among 
alternative disposition procedures. Manufacturers may choose to manage 
the collection and disposition of recalled tires, which may involve 
having retail outlets return the tires to a designated location(s) or 
may involve employing contractors to collect the tires from the retail 
outlets. Or, manufacturers may choose to authorize retail outlets to 
dispose of recalled tires themselves. In the latter case, manufacturers 
must advise retail outlets of the requirement that they comply with 
applicable state and local laws and regulations governing the 
disposition of tires. The manufacturer may establish differing 
procedures regarding the disposition of recalled tires on a recall-

[[Page 50080]]

by-recall basis, so long as the manufacturer's plan for each such 
recall includes all of the elements of these regulations (Sec.  
573.6(c)(9)). The choice of approaches is up to the manufacturer; 
however, at a minimum, a manufacturer must notify retail outlets about 
tire disposition programs annually.

B. RMA Proposal To Limit Reporting Requirements to Recalls Involving at 
Least 10,000 Tires

    RMA proposed to limit the applicability of this rule to recalls 
that involve at least 10,000 tires, stating that the previously 
existing requirements of part 573 were sufficient for recalls of lesser 
magnitude. According to figures submitted by RMA in its comments, this 
would exempt most tire recalls from the requirements of this rule. 
Other commenters did not take a position on this aspect of RMA's 
proposal; however, Advocates argued that section 7 of TREAD applies to 
all recalled tires that are within the manufacturer's control, 
regardless of the quantity of tires covered by the recall.
    Although we understand RMA's desire to minimize reporting 
requirements, we decline to grant this RMA request. Section 7 of the 
TREAD Act covers all tire recalls. That section states that a 
manufacturer's remedy program involving the replacement of tires shall 
include a plan addressing how to prevent replaced tires from being 
resold for installation on a motor vehicle and how to limit the 
disposal of replaced tires in landfills, particularly through 
beneficial non-vehicular uses. Section 7 also states that the 
manufacturer shall include information about the implementation of such 
plans with each quarterly report to NHTSA regarding the progress of the 
recall campaign. See 49 U.S.C. 30120(d). The use of the phrase ``shall 
include'' in both the sentence regarding the establishment of the plan 
and the sentence regarding quarterly reporting demonstrates that these 
elements are mandatory rather than optional. 2A Sutherland, Statutory 
Construction (6th Ed. Singer, 2000) at Sec.  46.06, citing United 
States v. Menasche, 348 U.S. 528 (1955) and Plaut v. Spendthrift Farm, 
Inc., 514 U.S. 211 (1995). The RMA proposal would eliminate the need 
for a plan for most tire recalls. In any event, we do not agree that 
existing part 573 is sufficient for small volume recalls because it 
does not contain any provisions regarding disposition of recalled tires 
or any provisions for reporting of failures to implement recall plans. 
Therefore, we have concluded that the notification and reporting 
requirements in Sec. Sec.  573.6(c)(9) and 573.7(b)(7) will apply to 
all remedy programs involving the replacement of tires.
    However, in response to RMA's comments, we are modifying the 
proposed reporting requirement in Sec.  573.6 to permit manufacturers a 
choice of notifying retail outlets of their programs either annually or 
for each tire recall they conduct. We do not see a reason to restrict 
this choice to recalls covering a particular number of tires.

C. Disposition By Tire Outlets or at a Central Location

    RMA suggested that manufacturers be permitted the option of 
requiring tire outlets to return recalled tires to the manufacturer for 
disposal, rather than having the outlets dispose of the tires 
themselves. RMA asserted that this would enhance public safety and 
permit accurate assessments of the progress of recalls by allowing for 
systematic accounting for collected recalled tires. RMA also claimed 
that this would permit manufacturers to test recalled tires to analyze 
their performance and potentially improve their design and would permit 
manufacturers to return to service any tires that had been included in 
the recall by mistake or that did not contain the defect or 
noncompliance that was the subject of the recall. RMA stated that 
linking reimbursement for replacement of recalled tires to a 
requirement to return the recalled tires would create an incentive for 
retail outlets to return recalled tires to the manufacturer.
    NADA, representing automobile dealers, supported this aspect of 
RMA's proposal, stating that manufacturer plans normally should involve 
``take-back programs'' and that manufacturers rather than retailers 
should physically arrange for tire disposition or, alternatively, 
instruct retailers to use specific transporters and third-party 
management facilities. NADA noted that this would give manufacturers 
more control over tire disposition and thus make it more likely that 
tires will be disposed of in an environmentally sound manner. The Tire 
Industry Association (TIA), representing tire dealers, wholesalers and 
distributors, and others, also supported RMA's proposal. Advocates did 
not object to this aspect of RMA's proposal.
    We have decided to permit manufacturers the option of disposing of 
tires centrally or having tire outlets dispose of tires. We agree with 
RMA and NADA that there are advantages to the manufacturers' managing 
the disposition of the tires, rather than having the tire outlets do 
so, and that linking reimbursement to return of the tires will 
encourage tire outlets to return the tires to the manufacturers. We 
also agree that there are advantages to placing disposal responsibility 
on the manufacturers. This should improve accounting for the progress 
of the recall, and thereby contribute to safety.

