[Federal Register Volume 69, Number 163 (Tuesday, August 24, 2004)]
[Rules and Regulations]
[Pages 52070-52101]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18833]



[[Page 52069]]

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Part II





Department of Transportation





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National Highway Traffic Safety Administration



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49 CFR Parts 591, 592, and 594



Certification; Importation of Vehicles and Equipment Subject to Federal 
Safety, Bumper and Theft Prevention Standards; Registered Importers of 
Vehicles Not Originally Manufactured To Conform With the Federal Motor 
Vehicle Safety Standards; Schedule of Fees Authorized by 49 U.S.C. 
30141; Final Rule

  Federal Register / Vol. 69, No. 163 / Tuesday, August 24, 2004 / 
Rules and Regulations  

[[Page 52070]]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 591, 592 and 594

[Docket No. NHTSA 2000-8159; Notice 2]
RIN 2127-AH67


Certification; Importation of Vehicles and Equipment Subject to 
Federal Safety, Bumper and Theft Prevention Standards; Registered 
Importers of Vehicles Not Originally Manufactured To Conform With the 
Federal Motor Vehicle Safety Standards; Schedule of Fees Authorized by 
49 U.S.C. 30141

AGENCY: National Highway Traffic Safety Administration (NHTSA), U.S. 
Department of Transportation (DOT).

ACTION: Final rule.

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SUMMARY: This document amends regulations that pertain to the 
importation by registered importers (RIs) of motor vehicles that were 
not manufactured to comply with all applicable Federal motor vehicle 
safety, bumper, and theft prevention standards. The principal effect of 
these changes is to clarify the requirements applicable to RIs and 
applicants for RI status, as well as the procedures for suspending or 
revoking the registrations of RIs that violate the statute or 
regulations governing these activities. Although we had proposed a 
number of changes to the procedures applicable to importation of 
vehicles originally manufactured for sale in Canada, based upon the 
comments from the public, we are not acting on those proposals at this 
time. We intend to issue a separate notice to propose a different 
approach for processing importations of those vehicles.

DATES: Effective Date: The effective date of this final rule is 
September 30, 2004. Petitions for Reconsideration: Petitions for 
reconsideration must be received on or before October 15, 2004.

ADDRESSES: Petitions for reconsideration of the amendments made by this 
final rule must refer to the docket or Regulatory Identification Number 
(RIN) for this rulemaking, and be addressed to the Administrator, 
National Highway Traffic Safety Administration 400 Seventh Street, SW., 
Washington, DC 20590.
    You may submit a petition by any of the following methods:
     Web Site: http://dms.dot.gov. Follow the instructions for 
submitting comments on the DOT electronic docket site. Please note, if 
you are submitting petitions electronically as a PDF (Adobe) file, we 
ask that the documents submitted be scanned using Optical Character 
Recognition (OCR) process, thus allowing the agency to search and copy 
certain portions of your submissions.\1\ Please also note that anyone 
is able to search the electronic form of all comments received into any 
of our dockets by the name of the individual submitting the comment (or 
signing the comment, if submitted on behalf of an association, 
business, labor union, etc.). You may review DOT's complete Privacy Act 
Statement in the Federal Register published on April 11, 2000 (Volume 
65, Number 70; Pages 19477-78) or you may visit http://dms.dot.gov.
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    \1\ Optical character recognition (OCR) is the process of 
converting an image of text, such as a scanned paper document or 
electronic fax file, into computer-editable text.
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     Fax: 1-202-493-2251.
     Mail: Docket Management Facility; U.S. Department of 
Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, 
Washington, DC 20590-001.
     Hand Delivery: Room PL-401 on the plaza level of the 
Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 
a.m. and 5 p.m., Monday through Friday, except Federal Holidays.
     Federal eRulemaking Portal: Go to http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: For technical issues, contact Coleman 
Sachs, Office of Vehicle Safety Compliance, NHTSA, (202-366-3151); for 
legal issues contact Michael Goode, Office of Chief Counsel, NHTSA 
(202-366-5263). NHTSA's address is 400 Seventh St., S.W., Washington, 
D.C. 20590.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background of This Rulemaking Action.
    A. The 1968 Importation Regulation (19 CFR 12.80).
    B. The Imported Vehicle Safety Compliance Act of 1988 (Pub. L. 
100-562).
    C. Vehicle Eligibility Determinations (49 CFR Part 593).
    D. Importations of Canadian Vehicles for Personal Use.
II. Our Efforts To Reduce the Burden on Canadian Vehicles Imported 
for Resale.
    A. The Present Importation Process.
    B. The Final Rule Does Not Adopt the Proposed Categorization of 
Vehicles Imported From Canada. NHTSA Will Issue a Notice Reflecting 
a Different Approach.
III. The Rule Will Enhance Motor Vehicle Safety by Ensuring Greater 
Accountability of Registered Importers.
    A. What is Required to Register as a RI and to Maintain the 
Registration (Section 592.5).
    1. Sections 592.5(a)(3)-(5): A Post Office Box or Foreign 
Address is Not an Acceptable Address for RIs; the Application Must 
Provide Social Security Numbers for Certain Individuals; the 
Application Must Identify Officers Authorized to Certify Compliance 
to NHTSA.
    2. Defining ``Service Insurance Policy'' and ``Independent 
Insurance Company'' to Best Ensure That Owners Will be Able to Have 
Noncompliances and Safety-Related Defects Remedied Without Charge.
    3. Section 592.5(a)(9): An Applicant Must Demonstrate Technical 
Ability to Perform Conformance Work.
    4. Section 592.5(a)(11): An Applicant Must Understand the Duties 
of a RI.
    5. Section 592.5(b): How NHTSA Will Treat an Incomplete 
Application.
    6. Section 592.5(e): Denial of Applications.
    7. Section 592.5(f): The Due Date for the RI's Annual Fee Will 
be September 30.
    8. Transfer of Current Section 592.5(f) to New Section 592.6(m): 
RIs Must Notify NHTSA of Changes of Information Provided in Their 
Applications.
    9. Section 592.5(g): How NHTSA Will Treat Applications Pending 
on Effective Date of the Final Rule.
    B. Bonding, Conformity, Certification, and Other Duties of a 
Registered Importer (Section 592.6).
    1. Section 592.6(a): RIs Must Ensure Conformance of All Imported 
Vehicles With Safety, Bumper, and Theft Prevention Standards, and 
Furnish a Conformance Bond.
    2. Section 592.6(b): Recordkeeping Requirements.
    3. Section 592.6(c): Only the RI May Affix a Certification Label 
to a Vehicle After the RI Has Conformed it; The RI Must Affix the 
Certification Label at its Facility Inside the United States.
    4. Section 592.6(d): Documentation That RIs Must Submit to 
NHTSA.
    5. Section 592.6(e): What RIs Must Not Do Before NHTSA Releases 
the Conformance Bond.
    6. Section 592.6(f): RIs Must Provide a Copy of the Service 
Insurance Policy With Each Vehicle.
    7. Section 592.6(g) RIs Must Provide and Retain Copies of 
Odometer Disclosure Statements.
    8. Section 592.6(i): RIs Must Remedy Noncompliances and Safety-
Related Defects, and Provide Reports Regarding Recalls.
    9. Section 592.6(l): RIs Must Notify NHTSA of Any Change of 
Information Contained in the Registration Application, and Must 
Notify NHTSA Before Adding or Discontinuing the Use of Any Facility.
    10. Section 592.6(m): RIs Must Assure That at Least One Full-
Time Employee of the RI is Present at at Least One of the RI's 
Facilities Identified in its Application.
    11. Section 592.6(n): RIs Must Not Co-Utilize the Same Employee 
or the Same Conformance, Repair, or Storage Facility.

[[Page 52071]]

    12. Section 592.6(o): RIs Must Provide Timely Responses to NHTSA 
Requests for Information.
    13. Section 592.6(p): RIs Must Pay Fees When They are Due.
    14. Section 592.6(q): Current RIs Must Provide Information That 
Will be Required of New RI Applicants.
    C. Automatic Suspension, Revocation, and Non-Automatic 
Suspension of Registrations; Reinstatement of RI Registrations 
(Section 592.7).
    1. Section 592.7(a): Automatic Suspension of the Registration of 
a RI.
    2. Section 592.7(b): Non-Automatic Suspension and Revocation of 
RI Registrations.
    3. Section 592.7(c): When and How NHTSA Will Reinstate Suspended 
RI Registrations.
    4. Section 592.7(d): Effects on a RI of Suspension or Revocation 
of its Registration.
    5. Section 592.7(e): Continuing Obligations of a RI Whose 
Registration Has Been Revoked or Suspended.
    D. Amendments to Part 591 to Preclude the Importation by a RI of 
a Salvage or Reconstructed Motor Vehicle; Minor Conforming 
Amendments to Part 591; Section 592.9: Forfeiture of Bond.
    E. Other Comments to the NPRM.
    1. New Classification of Importers.
    2. Electronic Transmissions.
    3. Availability of FMVSS.
    4. CAFE.
IV. Rulemaking Analyses and Notices
Regulatory Text.

I. Background of This Rulemaking Action

    This final rule is based upon a Notice of Proposed Rulemaking 
(NPRM) published on November 20, 2000 (65 FR 69810-38).
    Comments on the NPRM were received from a variety of sources. 
Registered Importers that commented were Autosource dba Trucks Plus, 
Chariots of Desire, Bisbee Importing, and Auto Enterprises, Inc. 
Vehicle manufacturers that commented were American Honda Motor Co., 
Volkswagen (Volkswagen of America, Volkswagen, AG, Audi, AG), and 
Harley-Davidson Motor Company. Trade organizations commenting were the 
North American Automobile Trade Association (NAATA), the Coalition of 
Vehicle Manufacturers, the National Automobile Dealers Association 
(NADA), the American Association of Motor Vehicle Administrators 
(AAMVA), and the National Auto Auction Association (NAAA). We had 
comments from two insurance companies (Avalon Risk Management, Inc. and 
XL Specialty Insurance Co.), one customhouse broker (BCB 
International), and the National Insurance Crime Bureau (NICB). We also 
received comments from Raymond J. Pelletti, Bryan Milazzo, Richard 
McLaren (Professor of Law, University of Western Ontario, Canada), and 
the law firm of Hyman & Kaplan P.A.

A. The Imported Vehicle Safety Compliance Act of 1988 (Pub. L. 100-562)

    Since January 31, 1990, the effective date of the Imported Vehicle 
Safety Act of 1988 (``the 1988 Act''), it has been unlawful to import 
into the United States vehicles not originally manufactured to conform 
to all applicable Federal motor vehicle safety standards 
(FMVSS)(sometimes referred to as ``gray market vehicles'') unless NHTSA 
has determined that they are capable of being modified to comply with 
the FMVSS in effect on the date of their manufacture.\2\ Conformity 
modifications may only be performed by, and nonconforming vehicles 
intended for resale may only be imported by, a ``registered importer'' 
(``RI''). Under the 1988 Act, a RI is an entity that NHTSA has 
recognized as being technically and financially capable of satisfying a 
number of requirements, including the ability to conform noncomplying 
vehicles to the FMVSS and to remedy noncompliances and safety-related 
defects that may exist or arise in the vehicles that they have 
imported. See generally 49 U.S.C. 30141-30147 and 49 CFR Parts 591-594.
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    \2\ The 1988 Act contains several exceptions under which 
noncomplying vehicles can be imported without going through a 
registered importer; e.g., vehicles temporarily imported for special 
purposes, vehicles that are least 25 years old. See 49 U.S.C. 
30112(b).
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    In the middle 1980s, the great majority of imported nonconforming 
vehicles were manufactured in Europe, due to the favorable rate of 
exchange of the dollar against European currencies. But as the rate of 
exchange grew less favorable for the dollar, the volume of gray market 
vehicle imports from Europe declined also; by 2000, these imports 
totaled only 1,292 units. In the same period, the Canadian dollar had 
declined substantially against the American dollar, making it an 
attractive commercial proposition to import Canadian vehicles. In 2002, 
the volume of Canadian imports reached 210,292 vehicles, representing 
99.2 percent of the total of 212,044 gray market vehicles imported by 
RIs.

B. Vehicle Eligibility Determinations (49 CFR Part 593)

    Before a nonconforming motor vehicle can be imported into the 
United States, NHTSA must have decided, after public notice and 
consideration of comments that vehicles of that make, model, and model 
year are capable of being modified to comply with the FMVSS. Each year, 
we also publish an updated list of eligible vehicles, as Appendix A to 
49 CFR Part 593, Determinations That a Vehicle Not Originally 
Manufactured to Conform to the Federal Motor Vehicle Safety Standards 
is Eligible for Importation.
    Most vehicles sold in Canada have counterparts of the same make, 
model, and model year in the United States that are physically 
identical to them. The Canadian motor vehicle safety laws are patterned 
on those of the United States, requiring that motor vehicles be 
manufactured to comply with the Canadian Motor Vehicle Safety Standards 
(CMVSS) and be certified as complying by their manufacturer. Further, 
the CMVSS are identical to the FMVSS in all but a few respects. To 
facilitate importation, we decided on our own initiative that most 
Canadian vehicles certified as complying with the CMVSS were eligible 
for importation (see 55 FR 32988, August 13, 1990 and that portion of 
Part 593, Appendix A, entitled ``Vehicles Certified by Their Original 
Manufacturer as Complying With All Applicable Canadian Motor Vehicle 
Safety Standards'' (49 CFR part 593 (2002)). Our decision has 
facilitated international trade by removing one barrier to the free 
flow of most Canadian vehicles across the Canadian-American border.

C. Importation of Canadian Vehicles for Personal Use

    To address the growing number of importations from Canada, some 
time ago we simplified the procedures under which some Canadian 
vehicles could be imported for personal use. Given the congruity of the 
FMVSS and the CMVSS, we decided that the certification requirement of 
the Safety Act (49 U.S.C. 30115) could be satisfied by a letter from 
the original manufacturer of the Canadian vehicle to the importer 
stating that the vehicle met all applicable FMVSS except for minor 
labeling requirements. By this we mean requirements such as those 
established by FMVSS No. 101 (a ``km'' label for an odometer calibrated 
in kilometers, and the tire information placard required by S4.3 of 
FMVSS No. 110 for passenger cars, or its counterpart for other vehicles 
in FMVSS No. 120) (these are referred to as virtual compliance 
certification letters). On this basis, we have exempted from the RI 
process Canadian vehicles imported for personal use by individuals who 
have a virtual compliance certification letter from the vehicle 
manufacturer. This has expedited traffic at the U.S.-Canadian

[[Page 52072]]

border and relieved a burden on individuals whose Canadian-certified 
cars comply with all FMVSS except for minor labeling requirements. 
However, those Canadian vehicles that have not been manufactured to 
meet the FMVSS that are more stringent than the CMVSS, such as FMVSS 
No. 208, Occupant Crash Protection, and the dynamic crash requirements 
of FMVSS No. 214, Side Impact Protection, obviously cannot be covered 
by a manufacturer's virtual compliance certification letter. A person 
wishing to import such a vehicle for personal use must contract with a 
RI to conform the vehicle as part of the importation process, as 
required under the 1988 Act. In addition, NHTSA would have to determine 
such a vehicle to be eligible for importation before it could be 
lawfully imported.
    We proposed to formalize these policies in 49 CFR 591.5(g), which 
would have covered importations of virtually compliant vehicles by RIs 
in addition to importations by individuals for personal use. In view of 
our decision, discussed below, not to extend the virtual compliance 
concept to vehicles imported by RIs, we are adopting Section 591.5(g) 
as proposed, but specifying that it applies only to vehicles imported 
for personal use.

II. Our Efforts To Reduce the Burden on Canadian Vehicles Imported for 
Resale

    In 2000, we preliminarily concluded that some of the current 
procedures and requirements have resulted in regulatory burdens on the 
importation of Canadian vehicles for resale that are not necessary to 
implement the safety purposes of the statute, and we proposed a number 
of simplifying amendments.

A. The Present Importation Process

    Nonconforming vehicles imported for resale can only be imported by 
a RI. The RI must enter the vehicle under a bond that guarantees that 
it will bring the vehicle into compliance and certify the vehicle's 
compliance to us within 120 days after entry. 49 U.S.C. 30141(d); 49 
CFR 591.8. The RI must support its certification with appropriate 
documentation.
    Until the bond is released, the RI may not register the vehicle or 
license it for use on the public roads (or release it from the RI's 
custody for such purposes). 49 U.S.C. 30146(a). However, if the RI has 
not heard from us within 30 days after submitting its certification 
package, it may release the vehicle. But if we advise the RI within the 
30-day period that we intend to inspect the vehicle, the RI must retain 
custody until the inspection is completed. 49 U.S.C. 30146(c).
    Failure of the RI to comply with these and other requirements can 
result in an order that it export the vehicle, forfeiture of the bond, 
civil penalty liability, and/or suspension or revocation of the RI's 
registration.

B. The Final Rule Does Not Adopt the Proposal To Establish Different 
Procedures for Importation From Canada. NHTSA Will Issue a Notice 
Reflecting a Different Approach

    The regulatory scheme that Congress imposed through the 1988 Act 
was based upon the then-existing composition of the gray market, which 
was heavily weighted towards European vehicles, and the assumption that 
vehicle safety standards in other countries afforded less protection 
than the FMVSS. In that light, we established a regulatory scheme that 
applied to all gray market vehicles, without regard to the country of 
origin or the extent to which the vehicle complied with applicable 
safety standards. However, contemporary realities do not appear to 
require such a complex scheme in the majority of instances. Today, 
almost all (99.2 percent in 2001) gray market vehicles are imported 
from one country, Canada. In general, these vehicles are certified as 
complying with the CMVSS, which are nearly identical to the FMVSS. Yet 
the importation procedures established by the statute and our current 
regulations treat all noncomplying vehicles the same, whether they were 
manufactured in a country with safety standards virtually identical to 
the FMVSS or in a country with no vehicle safety standards at all.
    In the NPRM, we proposed to make it easier to import for resale 
Canadian vehicles that are covered by a letter from the original 
manufacturer indicating that they are in compliance with all applicable 
FMVSS except for some labeling requirements of Standards Nos. 101, 110 
or 120 (and, where applicable, the daytime running lamp (DRL) 
specifications of Standard No. 108), the same way we have been doing 
for vehicles imported for personal use. Most manufacturers of Canadian-
certified vehicles had informed us which of their late-model vehicles 
conformed to the FMVSS except in these minor labeling respects, without 
making reference to DRLs. We proposed to identify these virtually-
compliant Canadian vehicles as ``Type 1 motor vehicles.'' We further 
proposed to require that the manufacturer's letter also include a 
statement of compliance with U.S. bumper and theft prevention 
standards. We proposed that a ``Type 1 motor vehicle'' be defined as 
follows:

    Type 1 motor vehicle means a motor vehicle that is certified by 
its original manufacturer as complying with all applicable Canadian 
motor vehicle safety standards and whose original manufacturer has 
informed NHTSA in writing that the vehicle complies with all 
applicable Federal motor vehicle safety, bumper, and theft 
prevention standards (except for the labeling requirements of 
Federal Motor Vehicle Safety Standards Nos. 101 and 110 or 120, and, 
if appropriate, S5.5.11 of Standard No. 108 (related to daytime 
running lamps)).

    We proposed to add an Appendix A to Part 592 which would list by 
make, model, and model year the vehicles that would be Type 1 vehicles, 
to be revised from time to time to reflect an evolving universe. This 
list would provide RIs, Customs officials, and customhouse brokers with 
a ready reference of vehicles eligible to enter the United States as 
Type 1 vehicles.
    Type 1 motor vehicles imported for resale would still have had to 
be imported by a RI, and the RI would have had to ensure that the 
vehicles met the DRL requirements of Standard No. 108, and were 
appropriately labeled to meet Standards Nos. 101 and 110 or 120.
    Our proposal was generally supported by eight commenters, including 
an original vehicle manufacturer. However, the proposal was objected 
to, on legal, practical, and policy grounds, by ten commenters, 
including some original vehicle manufacturers, RIs, a customhouse 
broker, a law firm, an insurer, and the NICB.
    The vehicle manufacturer's comment, which generally supported the 
proposal, recommended that Type 1 vehicle classifications be limited to 
car lines and models for which equivalent vehicles were available in 
both the United States and Canada for the same model year. The 
manufacturer stated that it would not furnish virtual compliance 
letters for vehicles certified for sale in Canada if it had offered no 
equivalent vehicles certified for sale in the United States in the same 
model year.
    One commenter was concerned that original vehicle manufacturers 
might manipulate the importation process by withholding identification 
of vehicles that are Type 1. To prevent manipulation, this commenter 
suggested that original manufacturers be required to report to NHTSA 
the compliance status of their Canadian market vehicles vis-[agrave]-
vis the FMVSS, and that penalties be imposed for any misrepresentations 
made in those reports. In our opinion, this approach is not feasible. 
We do not believe we have authority to impose such a requirement, 
particularly with respect to vehicle manufacturers outside the United 
States.

[[Page 52073]]

    We note that the proposal assumed that most, if not all, vehicle 
manufacturers would provide letters reflecting virtual compliance. 
Since publication of the NPRM this assumption has been called into 
question, as many manufacturers have made it clear that they oppose the 
importation of their Canadian vehicles into the United States and that 
they will not do anything to facilitate such importations.
    The primary legal issue raised by the commenters was that NHTSA 
lacks authority to allow importation of gray market vehicles of any 
sort without requiring a conformance bond. This argument is based upon 
Section 30141(d)(1), which specifies that ``a person importing a motor 
vehicle under this section shall provide a bond * * * and comply with 
the terms [NHTSA] decides are appropriate to ensure that the vehicle--
(A) will comply with applicable motor vehicle safety standards * * * 
within a reasonable time (specified by [NHTSA]) after the vehicle is 
imported. * * * '' As noted in the comment from the law firm, the bond 
is required to ensure that all noncomplying vehicles imported by or 
through a RI are brought into compliance with all applicable FMVSS. 
Since Type 1 vehicles would be imported by or through a RI and must be 
conformed to meet applicable FMVSS, the comment asserted that NHTSA's 
attempts to relax the bonding requirement for one class of vehicle 
while retaining it for a second class of vehicle would be ``arbitrary 
and capricious.'' In this commenter's opinion, elimination of the 
bonding requirement would not withstand judicial scrutiny because it is 
not supported by substantial evidence. In particular, the comment 
observed that NHTSA conducted no studies to support its position that 
Type 1 vehicles will be conformed in the absence of a bond. Another 
commenter contended that virtual compliance is technically the same as 
noncompliance.
    The proposal was further objected to on the grounds that it would 
facilitate the importation of vehicles that have been ``cloned.'' NICB 
identified these as vehicles ``that have been unsafely rebuilt from 
cars that were `totaled' in wrecks, or that contain unremedied safety 
defects, that were stolen from U.S. citizens, illegally exported to 
Canada, then returned with bogus vehicle identification numbers 
(`VINs'), or that were stolen from Canadian citizens.'' The commenter 
reported that ``cloned'' stolen or rebuilt salvage vehicles are already 
flowing into the United States with the rising tide of gray market 
imports from Canada. NHTSA's proposal would facilitate these scams, 
according to NICB. It would have the RI ``keep custody of a `gray 
market' vehicle, at least for the few days it would take to verify that 
the incoming vehicle is safe and not stolen, that it is not a dangerous 
`zombie' or a stolen car that soon may be repossessed from an innocent 
American car buyer.''
    Another comment, by a customhouse broker, was that the creation of 
two categories of imported vehicles, one requiring a bond and the other 
not requiring a bond, would be confusing and create a burden for 
brokerage and Customs offices, as it would not be realistic for brokers 
and officers to know the differences between Type 1 and Type 2 
vehicles. This commenter recommended retaining the bond for Type 1 
vehicles but waiving the 30-day hold period.
    There were also practical and policy objections to the proposed 
elimination of the bonding requirement. One commenter expressed concern 
that elimination of the bond may make it more difficult for NHTSA to 
ensure that safety recall campaigns are being completed on gray market 
vehicles. The commenter contended that by continuing to require the 
bond, NHTSA would be able to address the key concerns of whether the 
vehicle is safe and whether there is a viable RI standing behind the 
vehicle for 10 years.
    After considering these comments, we have decided not to adopt the 
approach that we proposed. This means that the current bond 
requirements remain unchanged. We still seek to expedite importations 
of vehicles from Canada for resale, and intend to issue a notice in the 
near future reflecting a new approach.

III. The Rule Will Enhance Motor Vehicle Safety by Requiring Greater 
Accountability of Registered Importers

    The second primary goal of this rulemaking is to achieve greater 
accountability and compliance with legal requirements on the part of 
RIs. The ability of RIs to capitalize upon the favorable Canadian 
exchange rate, the availability of vehicle models there that are 
marketable in the United States, and their desire to release vehicles 
promptly have resulted in conduct by some RIs that is not explicitly 
prohibited by Part 592, primarily because it was not contemplated in 
1989 when we issued the regulation. We proposed a number of changes to 
Part 592 and announced several interpretations of the statute and 
existing regulations, in order to address these situations and to 
assure that the RI program operates efficiently under the circumstances 
existing today.

A. What Is Required to Register as a RI and To Maintain the 
Registration (Section 592.5)?

    An entity that wishes to register as a RI must file an application 
with us as specified in 49 CFR 592.5(a). Moreover, at the time an RI 
submits its annual fee, as required by 49 U.S.C. 30141(a)(3), it must 
file a statement in which it affirms that the information provided in 
its application remains unchanged. 49 CFR 592.5(e).
    We have concluded that the present registration procedures must be 
revised and expanded in order to increase the likelihood that a RI will 
be technically and financially able to perform its duties. As addressed 
both in the NPRM and below, based on experience gained over the years, 
we will require more information from a person seeking to be a RI than 
was originally required. Moreover, we need to obtain this supplemental 
information from each existing RI. Because a RI who was registered 
before the application requirements are amended cannot affirm the 
continuing correctness of information that it has never furnished, we 
have concluded that the most appropriate way to ensure that the 
required information is provided is to require that existing RIs, as a 
condition of maintaining their existing registration, provide the 
additional information called for in the final rule not later than 
November 1, 2004, the first business day that is at least 30 days after 
the effective date of the amendment.
1. Sec. 592.5(a)(3)-(5): A Post Office Box or Foreign Address Is Not an 
Acceptable Address for a RI; The Application Must Provide Social 
Security Numbers for Certain Individuals; The Application Must Identify 
Officers Authorized To Certify Compliance to NHTSA
    Section 592.5(a)(3) currently requires the applicant to provide its 
``address,'' among other information. Two issues have arisen with 
respect to this requirement: whether a RI may give a post office box as 
its sole address, and whether a Canadian address is acceptable.
    We tentatively answered in the negative the question of the 
sufficiency of a post office box as the sole address for an RI, 
proposing that the application set forth:

    (3) . . . the full name, street address, and title of the person 
preparing the application, and the full name and street address, e-
mail address (if any), and telephone and facsimile (if any) numbers 
in the United States of the

[[Page 52074]]

person for whom application is made (the ``applicant'').

    We discussed potential difficulties in dealing with RIs who are 
located in Canada. We explained that we had not required that 
principals of a RI be citizens of the United States, and we had 
registered several RIs who have used mailing addresses in Canada, 
requiring them to maintain facilities in the United States where 
conformance work is performed and records are kept. We concluded that 
if the RI is an entity organized under the laws of any State (e.g., 
corporation, partnership, sole proprietorship), it may be legally 
served at the street address of the United States facility it has 
provided us, even though its principal(s) may reside in Canada. The 
question of the adequacy of service may differ, however, if the RI is 
an entity that is not organized under the laws of any State; that is to 
say, if it is a sole proprietorship, a partnership, or a corporation 
organized under the laws of Canada.
    The Safety Act provides a mechanism to assure that non-resident 
manufacturers, which includes importers for resale, can be served with 
orders and other process issued by the agency, by specifying that a 
manufacturer ``offering a motor vehicle or motor vehicle equipment for 
import shall designate an agent on whom service of notices and process 
in administrative and judicial proceedings may be made.'' 49 U.S.C. 
30164(a), implemented by 49 CFR 551.45, Service of process on foreign 
manufacturers and importers. This regulation requires ``any 
manufacturer, assembler, or importer of motor vehicles'' to ``designate 
a permanent resident of the United States upon whom service of all 
processes, notices, orders, decisions, and requirements may be made for 
him and on his behalf. * * * '' 49 CFR 551.45(a). As a RI is an 
``importer of motor vehicles,'' we proposed to require an applicant 
organized under the laws of another country to file a designation of 
agent in the form specified in Section 551.45 before we register it as 
a RI (proposed Section 592.5(a)(5)(v)).
    This would not relieve the RI from maintaining required facilities 
and records within the United States. To assure our ability to locate 
those facilities and records, we proposed (Section 592.5(a)(5)(ii)) to 
require an applicant to include the street address of each of its 
facilities in the United States, including the location of the records 
that it is required by this part to keep, and the street address that 
it designates as its mailing address. We also proposed (Section 
592.5(a)(5)(iii)) that an applicant provide a copy of its business 
license or other similar document authorizing it to do business as an 
importer, or modifier, or seller of motor vehicles (or a statement that 
it has made a bona fide inquiry and is not required by such state or 
local law to have such a license or document).
    In addition, we proposed (Section 592.5(a)(5)(iv)) that the 
applicant provide the name of each of its principals who is authorized 
to submit conformity certifications to NHTSA, and the street address of 
the repair, storage, or conformance facility where each identified 
principal will be located.
    Proposed Section 592.5(a)(3), which would require RI applicants to 
state their street addresses and telephone numbers in the United 
States, was supported by five commenters. Two commenters were concerned 
that NHTSA might no longer allow Canadians to serve as RIs. Both these 
commenters felt that NHTSA would be able to adequately regulate 
Canadian RIs, either through their designated agents in the U.S. or 
through rules of civil procedure in all Canadian provinces, which 
allegedly allow for service by American entities on Canadian persons. 
We wish to assure these commenters that it is not the intent of this 
rule to exclude Canadian entities from becoming, or continuing to be, 
RIs. However, it is imperative that we be able to readily inspect all 
premises in the United States where RIs are conducting operations under 
NHTSA's regulations, and be able to mail legal communications to 
Canadian-based RIs or their designated agents at those premises. 
Moreover, historically some entities have not designated agents 
pursuant to 49 CFR 551.45, or have not updated agent addresses.
    We will mail notices of proposed suspensions, both automatic and 
non-automatic, to the address in the United States that the RI provided 
in its application, and if these notices are returned to us as 
undelivered or undeliverable, we shall proceed with the suspension. A 
commenter observed that the enforcement and collection of fines and 
penalties might be an issue where ownership of a RI is outside the 
United States. We agree. The administration of the 1988 Act is best 
served by having all RIs maintain mailing addresses in the United 
States, which will forestall any question as to NHTSA's extra-
territorial inspection, order, and collection authority. We are 
therefore adopting Section 592.5(a)(3) as proposed.
    In Section 592.5(a)(4), we proposed that applicants provide the 
social security numbers of their principals or partners and persons 
authorized to sign certification submissions to NHTSA. The purpose of 
this provision was to allow us to determine whether any person 
associated with an applicant has ever been convicted of a misdemeanor 
or felony involving motor vehicles or the motor vehicle business, such 
as title fraud, odometer fraud, auto theft, or the sale of stolen 
vehicles. If we discovered that there was such a person associated with 
an applicant, we could deny the application after considering the 
severity of the offense and the prospective role of the associate in 
operating the RI's business. Two commenters supported denying 
registration to applicants who have a felony record involving motor 
vehicles or the motor vehicle business. No comments were filed in 
opposition. Accordingly, we are adopting the requirement for provision 
of social security numbers with RI applications. If these numbers are 
not provided, the application will be denied.
    In Section 592.5(a)(5)(iii) we proposed that an applicant provide a 
copy of its business license or other similar document authorizing it 
to do business, or a statement that it has made a bona fide inquiry and 
is not required by state or local law to have such a license or 
document. Three commenters agreed with the proposal, and no one opposed 
it. One specified that the license should be that of a motor vehicle 
repair facility and that at least one employee should be a licensed 
mechanic. Another commented that RIs be required to be licensed as 
manufacturers if their states license such activity. However, these 
comments did not include any information or data on the scope of state 
licensing requirements, and we have no present basis upon which to 
adopt such requirements.
    Upon review, we have concluded that there is an overlap between 
proposed Section 592.5(a)(5)(iii) and proposed Section 592.5(a)(9)(ii), 
which, among other things, would require the applicant to provide a 
copy of a license to do business at each facility that it identifies 
under that subparagraph. Accordingly, the final rule amends Section 
592.5(a)(5)(iii) to specify that the applicant will provide a copy of 
the business license, or inquiry statement, with respect to each such 
facility. Section 592.5(a)(9)(ii) will therefore not include such a 
requirement.
    In Section 592.5(a)(5)(iv), we proposed that an applicant provide 
the name of each principal that would be authorized to sign conformity 
statements to NHTSA and the street address of the repair, storage, or 
conformity facility where each such

[[Page 52075]]

principal would be located. There was one comment on this proposal, 
agreeing that conformity statements should be signed and submitted by a 
principal of a RI. This comment also supported including this 
requirement as a duty of a RI as we proposed under Section 592.6(d)(3). 
Accordingly, we are adopting both proposals.
    These provisions will ensure that there is a designated person who 
will be accountable for the veracity of the certification and its 
submission. It is very important from a safety perspective that 
imported vehicles meet applicable Federal motor vehicle safety 
standards and that all recall work be performed. Toward that end, it is 
critical that a principal assure that these requirements are met. Such 
a designated person should be fully conversant with NHTSA regulations, 
such as the FMVSS, recall administration, the prohibitions against 
affixing a certification label to a vehicle outside the United States 
and shipping a vehicle to a facility other than the RI's after the 
vehicle has entered the United States, and the need to retain the 
vehicle until the bond is released.
    In the final rule, in Section 592.4, we are defining ``principal'' 
to mean, with respect to a RI: If a corporation, an officer; if a 
partnership, a general partner; and if a sole proprietorship, the 
individual who is the sole proprietor. In addition, as proposed, the 
term includes a director of a corporation and any individual whose 
ownership interest is 10 percent or more.
2. Defining ``Service Insurance Policy'' and ``Independent Insurance 
Company'' To Best Ensure That Owners Will Be Able To Have 
Noncompliances and Safety-Related Defects Remedied Without Charge
    Under present Section 592.5(a)(8), an application must contain a 
copy of a contract to acquire, effective upon registration as an 
importer, a prepaid mandatory service insurance policy underwritten by 
an independent insurance company (or a copy of such policy) to ensure 
that the applicant will be able financially to remedy safety-related 
defects in the vehicles that it imports or conforms.
    In the context of Section 592.5(a)(8) we proposed definitions for 
the terms ``service insurance policy'' and ``independent insurance 
company'' to address our concerns.
    A ``service insurance policy'' would be defined as any policy 
issued or underwritten by an independent insurance company which covers 
a specific motor vehicle and guarantees that any noncompliance with a 
Federal motor vehicle safety standard or safety-related defect 
determined to exist in that vehicle will be remedied without charge to 
the owner of the vehicle. An ``independent insurance company'' would be 
defined as an entity that is registered with any State and authorized 
thereby to conduct an insurance business, none of whose affiliates, 
shareholders, officers, directors, or employees, or persons in affinity 
with such, is employed by, or has a financial interest in or otherwise 
controls or participates in the business of a RI to which it issues or 
underwrites such policies. The phrase ``in affinity with such'' 
includes but is not limited to family members such as spouses, parents, 
children, or in-laws.
    One commenter was of the view that ``the use of terms such as 
`backed by,' `issued by,' `underwritten by,' and `reinsured by' can be 
somewhat ambiguous when used out of context,'' going on to say that 
``the nature and extent of the `backing' or `re-insurance' is not 
defined.'' (We note that these terms were addressed in the preamble 
discussion of the issue without specific proposed definitions.) In this 
commenter's opinion, it would be possible for such backing or 
reinsurance ``to cover only a portion of the policy limit(s).'' The 
commenter recommended that ``the underwriter named on each policy 
actually themselves be an insurance company,'' and that ``NHTSA allow 
the Department of Treasury to evaluate these insurers as is done with 
the DOT bond.'' The commenter cited Treasury Circular 570 as containing 
a list of approved companies. In its view, ``this would ensure that 
issuers of service insurance policies (where the motoring public is at 
financial risk) are not held to a lower standard than are issuers of 
DOT Bonds (where the U.S. Government is at financial risk).'' Although 
we believe that the comment is well taken, such a requirement would be 
beyond the scope of our proposal. We will consider addressing this 
issue in the NPRM mentioned above.
    Another commenter suggested that an ``independent insurance 
company'' not only be registered with a State and authorized to conduct 
an insurance business in that State, but that it also be authorized to 
conduct the line of business under which the policy falls. We concur 
with this recommendation. Such an amendment emphasizes our intent that 
such policies be honored in the event the insurer is called upon to do 
so. Accordingly, we are modifying the definition of ``independent 
insurance company'' to define it in pertinent part as ``an entity that 
is registered with any State and authorized by that State to conduct an 
insurance business including the issuance or underwriting of a service 
insurance policy * * *.''
    We did not specifically request comments on whether the amount of 
coverage presently provided ($2,000 per vehicle) should be increased. 
One commenter considered the amount adequate. Another thought that the 
limit should be raised to an amount equal to the ``full retail price of 
the vehicle,'' to insure that the remedial options of replacement with 
an equivalent vehicle or refunding the purchase price could be 
achieved. Such an increase is beyond the scope of the proposal. 
Moreover, there has been no need demonstrated since 1989 for an 
increase in the amount of coverage per vehicle, even accounting for 
inflation.
    Only one comment was submitted in response to our question about 
whether there might be an alternative to the service insurance policy, 
such as a bond equal to 5 percent of the dutiable value of the vehicle. 
In the commenter's view, if such a bond were required, original vehicle 
manufacturers may decline to perform recall remedy work ``for free if 
they can be paid for it.'' Because most, if not all, manufacturers have 
authorized their franchised dealers in the United States to perform 
recall remedial work on vehicles of the same make, imported from 
Canada, at no charge to the owner, owners have not been experiencing 
problems related to obtaining recall remedies. For this reason, and the 
lack of public comment, we have concluded that there is no reason to 
switch to a different approach.
    Three commenters stated that the rule needs to address the 
importation of vehicles with outstanding Canadian liens because State 
vehicle registrars are not requiring this information. In the view of 
one commenter, this creates the potential for cross-border fraud. The 
solution suggested by the commenter is a Federal regulation requiring 
RIs to conduct lien searches across Canada and then to provide a 
statement regarding this research on each vehicle they import. We have 
concluded that imposing such a duty under Section 592.6 would be beyond 
the scope of our NPRM, but will consider addressing it in the 
forthcoming NPRM.
3. Section 592.5(a)(9): An Applicant Must Demonstrate Its Technical 
Ability To Perform Conformance Work
    The original ``gray market'' provisions of the Safety Act, in 
effect from 1968 to 1990, emphasized the responsibility of the importer 
to bring imported nonconforming vehicles into compliance with U.S. 
requirements but was silent regarding the qualifications of

[[Page 52076]]

the importer/modifier. In the 1988 Act, Congress rejected the 20-year 
practice of leaving conformers of motor vehicles unregulated, and 
enacted a statutory scheme under which only RIs may conform 
noncompliant vehicles. The statute directed NHTSA to establish 
procedures and requirements that, among other things, ensure that the 
RI ``will be able technically'' to carry out conformance and recall 
repair work. 49 U.S.C. 30141(c)(1)(C). The underlying intent was that a 
Federal agency would review the qualifications of each RI to bring 
vehicles into compliance with the FMVSS and to repair those that are 
included in safety recall campaigns if they have not been remedied by 
the fabricating manufacturer.
    As reflected in existing 49 CFR 592.5(a)(9), we currently require 
an applicant to demonstrate that it will be ``technically able [to 
remedy a noncompliance or safety-related defect] through repair.'' 
However, the current regulation does not specifically address the 
technical ability of the applicant to conform vehicles or the 
sufficiency of its facilities to do so. Therefore, we proposed to amend 
Section 592.5(a)(9) to require an applicant to submit information 
sufficient to demonstrate to us that it has the technical ability to 
bring vehicles into compliance with safety, bumper, and theft 
prevention standards, and to perform recall repairs on vehicles. This 
information could include a discussion of the applicant's facilities, 
its experience repairing vehicles, and the qualifications of its 
personnel.
    To demonstrate ownership or lease of facilities adequate for the 
conformance, repair, and storage of vehicles, under proposed Section 
592.5(a)(9)(ii) an applicant would have to provide a copy of the lease 
agreement or ownership document relating to each such facility. We also 
proposed that the applicant provide a copy of a license or other 
similar document issued by an appropriate local authority permitting 
the applicant to do business as an importer, or modifier, or seller of 
motor vehicles, or, alternatively, a statement by the applicant that it 
has made a bona fide inquiry and is not required by state or local law 
to have such a license. As noted above, this provision overlapped a 
requirement included in Section 592.5(a)(5)(iii), and we are addressing 
it in that section.
    We are authorized to inspect the conformance, storage, and record-
keeping facilities of an applicant to assist us in deciding whether to 
approve a RI application. 49 U.S.C. 30141(c)(1)(B) and 30166. In some 
instances, we have conducted an on-site inspection to judge the 
technical competence of an applicant; in others, we have relied on the 
description provided in the application. To reduce the need to conduct 
on-site inspections and to expedite the process, we proposed to require 
an applicant to submit still or video photographs of each of its 
facilities where vehicles would be conformed, remedied in safety recall 
campaigns, and stored prior to their release.
    Five commenters addressed proposed Section 592.5(a)(9). Two of 
these commenters wanted us to allow RIs to have contractors perform 
conformity work, one asserting that it was unrealistic for the agency 
to expect RIs to possess the facilities, technical expertise, and 
equipment to perform all required repairs and modifications on the 
vehicles that they import. This comment recommended that an applicant 
demonstrate that it has access to licensed dealer service departments 
and licensed professionals that have the facilities to modify or repair 
the vehicles it has imported.
    A third commenter supported the proposal that RIs submit proof that 
they own or lease facilities that are adequate to fulfill a RI's 
duties. This commenter and another also recommended that we require 
that a RI be specifically licensed to operate as a motor vehicle repair 
facility and to have at least one employee who is a licensed mechanic 
in the state where the RI is located. Finally, one commenter was of the 
view that a RI's employees should be required to provide proof of their 
immigration status if they were not U.S. citizens.
    In 1989 we proposed allowing RIs to contract out conformance work, 
but we did not adopt this proposal, and we are even less inclined to do 
so now. We have concluded that the statute is best implemented by 
placing the RI's responsibilities squarely on the RI itself. Congress 
replaced the previous regulatory scheme under which an importer of a 
gray market vehicle was free to have conformance work performed by any 
entity, regardless of its qualifications, with a scheme under which 
conformance work done would be done by an entity which had demonstrated 
to NHTSA its ``technical ability'' to perform that work. Permitting a 
delegation of conformance work would be inconsistent with this 
statutory goal and would dilute the direct accountability of a RI for 
vehicle modifications. We are aware of past instances in which RIs have 
contracted with other repair shops to replace odometers and 
speedometers calibrated in metric units with those calibrated in miles 
and miles per hour. The agency has directed those RIs to desist from 
this practice to ensure that the RI is responsible for any safety 
problems that may arise from the installation and for the accuracy of 
the odometer reading on the replaced unit.
    As for the suggestions that at least one principal or employee 
should be licensed as a mechanic in the state where the RI facility is 
located, we are not adopting this as a requirement. As indicated above, 
we have not been provided, and, at this time, we are not conversant, 
with the laws of the various states that relate to this issue, and 
there may be some that do not require licensing of auto repair 
mechanics. Further, the proposal did not ask for comment on this 
specific question. However, the fact that a principal or employee has 
been issued such a license or certificate is the type of information 
that an applicant could submit in support of its argument that it has 
the technical ability to conform vehicles. Should the licensee's 
employment or affiliation with a RI terminate, that fact would have to 
be reported to us as a change in relevant circumstances, as required by 
new Section 592.5(f).
    As for the comment that non U.S.-citizen employees of RIs should 
have to provide proof of their immigration status, we note that we did 
not propose such a requirement nor did the Immigration and 
Naturalization Service (or, as it is now named, U.S. Citizenship and 
Immigration Services) inform us of the desirability of such a 
requirement. In any event, we are reluctant to add requirements that 
appear to have little relevance to the ``technical ability'' of a RI to 
conform or repair motor vehicles.
4. Section 592.5(a)(11): An Applicant Must Understand the Duties of a 
RI
    At present, Section 592.5(a)(11) requires an applicant to state 
that it will fully comply with the duties of a RI as set forth in 
Section 592.6. We have proposed additions to, and clarifications of, 
the duties of a RI, and, in this light, proposed an amendment of 
Section 592.5(a)(11) to require an applicant to state that it has read 
and understood the duties of a registered importer as set forth in 49 
CFR 592.6 and that it will fully comply with each such duty.
    No commenter addressed this issue. We are adopting Section 
592.5(a)(11) as proposed.
5. Section 592.5(b): How NHTSA Will Treat an Incomplete Application
    Under the present regulation, if the information submitted by an 
applicant is incomplete, the Administrator notifies the applicant of 
the areas of