D. Incapacitation of Tires at Retail Outlets

    RMA proposed to eliminate the requirement for tire outlets to 
incapacitate those returned recalled tires that they ship to the 
manufacturer's designated central location, and also to modify the 
requirement for tire outlets to destroy by the close of business on the 
day of receipt those recalled tires that they dispose of themselves. 
This issue engendered the most controversy of any issue raised in this 
rulemaking.
    RMA argued that requiring retailers to incapacitate tires that are 
returned to the manufacturer would not increase safety, and that 
eliminating the requirement would permit manufacturers to do research 
and testing on the returned tires, and also to confirm that the 
returned tires were in fact subject to the recall and to return 
improperly returned tires to service. RMA also claimed that in some 
cases tire outlets were not sufficiently expert to determine whether 
tires are included in recalls.
    NADA and TIA supported this aspect of RMA's proposal. NADA 
commented that it made no sense to require dealers to destroy tires in 
the event of a ``manufacturer take-back,'' and that, for those recalls 
in which retail outlets dispose of returned recalled tires, the 
requirement should be modified to permit retail outlets to destroy 
returned tires within 24 hours of receipt rather than by the close of 
business on the day of receipt. TIA claimed that destroying tires could 
be a needless waste of fully compliant or non-defective tires that are 
erroneously removed from vehicles.
    Ford stated, in commenting on the NPRM, that it agreed that 
preventing the inadvertent reuse of tires that are subject to a recall 
campaign is important and that, in communications to its affected 
dealers regarding its owner notification campaign to replace Firestone 
Wilderness AT tires, Ford requested that its dealers render tires 
unusable as soon as they were removed from the vehicle.
    Advocates opposed RMA's proposal, arguing that the interest of 
safety requires immediate destruction of all returned recalled tires 
and that retail outlets are capable of determining from the labeling on 
a tire whether the tire was included in the recall, by reason of 
experience and training. Advocates acknowledged that compliance with 
such a requirement would probably not

[[Page 50081]]

be universal, but thought it likely that the requirement would increase 
the number of recalled tires damaged on removal from the vehicle and 
thereby decrease the likelihood that recalled tires would inadvertently 
be reinstalled on vehicles. Advocates argued that, in light of 
experience during the recent Firestone recall, it was better to err on 
the side of caution and safety rather than take a chance that recalled 
and defective tires will be resold, and that the best way to accomplish 
this is by damaging the tread or sidewall of recalled tires 
immediately. Advocates also argued that repair facility personnel could 
be trained to recognize recalled tire markings, citing NHTSA's 
statements in rulings on inconsequentiality petitions with respect to 
tire labeling that such personnel are adequately trained to identify 
tire labeling problems. Advocates did not address the testing issue 
raised by RMA.
    We have decided to retain the proposed requirement to incapacitate 
all returned recalled tires, regardless of whether they are sent back 
to the manufacturer for disposition or disposed of by the retail 
outlet, subject to one exception discussed below. There are numerous 
identifiers on tires, including the manufacturer (or brand name), size, 
tire identification number (TIN) in which information is encoded, and 
production period. As in other recalls, we believe that an inspection 
process for recalled defective or noncompliant tires can be 
sufficiently well defined to enable the entity or technician performing 
the recall to determine whether tires are included in the recall and 
should be replaced. Furthermore, we agree with Advocates that the best 
mechanism for ensuring that recalled tires are not reinstalled on 
vehicles (inadvertently or otherwise) is a requirement for prompt 
destruction of those tires. We believe that immediate incapacitation 
upon removal of the tires from a vehicle, as Ford requested of its 
dealers during its Firestone tire replacement campaign, is the most 
efficient way to ensure this. However, to accommodate possible 
differences in retail outlets' allocation of personnel, we are adopting 
NADA's proposed modification of the period for incapacitation, to 
permit alteration within 24 hours from receipt of the tires rather than 
requiring it to occur by the close of business on the day of receipt.
    With respect to RMA's point that manufacturers can only do research 
on returned tires that are not incapacitated prior to being returned, 
we are allowing manufacturers to include a limited ``testing 
exception'' in their plans. The manufacturer's plan could describe a 
test program under which a limited number of tires would be tested, 
including the outlets that would supply those tires. The tires to be 
tested would have to be specially labeled and promptly returned to the 
manufacturer for testing. We note that some meaningful research would 
be possible even on incapacitated tires, as it has been done on tires 
that failed. For example, peel strength tests and X-raying could be 
performed on tires in which holes had been drilled in the sidewall or 
the tread, and general analysis of such tires would also be possible.