[[Page 52077]]

insufficiency and that the application is being held in abeyance.
    We proposed a clarification under which the Administrator would 
notify the applicant of the ``information that is needed'' in order to 
complete the application, and that the Administrator would not give 
further consideration to the application until the information is 
received.
    We received one comment in support of this proposal. No other 
comments were received on the issue, and we are adopting Section 
592.5(b) as proposed.
    This section applies to new applications only. If an existing RI 
fails to file additional required information by November 1, 2004, as 
required by new Section 592.6(r), discussed below, the Administrator 
may automatically suspend the registration, pursuant to Section 
592.7(a)(4). Further, if an existing RI fails to file an annual 
statement as required by Section 592.6(l), the Administrator may 
suspend the registration, pursuant to Section 592.7(b)(1).
6. Section 592.5(e): Denial of Applications
    We received no comments on our proposed amendments to this section 
and are adopting them as proposed.
    Under these amendments, we are removing from present Section 
592.5(d) and placing in a new subsection (e) provisions related to 
denial of RI applications and refunds of certain components of the 
initial annual fee.
    At present, the regulation states only that ``If the information 
[in the application] is not acceptable, the Administrator informs the 
applicant in writing that its application is not approved.'' We are 
expanding this in several ways.
    We currently require an applicant to state that it has never had a 
registration revoked pursuant to Section 592.7 (Section 592.5(a)(6)). 
We are continuing this requirement and are restating Section 
30141(c)(3) as well by specifying that we shall deny registration to an 
applicant whose registration has previously been revoked (new Section 
592.5(e)(1)).
    We also currently require an applicant to state that it is not and 
was not ``directly or indirectly, owned or controlled by, or under 
common ownership or control with, a person who has had a registration 
revoked'' (Section 592.5(a)(6)). We are continuing this requirement and 
refer to the portion of Section 30141(c)(3) that specifies that we may 
deny registration to an applicant that is or was owned or controlled 
by, or under common ownership or control with, a RI whose registration 
has been revoked. For example, if we revoke the registration of a 
corporate RI that had four officers, we shall deny registration to an 
applicant in which any one of the four individuals, or specified family 
members, is involved.
    Under the current regulation, each RI's application must include 
the ``names of all owners, including shareholders, partners, or sole 
proprietors'' (Section 592.5(a)(4)), and, if an owner is a corporation, 
``the names of all shareholders of such corporation whose ownership 
interest is 10 percent or greater'' (Section 592.5(a)(5)). The RI is 
required to inform us of any change in the ownership information it has 
provided (Section 592.5(f)). Thus, under the present regulation, there 
is some information that can be used to compare the ownership interests 
of a RI whose registration has been revoked with those of an applicant. 
However, the present regulation, in our view, may not be sufficient to 
cover situations where an application is filed by person(s) who may be 
influenced by a revoked RI, or its shareholders, principals, partners, 
or employees, and whose name may not have appeared on that RI's 
application. For example, this would include a spouse, in-law, child, 
partner, substantial shareholder, or employee. Thus, the amended 
regulation will also require an applicant to state whether any of its 
shareholders, officers, directors, employees, or family members of such 
individuals had been previously affiliated with a RI in any capacity 
(e.g., major shareholder, partner, participant in the business), and, 
if so, to state the name of the RI and the capacity.
    Under the amended rule, NHTSA's denials of RI applications will be 
in writing and include the reasons for the denial. Applicants will be 
specifically permitted to submit a petition for reconsideration of the 
denial within 30 days (Section 592.5(e)(3)), and the denial will be in 
effect until the petition is acted upon.
7. Section 592.5(f): The Due Date for the RI's Annual Statement and Fee 
Will Be September 30
    No comments were received on the amendments proposed for Section 
592.5(f) and they are adopted as proposed.
    Under these amendments, present subsection (e) is redesignated 
subsection (f). Under 49 U.S.C. 30141(a)(3), a RI must pay an annual 
fee ``to pay for the costs of carrying out the registration program for 
importers * * *.'' The annual fee covers a fiscal year, October 1 
through September 30 of the year following. At present, the fee, along 
with the RI's statement that affirms that information provided to the 
agency remains correct and that it continues to comply with applicable 
requirements, must be filed and paid not later than October 31 of each 
year. This is a month after the beginning of the fiscal year. Moreover, 
Section 592.7(a) now provides that we may not revoke or suspend a 
registration until the 31st calendar day after an unpaid fee is due and 
payable. The 31st calendar day after October 31 is December 1. This 
means that a RI that does not pay its annual fee has a ``free ride'' to 
continue to operate for two months into the fiscal year.
    To address this anomaly, we are amending the present provisions to 
require payment of the annual fee, and submission of the annual 
affirmation statement, not later than September 30 of each year, to 
cover the next fiscal year. In addition, as discussed in more detail 
below, we are amending Section 592.7(a) to specify that we may 
automatically suspend a RI's registration if the annual fee has not 
been paid by the close of business on October 10 or, if October 10 
falls on a weekend or a holiday, the next business day.
8. Transfer of Current Section 592.5(f) to new Section 592.6(m): RIs 
Must Notify NHTSA of Changes of Information Provided in Their 
Applications
    Under current Section 592.5(f), a RI must notify us within 30 days 
of any change in the information provided in its application. This is a 
duty and, as such, is more appropriately located in Section 592.6, 
Duties of a registered importer. Therefore, we are designating it as 
new Section 592.6(m).
9. Section 592.5(h): How NHTSA Will Treat Applications Pending on the 
Effective Date of the Final Rule
    We received no comments on our proposed Section 592.5(h) and are 
adopting it as proposed.
    This section addresses how we will treat RI applications that are 
pending when this final rule becomes effective. Under subsection (h), 
if the application does not contain all the information that is 
required by Section 592.5(a) as amended by the final rule, we shall 
defer further consideration of the application until the information is 
received. Potential and pending applicants are advised to begin 
preparation of all newly-required information promptly following 
publication of this rule.

[[Page 52078]]

B. Bonding, Conformity, Certification, and Other Duties of a Registered 
Importer (Section 592.6)

    The obligations of a RI are set forth in Section 592.6. The NPRM 
represented our tentative decision that several provisions in that 
section should be amended or clarified, and that several more needed to 
be modified to reflect the establishment of different Types of motor 
vehicles (Type 1 and Type 2). Therefore, we proposed revising Section 
592.6 in its entirety.
    The present duties of a RI under Section 592.6 may be summarized as 
follows, by their subsection:
    (a) bond requirements;
    (b) recordkeeping;
    (c) conformance records after initial certification for same make, 
model, and model year has been submitted;
    (d) certification of conformed vehicles;
    (e) certification to NHTSA;
    (f) substantiation of certification;
    (g) obligation to notify and remedy;
    (h) requirement to admit NHTSA representatives for inspection;
    (i) maintenance of prepaid mandatory service insurance policy; and
    (j) obligation upon failure to conform vehicles.
    We are adopting the following structure of subsections for Section 
592.6:
    (a) conformance and bond requirements;
    (b) recordkeeping;
    (c) certification of conformed vehicles;
    (d) certification documentation to be submitted to NHTSA for motor 
vehicles;
    (e) acts prohibited before bond release;
    (f) furnishing the service insurance policy with the vehicle;
    (g) odometer disclosure requirements;
    (h) obligation to export or abandon a vehicle upon failure to 
conform it;
    (i) obligation to provide notification of and remedy for safety-
related defects and noncompliances, and to submit related reports to 
NHTSA;
    (j) requirement to admit NHTSA representatives for inspection;
    (k) requirement to provide an annual statement with fee;
    (l) notification to NHTSA upon change of information provided in 
application; prior notice of change of facility;
    (m) assurance that at least one full-time employee is present at 
each facility;
    (n) prohibition against co-utilization of employees, or 
conformance, repair, or storage facilities with any other RI;
    (o) timely response to NHTSA information requests;
    (p) timely payment of fees; and
    (q) provision not later than 30 days after effective date of final 
rule of information required of new RI applicants.
    We discuss below the requirements we have adopted.
1. Section 592.6(a): A RI Must Ensure Conformance of All Imported 
Vehicles With Safety, Bumper, and Theft Prevention Standards and 
Furnish a Conformance Bond
    Under current Section 592.6(a), a RI must ``furnish to the 
Secretary of the Treasury (acting on behalf of the Administrator)'' a 
bond to assure that it will bring a nonconforming vehicle into 
conformity with the FMVSS within 120 days of entry. We proposed to 
amend subsection (a) to make explicit that a RI must bring each vehicle 
under bond into conformity and that a RI must assure that any vehicle 
that it imports for resale has been deemed eligible for importation by 
the Administrator pursuant to Part 593 (this would include any pre-
determination vehicle that a RI originally imported under 49 CFR 
591.5(j)(1) for the specific purpose of developing conformance 
modifications to support an eligibility petition). The obligation to 
conform the vehicle would explicitly cover conformance with any Federal 
bumper and theft prevention standards applicable to the vehicle.
    We asked for comments on whether 120 days was needed to bring 
Canadian Type 2 vehicles into conformity. Given our decision to 
dispense with different requirements for different vehicle types, we 
will retain the 120-day period for all vehicles.
    Until now, Part 592 has been silent on the RI's responsibility to 
ensure conformance with the Theft Prevention Standard, though the 
matter is addressed in Part 567, the certification regulation. It is a 
violation of Federal law to import motor vehicles that do not comply 
with safety and bumper standards, but in each case the statutory 
prohibition does not apply if the vehicles have been determined to be 
capable of complying and are brought into conformity after importation 
(See 49 U.S.C. 30112, 30146, and 32506). It is also a violation of 
Federal law to import a vehicle subject to the Theft Prevention 
Standard that does not comply with that standard (see 49 U.S.C. 33114), 
but Section 33114 provides no exceptions that would allow post-
importation conformance. Thus, we have applied Section 33114 to require 
a vehicle to meet the Theft Prevention Standard at the time of entry, 
and have not allowed conformance after a vehicle has been imported.
    We have implemented this through our certification regulation (49 
CFR Part 567): If a RI imports a passenger car or multipurpose 
passenger vehicle from a line listed in Appendix A of 49 CFR Part 541, 
Federal Motor Vehicle Theft Prevention Standard, and the original 
manufacturer has not affixed a label meeting the requirements of 
Section 567.4(k), the RI is required to inscribe the Vehicle 
Identification Number on certain parts (Section 541.5(b)(3)), and to 
affix a label meeting these requirements before the vehicle is imported 
(Section 567.4(k)). We proposed to allow post-entry conformance on the 
basis that it might be difficult outside the United States to mark 
parts or to take other actions needed to certify compliance with the 
theft prevention standard.
    The purpose of the Theft Prevention Standard ``is to reduce the 
incidence of motor vehicle thefts by facilitating the tracing and 
recovery of parts from stolen vehicles'' (Section 541.2). We viewed it 
as unlikely that an imported vehicle subject to the Theft Prevention 
Standard would be stolen while in the custody of a RI. The NPRM 
represented our tentative conclusion that the purpose of the standard 
would not be compromised by allowing a RI to bring a vehicle into 
compliance after its entry and before its sale for on road use, during 
the period when the RI is conforming and certifying vehicles to the 
safety and bumper standards.
    NICB objected to this tentative conclusion. It remarked that 
``after * * * acknowledging that [the] statute `provides no 
exceptions,' NHTSA proposes nonetheless to create an exception to allow 
importation of vehicles from lines that are subject to the parts-
marking requirement, but that were not marked. This proposal flatly 
contradicts Congress' mandate, and NHTSA identifies no statutory 
authority * * *.'' NICB further asserted that even if NHTSA had 
authority ``to allow non-parts-marking-compliant `gray market' vehicles 
into the United States, it is not possible to implement the proposed 
rule'' without undercutting enforcement efforts to arrest those who 
profit from vehicle theft. NICB claimed that NHTSA's statement that it 
is unlikely that an imported vehicle subject to the parts-marking 
standard will be stolen while in the possession of a RI ``misses the 
point * * *. If a marked vehicle was stolen in the United States and 
re-imported, the major parts--including one in a `secret' location--
will be marked with a VIN different from the number on the VIN plate.'' 
NICB

[[Page 52079]]

concluded that, by allowing non-conforming vehicles to enter the 
country, ``NHTSA would unwittingly establish a new industry to create 
non-factory markings for major parts.''
    We have carefully considered this comment. We observed in the NPRM 
that the Theft Prevention Act did not provide any authority for post-
importation conformance.
    The Theft Prevention Act stands in strong contrast to the statutes 
authorizing the FMVSS and the Bumper Standard. 49 U.S.C. 30112(a) 
prohibits the importation of motor vehicles that do not conform, and 
are not certified as conforming with all applicable FMVSS, except as 
provided in Sections 30141 et seq. These sections allow importation of 
vehicles that do not conform to the FMVSS provided they will be brought 
into conformance by RIs.
    49 U.S.C. 32506(a) prohibits the importation of a passenger motor 
vehicle that does not conform to the Bumper Standard, except as that 
section may provide. Section 32506(c) authorizes the issuance of 
regulations providing for post-importation conformance of passenger 
motor vehicles with the Bumper Standard.
    Section 33114(a)(1), on the other hand, prohibits importation of a 
motor vehicle subject to the Theft Prevention Standard ``unless it 
conforms to the standard.'' Unlike Sections 30112(a) and 32506(a), 
Section 33114(a)(1) establishes no exceptions of any nature. Given the 
explicit exceptions in two other statutes that we administer relating 
to the manufacture of motor vehicles to comply with Federal standards 
and the importation of these vehicles into the United States, we have 
decided that we cannot find an implicit exception in the third such 
statute. It is manifestly clear that Congress intended that a vehicle 
to which the Theft Prevention Standard applies must comply with that 
standard before being admitted into the United States. Accordingly, we 
are not adopting that aspect of the NPRM.
2. Section 592.6(b): Recordkeeping Requirements
    For the most part, existing recordkeeping requirements will be 
retained, and the relatively minor changes proposed in the NPRM will be 
adopted. However, we will not need to include references to different 
``Types'' of motor vehicles, as we had proposed.
    We are clarifying that all records must be kept as hard copies (not 
electronically) at the facility in the United States identified by the 
RI in its application. Such records include copies of certifications of 
conformity submitted to NHTSA. The use of the term ``the facility'' 
means that all required records must be stored at a single location.
    One commenter disagreed with our proposal that all documents be 
stored in the United States. In its view, documents stored in Canada 
can still be provided by a RI upon NHTSA inquiry, and that if a RI 
fails to produce them, NHTSA has the same remedy as it has for a RI who 
fails to produce records stored in the United States.
    The question of NHTSA access to records is not limited to whether a 
RI will produce them upon request, but extends to whether NHTSA may 
readily inspect the records if it wishes to do so. By requiring that RI 
records be kept in the United States, we avoid any issue of whether 
NHTSA has the right to inspect records in a country outside the United 
States, and any cumbersome procedures and delays such inspections could 
entail. We are therefore adopting the final rule on this point as 
proposed.
    In addition to documenting eligibility, conformity, and proof that 
the needed work has been done, one of the primary purposes of 
recordkeeping is to provide a ready means of identifying vehicles that 
a RI must remedy without charge in the event of a future defect or 
noncompliance determination. Under 49 U.S.C. 30120(g), as amended by 
the Transportation Recall Enhancement, Accountability, and 
Documentation (TREAD) Act (Pub. L. 106-414), effective November 1, 
2000, the period of free remedy for vehicles has been increased from 8 
to 10 years. See amendments to 49 CFR 592.6(g)(1), 65 FR 68109-10, 
November 14, 2000. Thus, new Section 592.6(b) will require relevant 
records to be maintained for 10 years from the date of entry.
3. Section 592.6(c): Only a RI May Affix a Certification Label to a 
Vehicle After it Is Conformed; The RI Must Affix the Certification 
Label at Its Facility Inside the United States
    Under 49 U.S.C. 30146(a)(3), ``each registered importer shall 
include on each motor vehicle * * * a label prescribed by the 
[Administrator] identifying the importer and stating that the vehicle 
has been altered by the importer to comply with the standards 
applicable to the vehicle.'' We implemented this section by present 
Section 592.6(d), which requires the RI, upon completion of compliance 
modifications, to permanently affix a certification of compliance label 
to the vehicle that meets the requirements of 49 CFR part 567, and to 
provide to us a photograph of the label affixed to the vehicle. These 
requirements will be continued in amended Section 592.6(c), and 
modified as discussed below.
    Two issues have arisen with respect to gray market vehicle 
certification: Who may affix the certification label, and whether the 
certification label may be affixed outside the United States if 
compliance work is completed before importation.
    In some instances, we have discovered that a RI had not taken 
possession of the vehicles it had imported and was shipping its 
certification labels to a customer without having actually seen the 
cars it was purporting to modify and certify. We had made it clear, in 
the preamble to the final rule adopting Part 592, that a RI may not 
contract to have another person conform a vehicle for which it is the 
importer of record (54 FR 40063 at 40066). For similar reasons, it is 
improper for a RI to delegate the responsibility to affix the 
certification label.
    In every instance, the proper course of action for a RI is to take 
physical possession of the vehicle, perform all necessary conformance 
modifications at a facility that it has identified to NHTSA in its 
application to become a RI, and only then and there affix the 
certification label.
    Of course, if modifications had been made while the vehicle was 
still in a foreign country, those modifications would not have to be 
repeated by the RI in the United States. Under all circumstances, 
however, the RI must affix its certification label to the vehicle at 
its conformance facility in the United States after the vehicle has 
been brought into compliance, and all necessary recall remedies have 
been performed. We therefore proposed Section 592.6(c), which would 
require that all necessary conformance work be performed at a facility 
that the RI has identified to NHTSA for that purpose and that the 
certification label be permanently affixed at that facility after all 
appropriate modifications and recall work are performed on the vehicle.
    No commenter objected to our proposal to require that the 
certification label be affixed only by the RI, and we will adopt that 
requirement as proposed. With respect to the location at which 
conformance work could be performed, two commenters agreed with our 
proposal, one remarking that a RI should not be allowed to do 
conformance work and affix the certification label while the imported 
vehicle is on a car carrier, and that the vehicle should be required to 
be on the ground and physically within the RI's facility.

[[Page 52080]]

    However, a third commenter (with a fourth concurring) argued that 
there is no reason to prohibit RIs from affixing a certification label 
outside the United States. In its view, safeguards are in place because 
of the requirement that a conformance bond be posted for each vehicle.
    We cannot allow a RI to both conform and certify vehicles outside 
the United States. To do so would risk losing a considerable amount of 
control over the RI program. The person responsible for certifying a 
gray market vehicle must be subject to our direct jurisdiction for 
purposes of enforcing the statutory prohibitions against false and 
misleading certification, and to respond to our inquiries regarding 
certification submissions. Were we to allow certification outside the 
United States, there would be little reason to require a RI to maintain 
a facility in the United States for the rare occasion when it might 
have to remedy a noncompliance or safety-related defect. Moreover, 
allowing grey market vehicles to be certified outside the United States 
by a person other than their original manufacturer could result in some 
instances in their inadvertent importation into the United States 
without bond, contrary to 49 U.S.C. 30112(a), which allows unbonded 
entry only for vehicles that have been certified by their original 
manufacturers. Should such an entry of a gray market vehicle occur, an 
unbonded vehicle might not be held for 30 days after submission of the 
conformance package and we would have no basis upon which to demand 
export if the vehicle were found to be noncompliant. Accordingly, we 
specify in Section 592.6(c) that certification labels may be affixed 
only in the United States.
4. Section 592.6(d): Documentation That RIs Must Submit to NHTSA
    Currently, Section 592.6(f) specifies a limited amount of 
information that must be submitted to NHTSA with the RI's conformance 
certification, and provides that the RI must also submit ``such 
information, if any, as the Administrator may request.'' The material 
that is submitted is known as the ``conformity package.'' Over the 
years, we have requested that a number of additional items be submitted 
with the conformity package, such as the reading on the vehicle's 
odometer at the time of certification, and we have advised the RIs of 
these items through informal communications, such as a newsletter from 
our Office of Vehicle Safety Compliance. We have decided that it would 
be more appropriate to include these items in revised Section 592.6 so 
that there will be no doubt or confusion about what is required.
    We proposed two separate sets of requirements to apply to Type 1 
and Type 2 motor vehicles. Since we have decided not to proceed with 
that approach, we will have only a single set of requirements, i.e., 
those that were set out in proposed Section 592.6(d) as applying to 
Type 2 motor vehicles admitted to the United States under bond.
    We did not receive any comments with respect to the items to be 
included in the conformity package. We are therefore adopting new 
Section 592.6(d)(6) as proposed, with the exception that the RI will 
not state that it has brought the vehicle into conformity with the 
Theft Prevention Standard. Thus, the initial conformity package 
submitted to NHTSA by each RI for a given model/model year vehicle must 
contain (i) the make, model, model year and date of manufacture, 
odometer reading, VIN, and Customs Entry Number, (ii) a statement that 
the RI has brought the vehicle into conformity with all applicable 
Federal motor vehicle safety and bumper standards, and a description, 
with respect to each standard for which modifications were needed, of 
how it has modified the vehicle (this means that the initial conformity 
package could not simply utilize a form in which boxes are checked to 
indicate conformance), (iii) a copy of the bond given at the time of 
entry to ensure conformance, (iv) the vehicle's vehicle eligibility 
number (indicating that NHTSA has found the vehicle eligible for 
importation), (v) a copy of the HS-7 Declaration form executed at the 
time of the vehicle's importation if a Customs broker did not make an 
electronic entry with Customs, (vi) true and unaltered front, side, and 
rear photographs of the vehicle, (vii) true and unaltered photographs 
of the original manufacturer's certification label and the RI's 
certification label permanently affixed to the vehicle (and, if the 
vehicle is a motorcycle, a photograph or photocopy of the RI 
certification label before it has been affixed), (viii) documentation 
including photographs sufficient to demonstrate conformity, and (ix) 
the policy number of the service insurance policy furnished with the 
vehicle pursuant to Section 592.6(g). For clarity, we are also 
requiring the RI to include, as (x), a statement that clearly 
identifies the submission as the RI's initial certification for the 
make, model, and model year of the vehicle covered by the submission.
    Under current Section 592.6(f), a RI's second and subsequent 
conformity packages for a given make, model, and model year motor 
vehicle need not contain all the information in its first submission 
but only ``such information, if any, as the Administrator may 
request.'' We proposed new Section 592.6(d)(7) to clarify that the same 
information would be required for second and subsequent conformity 
packages for each model unless the RI stated that it had conformed the 
vehicle in the same manner as it stated in its initial submission for 
that model. The proposal stated that if the RI makes such a statement, 
it ``need only provide photographs and other documentation of the 
modifications that it made to such a vehicle to achieve conformity.'' 
However, that was not what we intended. Obviously, we need to receive 
the identifying information in subparagraph (i) of Section 592.6(d)(6), 
as well as much of the other information required under paragraph 
(d)(6). Our intent was to ease the burden on RIs involving the 
submission of subsequent conformity packages by not requiring the RIs 
to repeat their detailed descriptions of what modifications were made. 
We have revised Section 592.6(d)(7) to clarify that second and 
subsequent submissions need not provide the detailed description of 
conformance modifications needed and performed, if the vehicle was 
conformed in the same manner as described in the initial submission.
    Currently, we require RIs to submit a copy of the actual service 
insurance policy that applies to each vehicle with the conformity 
package for the vehicle. We have concluded that this is not necessary, 
as long as the RI submits the name of the insurer and the insurance 
policy number or other identifying information so that we have a record 
in case the owner of the vehicle needs to utilize the policy. We are 
adopting our proposal on this point.
    We received only one comment related to this issue. The commenter 
supported our proposal to only require RIs to provide policy numbers 
rather than copies of the actual policies, but asked that NHTSA supply 
the policy numbers to insurers in the same fashion that it currently 
provides information on bond releases. We understand that it is the 
practice of some insurers to provide RIs with quantities of blank 
policies, and that RIs do not always inform the insurer of the vehicles 
its policies cover, hence the request that NHTSA provide policy numbers 
routinely to insurers. This request would add yet another burden to 
NHTSA's importation enforcement program. We believe that this is a 
commercial matter, one that

[[Page 52081]]

should be resolved between a RI and its policy provider.
    Section 592.6 does not currently address a RI's obligations with 
respect to recalls pending at the time of importation on vehicles for 
which it is responsible under the statute. In recent years, we have 
required RIs to include a statement in each conformity package that 
there are no outstanding recalls applicable to the vehicle (i.e., 
recalls for which the remedy had not been performed). However, we have 
found that some RIs were not actually checking to see if such a 
statement was true and that in some cases vehicles were being released 
to the public with unremedied noncompliances and safety defects. 
Because of the clear adverse impact that this practice has on safety, 
we proposed that each conformity package contain substantiation that 
the vehicle is not subject to any safety recall campaigns being 
conducted by its original manufacturer (or its U.S. subsidiary) in the 
United States that have not been completed. There were no comments on 
this proposal, and we are adopting it as proposed.
    Although the revised regulation (specifically, Section 592.6(d)(5)) 
does not specify any particular document to substantiate that all 
defects and noncompliances have been remedied, the most convenient and 
straightforward substantiation would be a document issued by the 
original manufacturer or a franchised dealer of that manufacturer 
stating that there are no outstanding recalls that apply to the 
vehicle, identified with a reference to a specific VIN. If the 
manufacturer's or dealer's records indicated that there were one or 
more recall campaigns for which a remedy had not been performed, the RI 
will have to submit repair records demonstrating that the remedy work 
had been performed on or before the submission. In appropriate cases, a 
RI could submit a printout from NHTSA's website showing that there were 
no recalls applicable to the specific model and model year of a 
vehicle.
    We are moving in the direction of allowing the electronic 
submission of certain conformance documentation. However, we need to 
assure ourselves that all photographic information is authentic. It was 
our concern that current technology might be sufficiently advanced that 
it would be easy to alter digital or digitized photographs. We have 
discovered irregularities by noticing such things as color 
inconsistencies in the photographs. Because colors can be easily 
manipulated in a digital image, the agency's ability to detect such 
anomalies could be compromised. However, we proposed only that 
photographs documenting conformity be ``true and unaltered,'' a term 
that would not per se prohibit digital photographs and would encompass 
all types of photographs submitted. These photographs would be retained 
for all vehicles conformed by RIs, including but not limited to views 
of the vehicle speedometer/odometer displays and the RI's and original 
manufacturer's certification labels.
    Two commenters supported allowing electronic submission of digital 
photographs. According to one, digital cameras exist that have a 
technology precluding manipulation of the image. The second commenter 
said that other Federal agencies, including the U.S. Customs Service 
(now the Bureau of Customs and Border Protection), have successfully 
used this technology without giving up program control. In view of 
these comments, and of the growing use of digital cameras since our 
year 2000 proposal, we have decided that we will accept digital photos 
as part of a certification of conformance package; however, these 
packages will not be allowed to be submitted electronically at this 
time. See discussion below of Section E.2, Electronic Transmission. The 
regulation will be amended as proposed, to require the submission of 
``true and unaltered photographs.''
    Section 592.6(e) currently requires a RI, after it has completed 
bringing a vehicle into conformity, to certify to NHTSA that the 
vehicle complies with all applicable FMVSS, ``and that it is the person 
legally responsible for bringing the vehicle into conformity.'' In some 
recent instances, RIs have applied certification labels and submitted 
conformity packages to NHTSA without any knowledge of what 
modifications were needed, what in fact was done, or whether standards 
were met, and without exercising any control over the process. For 
example, certification to NHTSA has been provided by individuals who 
have never seen the vehicles and are hundreds of miles away from the 
RI's conformance facility, purportedly based upon having been granted a 
power of attorney from the RI responsible for the vehicle's 
importation. In another instance, we informed a RI that we would not 
accept certifications to us from appointed individuals resident in 
Canada.
    In our view, certification to NHTSA is a duty that must be 
performed by someone who has personal knowledge of the relevant 
information. We therefore proposed, in new Section 592.6(d)(3), that 
the required certification to NHTSA could only be signed by a principal 
of the RI, who would attest to having personal knowledge that the RI 
had performed all work required to bring the vehicle into conformity 
with all applicable Federal motor vehicle safety, bumper, and theft 
prevention standards. As noted above, the identity of the principal(s) 
authorized to make this certification would be stated in the RI 
application or in subsequent filings with NHTSA pursuant to Section 
592.6(m).
    These provisions elicited opposition from several commenters. NAATA 
stated that principals should not be required to sign certifications 
because this practice is not commercially viable. The commenter 
asserted that in a majority of cases, employees prepare certifications 
and the principal does not have specific knowledge of all information 
behind the certification, ``nor can NHTSA expect the principal to have 
knowledge.'' NAATA suggested that a stamp of the principal's signature 
or a signature of the employee in charge should be sufficient. Two 
commenters asserted that it is legal to delegate signature authority 
and that a properly authorized agent's signature is always binding on 
the principal. One further commented that signature stamps have long 
been accepted in commerce. A fourth commenter suggested that we allow 
signatures to be submitted electronically once a power of attorney is 
signed.
    We have carefully considered these comments and rejected them. Most 
telling was NAATA's comment that we cannot ``expect'' the principal to 
have knowledge of information behind the certification. To the 
contrary, that is exactly what we do expect. One of the primary 
purposes of this rulemaking is to ensure that RIs conform the vehicle 
to the Federal motor vehicle safety standards and assure that recall 
remedies are performed by requiring one of their principals to be 
personally responsible for the accuracy of the conformance 
documentation and for the certification that the vehicle complies with 
applicable standards and that all outstanding recalls have been 
completed. We recognize that some RIs may have to change their 
procedures and personnel to comply with this requirement, but we have 
concluded that it is necessary to assure that the safety objectives of 
the statute are achieved.
    In addition, we have concluded that the general language proposed 
in the NPRM could allow the submission of unclear or ambiguous 
certifications. To address this possibility, we have decided to require 
that the certification by the RI in the conformity package

[[Page 52082]]

must take one of the following two forms: (1) ``I know that the vehicle 
that I am certifying conforms with all applicable Federal motor vehicle 
safety and bumper standards because I personally witnessed each 
modification performed on the vehicle to effect compliance,'' or (2) 
``I know that the vehicle I am certifying conforms with all applicable 
Federal motor vehicle safety and bumper standards because the persons 
who performed the necessary modifications to the vehicle are employees 
of [RI name] and have provided full documentation of the work that I 
have reviewed, and I am satisfied that the vehicle as modified 
complies'' (see new Section 592.6(d)(1)). As proposed, the principal (a 
corporate officer, general partner, or sole proprietor) must sign the 
certification, a copy of which would have to be retained under Section 
592.6(b)(5). Also, the certification must be personally signed and not 
bear a stamped signature or one applied by mechanical means. The 
submission to the Administrator must identify the facility where the 
conformance work was performed, and the location where the vehicle may 
be inspected should we need to inspect it before release of the 
conformance bond. Section 592.6(d)(4).
    Finally, we want to add a word of caution. For many years we have 
not objected to RI certifications through the use of a form that 
contains a check list on which the RI indicates whether the vehicle was 
originally manufactured to conform to a specific Federal motor vehicle 
safety standard (by checking a column headed ``O''), or modified by the 
RI to conform to the standard (by checking a column headed ``M''), or 
that the standard is not applicable to the vehicle (by checking a 
column headed ``N/A''). There have been times that RIs have 
inaccurately checked the box for a standard that does not apply to the 
vehicle, or indicated that the RI modified the vehicle when the 
vehicle, in fact, was originally manufactured to comply, or indicated 
that a standard did not apply when it did. If a RI indicates that a 
standard did not apply to a particular vehicle when in fact it did, we 
will regard the submission as incomplete and return it to the RI. We 
will also return submissions as incomplete where appropriate boxes are 
not checked or data not provided. If a submission is returned to a RI, 
we will charge the RI for the costs associated with the return. Return 
would not toll the 120-day period for submitting compliance information 
as provided under Section 592.6(a) (i.e., the conformity package would 
have to be resubmitted within 120 days of importation). In that 
circumstance, we would not regard certification as having been provided 
to NHTSA within the meaning of 49 U.S.C. 30146(a)(1) if the submission 
is returned to a RI, and the 30-day period that a RI is required to 
retain custody of a vehicle will run from the day that a complete 
submission has been received by NHTSA.
    Further, if a RI has certified to us that a vehicle has been 
modified with respect to a specific standard (e.g., if the RI has 
checked the ``M'' box on the form for a particular standard) when it 
has not in fact modified the vehicle in that respect, we will consider 
that to be a knowingly false certification within the meaning of 49 
U.S.C. 30115 and 30141(c)(4)(B), which authorizes us to establish 
procedures for automatic suspension of a RI registration, as related 
below in our discussion of Section 592.7(a). We believe that the 
possibility of automatic suspension should bring greater accountability 
to the certification process by encouraging RIs to complete their 
certification in a careful and thorough manner. It will also enhance 
motor vehicle safety by providing a greater incentive to RIs to make 
all necessary modifications to the vehicles they conform.
5. Section 592.6(e): What RIs Must Not Do Before NHTSA Releases the 
Conformance Bond
    A RI may license or register an imported motor vehicle for use on 
public roads, or release custody of a motor vehicle to a person for 
license or registration for use on public roads ``only after 30 days 
after the registered importer certifies [to NHTSA] that the motor 
vehicle complies [with applicable FMVSS].'' 49 U.S.C. 30146(a)(1). We 
have construed this provision to allow a RI to license or register a 
vehicle, or release custody of a vehicle, for use on the public roads 
less than 30 days after receipt of the conformance package if we have 
notified the RI that the conformance bond required by 49 U.S.C. 
30141(d) has been released.
    We have tried to accommodate RIs by reducing data-submission 
requirements for vehicles certified to the Canadian standards, and by 
expediting the process by releasing the conformance bonds. (We intend 
to propose a new approach in the forthcoming NPRM that would further 
expedite bond releases. However, that new process is not yet in place). 
During 2002, we released conformance bonds within an average of five 
working days after they were received by OVSC. However, despite these 
short processing times, we have discovered that in some instances 
vehicles imported from Canada have been shipped directly to auction 
houses or dealers and sold very soon after entry, before bonds were 
released, and in some instances, even before we had received a 
certification of conformity from the RI.
    The RI's duty to retain ``custody'' of the vehicles is a statutory 
requirement that had not been explicitly restated previously in Part 
592 even though it is one of the conditions of the conformance bond 
required by Part 591 and Annex A of that Part. To emphasize this 
statutory requirement, we are restating it in Section 592.6.
    Issues have arisen as to whether the retention of ``custody'' 
requires a RI to maintain physical possession of a vehicle at one of 
its own facilities, pending bond release. It has been our view that, at 
a minimum, we need to know the location of a vehicle to be able to 
inspect it during the period before we release the bond, and to have 
the same access to the vehicle as if it were stored at the RI's own 
facility. In addition, title to the vehicle must not have passed from 
the RI who imported the vehicle to any other person or entity before 
bond release so that we can be certain that a RI will be able to 
fulfill the bond condition to export or abandon the vehicle if NHTSA 
does not release the bond. See letters of April 17, 2000, from Frank 
Seales, Jr., to Philip Trupiano, and of April 19, 2000, from Kenneth N. 
Weinstein to John Dowd, et al., which have been placed in the docket. 
In the NPRM, we proposed to codify those policies and interpretations.
    The custody requirements that we proposed were supported by two 
commenters. These restrictions parallel those of the EPA with respect 
to emissions requirements established under the Clean Air Act to ensure 
that the Independent Commercial Importer (ICI) which has registered 
with EPA retains physical possession of a vehicle at its own facility 
pending bond release. Under EPA's regulation, during the period of 
``conditional admission'' before EPA issues a certificate of conformity 
and a vehicle is released, the importer may not operate the vehicle on 
the public roads, sell or offer it for sale, or store it on the 
premises of a dealer. 40 CFR 85.1513(b).
    One RI specifically opposed this proposal. The commenter claimed 
that the statute does not authorize NHTSA to prohibit vehicle operation 
on the public roads before release of the bond. We believe that the 
prohibition against on-road use of gray market vehicles during the 
period between importation and bond release is implicit in the 
statutory scheme. Gray market vehicles are

[[Page 52083]]

conditionally admitted into the United States, subject to being brought 
into compliance by the RI and to being certified as compliant by the 
RI. The statute provides NHTSA with a period of 30 days after receipt 
of the RI's certification to review the conformity package to assure 
that all required actions were taken by the RI. Until this procedure is 
completed and NHTSA has accepted a certification of compliance by 
releasing the bond, the vehicle cannot be considered compliant. 
Moreover, operation of a vehicle on the public roads is an introduction 
of that vehicle into interstate commerce, and introduction of a 
noncompliant vehicle into interstate commerce is a specific violation 
of 49 U.S.C. 30112(a).
    The RI commenter noted that some limited operation of gray market 
vehicles on the public roads is necessary because RIs ``must be able to 
take vehicles to a dealership for recall service before certification 
of compliance is made.'' Although a RI could use a tow truck in this 
circumstance, we are willing to allow limited use of the public roads 
for recall service, and we have adopted Section 592.6(e)(1) 
accordingly. Thus, under the final rule, if a RI imports a motor 
vehicle and sells it or offers it for sale at any time before the end 
of the 30-day hold period following submission of the conformity 
package or before the bond has been released, whichever first occurs, 
or stores it on a dealer's lot, or allows it to be operated on the 
public roads for a purpose other than transportation to and from a 
dealership for remedy of a noncompliance or safety-related defect, a 
violation will have taken place for which sanctions may be imposed.
    In addition to the restrictions that parallel EPA's, we are also 
adopting language that tracks the statutory prohibitions in the Safety 
Act against premature licensing or registering of a motor vehicle for 
use on the public roads, or release of custody to any person for such 
purposes.
    With respect to the titling of vehicles, we made the following 
remarks in the NPRM (p. 69280):

    In line with our past interpretations, we propose to continue to 
permit a RI to obtain title in its own name to the vehicles that it 
imports for resale, either before or after importation, but we shall 
not allow the RI to title it in the name of any other entity (such 
as a title clearer, dealer or a retail purchaser) until after we 
have released the bond. This is designed to ensure that the RI 
retains the ability to export or abandon the vehicle to the United 
States, upon demand by the United States, for its failure to conform 
the vehicle.

    One comment was received agreeing that vehicles should not be 
allowed to be titled in the name of a person other than a RI before 
bond release. However, one commenter disagreed, arguing that NHTSA 
lacks the statutory authority to impose a titling restriction because 
the prohibition of Section 30146(a)(1) is against ``licensing'' and 
``registration'' only, and does not include the word ``titling.'' We 
disagree with this contention. In many instances, titling is a 
prerequisite for registering a vehicle. In any event, prohibiting 
anyone from holding title other than the RI that imported the vehicle 
upholds the statutory purpose forbidding the registration of imported 
vehicles for use on the public roads before we review and accept the 
RI's conformance certification and release the bond. Moreover, as 
discussed above, it will assure that improperly certified vehicles can 
be re-exported or abandoned to the United States.
    A further comment cautioned that NHTSA should not encourage States 
to use their titling authority to administer or enforce Federal 
regulations. Our restrictions apply solely to RIs, and we are not 
imposing mandates on the States. However, we recognize that States have 
interests under their vehicle laws and consumer protection laws in 
assuring that only compliant vehicles are operated on their roads, and 
we believe that it is appropriate for States to refuse to title 
vehicles in the absence of a bond release.
    Although our preamble remarks on p. 69280, set forth above, spoke 
in terms of our existing practice, the NPRM did not propose specific 
language. After due consideration of the comments from the public on 
this issue, we have decided to formalize the interpretations by adding 
titling restrictions to the regulatory text of the final rule, 
specifically as an addition to Sections 592.6(e)(4) and (5) as actions 
not to be taken before release of the DOT bond. Thus, prior to bond 
release, a RI, with respect to a vehicle that it has imported, must not 
``(4) Title in a name other than its own, or license or register the 
motor vehicle for use on public streets, roads, or highways, or (5) 
Release custody of the motor vehicle to a person for sale, or license 
or registration for use on public streets, roads, or highways, or title 
the vehicle in a name other than its own.''
6. Section 592.6(f): RIs Must Provide a Copy of the Service Insurance 
Policy With Each Vehicle
    Under the current rules, an applicant must provide a copy of a 
contract to acquire, effective upon its registration as a RI, a prepaid 
mandatory service insurance policy underwritten by an independent 
insurance company, or a copy of such policy, in an amount that equals 
$2,000 for each motor vehicle for which the applicant will furnish a 
certificate of conformity to the Administrator. The purpose of the 
policy is to ensure that the applicant will be able financially to 
remedy any noncompliance or safety-related defect occurring in the 
vehicle.
    In the NPRM, we proposed to require each RI to deliver such a 
policy with each vehicle it conforms. We also proposed that, on a 
monthly basis, each RI would have to provide to the insurance company 
issuing the policies the VINs of each vehicle covered by a policy. We 
did so in an effort to ensure that the purchasers of all gray market 
vehicles are aware of their ability to use this policy to have safety 
recall work done at no charge to them, and to ensure that the issuers 
of the policies are informed of the number and identity of the vehicles 
that their policies cover.
    We had no comments on this proposed requirement, and are adopting 
it.
7. Section 592.6(g): RIs Must Provide and Retain Copies of Odometer 
Disclosure Statements
    We proposed a new Section 592.6(h) to remind RIs of their 
obligation, which exists independently under 49 U.S.C. 32705 and 49 CFR 
Part 580, Odometer Disclosure Requirements, to provide an odometer 
mileage disclosure statement to the transferee of any vehicle that they 
transfer. Dealers and distributors, such as a RI that imports vehicles 
for resale, must also retain a copy for five years (49 CFR 580.8(a)). 
We want to reiterate these obligations in Part 592, so that a RI that 
focuses principally on 49 CFR Parts 591-594 does not miss this 
requirement. Also, a failure to comply with these requirements will be 
a violation of this Part.
    We had one comment on this issue, which agreed with our proposal, 
and we are adopting it as proposed.
8. Section 592.6(h): RIs Must Remedy Noncompliances and Safety-Related 
Defects, and Provide Reports Regarding Certain Recalls
    As discussed above, each RI is statutorily responsible for 
conducting recalls to address noncompliances and safety defects in the 
vehicles that it imports or conforms. 49 U.S.C. 30147(a)(1). Section 
592.6(g) currently specifies certain RI responsibilities with respect 
to recalls, but it does not address some relevant issues that should be 
addressed.

[[Page 52084]]

    As currently written, Section 592.6(g) is primarily directed toward 
recalls that are announced after a vehicle has been released by the RI 
and is already in the possession of an owner, and it does not address 
recalls that apply to imported vehicles at the time they are imported. 
To assure that there is no misunderstanding about the duties of a RI 
under the latter circumstances, we are amending Sections 592.6(b), (c), 
(d), as described earlier in this notice.
    We also proposed amendments addressing a RI's responsibilities for 
recalls that are announced after the vehicle has been certified by the 
RI. These duties already exist by virtue of Section 30147(a)(1). 
However, some RIs have not attended to their obligations in this 
regard. To further emphasize these obligations, we are restating them 
in Part 592.
    Current Section 592.6(g) requires a RI to provide notification and 
remedy ``with respect to any motor vehicle for which it has furnished a 
certificate of conformity.''
    We understand that it is the practice of most major manufacturers 
who sell vehicles in the United States (with the exception of some 
Asian-based producers of Canadian vehicles) to include in their U.S. 
safety recall campaigns vehicles that were originally manufactured for 
sale in Canada that have been registered in the United States. In such 
cases, the owner of a vehicle modified by a RI normally will be 
notified of the defect or noncompliance by the original manufacturer. 
However, this may not always be the case, particularly with regard to 
recently-imported vehicles, since the State vehicle registration 
records used by the manufacturer may not be completely up-to-date at 
all times.
    The statute requires a RI to assure that the owner of each vehicle 
it imports or conforms is provided with notification of all 
noncompliances and safety-related defects determined to exist in the 
vehicle and the opportunity to receive a free remedy. To allow us to 
ascertain whether a RI is satisfying those obligations, when a vehicle 
manufacturer determines that a noncompliance or safety-related defect 
exists in its vehicles and commences a notification and remedy 
campaign, we need to know whether the manufacturer will cover the 
manufacturer's vehicles that the RI has imported. If it does not, the 
RI must notify each current owner and provide an appropriate remedy at 
no charge. We therefore proposed that each RI inform us not later than 
30 days after a vehicle manufacturer commences a notification campaign 
applicable to vehicles imported by the RI whether the manufacturer's 
recall will cover those vehicles. If not, the RI would be required to 
furnish us with a copy of the notification that it intends to send to 
the different vehicle owners in accordance with 49 CFR Part 577, to 
actually send such notifications, and to provide the appropriate remedy 
without charge.
    Two commenters strongly supported the statutory provisions and our 
proposed implementation of RI notification and remedy responsibilities. 
One of these argued that the proposal did not go far enough, and that 
NHTSA should require RIs to substantiate to NHTSA that they are 
maintaining a current paid subscription to a manufacturer database such 
as Alldata or Mitchell. The comment further recommended that RIs be 
required to identify for NHTSA and vehicle owners an established time 
period and methodology for providing notification of future recalls, 
and how it will perform the remedy.
    We do not believe that it is necessary to mandate any particular 
methodology to be used by RIs. In practice, while we are not obligated 
to do so, we have been notifying RIs (normally at the end of each 
calendar quarter, by fax) of safety recalls that may apply to the 
vehicles they imported (based on make, model, and model year). New 
Section 592.5(a)(9)(iv) requires an applicant for RI status to 
demonstrate that it is able to acquire and maintain information 
regarding the vehicles that it imported and/or for which it submitted 
certification to NHTSA, and the names and addresses of the owners of 
these vehicles in order to notify such owners of safety-related defects 
or noncompliances. This will allow RI applicants flexibility while 
assuring that they will be able to conduct required notifications.
    The same commenter also argued that NHTSA should prohibit RIs from 
subcontracting their recall responsibilities unless the remedy is 
performed at an authorized dealership for the model of vehicle 
involved. We believe that this comment has merit, and have adopted this 
prohibition in the final rule. The 1988 Act directs us to impose 
``requirements that ensure that the importer * * * will be able 
technically * * * to carry out responsibilities under sections * * * 
30118-30121 * * * of this title.'' These are the defect and 
noncompliance notification and remedy responsibilities. Once an 
applicant has established it is technically capable of remedying 
noncompliances and is registered as a RI, the RI should not subcontract 
this duty to anyone other than an authorized dealer or facility for the 
vehicle in question, since we have no basis to conclude that any other 
entities would be capable of making the necessary repairs under the 
recall. We have always prohibited RIs from subcontracting work needed 
to bring a vehicle into conformance; the work needed to remedy 
noncompliances and safety defects should be treated in a similar 
manner.
    We proposed in Section 592.6(j)(2) that the RI must inform NHTSA 
whether the original manufacturer or the RI will provide notification 
and remedy for defects and noncompliances that have been found to exist 
in a vehicle as of the time of importation. One RI commenter objected, 
arguing that such a requirement would be unworkable because a RI is not 
in a position to know whether all the vehicles it has imported that are 
subject to a specific recall are to be included in the manufacturer's 
U.S. campaign. The commenter explained that some vehicles may be 
excluded from the original manufacturer's VIN database search, such as 
recently-imported vehicles and vehicles not yet titled and registered.
    We have decided on a different, less burdensome approach, in the 
final rule. If a RI becomes aware (from whatever source) that the 
manufacturer of a vehicle it has imported will not remedy free of 
charge a defect or noncompliance that has been decided to exist in that 
vehicle, within 30 days thereafter, the RI must inform NHTSA and submit 
a copy of the notification letter that it intends to send to the owner 
of the vehicle(s) in question. We are adopting Section 592.6(i)(2) to 
reflect this approach.
    Under Section 573.7 (formerly Section 573.6), manufacturers 
conducting recalls must provide six quarterly reports to us setting 
forth specified information regarding the recall. This information 
allows us to monitor the campaigns, and includes the number of vehicles 
or items of equipment covered by the campaign and the number of 
vehicles or equipment items remedied by the end of each calendar 
quarter. Because RIs have a statutory responsibility to notify and 
remedy, they, too, are subject to this reporting requirement. However, 
we have concluded that some of the provisions of Section 573.7 should 
not apply to them, and we proposed less stringent requirements.
    For recalls that have been announced by a vehicle manufacturer 
before the RI submits its conformity package under Section 592.6(d), 
the RI must ensure the completion of appropriate recall repairs before 
it releases the vehicle. Therefore, there appears to be no need for the 
RI