E. ``Exceptions Reporting''

    We proposed to require manufacturers to report to us quarterly (as 
part of their quarterly reports on the progress of recall campaigns), 
based on reports from outlets they control, about the numbers of 
incidents in which tire outlets had either failed to dispose of tires 
in accordance with applicable laws and regulations or failed to 
promptly incapacitate returned tires. NADA commented that this 
requirement seemed unnecessary and that perhaps manufacturers should be 
required to file reports only if and when they are forced to arrange to 
stockpile used recalled tires in an environmentally safe manner in the 
event of a collapse of the marketplace for beneficial reuse. TIA urged 
that the ``exceptions reporting'' be limited to instances in which a 
company deviates from the manufacturer's recall plan, in order to 
reduce paperwork. RMA stated in its comments on the NPRM that it 
doubted the constitutionality or effectiveness of this proposal. It 
argued that the proposed monthly report from the outlet to the 
manufacturer was unnecessary and that the proposed ``exceptions 
report'' was not described and is not necessary or helpful. RMA 
subsequently stated that it ``recognizes that NHTSA believes that 
reports * * * are necessary,'' but urged NHTSA to minimize the number 
of reports and to consider ``exceptions reporting'' requiring reporting 
of deviations by retail outlets to the manufacturer within 30 days. 
RMA's proposed regulatory text, appended to its May 9, 2002, comment, 
did not contain any proposal for amending 49 CFR 573.6 (2001).
    We are not adopting RMA's implicit suggestion to eliminate 
reporting by manufacturers to this agency about the success (or lack 
thereof) of their tire disposition programs. In section 7 of the TREAD 
Act, Congress mandated such reporting by manufacturers. We have tried 
to minimize the burden of the required reporting by limiting it to the 
``exceptions'' in which requirements were not met, rather than 
providing for fuller reporting that would include reporting on 
activities that are in compliance with the regulations. We do not 
understand RMA's comment that the contents of the required ``exceptions 
reports'' are not clear. Although it does not use the term ``exceptions 
reporting,'' the regulatory text that we proposed in the NPRM clearly 
identified what we intended manufacturers to include in their reports.
    We are adopting most of the regulatory text for Sec.  573.7 that we 
proposed. The requirements now include three items of information: The 
aggregate number of recalled tires which the manufacturer becomes aware 
have not been rendered unsuitable for resale in accordance with the 
manufacturer's instructions; the aggregate number of recalled tires 
which the manufacturer becomes aware have been disposed of in violation 
of applicable state and local laws and regulations; and a description 
of any failure of a tire outlet to act in accordance with the 
directions in the manufacturer's plan, including an identification of 
the outlets in question. These requirements are intended to assist us 
in tracking the success of recalls from both a safety and an 
environmental perspective. We note that these limitations are similar 
to those requested by TIA in its comments.
    We are not certain whether RMA continues to claim that these 
requirements are unconstitutional, but if so, we deny that claim.

F. Scope of Applicability of Requirements

    Advocates proposed that we extend the incapacitation requirements 
of the rule to retail outlets that are not within the manufacturers' 
control. While Advocates appeared to recognize that our power to 
regulate tire disposition under the TREAD Act is not without limit, 
that organization argued that we have inherent authority and a ``public 
safety obligation'' to do so. RMA claimed that we lacked statutory 
authority to extend the mandatory elements of this rule (primarily the 
requirement to report deviations to the manufacturer) beyond outlets 
that the manufacturer controls.
    We have concluded that Advocates' proposal goes beyond the TREAD 
Act. Congress was careful to insert, at two locations in the statutory 
section that mandates the manufacturer's inclusion of a plan for tire 
disposition in its tire remedy program, the phrase ``to the extent 
reasonably within the control of the manufacturer. * * *''