[[Page 52085]]

to submit any reports pursuant to Section 573.7 with respect to those 
recalls. This is reflected in our new Section 592.6(i)(5). Nor do we 
need to receive reports from RIs with respect to recall campaigns being 
conducted by the original manufacturer on vehicles imported by the RI.
    There may be some instances when a manufacturer conducts a recall 
of vehicles sold in the United States, but does not include the 
Canadian counterparts of the recalled vehicles. Recall implementation 
in this instance falls upon the RI, as it does in those rare cases in 
which a RI makes its own determination of a defect or noncompliance. In 
these instances we need to receive progress reports from RIs. While 49 
CFR 573.7 requires vehicle manufacturers to submit six quarterly 
reports containing extensive, detailed information, we believe that 
fewer reports and significantly less information is needed from RIs. 
Although one commenter asserted that RIs ``should be required to handle 
all recalls in the same manner as OEMs, we shall require only two 
reports for each post-importation recall campaign, which will also 
serve to ease the paperwork burden on small businesses. (We note that 
RIs might need to simultaneously conduct campaigns on the products of a 
number of vehicle manufacturers rather than focusing on a single 
manufacturer's product at one time.) There were no comments 
specifically addressing our proposals regarding the timing and content 
of these reports. Therefore, we are adopting Section 592.6(i)(5) 
(Section 592.6(j)(5) in the NPRM) as proposed.
    Finally, we have reviewed current Section 592.6(g)(2)(i) relating 
to the period for which a RI must provide a remedy without charge, and 
have restated it in Section 592.6(i)(6) in a much simpler fashion. By 
doing so, we are heeding E.O. 12866 and its goal that rules be written 
in plain language. As noted in our discussion under Section 592.6(b), 
the TREAD Act has increased the period of free remedy from 8 to 10 
years. This increase, effective as of the date of enactment of the 
TREAD Act, is reflected in conforming amendments to our general 
recordkeeping regulation, 49 CFR Part 576.
9. Section 592.6(l): RIs Must Notify NHTSA of Any Change of Information 
Contained in the Registration Application, and Must Notify NHTSA Before 
Adding or Discontinuing the Use of Any Facility
    At present, Section 592.5(f) requires a RI to notify us not later 
than 30 days after a change in any of the information submitted in its 
registration application. We proposed to maintain this requirement as a 
duty with two additions.
    We have concluded that, where the change involves the use of a 
facility (e.g., for modifications, repair, or storage) not designated 
in the registration application, a RI must notify us of its intent to 
use such facility not less than 30 days before such change takes place, 
and provide us with the same information regarding the facility that is 
required in the original RI application, including still or video 
photographs of the facility. This will allow us to evaluate the 
adequacy of the new facility for the services to be performed there. We 
will also require a RI to notify us at least 10 days before it 
discontinues the use of any identified facility, and to identify the 
facility, if any, that will be used in its stead.
    We had one comment on this aspect of the NPRM, which supported it, 
and therefore we are adopting it as proposed.
10. Section 592.6(m): RIs Must Assure That at Least One Full-Time 
Employee of the RI Is Present at One or More of the Facilities It 
Identified in Its Application
    Where a RI has several separate facilities, we are concerned about 
the RI's ability to supervise conformance and recall work, to maintain 
records regarding the vehicles it has imported, and our ability to 
inspect the vehicles, operation, and records. To address these 
concerns, we proposed to adopt a new Section 592.6(n) to require each 
RI to assure that at least one full-time employee of the RI is present 
at each of its facilities. This is consistent with our statement in the 
preamble to the final rule establishing Part 592 that a RI may not 
utilize agents to fulfill its statutory responsibilities, and that 
``conformance operations must be carried out by Registered Importers 
[and] their employees.'' 54 FR 40083, at 40086.
    Our proposal on this point was supported by two commenters. NAATA 
opposed it, on the grounds that the volume of imports by a RI may not 
support the need for a full-time employee. The commenter contended that 
if NHTSA requires this, the RI should be able to maintain a facility 
with no employee on condition that no vehicles are stored at the 
facility. The facility we are primarily concerned with is the facility 
where the RI's conformance work is performed. However, we realize that 
there may be times when the volume of imports is such that the 
conformance facility is not in use. Nevertheless, we believe that a RI 
should be accessible to NHTSA during normal business hours, and this 
can be best assured by requiring a RI to have at least one full-time 
employee present at one or more of the facilities in the United States 
it has designated in its application. The term ``employee'' includes 
any officer of a corporation and partner of a partnership. Accordingly, 
we are modifying our proposal and adopting this requirement.
11. Section 592.6(n): RIs Must Not Co-Utilize the Same Employee or the 
Same Conformance or Repair Facility
    Questions have been raised whether two or more RIs may use common 
employees or a shared facility to perform conformance modifications or 
recall repairs, or to store imported vehicles. As indicated above, we 
do not allow a RI to make arrangements with other persons, including 
its customers (e.g., used car dealers) or other RIs, under which the 
other entity would perform the RI's duties. We had tentatively 
concluded that to allow two or more RIs to use the same employee, or a 
common facility for repairs, conformance work, or storage, raised the 
possibility of ineffective management and controls, particularly when 
the main office of a RI is some distance away from the facility in 
question. It could also raise questions of accountability for any 
problems that might arise. We also noted that if more than one RI 
shared a storage facility, it would be difficult for us to identify 
bonded vehicles for which an individual RI may be responsible when we 
are conducting inspections. We therefore proposed to prohibit a RI from 
co-utilizing any employee, or any conformance, repair, or storage 
facility, with another RI.
    The proposal was supported by two commenters, and opposed by one on 
the basis that co-utilization of facilities does not compromise a RI's 
ability to perform conformance work. However, this comment did not 
address our concerns regarding accountability, management and controls. 
We are concerned that, if two RIs utilize common facilities and 
personnel, one RI may blame the other RI for any of its own failures to 
comply with statutory or regulatory requirements (e.g., vehicles sold 
before bond release, vehicles not modified in a timely manner because 
the mechanic is busy modifying the vehicles imported by the other RI, 
and affixing labels of one RI on the vehicles of the other). 
Accordingly, the final rule is adopted substantially as proposed. 
However, we have decided to allow co-utilization of storage facilities, 
since such co-utilization of those facilities is less

[[Page 52086]]

likely to create the sorts of problems that concern us.
    As we noted in the preamble to the NPRM, if a RI stores bonded 
vehicles on premises other than its own, the storage area should be 
clearly delineated and the vehicles being stored not mingled with 
vehicles for which the RI is not responsible. We are now adding this as 
a regulatory requirement in Section 592.6(n), and it will also be 
applicable to storage facilities that a RI co-utilizes with one or more 
RIs.
12. Section 592.6(o): RIs Must Provide Timely Responses to NHTSA 
Requests for Information
    Under 49 U.S.C. 30166(e), we reasonably may require a manufacturer 
to make reports to enable us to decide whether it is complying with any 
of our requirements. Our requests for information invariably identify 
the date by which we expect a response. As noted above, a RI is a 
statutory manufacturer because it imports motor vehicles for resale. We 
had tentatively decided that a regulation reiterating the requirement 
to make timely reports under Section 30166(e) would heighten our 
ability to obtain information, and would provide a basis for suspension 
or revocation of a registration if the information were not forthcoming 
in a timely manner. There was no comment on this aspect of our 
proposal, and we are adopting it in the final rule.
13. Section 592.6(p): RIs Must Pay Fees When They Are Due
    We proposed a new section adding a specific duty for a RI to pay 
all applicable fees in a timely manner. Although a registration may be 
suspended under Section 592.7(a) upon a RI's failure to pay fees when 
they are due and payable, we wished to emphasize that it is an 
affirmative duty for a RI to pay fees and to pay them when they are 
due. There was no comment on this aspect of our proposal, and we are 
adopting it in the final rule.
14. Section 592.6(q): Current RIs Must Provide Information That Will be 
Required of New RI Applicants
    As described above, we are adopting comprehensive revisions to 
Section 592.5 with respect to the information required in RI 
applications. By their own terms, these new requirements will apply to 
applications pending as of the effective date of the final rule. 
However, we believe that, to assure proper qualifications and 
operations, entities that are RIs at the time the final rule becomes 
effective must furnish the equivalent information, even though that 
information was not required at the time they submitted their original 
applications. In order to ensure that this information is provided by 
those whose applications have been granted previously (i.e., those who 
are already RIs at the time of the final rule), we proposed that RIs, 
not later than 30 days after the effective date of the amendments to 
Section 592.5(a), should provide all the information that the revised 
regulation will require. This additional information would include the 
RI's designation of an agent for service of process if it is not 
organized under the law of any State of the United States. A RI could 
incorporate by reference any item of information previously provided to 
the Administrator in its application, annual statement, or notification 
of change by a clear reference to the date, page, and entry in the 
existing document. Failure to provide this information not later than 
the effective date of the amendments would be grounds for suspension.
    The sole commenter on this aspect of the proposal believed that 
NHTSA should suspend a registration immediately if a RI failed to 
provide information in accordance with the new regulation. We address 
the topic of automatic suspension immediately below and are adopting 
this provision as proposed.

C. Automatic Suspension, Revocation, and Suspension of Registrations; 
Reinstatement of RI Registrations (Section 592.7)

1. Section 592.7(a): Automatic Suspension of the Registration of a RI
    49 U.S.C. 30141(c)(4)(A) authorizes NHTSA to suspend a registration 
if a RI fails to comply with specified statutory requirements as well 
as ``regulations prescribed under this subchapter,'' i.e., 49 U.S.C. 
Sections 30141-47. Two of the circumstances warranting suspension are 
of a serious enough nature that Section 30141(c)(4)(B) requires the 
suspension to be ``automatic:'' when a registered importer does not, in 
a timely manner, pay a fee required by 49 CFR Part 594 and when a RI 
knowingly files a false or misleading certification under 49 U.S.C. 
30146. Our present regulation covers this in 49 CFR 592.7(a) and (b).
    Currently, Section 592.7(a) provides that a registration will 
automatically be suspended if we have not received a fee by the 
beginning of the 31st day after it is due and payable. To date, on 
several occasions we have automatically suspended registrations for 
failure to timely pay the annual fee that the RI must pay pursuant to 
Section 594.6. In addition, 49 U.S.C. 30141(a)(3) also authorizes the 
imposition of fees ``to pay for the costs of--(A) processing bonds 
provided * * * under subsection (d) of this section; and (B) making the 
decisions under this subchapter.''
    Under this provision, we have established fees for the filing of a 
petition for a determination whether a vehicle is eligible for 
importation (Section 594.7); for importing a vehicle covered by an 
eligibility determination by NHTSA (Section 594.8); for reimbursement 
of bond processing costs (Section 594.9); and for review and processing 
of a conformity certificate (Section 594.10).
    Under current Section 594.5(e), (f), and (g), the fees for 
importing a vehicle covered by a NHTSA eligibility determination, for 
bond processing costs, and for the NHTSA review and processing of a 
conformity certificate are to be submitted with the certificate of 
conformity. However, we have allowed RIs to delay payment until 30 days 
after we issue a monthly invoice indicating the amount due. In 
practice, about 80 percent of the payments are made less than two weeks 
after the invoice, and most payments are transmitted electronically or 
made by credit card. We proposed to formalize the actual payment 
practice by establishing a due date of 15 days from the date of the 
invoice by deleting subsections (e), (f), and (g) and adding a new 
Section 594.5(f). No one commented on the due date aspect of the 
proposal and we are adopting it in the final rule.
    We intend to suspend automatically a RI's registration if any of 
the required fees are not received by their due dates. As we proposed 
in Section 592.7(a)(1), if a RI has not paid its annual fee by October 
10 or paid its other fees within 15 calendar days of NHTSA's invoice, 
on the next business day we would inform Customs that the RI's 
registration had been suspended until further notice, and that the RI 
may not import any additional motor vehicles. We intend to apply this 
policy as of September 30, 2004 to fees that are overdue as of that 
date under the old rule.
    Two commenters supported automatic suspension for non-payment of 
fees. A RI commenter cautioned us to be sure before acting that NHTSA 
had not made a recording mistake, and recommended that the agency 
contact the RI to determine whether a mistake has been made before it 
notifies Customs that a registration has been suspended. This does not 
place the burden where it belongs. As noted above, a RI receives an 
invoice each month. If the RI fails to receive an invoice, it should 
contact NHTSA. We

[[Page 52087]]

often call the RI if we do not receive payment but are not assuming a 
duty to do so. However, when a charge on a credit card is repeatedly 
rejected, following up becomes time-consuming and wasteful. As a matter 
of enforcement discretion, we intend to notify a RI by telephone, 
contemporaneously confirmed in writing, upon the initial rejection of a 
credit charge. If the charge is not honored a second time, we shall 
automatically suspend the registration. We will not provide this 
notification for repeat offenders.
    If a fee is paid after a registration is suspended, following 
receipt and clearance of the payment, we will reinstate the 
registration and inform Customs of this action. One commenter suggested 
that we should notify Customs of the reinstatement on the next business 
day. We will normally attempt to do so, but cannot assure that we will 
do so, as we cannot predict the press of business on any given day.
    To further encourage timely payment and to partially cover our 
administrative costs of processing such a suspension and reinstatement, 
we proposed to require the RI to also pay an amount equal to ten 
percent of the overdue amount as a condition for having the 
registration reinstated. We are adopting this proposal in the absence 
of any comments to the contrary.
    Congress also directed us to establish procedures for automatically 
suspending a registration of a RI that has knowingly filed a false or 
misleading certification. 49 U.S.C. 30141(c)(4)(B). We proposed rules 
to implement this provision. Two commenters supported our proposal. 
Auto Enterprises suggested that such a suspension should only occur if 
we found that the RI ``knowingly and deliberately attempted to deceive 
NHTSA on a material issue that could be reasonably viewed as having the 
potential of endangering motor vehicle safety.'' However, this would 
limit the statutory provision, which refers only to knowingly filing a 
false or misleading certification. The limiting elements of ``material 
issue'' and ``potential of endangering motor vehicle safety'' are not 
specified by the statute. A RI is presumed to know the truth or falsity 
of what its principal has signed.
    Under proposed Section 592.7(a)(2), which we are adopting in the 
final rule as proposed, if we decide that a RI has knowingly filed a 
false or misleading certification, we would automatically suspend the 
RI's registration, effective immediately, notifying the RI by letter of 
the decision, the length of the suspension, if applicable, and the 
facts upon which our decision was based. We will afford the RI, within 
30 days of the notification, an opportunity to challenge the decision 
by presenting data, views, and arguments in writing or in person.
    We could also suspend a registration non-automatically for these 
violations under Section 30141(c)(4)(A), and Section 592.7(b) 
(discussed below). For example, in a factually complex case involving 
what appears to be a filing of a false and misleading certification 
under Section 30146, we might provide an opportunity to be heard before 
issuing a suspension.
    The NPRM also identified three further situations that we believe 
warrant automatic suspension. The first concerned the failure to 
maintain a current telephone number and a street address where mail is 
received. It is imperative that we be able to reach each RI to obtain 
information or to conduct an inspection. As specified in new Section 
592.5(a)(5)(i), each RI must include telephone numbers and a street 
address in the United States with its application. Under current 
Section 592.5(f), a regulation prescribed under Section 30141(c)(1), a 
RI is to notify us in writing within 30 days after any change of street 
address or phone number. As noted above, under new Section 592.6(m), a 
RI will be required to notify us at least 30 days in advance of its 
change of street address and/or telephone number.
    There have been instances in which mail addressed to a RI has been 
returned as ``undeliverable.'' When this occurs, and the RI cannot 
readily be contacted by us, the agency has lost its ability to 
communicate with the RI even though the RI may still be importing motor 
vehicles. To address this situation, we proposed in Section 592.7(a)(3) 
to automatically suspend a registration, and request Customs not to 
allow vehicles to be imported into the U.S. by a RI, if our letters to 
the RI are returned to us as undeliverable at the street address it has 
provided to us or if the telephone number provided to us is 
disconnected. There were no comments on this aspect of the proposed 
rule, and we are adopting it.
    The second situation involves compliance with the new provision (in 
Section 592.6(f)) that requires each entity that is a RI at the time 
that the final rule takes effect to provide us with information 
equivalent to that which will be required of new RI applicants, not 
later than 30 days after the effective date. If a RI fails to provide 
this information, we shall automatically suspend its registration 
(Section 592.7(a)(4)). We had one comment on this aspect of the 
proposal, expressing support for ``immediate suspension,'' which we 
believe means automatic suspension.
    Third, we have become aware of several instances in which a RI 
released vehicles using forged or otherwise falsified documents 
purporting to be agency bond release letters. In addition to other 
sanctions such as fines and penalties, we believe that the registration 
of a RI that is releasing vehicles on the basis of such falsified bond 
release letters should be suspended automatically. We had no comments 
on this aspect of the proposal, and we are adopting it. Moreover, it is 
likely that during such a suspension we would commence a proceeding to 
revoke the RI's registration, in accordance with the procedures 
discussed below that we are adopting in Section 592.7(b).
    We asked for comments as to whether other violations of Section 
30141(c)(4) might warrant automatic suspension, such as failure to 
admit a NHTSA inspector to the premises, or to make records available 
for inspection. There were no comments, and we have decided not to 
include these failures of a RI as grounds for automatic suspension. Of 
course, we could take other enforcement action with respect to such 
violations.
    There were no comments specifically addressing the procedural steps 
we proposed that would lead to automatic suspension of an RI 
registration, and we are adopting them as proposed. One RI commenter 
stated in very general terms that any automatic suspension before a 
hearing must take into account due process, and that RIs have a basic 
right to a fair hearing to ensure the right to be heard before adverse 
action is taken by the agency. We reviewed the issue of conformance 
with the Fifth Amendment (due process) and the Administrative Procedure 
Act before issuing the proposal, and we concluded that the procedures 
we proposed are consistent with applicable law. We did not receive any 
specific comments to the contrary. The effect of an automatic 
suspension is that a RI may not continue to import vehicles after it 
has been notified of the suspension. Section 592.7(c), discussed more 
fully below, specifies the conditions under which a suspended 
registration may be reinstated. Section 592.7(a)(7) provides an 
opportunity for a RI to seek reconsideration of an automatic 
suspension.
2. Section 592.7(b): Non-Automatic Suspension and Revocation of RI 
Registrations
    49 U.S.C. 30141(c)(4)(A) requires us to establish procedures for 
revoking or