[[Page 50082]]

    Under the ordinary rules of statutory construction, statutes are to 
be read to effectuate all of their provisions: ``It is an elementary 
rule of construction that effect must be given, if possible, to every 
word, clause and sentence of a statute.'' 2A Sutherland, Statutory 
Construction, supra, at Sec.  46.06. If we followed Advocates' 
suggestion and ignored the phrase ``to the extent reasonably within the 
control of the manufacturer'' despite the fact that it appears twice in 
the statute, the regulation would not be consistent with this rule of 
construction.
    We disagree with Advocates' claim that extension of the 
incapacitation requirements of the rule to retail outlets outside of 
the manufacturer's direct control is necessary to ensure the 
elimination of the safety problem of resale of unremedied recalled 
tires. This final rule does require manufacturers to notify outlets 
that are not under their direct control of the prohibition in 49 U.S.C. 
30120(i) and (j) on the resale of unremedied recalled tires. Moreover, 
failure to comply with these requirements is an independent violation 
of the Safety Act, and the regulations promulgated thereunder, that can 
subject a retail outlet to substantial civil penalties.
    Advocates also proposed that we include an explicit definition of 
the term ``to the extent reasonably within the control of the 
manufacturer'' in the regulation, arguing that the meaning of the 
phrase is not self-evident. Ford made a related request, asking that we 
specifically recognize that motor vehicle dealers that implement tire 
recalls are not reasonably within the control of motor vehicle 
manufacturers who initiate tire recalls. NADA supported Ford's view 
that there are significant differences between the degree of control 
that manufacturers exercise over their authorized retail outlets and 
the degree of control that vehicle manufacturers exercise over their 
dealers, many of which are independently owned and operated.
    We do not find it necessary to include a definition of the 
statutory term ``reasonably within the control of the manufacturer'' in 
this final rule. We believe that this phrase is sufficiently clear to 
be applied without a definition. In any event, the comments were not 
sufficiently comprehensive and detailed for us to formulate such a 
definition that would cover various arrangements between manufacturers 
and the wide variety of retail outlets that may participate in tire 
recalls. As to vehicle manufacturers, we believe that it is appropriate 
for vehicle manufacturers that conduct tire recalls to be required to 
provide their dealers with the information. Vehicle manufacturers 
already have in place systems under which they notify dealers of 
recalls and require dealers to report remedy activities to the 
manufacturer. It will not be unduly burdensome for vehicle 
manufacturers and dealers to include in those notifications and reports 
the limited information specified in Sec.  573.6(c)(9) in the 
relatively rare instances in which vehicle manufacturers conduct tire 
recalls.

G. Disposition of Tires in Landfills

    The National Solid Waste Management Association (NSWMA) urged us to 
permit the use of scrap tires in landfills, in recognition of newer, 
environmentally friendly landfilling techniques that assertedly are 
sanctioned by applicable state landfill permitting regulations and 
unspecified regulations promulgated by the Environmental Protection 
Agency (EPA) under subtitle D of the Resource Conservation and Recovery 
Act, as amended. NSWMA stated that these types of uses are among those 
classified by the Scrap Tire Management Council as ``civil engineering 
applications'' for scrap tires, and attached to its comments a table 
containing a partial list of landfills that use tires or tire chips for 
construction purposes. RMA, which runs the Scrap Tire Management 
Council, likewise urged NHTSA to acknowledge that scrap tires are now 
used in an economical and environmentally viable fashion as 
construction materials in landfill operations, such as lining, 
engineered fill, and daily cover.
    Even if some State and local jurisdictions now permit specific uses 
of scrap tires in landfills, we cannot grant NSWMA and RMA's request to 
authorize such uses in this regulation. Section 7 of the TREAD Act 
specifically requires that the manufacturers' plans must address how to 
limit the disposal of replaced tires in landfills, particularly through 
various alternative beneficial non-vehicular uses. If NSWMA and RMA 
wish to utilize recalled tires in environmentally sanctioned mechanisms 
in landfills, they must convince Congress to amend section 7 of TREAD. 
Unless that occurs, we cannot adopt their comments.