[[Page 52088]]

suspending a registration for not complying with a requirement of 49 
U.S.C. 30141-30147, or any of sections 30112, 30115, 30117-30122, 
30125(c), 30127, or 30166, or regulations prescribed under any of those 
sections. We intended to implement 49 U.S.C. 30141(c)(4)(A) by 
regulation, but had not completely done so by the time we issued the 
NPRM.
    The statute authorizes us to consider revocation or suspension of a 
RI's registration for a broad range of violations, namely for any 
failure to comply with any aspect of the Imported Vehicle Safety Act of 
1988 or its implementing regulations, 49 CFR Parts 591-594, as well as 
other general requirements of Chapter 301 relating to general 
prohibitions, certifications of compliance, notification relating to 
defects and noncompliances with FMVSS, recalls, testing of school 
buses, automatic crash protection and seat belts, inspections, and 
recordkeeping. 49 U.S.C. Section 30141(c)(4)(A). We proposed in Section 
592.7(b) to reflect the statutory language of 49 U.S.C. 30141(c)(4)(A) 
and to clarify and broaden the circumstances under which a registration 
may be suspended or revoked. This would include any failure to perform 
any duty prescribed by Section 592.6. (As described above, additional 
duties are now specified in Section 592.6.) One of these duties is to 
provide information that will be required of new RI applicants (Section 
592.6(r)). Thus, for example, if a RI failed to provide a copy of its 
business license or other similar document issued by an appropriate 
State or local authority authorizing it to do business as an importer, 
modifier, or seller of motor vehicles, which new Section 
592.5(a)(5)(iii) requires to be submitted by applicants, grounds would 
exist for suspension of the RI's registration. There were no comments 
on this aspect of the proposal, and we are adopting it as proposed.
    Before issuing the NPRM, we reviewed the suspension and revocation 
procedures currently specified in Section 592.7(b) and (c). Under these 
procedures, if the Administrator has reason to believe that a RI has 
failed to comply with a requirement and that a RI's registration should 
be suspended or revoked, (s)he notifies the RI in writing, affording an 
opportunity to present data, views, and arguments, either in writing or 
in person, as to why the registration should not be revoked or 
suspended. The Administrator then decides the appropriate action under 
the circumstances. If a registration is suspended or revoked, the RI 
may request reconsideration of the decision ``if the request is 
supported by factual matter which was not available to the 
Administrator at the time the registration was suspended or revoked'' 
(current Section 592.7(d)).
    We proposed a revised procedure for non-automatic suspension and 
revocation of registrations, which, in the absence of comments, we are 
adopting. Under the revised procedure, the Administrator will notify 
the RI if there is reason to believe that the RI had violated one or 
more statutes or regulations, and that suspension for a proposed period 
or revocation would be an appropriate sanction under the circumstances. 
The proceedings will then essentially follow those set out in Sections 
592.7(a), (b), and (c) of the current regulation, affording the RI, 
within 30 days of the Administrator's notification, an opportunity to 
present data, views, and arguments in writing or in person as to 
whether the violations occurred, why the registration ought not to be 
suspended or revoked, or whether the suspension should be shorter than 
proposed. The Administrator will make a decision on the basis of all 
information then available and notify the RI in writing of the 
decision. Because the RI will already have been afforded an opportunity 
to present data, views, and arguments relating to the proposed 
suspension, we will not provide an opportunity to seek administrative 
reconsideration of a decision to suspend or revoke a registration under 
this subsection.
3. Section 592.7(c): When and How NHTSA Will Reinstate Suspended RI 
Registrations
    Current Section 592.7(f) specifies that the Administrator shall 
reinstate a suspended registration if the cause that led to the 
suspension no longer exists, as determined by the Administrator, either 
upon the Administrator's motion, or upon the submission of further 
information or fees by the RI. The NPRM expressed our belief that the 
provisions governing reinstatement of registrations need to be 
clarified and expanded to reflect the changes we are adopting in our 
suspension procedures.
    Under the amended final rule, there are four specific bases upon 
which a registration can be automatically suspended (Section 592.7(a)). 
A registration may also be suspended non-automatically for failure to 
comply with statutory or regulatory authorities after notification from 
the Administrator (Section 592.7(b)). Amended Section 592.7(c)(1)-(4) 
specifies the conditions under which the registrations could be 
reinstated under each of the four bases for automatic suspension. 
Amended Section 592.7(c)(5) specifies that a registration that is 
suspended non-automatically shall be reinstated at the expiration of 
the period of suspension specified by the Administrator or such earlier 
date as the Administrator may decide is appropriate.
    In the absence of any comments on the proposed conditions of 
reinstatement, we are adopting them as proposed.
    The one comment on this aspect of the proposal suggested that NHTSA 
should be required to notify the U.S. Customs Service (now the Bureau 
of Customs and Border Protection) by the next business day when a 
suspended registration has been reinstated. As explained above, it has 
been our practice to notify Customs promptly when a RI is reinstated, 
but we cannot assure that the notification will occur on the next 
business day. We are adding specific language to this effect in new 
Section 592.7(c)(6).
4. Section 592.7(d): Effects on a RI of Suspension or Revocation of Its 
Registration
    During the period that a registration is suspended or if a 
registration is revoked, the entity will not be considered an active 
RI, will not have the rights and authorities appertaining thereto, and 
will not be allowed to import vehicles. We will promptly notify Customs 
of our action. If a RI imports vehicles on or after the suspension 
date, its suspension will be extended by one day for each day that it 
has imported vehicles while its registration is suspended, and other 
enforcement action may also be taken depending on the circumstances.
    Under current Section 592.7(e), if a registration is revoked, the 
RI is not refunded any annual or other fees it has paid for the fiscal 
year in which its registration is revoked. This practice will be 
retained in new Section 592.7(d). In addition, in accordance with 49 
U.S.C. 30141(c)(2), the section will specify that a RI whose 
registration has been revoked may not apply for reregistration. The 
prohibition will also apply if any of the principals of the applicant 
had been, or is affiliated with, a principal of a RI whose registration 
has been revoked.
    We received no comments on this aspect of the proposed rule and are 
adopting our proposal.
    Although a suspended or revoked RI will be foreclosed from 
importing vehicles, there may well be vehicles in its custody that are 
still under bond. New Section 592.7(d)(2) (proposed as Section 
597(e)(2)) and (d)(3) cover these vehicles. With respect to those 
vehicles that the RI has certified and for which

[[Page 52089]]

it has submitted conformity packages to NHTSA at the time of a 
suspension or revocation, NHTSA will review and act upon the 
submissions as if the suspension or revocation had not occurred, and 
the RI may release the vehicles from custody when NHTSA releases the 
bonds, even if its suspension is in effect or its registration has been 
revoked. With respect to those vehicles for which certification or 
information submissions have not been submitted at the time a 
registration has been suspended, the RI must perform conformance work, 
and submit certification conformity packages to NHTSA within the 120-
day submittal period.
    When a registration has been revoked, or suspended for more than 
the first time, the RI will be required to export all vehicles which it 
imported for which it has not yet submitted conformity packages to 
NHTSA at the time of the suspension or revocation.
    With respect to those vehicles imported for personal use by other 
persons under Section 591.5(f)(2)(ii) that a RI has contracted to 
conform and for which it has not yet submitted certifications, a 
suspended or revoked RI will be required to notify immediately the 
owners of the vehicles of NHTSA's action. We are adopting a conforming 
amendment to Part 591 under which the notified owner will be able to 
contract with another RI in order to have the vehicle certified and 
released. The applicable 120-day period for submission of certification 
information will be tolled during the period from the date of the RI's 
notice to the importer until the date of the contract with the 
substitute RI.
5. Section 592.7(e): Continuing Obligations of a RI Whose Registration 
Has Been Revoked or Suspended
    We are removing existing Section 591.7(e), which has expired 
(Section 591.7(e) provided for applications to the Administrator, on or 
before February 14, 2000, to change the status of vehicles imported 
pursuant to Section 591.5(j)).
    New Section 592.7(e)(1) clarifies that a RI whose registration is 
suspended or revoked remains obligated under Section 592.6(j) to notify 
owners of, and to remedy, noncompliances or safety-related defects for 
each vehicle for which it has furnished a certificate of conformity to 
the Administrator.
    There were no comments on this aspect of the NPRM, which is being 
adopted as proposed.

D. Amendments to Part 591 to Preclude the Importation by a RI of a 
Salvage or Reconstructed Motor Vehicle; Minor Conforming Amendments to 
Part 591; Section 592.9: Forfeiture of Bond

    Within the past several years, some RIs have sought to import 
heavily damaged motor vehicles both before and after their repair. In 
addition, some motor vehicles have been imported consisting of the body 
of one vehicle and the chassis and frame of another. Although we may 
have determined under Part 593 that the original vehicles, as 
manufactured, are capable of being modified to meet the FMVSS, we were 
not considering damaged vehicles. When a vehicle has been heavily 
damaged or reconstructed, we have no assurance that it can be restored 
to a condition in which it complies, or can be brought into compliance 
with, the Federal motor vehicle safety standards. The NPRM represented 
our tentative decision that the safety of the American public would be 
served by prohibiting importation of salvage, repaired salvage, or 
reconstructed vehicles into this country. Accordingly, we proposed 
amending Part 591 to require a RI to declare that each motor vehicle it 
is importing is not a salvage motor vehicle, a repaired salvage motor 
vehicle, or a reconstructed motor vehicle. We proposed the following 
definitions for these terms:

    Reconstructed motor vehicle means a motor vehicle whose body is 
less than 25 years old and which is mounted on a chassis or frame 
that is not its original chassis or frame and that is less than 25 
years old.
    Repaired salvage vehicle means a salvage motor vehicle that has 
been repaired to the extent that any State will issue it a title and 
register it for use on the public streets, roads, or highways.
    Salvage motor vehicle means a motor vehicle less than 25 years 
old that has been wrecked, damaged, or destroyed to the extent that 
to repair it to the extent that any State would issue a title and 
register it for use on the public streets, roads or highways would 
require replacement of two or more of the following subassemblies: 
Front clip assembly (fenders, grille, hood, and bumper), rear clip 
assembly (rear quarter panels and floor panel assembly), side 
assembly (fenders, door(s) and quarter panel), engine and 
transmission, top assembly (except for convertible tops), or frame.

    We received five comments on this aspect of our proposal. One 
commenter argued that salvage vehicles should still be eligible for 
import as parts. The commenter opposed a ban on reconstructed motor 
vehicles because in its view the definitions of this category of 
vehicle are not clear and vary among jurisdictions. The commenter 
asserted that reconstructed motor vehicles can be repaired to be as 
safe as other vehicles. A second commenter supported a ban on vehicles 
that have been totaled or severely damaged. It recommended that NHTSA 
use the definitions that were approved by the Senate Committee on 
Commerce, Science and Transportation in its consideration, in July 
1999, of legislation (not enacted) to establish nationally uniform and 
workable definitions of those terms.
    A third commenter argued that the proposed salvage definition is 
seldom followed in the U.S. or Canada. It recommended ``accepting the 
determination of vehicle status * * * made by the jurisdiction where 
the vehicle was registered at the time of the damage.'' A fourth 
commenter suggested definitions for salvage vehicle, non-repairable 
vehicle, and flood vehicle.
    We based our proposed definition of ``salvage motor vehicle'' in 
large part upon that of the State of Georgia. Our definition of 
``reconstructed motor vehicle'' would be predicated on the fact that, 
pursuant to 49 U.S.C. 30112(b)(9), motor vehicles that are at least 25 
years old may be imported without the need to meet the Federal motor 
vehicle safety standards, and therefore are not imported under the RI 
program.
    Under the legislative proposal mentioned by the second commenter, a 
``rebuilt salvage vehicle'' would be defined as ``a passenger motor 
vehicle which was previously issued a salvage title, has passed a State 
anti-theft inspection, and has been issued a certificate stating so.'' 
The term ``nonrepairable vehicle'' would be defined as ``any passenger 
motor vehicle which is incapable of safe operation on the roads and 
highways and which has no resale value except as a source of parts or 
scrap, or which the owner irreversibly designates as a source of parts 
or scrap.'' A ``flood vehicle'' would be ``a motor vehicle that is 
acquired by an insurance company as part of a damage settlement due to 
water damage, or a vehicle that has been submerged in water such that 
water has reached over the door sill, entered the passenger or trunk 
compartment, has exposed any electrical, computerized, or mechanical 
component to water.''
    Another commenter agreed with the definitions submitted by the 
previous commenter for ``nonrepairable vehicle'' and for ``flood 
vehicle.'' It submitted its own definition for ``salvage vehicle':

    A salvage vehicle is a motor vehicle, other than a flood or non-
repairable vehicle which has been
    (A) wrecked, destroyed, or damaged, to the extent that the total 
cost of repairs to rebuild or reconstruct it to its prior condition, 
and for

[[Page 52090]]

legal operation on the roads or highways, exceeds 75 percent of its 
value at the time it was wrecked, destroyed, or damaged;
    (B) Wrecked, destroyed, or damaged, to which an insurance 
company acquires ownership pursuant to a damage settlement; or
    (C) Voluntarily designated as such, without regard to its level 
of damage, age, or value, by an owner who obtains a salvage title.

    We have carefully considered this suggested definition in light of 
the fact that no commenter specifically supported the definition we 
proposed, and have concluded that, with minor changes, it should be 
adopted. Thus, under the final rule:

    Salvage motor vehicle means a motor vehicle, whether or not 
repaired, which has been (1) wrecked, destroyed, or damaged, to the 
extent that the total estimated or actual cost of parts and labor to 
rebuild or reconstruct the motor vehicle to its pre-accident 
condition and for legal operation on the streets, roads, or 
highways, exceeds 75 percent of its retail value at the time it was 
wrecked, destroyed, or damaged; or (2) wrecked, destroyed, or 
damaged, to which an insurance company acquires ownership pursuant 
to a damage settlement; (other than a damage settlement in 
connection with a recovered theft vehicle unless such motor vehicle 
sustained sufficient damage to meet the 75 percent threshold 
specified in the first sentence), or (3) voluntarily designated as 
such by its owner, without regard to the extent of the motor 
vehicle's damage and repairs.

    With the inclusion of the phrase, ``whether or not repaired,'' we 
remove the need for a definition of ``repaired salvage vehicle.'' We 
are adopting our proposed definition of ``reconstructed vehicle'' 
because of the questions that arise as to the reasons for the 
reconstruction, the quality of the reconstruction, and the extent to 
which the original safety features of both vehicles have been retained 
or compromised. Above all, it seems highly unlikely that a 
reconstructed vehicle could be modified to comply with the Federal 
motor vehicle safety standards.
    Section 591.8(c) requires that ``the surety on a bond shall possess 
a certificate of authority to underwrite Federal bonds. (See list of 
certificated sureties at 54 FR 27800, June 30, 1989).'' When published 
late in 1989, this list was intended to be a reference to current 
sureties, rather than a list of specific sureties incorporated by 
reference. The list is a document that changes as sureties are added to 
and dropped from the list, and we are dropping the reference to it. The 
requirement will remain that, at the time the bond is given, the surety 
possesses a certificate of authority to underwrite Federal bonds.
    To ensure that the conditions under which the conformance bond may 
be forfeited are clearly understood, we proposed to adopt a new Section 
592.9 that clearly describes the forfeiture conditions. There were no 
comments on this aspect of the proposal, and we are adopting it as 
proposed.
    We are also making a minor amendment to Section 591.8(d)(3) to 
conform it to the associated Condition 3 in each of the Conformance 
Bonds contained in Appendix A and Appendix B to Part 591. Section 
591.8(d)(3) is structured as a prohibition (release of a vehicle from 
custody within 30 days after certification to the Administrator) that 
no longer applies if a condition is met (bond release) to which there 
is an exception (two conditions under which the vehicle will not be 
released). The amendment clarifies that if one or both of the latter 
conditions occur, the vehicle shall not be released until after the 
appropriate condition is met even though more than 30 days may have 
passed after the Registered Importer has provided certification to the 
Administrator.

E. Other Comments to the NPRM

    1. New Classification of Importers. NAATA observed that many RIs do 
not comply with the existing rules because of costs and competitive 
influences. This commenter predicted that these practices would 
continue even if the proposed rules were adopted. To address this 
shortcoming, the commenter recommended that there should be a third 
class of RI, identified as ``Certification Bureaus.'' These bureaus 
``would accept the entire liability and responsibility for complete 
vehicle certification and compliance and for subsequent recall 
notification.'' The ``Certification Bureau'' would be the only entity 
allowed to be a subcontractee of a RI. We interpret this comment as 
indicating NAATA's view that a Certification Bureau would be free of 
competitive pressures because it would not be importing vehicles.
    An entity not importing, or not intending to import, vehicles would 
not be eligible to become a RI under the statute. Further, as we have 
said before, we do not read the statute as countenancing the delegation 
of duties of an RI. The RI alone must be totally responsible for 
fulfilling its statutory obligations. Therefore, we are not 
implementing NAATA's suggestions. Moreover, we would not have statutory 
authority to regulate the activities of a ``certification bureau'' 
because such an entity would not qualify as a RI or be engaged in 
importation activities that are subject to the Safety Act. The Safety 
Act imposes certification responsibilities, and other duties and 
responsibilities on manufacturers and importers for resale (who are 
defined as ``manufacturers'' under 49 U.S.C. 30102(a)(5)(B)), and does 
not authorize their delegation to other persons.
    2. Electronic Transmissions. Four commenters encouraged NHTSA to 
permit the electronic submissions of compliance data to lighten its 
workload, reduce expenses for all parties involved, and expedite the 
release of conformance bonds. We agree that this is a worthy goal, and 
it is a critical part of the revised system that we will propose in the 
subsequent NPRM. However, to spare the disruption to our work process 
that would be necessary to accommodate such a change, we are not 
adopting it at this time.
    3. Availability of FMVSS. One commenter recommended that NHTSA 
supply RIs with hard copies of the FMVSS and regulations, or identify 
the source from which that information may be obtained. Hard copies of 
the regulations are too costly to permit us to distribute them free of 
charge. OVSC routinely identifies how the regulations may be ordered in 
the information it supplies to those who may wish to apply to become a 
RI, and in its occasional guidance to RIs advising of changes in the 
regulations. The full text of specific regulations may also be 
downloaded from the Electronic Code of Federal Regulations (e-CFR)'' 
Web site at http://www.gpoaccess.gov/ecfr.
    4. CAFE. Three comments were received expressing the opinion that 
RIs should comply with Corporate Average Fuel Economy (CAFE) Standards. 
We agree that CAFE requirements apply to RIs. By letter dated June 15, 
1999, which we have placed in the docket for this rulemaking, we asked 
the Environmental Protection Agency (EPA) to work with us in developing 
an appropriate approach to this issue. We have had several subsequent 
discussions with EPA concerning this matter. However, we have not yet 
resolved all the many difficult issues that need to be addressed before 
CAFE requirements can be applied to RIs.

IV. Rulemaking Analyses and Notices

A. Executive Order 12866 (Federal Regulation) and DOT Regulatory 
Policies and Procedures

    This notice has not been reviewed under E.O. 12866. After 
considering the impacts of this rulemaking action, we have determined 
that the action is not significant within the meaning of the Department 
of Transportation regulatory policies and procedures. The intent of the 
rulemaking action is to modify regulatory procedures that have been in

[[Page 52091]]

effect for over ten years. In many cases, the effect of the proposed 
amendments would be to relax or eliminate burdens on regulated 
entities. In most other cases, the new provisions clarify existing 
requirements and responsibilities. This action does not involve a 
substantial public interest or controversy. The rulemaking action would 
not have a substantial impact on any transportation safety program or 
on state and local governments. The impacts are so minimal as not to 
warrant the preparation of a full regulatory evaluation.

B. Regulatory Flexibility Act

    We have also considered the effects of this action in relation to 
the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
    A RI commenter contested our conclusion in the preamble to the NPRM 
that the proposed rule would not have a significant economic impact 
upon a substantial number of small entities, choosing to base its 
conclusion on the multiple of estimated gray market vehicles imported 
in 2000 (200,000) by the ``conservative average valuation of $12,000 
per vehicle,'' or a gross dollar volume of $2.4 billion. However, the 
gross dollar volume associated with the gray market program has nothing 
to do with the issue of the impact of the proposed amendments. On the 
contrary, the overall costs of compliance with the new requirements 
imposed by this rule (e.g., requiring RIs to maintain their own 
facility for conformance work and to have one full-time employee at a 
facility during normal business hours (which can be a corporate officer 
or partner of a partnership), requiring certification to NHTSA to be 
made by a principal of the RI, requiring applicants for RI status to 
provide additional information in their possession) are likely to be 
minimal. For these reasons, NHTSA does not accept the comment that the 
rulemaking action is likely to have a significant economic impact, 
requiring the agency, pursuant to 5 U.S.C. 609 to hold a public hearing 
on the rulemaking.
    For the reasons discussed above under E.O. 12866 and the DOT 
Policies and Procedures, I certify that this action will not have a 
significant economic impact upon a substantial number of small 
entities.
    The following is our statement providing the factual basis for our 
certification (5 U.S.C. 605(b)). The rule primarily affects Registered 
Importers (RIs) of motor vehicles. As of January 1, 2003, there were 
168 entities that are currently RIs under 49 CFR Part 592. Most, if not 
all, RIs import motor vehicles for resale. That this is a profitable 
business is demonstrated by the large number of vehicles imported from 
Canada and the increasing number of applicants to become a RI. Most of 
the amendments adopted in the final rule are refinements and 
clarifications of existing RI obligations. We agree that many, if not 
most, RIs are small businesses as defined by the Small Business 
Administration's regulations, but we believe that the final rule will 
not have a significant economic impact upon a substantial number of 
small entities. Governmental jurisdictions will not be affected.

C. Executive Order 13132 (Federalism)

    E. O. 13132 (64 FR 43255, August 10, 1999) revokes and replaces 
E.O.s 12612 ``Federalism'' and 12875 ``Enhancing the Intergovernmental 
Partnership.'' E.O. 13132 requires NHTSA to develop an accountable 
process to ensure ``meaningful and timely input by State and local 
officials in the development of regulatory policies that have 
federalism implications.'' E.O. 13132 defines the term ``Policies that 
have federalism implications'' to include regulations that have 
``substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government.'' Under 
E.O. 13132, NHTSA may not issue a regulation that has federalism 
implications, that imposes substantial direct compliance costs, and 
that is not required by statute, unless the Federal government provides 
the funds necessary to pay the direct compliance costs incurred by 
State and local governments, or NHTSA consults with State and local 
officials early in the process of developing the proposed regulation.
    One commenter noted that under Section 9(b) of E.O. 13132, ``no 
agency shall promulgate any regulation that * * * imposes substantial 
direct compliance costs on state and local governments.'' The comment 
contended that State and local governments have incurred direct 
compliance costs based on the premise that the large increase in the 
number of Canadian vehicles must have increased the paperwork 
requirements in the States' motor vehicle title offices. The comment is 
not well taken. Any increase in the number of Canadian vehicles 
imported into the United States is independent of this rulemaking 
action. The final rule does not require any action by State or local 
governments. To the extent that there are indirect compliance costs 
involved in titling and registering an increased number of vehicles, 
these costs may be offset by the fees that States and local 
jurisdictions impose for these services.
    Accordingly, we state that the final rule will not have substantial 
direct effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government as specified in 
E.O. 13132. Thus, the requirements of section 6 of the Executive Order 
do not apply to this rule.

D. National Environmental Policy Act

    We have analyzed this action for purposes of the National 
Environmental Policy Act. The action will not have a significant effect 
upon the environment because the final rule would not impose any 
manufacturing requirements. We expect the volume of vehicles imported 
from Canada to fluctuate, independent of our rulemaking actions, based 
on differences in the exchange rate of the American and the Canadian 
dollar, and the presence or absence of incentive programs for new-car 
purchases.

E. Civil Justice Reform

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

F. Paperwork Reduction Act

    The procedures in this rule to permit importation of motor vehicles 
and equipment not originally manufactured for the U.S. market include 
information collection requirements as that term is defined by OMB in 5 
CFR Part 1320. The original information collection requirements were 
approved by the Office of Management and Budget (OMB) pursuant to the 
requirements of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.). 
This collection of information has been assigned OMB Control No. 2127-
0002 (``Motor Vehicle Information''). Under the final rule, new 
requirements will be imposed for RIs to retain records pertaining to 
modified vehicles for an additional two years, and for RIs and 
applicants for RI status to submit additional information to support an 
application for registration and the annual renewal of an existing 
registration. On October 3, 2003, the agency published, at 68 FR 57508, 
a notice describing these additional recordkeeping requirements and 
soliciting public comment thereon. Thereafter, on July 26, 2004, OMB 
approved this additional information collection as a revision to the 
collection

[[Page 52092]]

it previously approved under OMB Control No. 2127-0002. That approval 
also covers information collected by the agency through the HS-7 
Declaration Form and the HS-474 Bond to Ensure Conformance with Motor 
Vehicle Safety and Bumper Standards.

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 tribal 
governments, in the aggregate, or by the private sector, of more than 
$100 million annually. Because the final rule will not result in an 
expenditure of $100 million, no Unfunded Mandates assessment has been 
prepared.

List of Subjects in 49 CFR Parts 591, 592, 594

    Imports, Motor vehicle safety, Motor vehicles, Reporting and 
recordkeeping requirements.


0
In consideration of the foregoing, 49 CFR parts 591, 592, and 594 are 
amended as follows:

PART 591--IMPORTATION OF VEHICLES AND EQUIPMENT SUBJECT TO FEDERAL 
SAFETY, BUMPER AND THEFT PREVENTION STANDARDS

0
1. The authority citation for part 591 is revised to read as follows:

    Authority: Pub. L. 100-562, 49 U.S.C. 322(a), 30117, 30141-
30147; delegation of authority at 49 CFR 1.50.