H. Recycling and Reuse Opportunities

    TIA recommended that the final rule include a requirement that 
manufacturers seek the highest and best recycling or reuse 
opportunities for recalled tires when it is practical and safe to do 
so. RMA opposed this request, stating that it supports all scrap tire 
market applications that are environmentally sound and that it is 
inappropriate for NHTSA to make subjective judgments that would value 
certain markets over others.
    We are not adopting TIA's recommendation. Section 7 of TREAD 
permits manufacturers who dispose of recalled tires to choose to among 
``beneficial non-vehicular reuse'' applications and does not 
specifically authorize NHTSA to favor certain uses over others. In any 
event, TIA's comment was in the nature of an undefined goal. Also, the 
market conditions for recycling may change from time to time, and it 
would be inadvisable for us to advocate particular uses over others 
when those uses might become commercially infeasible, or when 
additional uses might subsequently be developed. Some uses may be 
impractical in some states. For these reasons, we are leaving the 
choice of ``beneficial non-vehicular reuse'' applications to the 
manufacturers.

I. Anti-stockpiling Provision

    TIA recommended adding a provision to require manufacturers who 
conduct centralized recalls to accept shipments of recalled tires from 
retail outlets, either every 30 days or once a minimum weight is 
reached, whichever comes first. RMA stated that it understood TIA's 
concern and recommended that manufacturers include in the recall plan a 
description of the frequency of shipments, rather than specifying a 
default frequency in the final rule, in order to allow the manufacturer 
to set shipment frequency at levels appropriate to specific recalls.
    We agree both with TIA's concern about stockpiling and with RMA's 
recommendation against specifying a default frequency. Excessive 
stockpiling could have negative environmental consequences, such as the 
potential for mosquito propagation in collected water and emissions and 
runoff from tire fires. Therefore, we are adding a provision to the 
final rule that requires manufacturers that wish to limit the frequency 
of shipments of recalled tires to include in the recall plan a 
provision on the frequency of shipments, that includes both a minimum 
period of time and a minimum weight (to be specified by the 
manufacturer), whichever comes first, but does not specify default 
frequencies for either time or weight.

J. Costs

    In the NPRM, we estimated the costs associated with our proposed 
reporting requirements and sought comments on our estimates. We 
estimated the maximum cost to manufacturers of notification at $1.00 
per manufacturer

[[Page 50083]]

per affected retail outlet. We estimated the costs of recycling tires 
at approximately $1.00 per tire for transportation and $2.00 per tire 
for recycling, and noted that manufacturers and entities that replace 
tires might already be incurring these costs. We also estimated the 
cost of equipment to incapacitate the tires, as explained more fully 
below.
    We received only one comment on our cost estimates. TIA addressed 
the cost of recycling; it stated that the cost of recycling is between 
$1.00 and $1.20 per passenger tire and that if tires are stockpiled, 
the cost is about $1.50 per tire (or $2.00 per tire if a fire were to 
result). Both the upper and the lower boundaries of the range of TIA's 
cost estimate for recycling are lower than our single estimate of $2.00 
per tire. We note that TIA's estimate does not include the costs of 
notification, and that no commenter addressed the cost of the equipment 
to incapacitate tires.
    Accordingly, we are not modifying our original cost estimates.

IV. Regulatory Analyses and Notices

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

    This final rule has not been reviewed under E.O. 12866, 
``Regulatory Planning and Review.'' After considering the impacts of 
this rulemaking action, and consultation with the Office of Management 
and Budget, we have determined that the action is not ``significant'' 
within the meaning of the Department of Transportation regulatory 
policies and procedures. The impact of this rule does not warrant 
preparation of a full regulatory evaluation because these provisions 
only involve restriction on the disposition of recalled defective and 
noncompliant tires. Tire recalls are uncommon and most involve fewer 
than 10,000 tires. In light of the statutory requirements, this action 
does not involve a substantial public interest or controversy.

B. Regulatory Flexibility Act

    We have also considered the impacts of this notice under the 
Regulatory Flexibility Act. For the reasons discussed above under 
``E.O. 12866 and the DOT Policies and Procedures,'' I certify that this 
final rule will not have a significant economic impact on a substantial 
number of small entities. The primary impact of this final rule will be 
felt by the major manufacturers, which are not small entities. This 
impact will be minor, since it primarily will involve adding a 
description of plans for incapacitating and disposing of recalled 
noncompliant or defective tires to the manufacturers' remedy programs, 
notifying affected retail outlets of the plans, and providing minimal 
reporting on the plans in the quarterly reports that manufacturers 
already must file with NHTSA. We have estimated this cost at $1.00 per 
manufacturer per affected retail outlet, but the cost could well be 
less because manufacturers may already be including some of this 
information in their notices to dealers. We received no comments on 
this cost estimate.
    Disposal requirements will be governed by applicable State and 
local laws and regulations. It is likely that manufacturers and 
entities that replace tires already are complying with applicable 
requirements for tire disposal. If not, manufacturers, which we 
understand currently pay for tire recalls, will ultimately incur the 
costs associated with tire disposal, e.g. the costs of transporting 
disabled tires and the costs of recycling the tires. We have estimated 
these costs at approximately $1.00 per tire for transportation and 
$2.00 per tire for recycling. As indicated above, the sole cost 
estimate we received, from TIA, was lower.
    This final rule could also have an impact on the nation's 3,500 
tire dealers, many of which are small entities. If they do not comply 
with applicable requirements for tire disposal, manufacturer-controlled 
tire dealers will incur the costs of ``exceptions reporting'' to 
manufacturers of any instances in which the dealer did not comply with 
the manufacturer's plan for disposing of recalled tires. We estimate 
these reporting costs at $1.00 per affected dealer per recall. Each 
dealer could also incur a one-time cost for obtaining equipment to 
incapacitate tires so that the tires cannot be resold to the public. 
The one time-cost would likely range between $70.00 (to purchase a 
power drill and a drill bit) and $95.00 (to purchase a cutoff saw and 
blade(s)) per affected dealer, or a maximum of between $245,000 and 
$332,500, assuming that each of the 3,500 dealers purchases a new drill 
and bit or cutoff saw and blade. We believe that many dealers already 
own such equipment and that therefore the maximum aggregate one-time 
cost would be far lower. Also, we note that, because not every dealer 
is involved in a tire recall every year, the aggregate one-time cost 
would be incurred over a multi-year time period. We received no comment 
on these estimates.

C. National Environmental Policy Act

    We have reviewed this proposal for the purposed of compliance with 
the National Environmental Policy Act (42 U.S.C. 4321 et seq.) and 
determined that, although it should have environmental benefits, it 
will not have a significant impact on the quality of the human 
environment. The final rule will not require manufacturers to conduct 
any recalls beyond those that they already are required to conduct. The 
sale of recalled tires is prohibited by other provisions in the Safety 
Act. Other State laws and regulations already govern disposal 
requirements, but we anticipate that this rule will increase compliance 
with those requirements. Hundreds of millions of tires are replaced 
each year, but this rule will address only a very small fraction of 
them.

D. Paperwork Reduction Act

    This rule contains provisions that are considered to be information 
collection requirements as that term is defined by the Office of 
Management and Budget (OMB) in 5 CFR part 1320.
    Pursuant to the Paperwork Reduction Act of 1995 (PRA), and OMB's 
regulation at 5 CFR 1320.5(b)(2), NHTSA will seek approval from OMB for 
an amendment to a previously approved information collection 
requirement (OMB control number 2127-0004). As part of that process, 
the agency has issued a notice seeking public comment on the PRA 
burdens of the rule. See 69 FR 21881 (April, 22, 2004). In its 
submission to OMB, NHTSA will summarize the public comments received in 
response to the April 22, 2004, notice, and discuss any changes in the 
estimates of the collection of information resulting from the comments.

E. Executive Order 13132 (Federalism)

    Executive Order 13132 on ``Federalism'' requires us to develop an 
accountable process to ensure ``meaningful and timely input'' by State 
and local officials in the development of ``regulatory policies that 
have federalism implications.'' The E.O. defines this phrase to include 
regulations ``that have substantial direct effects on the States, on 
the relationship between the national government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government.'' This final rule, which requires that manufacturers 
include a plan for disposal of recalled tires in their remedy programs 
under section 30120 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

[[Page 50084]]

levels of government, as specified in E.O. 13132. This rulemaking does 
not have those effects because it applies directly only to 
manufacturers that already are required to file remedy plans under 
section 30120, rather than to the States or local governments, and 
because it directs manufacturers to file plans that conform with 
applicable state and/or local requirements.

F. Civil Justice Reform

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

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 costs, benefits and 
other effects of proposed or final rules that include a Federal mandate 
likely to result in the expenditure by State, local or tribunal 
governments, in the aggregate, or by the private sector, of more than 
$100 million annually. Because this rule will not have a $100 million 
annual effect, no Unfunded Mandates assessment is necessary and one has 
not been prepared.