0
2. Section 591.4 is amended by adding the definitions for 
``Reconstructed motor vehicle'' and ``Salvage motor vehicle'' in 
alphabetical order to read as follows:


Sec.  591.4  Definitions.

* * * * *
    Reconstructed motor vehicle means a motor vehicle whose body is 
less than 25 years old and which is mounted on a chassis or frame that 
is not its original chassis or frame and that is less than 25 years 
old.
    Salvage motor vehicle means a motor vehicle, whether or not 
repaired, which has been:
    (1) Wrecked, destroyed, or damaged, to the extent that the total 
estimated or actual cost of parts and labor to rebuild or reconstruct 
the motor vehicle to its pre-accident condition and for legal operation 
on the streets, roads, or highways, exceeds 75 percent of its retail 
value at the time it was wrecked, destroyed, or damaged; or
    (2) Wrecked, destroyed, or damaged, to which an insurance company 
acquires ownership pursuant to a damage settlement (other than a damage 
settlement in connection with a recovered theft vehicle unless such 
motor vehicle sustained sufficient damage to meet the 75 percent 
threshold specified in the first sentence); or
    (3) Voluntarily designated as such by its owner, without regard to 
the extent of the motor vehicle's damage and repairs.

0
3. Section 591.5 is amended as follows:
    (a) By adding the word ``and'' following the semicolon at the end 
of paragraph (f)(2)(ii);
    (b) By adding a new paragraph (f)(3); and,
    (c) By adding a new paragraph (g).
    The revisions and additions read as follows:


Sec.  591.5  Declarations required for importation.

* * * * *
    (f) * * *
    (3) The vehicle is not a salvage motor vehicle or a reconstructed 
motor vehicle.
    (g) (For importations for personal use only) The vehicle was 
certified by its original manufacturer as complying with all applicable 
Canadian motor vehicle safety standards and its original manufacturer 
has informed NHTSA that it complies with all applicable Federal motor 
vehicle safety, bumper, and theft prevention standards, or that it 
complies with all such standards except for the labeling requirements 
of Federal Motor Vehicle Safety Standards Nos. 101 and 110 or 120, and/
or the specifications of Federal Motor Vehicle Safety Standard No. 108 
relating to daytime running lamps. The vehicle is not a salvage motor 
vehicle, a repaired salvage motor vehicle, or a reconstructed motor 
vehicle.
* * * * *

0
4. Section 591.6 is amended by revising paragraph (c) to read as 
follows:


Sec.  591.6  Documents accompanying declarations.

* * * * *
    (c) A declaration made pursuant to paragraph (f) of Sec. 591.5, and 
under a bond for the entry of a single vehicle, shall be accompanied by 
a bond in the form shown in Appendix A to this part, in an amount equal 
to 150% of the dutiable value of the vehicle, or, if under bond for the 
entry of more than one vehicle, shall be accompanied by a bond in the 
form shown in Appendix B to this part and by Customs Form CF 7501, for 
the conformance of the vehicle(s) with all applicable Federal motor 
vehicle safety and bumper standards, or, if conformance is not 
achieved, for the delivery of such vehicles to the Secretary of 
Homeland Security for export at no cost to the United Sates, or for its 
abandonment.
* * * * *

0
5. Section 591.7 is amended by revising paragraph (e) to read as 
follows:


Sec.  591.7  Restrictions on importations.

* * * * *
    (e) If the importer of a vehicle under Sec. 591.5(f)(2)(ii) has 
been notified in writing by the Registered Importer with which it has 
executed a contract or other agreement that the registration of the 
Registered Importer has been suspended (for other than the first time) 
or revoked, pursuant to Sec. 592.7 of this chapter, and that it has not 
affixed a certification label on the vehicle and/or filed a 
certification of conformance with the Administrator as required by 
Sec. 592.6 of this chapter, and that it therefore may not release the 
vehicle for the importer, the importer shall execute a contract or 
other agreement with another Registered Importer for the certification 
of the vehicle and submission of the certification of conformance to 
the Administrator. The Administrator shall toll the 120-day period for 
submission of a certification to the Administrator pursuant to 
Sec. 592.6(d) of this chapter during the period from the date of the 
Registered Importer's notification to the importer until the date of 
the contract with the substitute Registered Importer.

0
6. Section 591.8 is amended by revising the introductory text of 
paragraph (d), and paragraphs (d)(1), (d)(3), and (d)(6) to read as 
follows:


Sec.  591.8  Conformance bond and conditions.

* * * * *
    (d) In consideration of the release from the custody of the Bureau 
of Customs and Border Protection, or the withdrawal from a Customs 
bonded warehouse into the commerce of, or for consumption in, the 
United States, of a motor vehicle not originally manufactured to 
conform to applicable standards issued under part 571 and part 581 of 
this chapter, the obligors (principal and surety) shall agree to the 
following conditions of the bond:
    (1) To have such vehicle brought into conformity with all 
applicable standards issued under part 571 and part 581 of this chapter 
within the number of days after the date of entry that the 
Administrator has established for such vehicle (to wit, 120 days);
* * * * *
    (3) In the case of a Registered Importer, not to release custody of 
the

[[Page 52093]]

vehicle to any person for license or registration for use on public 
roads, streets, or highways, or license or register the vehicle from 
the date of entry until 30 calendar days after it has certified 
compliance of the vehicle to the Administrator, unless the 
Administrator has notified the principal before 30 calendar days that 
(s)he has accepted the certification, and that the vehicle and bond may 
be released, except that no such release shall be permitted, before or 
after the 30th calendar day, if the principal has received written 
notice from the Administrator that an inspection of the vehicle will be 
required or that there is reason to believe that such certification is 
false or contains a misrepresentation;
* * * * *
    (6) If the principal has received written notice from the 
Administrator that the vehicle has been found not to comply with all 
applicable Federal motor vehicle safety and bumper standards, and 
written demand that the vehicle be abandoned to the United States, or 
delivered to the Secretary of Homeland Security for export (at no cost 
to the United States), or to abandon the vehicle to the United States, 
or to deliver the vehicle, or cause the vehicle to be delivered to, the 
custody of the Bureau of Customs and Border Protection at the port of 
entry listed above, or to any other port of entry, and to secure all 
documents necessary for exportation of the vehicle from the United 
States at no cost to the United States, or in default of abandonment or 
redelivery after prior notice by the Administrator to the principal, to 
pay to the Administrator the amount of the bond.
* * * * *

0
7. Appendix A to part 591 is amended by revising the introductory text 
and Condition (6) to read as follows:

APPENDIX A TO PART 591--SECTION 591.5(f) BOND FOR THE ENTRY OF A SINGLE 
VEHICLE

Department of Transportation

National Highway Traffic Safety Administration

BOND TO ENSURE CONFORMANCE WITH FEDERAL MOTOR VEHICLE SAFETY AND BUMPER 
STANDARDS

(To redeliver vehicle, to produce documents, to perform conditions 
of release such as to bring vehicle into conformance with all 
applicable Federal motor vehicle safety and bumper standards)

    Know All Men by These Presents That (principal's name, mailing 
address which includes city, state, ZIP code, and state of 
incorporation if a corporation), as principal, and (surety's name, 
mailing address which includes city, state, ZIP code and state of 
incorporation), as surety, are held and firmly bound unto the UNITED 
STATES OF AMERICA in the sum of (bond amount in words) dollars ($ 
(bond amount in numbers)), which represents 150% of the entered 
value of the following described motor vehicle, as determined by the 
Bureau of Customs and Border Protection: (make, model, model year, 
and VIN) for the payment of which we bind ourselves, our heirs, 
executors, and assigns (jointly and severally), firmly bound by 
these presents.
    WITNESS our hands and seals this------day of------, 20----.
    WHEREAS, motor vehicles may be entered under the provisions of 
49 U.S.C. Chapters 301 and 325; and DOT Form HS-7 ``Declaration;''
    WHEREAS, pursuant to 49 CFR part 591, a regulation promulgated 
under the provisions of 49 U.S.C. Chapter 301, the above-bounden 
principal desires to import permanently the motor vehicle described 
above, which is a motor vehicle that was not originally manufactured 
to conform to the Federal motor vehicle safety or bumper standards; 
and
    WHEREAS, pursuant to 49 CFR part 592, a regulation promulgated 
under the provisions of 49 U.S.C. Chapter 301, the above-bounden 
principal has been granted the status of Registered Importer of 
motor vehicles not originally manufactured to conform to the Federal 
motor vehicle safety and bumper standards (or, if not a Registered 
Importer, has a contract with a Registered Importer covering the 
vehicle described above); and
    WHEREAS, pursuant to 49 CFR part 593, a regulation promulgated 
under 49 U.S.C. Chapter 301, the Administrator of the National 
Highway Traffic Safety Administration has decided that the motor 
vehicle described above is eligible for importation into the United 
States; and
    WHEREAS, the motor vehicle described above has been imported at 
the port of ----------, and entered at said port for consumption on 
entry No.------, dated------, 20----;
    NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH THAT--
* * * * *
    (6) And if the principal has received written notice from the 
Administrator that the vehicle has been found not to comply with all 
applicable Federal motor vehicle safety and bumper standards, and 
written demand that the vehicle be abandoned to the United States, 
or delivered to the Secretary of Homeland Security for export (at no 
cost to the United States), the principal shall abandon the vehicle 
to the United States, or shall deliver the vehicle, or cause the 
vehicle to be delivered to, the custody of the Bureau of Customs and 
Border Protection at the port of entry listed above, or any other 
port of entry, and shall execute all documents necessary for 
exportation of the vehicle from the United States, at no cost to the 
United States; or in default of abandonment or redelivery after 
proper notice by the Administrator to the principal, the principal 
shall pay to the Administrator the amount of this obligation;
* * * * *

0
8. Appendix B to part 591 is amended by revising the introductory text 
of Appendix B and Condition (6) to read as follows:

APPENDIX B TO PART 591--SECTION 591.5(f) BOND FOR THE ENTRY OF MORE 
THAN A SINGLE VEHICLE

Department of Transportation

National Highway Traffic Safety Administration

BOND TO ENSURE CONFORMANCE WITH FEDERAL MOTOR VEHICLE SAFETY AND BUMPER 
STANDARDS

(To redeliver vehicles, to produce documents, to perform conditions 
of release such as to bring vehicles into conformance with all 
applicable Federal motor vehicle safety and bumper standards)

    Know All Men by These Presents That (principal's name, mailing 
address which includes city, state, ZIP code, and state of 
incorporation if a corporation), as principal, and (surety's name, 
mailing address which includes city, state, ZIP code and state of 
incorporation) as surety, are held and firmly bound unto the UNITED 
STATES OF AMERICA in the sum of (bond amount in words) dollars ($ 
(bond amount in numbers)), which represents 150% of the entered 
value of the following described motor vehicle, as determined by the 
Bureau of Customs and Border Protection (make, model, model year, 
and VIN of each vehicle) for the payment of which we bind ourselves, 
our heirs, executors, and assigns (jointly and severally), firmly 
bound by these presents.
    WITNESS our hands and seals this------day of------, 20----.
    WHEREAS, motor vehicles may be entered under the provisions of 
49 U.S.C. Chapters 301 and 325; and DOT Form HS-7 ``Declaration,''
    WHEREAS, pursuant to 49 CFR part 591, a regulation promulgated 
under the provisions of 49 U.S.C. Chapter 301, the above-bounden 
principal desires to import permanently the motor vehicles described 
above, which are motor vehicles that were not originally 
manufactured to conform to the Federal motor vehicle safety, or 
bumper, or theft prevention standards; and
    WHEREAS, pursuant to 49 CFR part 592, a regulation promulgated 
under the provisions of 49 U.S.C. Chapter 301, the above-bounden 
principal has been granted the status of Registered Importer of 
motor vehicles not originally manufactured to conform to the Federal 
motor vehicle safety, bumper, and theft prevention standards; and
    WHEREAS, pursuant to 49 CFR part 593, a regulation promulgated 
under 49 U.S.C. Chapter 301, the Administrator of the National 
Highway Traffic Safety Administration has decided that each motor 
vehicle described above is eligible for importation into the United 
States; and
    WHEREAS, the motor vehicles described above have been imported 
at the port of------, and entered at said port for

[[Page 52094]]

consumption on entry No.--------, dated---- --, 20----;
    NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH THAT--
* * * * *
    (6) And if the principal has received written notice from the 
Administrator that such vehicle has been found not to comply with 
all applicable Federal motor vehicle safety and bumper standards, 
and written demand that such vehicle be abandoned to the United 
States, or delivered to the Secretary of Homeland Security for 
export (at no cost to the United States), the principal shall 
abandon such vehicle to the United States, or shall deliver such 
vehicle, or cause such vehicle to be delivered to, the custody of 
the Bureau of Customs and Border Protection at the port of entry 
listed above, or any other port of entry, and shall execute all 
documents necessary for exportation of such vehicle from the United 
States, at no cost to the United States; or in default of 
abandonment or redelivery after proper notice by the Administrator 
to the principal, the principal shall pay to the Administrator an 
amount equal to 150% of the entered value of such vehicle as 
determined by the Bureau of Customs and Border Protection.
* * * * *

PART 592--REGISTERED IMPORTERS OF VEHICLES NOT ORIGINALLY 
MANUFACTURED TO CONFORM TO THE FEDERAL MOTOR VEHICLE SAFETY 
STANDARDS

0
9. The authority citation for part 592 is revised to read as follows:

    Authority: Pub. L. 100-562, 49 U.S.C. 322(a), 30117, 30141-
30147; delegation of authority at 49 CFR 1.50.

0
10. Section 592.4 is amended by adding the definitions of ``Independent 
insurance company'', ``Principal'', ``Safety recall'', and ``Service 
insurance policy'' in alphabetical order to read as follows:


Sec.  592.4  Definitions

* * * * *
    Independent insurance company means an entity that is registered 
with any State and authorized by that State to conduct an insurance 
business including the issuance or underwriting of a service insurance 
policy, none of whose affiliates, shareholders, officers, directors, or 
employees, or any person in affinity with such, is employed by, or has 
a financial interest in, or otherwise controls or participates in the 
business of, a Registered Importer to which it issues or underwrites a 
service insurance policy.
* * * * *
    Principal, with respect to a Registered Importer, means any officer 
of a corporation, a general partner of a partnership, or the sole 
proprietor of a sole proprietorship. The term includes a director of an 
incorporated Registered Importer, and any person whose ownership 
interest in a Registered Importer is 10% or more.
* * * * *
    Safety recall means a notification and remedy campaign conducted 
pursuant to 49 U.S.C. 30118-30120 to address a noncompliance with a 
Federal motor vehicle safety standard or a defect that relates to motor 
vehicle safety.
    Service insurance policy means any policy issued or underwritten by 
an independent insurance company which covers a specific motor vehicle 
and guarantees that any noncompliance with a Federal motor vehicle 
safety standard or defect related to motor vehicle safety determined to 
exist in that vehicle will be remedied without charge to the owner of 
the vehicle.

0
11. Section 592.5 is amended by revising paragraphs (a)(3), (4), (5), 
(9), and (11), (b), (d), (e) and (f) and by adding a new paragraph (h) 
to read as follows:


Sec.  592.5  Requirements for registration and its maintenance.

    (a) * * *
    (3) Sets forth the full name, street address, and title of the 
person preparing the application, and the full name, street address, e-
mail address (if any), and telephone and facsimile machine (if any) 
numbers in the United States of the person for whom application is made 
(the ``applicant'').
    (4) Specifies the form of the applicant's organization (i.e., sole 
proprietorship, partnership, or corporation) and the State under which 
it is organized, and:
    (i) If the applicant is an individual, the application must include 
the full name, street address, date of birth, and Social Security 
Number of the individual;
    (ii) If the applicant is a partnership, the application must 
include the full name, street address, date of birth, and Social 
Security Number of each partner; if one or more of the partners is a 
limited partnership, the application must include the names and street 
addresses of the general partners and limited partners; if one or more 
of the partners is a corporation, the application must include the 
information specified by either paragraph (a)(4)(iii) or (iv) of this 
section, as applicable;
    (iii) If the applicant is a non-public corporation, the application 
must include the full name, street address, date of birth, and Social 
Security Number of each officer, director, manager, and person who is 
authorized to sign documents on behalf of the corporation. The 
application must also include the name of any person who owns or 
controls 10 percent or more of the corporation. The applicant must also 
provide a statement issued by the Office of the Secretary of State, or 
other responsible official of the State in which the applicant is 
incorporated, certifying that the applicant is a corporation in good 
standing;
    (iv) If the applicant is a public corporation, the applicant must 
include a copy of its latest 10-K filing with the Securities and 
Exchange Commission, and provide the name and address of any person who 
is authorized to sign documents on behalf of the corporation;
    (v) Contains a statement that the applicant has never had a 
registration revoked pursuant to Sec. 592.7, nor is it, nor was it, 
directly or indirectly, owned or controlled by, or under common 
ownership or control with, a Registered Importer that has had a 
registration revoked pursuant to Sec. 592.7; and
    (vi) Identifies any shareholder, officer, director, employee, or 
any person in affinity with such, who has been previously affiliated 
with another Registered Importer in any capacity. If any such persons 
are identified, the applicant shall state the name of each such 
Registered Importer and the affiliation of any identified person.
    (5) Includes the following:
    (i) The street address and telephone number in the United States of 
each of its facilities for conformance, storage, and repair that the 
applicant will use to fulfill its duties as a Registered Importer and 
where the applicant will maintain the records it is required by this 
part to keep;
    (ii) The street address that the applicant designates as its 
mailing address (in addition, an applicant may list a post office box, 
provided that it is in the same city as the street address designated 
as its mailing address);
    (iii) A copy of the applicant's business license or other similar 
document issued by an appropriate State or local authority, authorizing 
it to do business as an importer, or modifier, or seller of motor 
vehicles, as applicable to the applicant and with respect to each 
facility that the applicant has identified pursuant to paragraph 
(a)(5)(i) of this section, or a statement by the applicant that it has 
made a bona fide inquiry and is not required by such State or local 
authority to have such a license or document;
    (iv) The name of each principal of the applicant whom the applicant 
authorizes to submit conformity certifications to NHTSA and the street 
address of the repair, storage, or conformance facility where each such 
principal will be located; and

[[Page 52095]]

    (v) If an applicant is a corporation not organized under the laws 
of a State of the United States, or is a sole proprietorship or 
partnership located outside the United States, the application must be 
accompanied by the applicant's designation of an agent for service of 
process in the form specified by Section 551.45 of this chapter.
* * * * *
    (9) Sets forth in full complete descriptive information, views, and 
arguments sufficient to establish that the applicant:
    (i) Is technically able to modify any nonconforming motor vehicle 
to conform to all applicable Federal motor vehicle safety and bumper 
standards, including but not limited to the professional qualifications 
of the applicant and its employees at the time of the application (such 
as whether any such persons have been certified as mechanics), and a 
description of their experience in conforming and repairing vehicles;
    (ii) Owns or leases one or more facilities sufficient in nature and 
size to repair, conform, and store the vehicles for which it provides 
certification of conformance to NHTSA and which it imports and may hold 
pending release of conformance bonds, including a copy of a deed or 
lease evidencing ownership or tenancy for each such facility, still or 
video photographs of each such facility, the street address and 
telephone number of each such facility;
    (iii) Is financially and technically able to provide notification 
of and to remedy a noncompliance with a Federal motor vehicle safety 
standard or a defect related to motor vehicle safety determined to 
exist in the vehicles that it imports and/or for which it provides 
certification of conformity to NHTSA through repair, repurchase or 
replacement of such vehicles; and
    (iv) Is able to acquire and maintain information regarding the 
vehicles that it imported and the names and addresses of owners of the 
vehicles that it imported and/or for which it provided certifications 
of conformity to NHTSA in order to notify such owners when a 
noncompliance or a defect related to motor vehicle safety has been 
determined to exist in such vehicles.
* * * * *
    (11) Contains the statement: ``I certify that I have read and 
understood the duties of a Registered Importer, as set forth in 49 CFR 
592.6, and that [name of applicant] will fully comply with each such 
duty. I further certify that all the information provided in this 
application is true and correct. I further certify that I understand 
that, in the event the registration for which it is applying is 
suspended or revoked, or lapses, [name of applicant] will remain 
obligated to notify owners and to remedy noncompliances or safety 
related defects, as required by 49 CFR 592.6(j), for each vehicle for 
which it has furnished a certificate of conformity to the 
Administrator.''
    (b) If the application is incomplete, the Administrator notifies 
the applicant in writing of the information that is needed for the 
application to be complete and advises that no further action will be 
taken on the application until the applicant has furnished all the 
information needed.
* * * * *
    (d) When the application is complete (and, if applicable, when the 
applicant has paid a sum representing the inspection component of the 
initial annual fee), the Administrator reviews the application and 
decides whether the applicant has complied with the requirements 
prescribed in paragraph (a) of this section. The Administrator shall 
base this decision on the application and upon any inspection NHTSA may 
have conducted of the applicant's conformance, storage, and 
recordkeeping facilities and any assessment of the applicant's 
personnel. If the Administrator decides that the applicant complies 
with the requirements, (s)he informs the applicant in writing and 
issues it a Registered Importer Number.
    (e)(1) The Administrator shall deny registration to any applicant 
who (s)he decides does not comply with the requirements of paragraph 
(a) of this section and to an applicant whose previous registration has 
been revoked. The Administrator also may deny registration to an 
applicant that is or was owned or controlled by, or under common 
ownership or control with, or in affinity with, a Registered Importer 
whose registration has been revoked. In determining whether to deny an 
application, the Administrator may consider whether the applicant is 
comprised in whole or in part of relatives, employees, major 
shareholders, partners, or relatives of former partners or major 
shareholders, of a Registered Importer whose registration was revoked.
    (2) If the Administrator denies an application, (s)he informs the 
applicant in writing of the reasons for denial and that the applicant 
is entitled to a refund of that component of the initial annual fee 
representing the remaining costs of administration of the registration 
program, but not those components of the initial annual fee 
representing the costs of processing the application, and, if 
applicable, the costs of conducting an inspection of the applicant's 
facilities.
    (3) Within 30 days from the date of the denial, the applicant may 
submit a petition for reconsideration. The applicant may submit 
information and/or documentation supporting its request. If the 
Administrator grants registration as a result of the request, (s)he 
notifies the applicant in writing and issues it a Registered Importer 
Number. If the Administrator denies registration, (s)he notifies the 
applicant in writing and refunds that component of the initial annual 
fee representing the remaining costs of administration of the 
registration program, but does not refund those components of the 
initial annual fee representing the costs of processing the 
application, and, if applicable, the costs of conducting an inspection.
    (f) In order to maintain its registration, a Registered Importer 
must file an annual statement. The Registered Importer must affirm in 
its annual statement that all information provided in its application 
or pursuant to Sec.  592.6(r), or as may have been changed in any 
notification that it has provided to the Administrator in compliance 
with Sec.  592.6(m), remains correct, and that it continues to comply 
with the requirements for being a Registered Importer. The Registered 
Importer must include with its annual statement a current copy of its 
service insurance policy. Such statement must be titled ``Yearly 
Statement of Registered Importer,'' and must be filed not later than 
September 30 of each year. A Registered Importer must also pay any 
annual fee, and any other fee that is established under part 594 of 
this chapter. An annual fee must be paid not later than September 30 of 
any calendar year for the fiscal year that begins on October 1 of that 
calendar year. The Registered Importer must pay any other fee not later 
than 15 days after the date of the written notice from the 
Administrator.
* * * * *
    (h) An applicant whose application is pending on September 30, 
2004, and which has not provided the information required by paragraph 
(a) of this section, as amended, must provide all the information 
required by that subsection before the Administrator will give further 
consideration to the application.