H. Data Quality Guidelines

    The information that NHTSA is mandated to collect may be made 
available to the public via the agency's Web site. The distribution of 
such data via the agency's Web site may constitute ``information 
dissemination'' as that term is defined under the Guidelines for 
Ensuring and Maximizing the Quality, Objectivity, Utility, and 
Integrity of Information Disseminated by Federal Agencies 
(``Information Quality Guidelines''), issued by the Office of 
Management and Budget (OMB) (67 FR 8452, Feb. 22, 2002), and in 
Department of Transportation Guidelines that were issued on September 
25, 2002 (67 FR 61719, October 1, 2002), and are available through the 
Department's Docket Management System (DMS) Web site at http://dms.dot.gov at OST-2002-11996.
    If a determination were made that the public distribution of the 
manufacturer's programs and reports to ODI concerning the disposition 
of recalled tires constituted information dissemination and was, 
therefore, subject to the OMB/DOT Information Quality Guidelines, then 
the agency would review the information prior to distribution to 
ascertain its utility, objectivity, and integrity (collectively, 
``quality''). Under the Guidelines, any affected person who believed 
that the information ultimately disseminated by NHTSA was of 
insufficient quality could file a complaint with the agency. The agency 
would review the disputed information, make an initial determination of 
whether it agreed with the complainant, and notify the complainant of 
its initial determination. Once notified of the initial determination, 
the affected person could file an appeal with the agency.

List of Subjects in 49 CFR Part 573

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

0
In consideration of the foregoing, 49 CFR part 573 is amended as 
follows:

PART 573--DEFECT AND NONCOMPLIANCE RESPONSIBILITY AND REPORTS

0
1. The authority citation for part 573 continues to read as follows:

    Authority: 49 U.S.C. 30102, 30103, 30116-121, 30166; delegation 
of authority at 49 CFR Sec.  1.50.


0
2. Section 573.6 is amended by redesignating paragraphs (c)(9) through 
(c)(11) as paragraphs (c)(10) through (c)(12) respectively and by 
adding a new paragraph (c)(9) to read as follows:


Sec.  573.6  Defect and noncompliance information report.

* * * * *
    (c) * * *
    (9) In the case of a remedy program involving the replacement of 
tires, the manufacturer's program for remedying the defect or 
noncompliance shall:
    (i) Address how the manufacturer will assure that the entities 
replacing the tires are aware of the legal requirements related to 
recalls of tires established by 49 U.S.C. Chapter 301 and regulations 
thereunder. At a minimum, the manufacturer shall notify its owned 
stores and/or distributors, as well as all independent outlets that are 
authorized to replace the tires that are the subject of the recall, 
annually or for each individual recall that the manufacturer conducts, 
about the ban on the sale of new defective or noncompliant tires (49 
CFR 573.11); the prohibition on the sale of new and used defective and 
noncompliant tires (49 CFR 573.12); and the duty to notify NHTSA of any 
sale of a new or used recalled tire for use on a motor vehicle (49 CFR 
573.10). For tire outlets that are manufacturer-owned or otherwise 
subject to the control of the manufacturer, the manufacturer shall also 
provide directions to comply with these statutory provisions and the 
regulations thereunder.
    (ii) Address how the manufacturer will prevent, to the extent 
reasonably within its control, the recalled tires from being resold for 
installation on a motor vehicle. At a minimum, the manufacturer shall 
include the following information, to be furnished to each tire outlet 
that it owns, or that is authorized to replace tires that are recalled, 
either annually or for each individual recall the manufacturer 
conducts:
    (A) Written directions to manufacturer-owned and other 
manufacturer-controlled outlets to alter the recalled tires permanently 
so that they cannot be used on vehicles. These shall include 
instructions on the means to render recalled tires unsuitable for 
resale for installation on motor vehicles and instructions to perform 
the incapacitation of each recalled tire, with the exception of any 
tires that are returned to the manufacturer pursuant to a testing 
program, within 24 hours of receipt of the recalled tire at the outlet. 
If the manufacturer has a testing program for recalled tires, these 
directions shall also include criteria for selecting recalled tires for 
testing and instructions for labeling those tires and returning them 
promptly to the manufacturer for testing.
    (B) Written guidance to all other outlets which are authorized to 
replace the recalled tires on how to alter the recalled tires promptly 
and permanently so that they cannot be used on vehicles.
    (C) A requirement that manufacturer-owned and other manufacturer-
controlled outlets report to the manufacturer, either on a monthly 
basis or within 30 days of the deviation, the number of recalled tires 
removed from vehicles by the outlet that have not been rendered 
unsuitable for resale for installation on a motor vehicle within the 
specified time frame (other than those returned for testing) and 
describe any such failure to act in accordance with the manufacturer's 
plan;
    (iii) Address how the manufacturer will limit, to the extent 
reasonably within its control, the disposal of the recalled tires in 
landfills and, instead, channel them into a category of positive reuse 
(shredding, crumbling, recycling, and recovery) or another alternative 
beneficial non-vehicular use. At a minimum, the manufacturer shall 
include the following information, to be furnished to each tire outlet 
that it owns or that is authorized to replace tires that are recalled, 
either annually or for each individual recall that the manufacturer 
conducts:

[[Page 50085]]

    (A)(1) Written directions that require manufacturer-owned and other 
manufacturer-controlled outlets either:
    (i) To ship recalled tires to one or more locations designated by 
the manufacturer as part of the program or allow the manufacturer to 
collect and dispose of the recalled tires; or
    (ii) To ship recalled tires to a location of their own choosing, 
provided that they comply with applicable state and local laws and 
regulations regarding disposal of tires.
    (2) Under option (c)(9)(iii)(A)(1)(ii) of this section, the 
directions must also include further direction and guidance on how to 
limit the disposal of recalled tires in landfills and, instead, channel 
them into a category of positive reuse (shredding, crumbling, 
recycling, and recovery) or another alternative beneficial non-
vehicular use.
    (B)(1) Written guidance that authorizes all other outlets that are 
authorized to replace the recalled tires either:
    (i) To ship recalled tires to one or more locations designated by 
the manufacturer or allow the manufacturer to collect and dispose of 
the recalled tires; or
    (ii) To ship recalled tires to a location of their own choosing, 
provided that they comply with applicable state and local laws and 
regulations regarding disposal of tires.
    (2) Under option (c)(9)(iii)(B)(1)(ii) of this section, the 
manufacturer must also include further guidance on how to limit the 
disposal of recalled tires in landfills and, instead, channel them into 
a category of positive reuse (shredding, crumbling, recycling, and 
recovery) or another alternative beneficial non-vehicular use.
    (C) A requirement that manufacturer-owned and other manufacturer-
controlled outlets report to the manufacturer, on a monthly basis or 
within 30 days of the deviation, the number of recalled tires disposed 
of in violation of applicable state and local laws and regulations, and 
describe any such failure to act in accordance with the manufacturer's 
plan; and
    (D) A description of the manufacturer's program for disposing of 
the recalled tires that are returned to the manufacturer or collected 
by the manufacturer from the retail outlets, including, at a minimum, 
statements that the returned tires will be disposed of in compliance 
with applicable state and local laws and regulations regarding disposal 
of tires, and will be channeled, insofar as possible, into a category 
of positive reuse (shredding, crumbling, recycling and recovery) or 
another alternative beneficial non-vehicular use, instead of being 
disposed of in landfills.
    (iv) To the extent that the manufacturer wishes to limit the 
frequency of shipments of recalled tires, it must specify both a 
minimum time period and a minimum weight for the shipments and provide 
that shipments may be made at whichever minimum occurs first.
    (v) Written directions required under this paragraph to be 
furnished to a manufacturer-owned or controlled outlet shall be sent to 
the person in charge of each outlet by first-class mail or by 
electronic means, such as FAX transmissions or e-mail, with further 
instructions to notify all employees of the outlet who are involved 
with removal, rendering unsuitable for use, or disposition of recalled 
tires of the applicable requirements and procedures.
    (vi) Manufacturers must implement the plans for disposition of 
recalled tires that they file with NHTSA pursuant to this paragraph. 
The failure of a manufacturer to implement its plan in accordance with 
its terms constitutes a violation of the Safety Act.
* * * * *

0
3. Section 573.7 is amended by adding paragraph (b)(7) to read as 
follows:


Sec.  573.7  Quarterly reports.

* * * * *
    (b) * * *
    (7) For all recalls that involve the replacement of tires, the 
manufacturer shall provide:
    (i) The aggregate number of recalled tires that the manufacturer 
becomes aware have not been rendered unsuitable for resale for 
installation on a motor vehicle in accordance with the manufacturer's 
plan provided to NHTSA pursuant to Sec.  573.6(c)(9);
    (ii) The aggregate number of recalled tires that the manufacturer 
becomes aware have been disposed of in violation of applicable state 
and local laws and regulations; and
    (iii) A description of any failure of a tire outlet to act in 
accordance with the directions in the manufacturer's plan, including an 
identification of the outlet(s) in question.
* * * * *

    Issued on: August 5, 2004.
Jeffrey W. Runge,
Administrator.
[FR Doc. 04-18354 Filed 8-12-04; 8:45 am]
BILLING CODE 4910-59-P