0
12. Section 592.6 is revised to read as follows:


Sec.  592.6  Duties of a registered importer.

    Each Registered Importer must:
    (a) With respect to each motor vehicle that it imports into the 
United States,

[[Page 52096]]

assure that the Administrator has decided that the vehicle is eligible 
for importation pursuant to part 593 of this chapter, prior to such 
importation. The Registered Importer must also bring such vehicle into 
conformity with all applicable Federal motor vehicle safety standards 
prescribed under part 571 of this chapter and the bumper standard 
prescribed under part 581 of this chapter, if applicable, and furnish 
certification to the Administrator pursuant to paragraph (e) of this 
section, within 120 calendar days after such entry. For each motor 
vehicle, the Registered Importer must furnish to the Secretary of 
Homeland Security at the time of importation a bond in an amount equal 
to 150 percent of the dutiable value of the vehicle, as determined by 
the Secretary of Homeland Security, to ensure that such vehicle either 
will be brought into conformity with all applicable Federal motor 
vehicle safety and bumper standards or will be exported (at no cost to 
the United States) by the importer or the Secretary of Homeland 
Security or abandoned to the United States. However, if the Registered 
Importer has procured a continuous entry bond, it must furnish the 
Administrator with such bond, and must furnish the Secretary of 
Homeland Security (acting on behalf of the Administrator) with a 
photocopy of such bond and Customs Form CF 7501 at the time of 
importation of each motor vehicle.
    (b) Establish, maintain, and retain, for 10 years from the date of 
entry, at the facility in the United States it has identified in its 
application pursuant to Sec.  592.5 (a)(5)(i), for each motor vehicle 
for which it furnishes a certificate of conformity, the following 
records, including correspondence and other documents, in hard copy 
format:
    (1) The declaration required by Sec.  591.5 of this chapter.
    (2) All vehicle or equipment purchase or sales orders or 
agreements, conformance agreements between the Registered Importer and 
persons who import motor vehicles for personal use, and correspondence 
between the Registered Importer and the owner or purchaser of the 
vehicle.
    (3) The make, model, model year, odometer reading, and VIN of each 
vehicle that it imports and the last known name and address of the 
owner or purchaser of the vehicle.
    (4) Records, including photographs and other documents, sufficient 
to identify the vehicle and to substantiate that it has been brought 
into conformity with all Federal motor vehicle safety and bumper 
standards that apply to the vehicle, that the certification label has 
been affixed, and that either the vehicle is not subject to any safety 
recalls or that all noncompliances and safety defects covered by such 
recalls were remedied before the submission to the Administrator under 
paragraph (d) of this section. All photographs submitted shall be 
unaltered.
    (5) A copy of the certification submitted to the Administrator 
pursuant to paragraph (d) of this section.
    (6) The number that the issuer has assigned to the service 
insurance policy that will accompany the vehicle and the full corporate 
or other business name of the issuer of the policy, and substantiation 
that the Registered Importer has notified the issuer of the policy that 
the policy has been provided with the vehicle.
    (c) Take possession of the vehicle and perform all modifications 
necessary to conform the vehicle to all Federal motor vehicle safety 
and bumper standards that apply to the vehicle at a facility that it 
has identified to the Administrator pursuant to Sec.  592.5(a)(5)(i), 
and permanently affix to the vehicle at that facility, upon completion 
of conformance modifications and remedy of all noncompliances and 
defects that are the subject of any pending safety recalls, a label 
that identifies the Registered Importer and states that the Registered 
Importer certifies that the vehicle complies with all Federal motor 
vehicle safety and bumper standards that apply to the vehicle, and 
contains all additional information required by Sec.  567.4 of this 
chapter.
    (d) For each motor vehicle, certify to the Administrator:
    (1) Within 120 days of the importation that it has brought the 
motor vehicle into conformity with all applicable Federal motor vehicle 
safety and bumper standards in effect at the time the vehicle was 
manufactured by the fabricating manufacturer. Such certification shall 
state verbatim either that ``I know that the vehicle that I am 
certifying conforms with all applicable Federal motor vehicle safety 
and bumper standards because I personally witnessed each modification 
performed on the vehicle to effect compliance,'' or that ``I know that 
the vehicle I am certifying conforms with all applicable Federal motor 
vehicle safety and bumper standards because the person who performed 
the necessary modifications to the vehicle is an employee of [RI name] 
and has provided full documentation of the work that I have reviewed, 
and I am satisfied that the vehicle as modified complies.'' The 
Registered Importer shall also certify, as appropriate, that either:
    (i) The vehicle is not required to comply with the parts marking 
requirements of the theft prevention standard (part 541 of this 
chapter); or
    (ii) The vehicle complied as manufactured with those parts marking 
requirements.
    (2) If the Registered Importer certifies that the vehicle was 
originally manufactured to comply with a standard that does not apply 
to the vehicle or that it has modified the vehicle to conform to such 
standard, or if the certification is incomplete, the Administrator may 
refuse to accept the certification. The Administrator shall refuse to 
accept a certification for a vehicle that has not been determined to be 
eligible for importation under part 593 of this chapter. If the 
Administrator does not accept a submission, (s)he shall return it to 
the Registered Importer. The costs associated with such a return will 
be charged to the Registered Importer. If the Administrator returns the 
submission as described above and the vehicle is eligible for 
importation, the 120-day period specified in paragraph (d)(1) of this 
section continues to run, but the 30-day period specified in paragraph 
(f) of this section does not begin to run until the Administrator has 
accepted the submission. If the vehicle is not eligible for 
importation, the importer must export it from, or abandon it to, the 
United States. If the Registered Importer certifies that it has 
modified the vehicle to bring it into compliance with a standard and 
has, in fact, not performed all required modifications, the 
Administrator will regard such certification as ``knowingly false'' 
within the meaning of 49 U.S.C. 30115 and 49 U.S.C. 30141(c)(4)(B).
    (3) The certification must be signed and submitted by a principal 
of the Registered Importer designated in its registration application 
pursuant to Sec.  592.5(a)(5)(iv), with an original hand-written 
signature and not with a signature that is stamped or mechanically 
applied.
    (4) The certification to the Administrator must specify the 
location of the facility where the vehicle was conformed, and the 
location where the Administrator may inspect the motor vehicle.
    (5) The certification to the Administrator must state and contain 
substantiation either that the vehicle is not subject to any safety 
recalls as of the time of such certification, or, alternatively, that 
all noncompliances and defects that are the subject of those safety 
recalls have been remedied.
    (6) When a Registered Importer certifies a make, model, and model 
year

[[Page 52097]]

of a motor vehicle for the first time, its certification must include:
    (i) The make, model, model year and date of manufacture, odometer 
reading, VIN that complies with Sec.  565.4(b), (c), and (g) of this 
chapter, and Customs Entry Number,
    (ii) A statement that it has brought the vehicle into conformity 
with all Federal motor vehicle safety and bumper standards that apply 
to the vehicle, and a description, with respect to each standard for 
which modifications were needed, of the modifications performed,
    (iii) A copy of the bond given at the time of entry to ensure 
conformance with the safety and bumper standards,
    (iv) The vehicle's vehicle eligibility number, as stated in 
Appendix A to part 593 of this chapter,
    (v) A copy of the HS-7 Declaration form executed at the time of its 
importation if a Customs broker did not make an electronic entry for 
the vehicle with the Bureau of Customs and Border Protection,
    (vi) Unaltered front, side, and rear photographs of the vehicle,
    (vii) Unaltered photographs of the original manufacturer's 
certification label and the certification label of the Registered 
Importer affixed to the vehicle (and, if the vehicle is a motorcycle, a 
photograph or photocopy of the Registered Importer certification label 
before it has been affixed),
    (viii) Unaltered photographs and documentation sufficient to 
demonstrate conformity with all applicable Federal motor vehicle safety 
and bumper standards to which the vehicle was not originally 
manufactured to conform,
    (ix) The policy number of the service insurance policy furnished 
with the vehicle pursuant to paragraph (g) of this section, and the 
full corporate or other business name of the insurer that issued the 
policy, and
    (x) A statement that the submission is the Registered Importer's 
initial certification submission for the make, model, and model year of 
the vehicle covered by the certification.
    (7) Except as specified in this paragraph, a Registered Importer's 
second and subsequent certification submissions for a given make, 
model, and model year vehicle must contain the information required by 
paragraph (d)(6) of this section. If the Registered Importer conformed 
such a vehicle in the same manner as it stated in its initial 
certification submission, it may say so in a subsequent submission and 
it need not provide the description required by paragraph (d)(6)(ii) of 
this section.
    (e) With respect to each motor vehicle that it imports, not take 
any of the following actions until the bond referred to in paragraph 
(a) of this section has been released, unless 30 days have elapsed from 
the date the Administrator receives the Registered Importer's 
certification of compliance of the motor vehicle in accordance with 
paragraph (d) of this section (the 30-day period will be extended if 
the Administrator has made written demand to inspect the motor 
vehicle):
    (1) Operate the motor vehicle on the public streets, roads, and 
highways for a purpose other than transportation to and from a 
franchised dealership of the vehicle's original manufacturer for 
remedying a noncompliance or safety-related defect;
    (2) Sell the motor vehicle or offer it for sale;
    (3) Store the motor vehicle on the premises of a motor vehicle 
dealer;
    (4) Title the motor vehicle in a name other than its own, or 
license or register it for use on public streets, roads, or highways; 
or
    (5) Release custody of the motor vehicle to a person for sale, or 
for license or registration for use on public streets, roads, and 
highways, or for titling in a name other than that of the Registered 
Importer who imported the vehicle.
    (f) Furnish with each motor vehicle for which it furnishes 
certification or information to the Administrator in accordance with 
paragraph (d) of this section, not later than the time it sells the 
vehicle, or releases custody of a vehicle to an owner who has imported 
it for personal use, a service insurance policy written or underwritten 
by an independent insurance company, in the amount of $2,000. The 
Registered Importer shall provide the insurance company with a monthly 
list of the VINs of vehicles covered by the policies of the insurance 
company, and shall retain a copy of each such list in its files.
    (g) Comply with the requirements of part 580 of this chapter, 
Odometer Disclosure Requirements, when the Registered Importer is a 
transferor of a vehicle as defined by Sec.  580.3 of this chapter.
    (h) With respect to any motor vehicle it has imported and for which 
it has furnished a performance bond, deliver such vehicle to the 
Secretary of Homeland Security for export, or abandon it to the United 
States, upon demand by the Administrator, if such vehicle has not been 
brought into conformity with all applicable Federal motor vehicle 
safety and bumper standards within 120 days from entry.
    (i)(1) With respect to any motor vehicle that it has imported or 
for which it has furnished a certificate of conformity or information 
to the Administrator as provided in paragraph (d) of this section, 
provide notification in accordance with part 577 of this chapter and a 
remedy without charge to the vehicle owner, after any notification 
under part 573 of this chapter that a vehicle to which such motor 
vehicle is substantially similar contains a defect related to motor 
vehicle safety or fails to conform with an applicable Federal motor 
vehicle safety standard. However, this obligation does not exist if the 
manufacturer of the vehicle or the Registered Importer of such vehicle 
demonstrates to the Administrator that the defect or noncompliance is 
not present in such vehicle, or that the defect or noncompliance was 
remedied before the submission of the certificate or the information to 
the Administrator, or that the original manufacturer of the vehicle 
will provide such notification and remedy.
    (2) If a Registered Importer becomes aware (from whatever source) 
that the manufacturer of a vehicle it has imported will not provide a 
remedy without charge for a defect or noncompliance that has been 
determined to exist in that vehicle, within 30 days thereafter, the 
Registered Importer must inform NHTSA and submit a copy of the 
notification letter that it intends to send to owners of the vehicle(s) 
in question.
    (3) Any notification to vehicle owners sent by a Registered 
Importer must contain the information specified in Sec.  577.5 of this 
chapter, and must include the statement that if the Registered 
Importer's repair facility is more than 50 miles from the owner's 
mailing address, remedial repairs may be performed at no charge at a 
specific facility designated by the Registered Importer that is within 
50 miles of the owner's mailing address, or, if no such facility is 
designated, that repairs may be performed anywhere, with the cost of 
parts and labor to be reimbursed by the Registered Importer.
    (4) Defect and noncompliance notifications by a Registered Importer 
must conform to the requirements of Sec. Sec.  577.7 and 577.8 of this 
chapter, and are subject to Sec. Sec.  577.9 and 577.10 of this 
chapter.
    (5) Except as provided in this paragraph, instead of the six 
quarterly reports required by Sec.  573.7(a) of this chapter, the 
Registered Importer must submit to the Administrator two reports 
containing the information specified in Sec.  573.7(b)(1) through (4) 
of this chapter. The reports shall cover the periods ending nine and 18 
months after the commencement of the owner notification campaign, and 
must be

[[Page 52098]]

submitted within 30 days of the end of each period. However, the 
reporting requirements established by this paragraph shall not apply to 
any safety recall that a vehicle manufacturer conducts that includes 
vehicles for which the Registered Importer has submitted the 
information required by paragraph (d) of this section.
    (6) The requirement that the remedy be provided without charge does 
not apply if the motor vehicle was bought by its first purchaser from 
the Registered Importer (or, if imported for personal use, conformed 
pursuant to a contract with the Registered Importer) more than 10 
calendar years before the date the Registered Importer or the original 
manufacturer notifies the Administrator of the noncompliance or safety-
related defect pursuant to part 573 of this chapter.
    (j) In order that the Administrator may determine whether the 
Registered Importer is meeting its statutory responsibilities, allow 
representatives of NHTSA during operating hours, upon demand, and upon 
presentation of credentials, to copy documents, or to inspect, monitor, 
or photograph any of the following:
    (1) Any facility identified by the Registered Importer where any 
vehicle for which a Registered Importer has the responsibility of 
providing a certificate of conformity to the Administrator is being 
modified, repaired, tested, or stored, and any facility where any 
record or other document relating to the modification, repair, testing, 
or storage of these vehicles is kept;
    (2) Any part or aspect of activities relating to the modification, 
repair, testing, or storage of vehicles by the Registered Importer; and
    (3) Any motor vehicle for which the Registered Importer has 
provided a certification of conformity to the Administrator before the 
Administrator releases the conformance bond.
    (k) Provide an annual statement and pay an annual fee as required 
by Sec.  592.5(f).
    (l) Except as noted in this paragraph, notify the Administrator in 
writing of any change that occurs in the information which was 
submitted in its registration application, not later than the 30th 
calendar day after such change. If a Registered Importer intends to use 
a facility that was not identified in its registration application, not 
later than 30 days before it begins to use such facility, it must 
notify the Administrator of its intent to use such facility and provide 
a description of the intended use, a copy of the lease or deed 
evidencing the Registered Importer's ownership or tenancy of the 
facility, and a copy of the license or similar document issued by an 
appropriate state or municipal authority stating that the Registered 
Importer is licensed to do business at that facility as an importer 
and/or modifier and/or seller of motor vehicles (or a statement that it 
has made a bona fide inquiry and is not required by state or local law 
to have such a license or permission), and a sufficient number of 
unaltered photographs of that facility to fully depict the Registered 
Importer's intended use. If a Registered Importer intends to change its 
street address or telephone number or discontinue use of a facility 
that was identified in its registration application, it shall notify 
the Administrator not less than 10 days before such change or 
discontinuance of such use, and identify the facility, if any, that 
will be used instead.
    (m) Assure that at least one full-time employee of the Registered 
Importer is present at at least one of the Registered Importer's 
facilities in the United States during normal business hours.
    (n) Not co-utilize the same employee, or any repair or conformance 
facility, with any other Registered Importer. If a Registered Importer 
co-utilizes the same storage facility with another Registered Importer 
or another entity, the storage area of each Registered Importer must be 
clearly delineated, and the vehicles being stored by each Registered 
Importer may not be mingled with vehicles for which that Registered 
Importer is not responsible.
    (o) Make timely, complete, and accurate responses to any requests 
by the Administrator for information, whether by general or special 
order or otherwise, to enable the Administrator to decide whether the 
Registered Importer has complied or is complying with 49 U.S.C. 
Chapters 301 and 325, and the regulations issued thereunder.
    (p) Pay all fees either by certified check, cashier's check, money 
order, credit card, or Electronic Funds Transfer System made payable to 
the Treasurer of the United States, in accordance with the invoice of 
fees incurred by the Registered Importer in the previous month that is 
provided by the Administrator. All such fees are due and payable not 
later than 15 days from the date of the invoice.
    (q) Not later than November 1, 2004, file with the Administrator 
all information required by Sec.  592.5(a), as amended. If a Registered 
Importer has previously provided any item of information to the 
Administrator in its registration application, annual statement, or 
notification of change, it may incorporate that item by reference in 
the filing required under this subsection, provided that it clearly 
indicates the date, page, and entry of the previously-provided 
document.

0
13. Section 592.7 is revised to read as follows:


Sec.  592.7  Suspension, revocation, and reinstatement of suspended 
registrations.

    This section specifies the acts and omissions that may result in 
suspensions and revocations of registrations issued to Registered 
Importers by NHTSA, the process for such suspensions and revocations, 
and the provisions applicable to the reinstatement of suspended 
registrations.
    (a) Automatic suspension of a registration. 49 U.S.C. 
30141(c)(4)(B) explicitly authorizes NHTSA to automatically suspend a 
registration when a Registered Importer does not, in a timely manner, 
pay a fee required by part 594 of this chapter or knowingly files a 
false or misleading certification under 49 U.S.C. 30146. NHTSA also may 
automatically suspend a registration under other circumstances, as 
specified in paragraphs (3), (4) and (5) of this section.
    (1) If the Administrator has not received the annual fee from a 
Registered Importer by the close of business on October 10 of a year, 
or, if October 10 falls on a weekend or holiday, by the next business 
day thereafter, or has not received any other fee owed by a Registered 
Importer within 15 calendar days from the date of the Administrator's 
invoice, the Registered Importer's registration will be automatically 
suspended at the beginning of the next business day. The Administrator 
will promptly notify the Registered Importer in writing of the 
suspension. Such suspension shall remain in effect until reinstated 
pursuant to paragraph (c)(1) of this section.
    (2) If the Administrator decides that a Registered Importer has 
knowingly filed a false or misleading certification, (s)he shall 
promptly notify the Registered Importer in writing that its 
registration is automatically suspended. The notification shall inform 
the Registered Importer of the facts and conduct upon which the 
decision is based, and the period of suspension (which begins as of the 
date indicated in the Administrator's written notification). The 
notification shall afford the Registered Importer an opportunity to 
seek reconsideration of the decision by presenting data, views, and 
arguments in writing and/or in person, within 30 days. Not later than 
30 days after the submission of data, views, and arguments, the 
Administrator, after

[[Page 52099]]

considering all the information available, shall notify the Registered 
Importer in writing of his or her decision on reconsideration. Any 
suspension issued under this paragraph shall remain in effect until 
reinstated pursuant to paragraph (c)(2) of this section.
    (3) If mail is undeliverable to the Registered Importer at the 
official street address it has provided to the Administrator, or if the 
telephone has been disconnected at the telephone number specified by 
the Registered Importer, the Administrator may automatically suspend 
the Registered Importer's registration. Such suspension shall remain in 
effect until the registration is reinstated pursuant to paragraph 
(c)(3) of this section.
    (4) If a Registered Importer, not later than November 1, 2004, does 
not file with the Administrator all information required by Sec.  
592.5(a), as required by Sec.  592.6(q), the Administrator may 
automatically suspend the registration. The Administrator shall 
promptly notify the Registered Importer in writing of the suspension. 
Such a suspension shall remain in effect until the registration is 
reinstated pursuant to paragraph (c)(4) of this section.
    (5) If a Registered Importer releases one or more motor vehicles on 
the basis of a forged or falsified bond release letter, and the 
Administrator has not in fact issued such a letter, the Administrator 
may automatically suspend the registration. The Administrator shall 
promptly notify the Registered Importer in writing of the suspension.
    (6) The Administrator, in his or her sole discretion, may provide 
notice of a proposed automatic suspension or revocation for reasons 
specified in paragraphs (a)(1) through (a)(5) of this section.
    (7) The notification shall afford the Registered Importer an 
opportunity to seek reconsideration of the decision by presenting data, 
views, and arguments in writing and/or in person, within 30 days of 
such notification, before a decision, as provided in paragraph (b)(2) 
of this section. Not later than 30 days after the submission of data, 
views, and arguments, the Administrator, after considering all the 
information available, shall notify the Registered Importer in writing 
of his or her decision on reconsideration. Any automatic suspension 
issued under this paragraph shall remain in effect until reinstated 
pursuant to paragraph (c)(2) of this section.
    (b) Non-automatic suspension or revocation of a registration. (1) 
49 U.S.C. 30141(c)(4)(A) authorizes NHTSA to revoke or suspend a 
registration if a Registered Importer does not comply with a 
requirement of 49 U.S.C. 30141-30147, or any of 49 U.S.C. 30112, 30115, 
30117-30122, 30125(c), 30127, or 30166, or any regulations issued under 
these sections. These regulations include, but are not limited to, 
parts 567, 568, 573, 577, 591, 593, and 594 of this chapter.
    (2) When the Administrator has reason to believe that a Registered 
Importer has violated one or more of the statutes or regulations cited 
in paragraph (b)(1) of this section and that suspension or revocation 
would be an appropriate sanction under the circumstances, (s)he shall 
notify the Registered Importer in writing of the facts giving rise to 
the allegation of a violation and the proposed length of a suspension, 
if applicable, or revocation. The notice shall afford the Registered 
Importer an opportunity to present data, views, and arguments, in 
writing and/or in person, within 30 days of the date of the notice, as 
to whether the violation occurred, why the registration ought not to be 
suspended or revoked, or whether the suspension should be shorter than 
proposed. If the Administrator decides, on the basis of the available 
information, that the Registered Importer has violated a statute or 
regulation, the Administrator may suspend or revoke the registration. 
The Administrator shall notify the Registered Importer in writing of 
the decision, including the reasons for it. A suspension or revocation 
is effective as of the date of the Administrator's written notification 
unless another date is specified therein. The Administrator shall state 
the period of any suspension in the notice to the Registered Importer. 
There shall be no opportunity to seek reconsideration of a decision 
issued under this paragraph.
    (c) Reinstatement of suspended registrations. (1) When a 
registration has been suspended under paragraph (a)(1) of this section, 
the Administrator will reinstate the registration when all fees owing 
are paid by wire transfer or certified check from a bank in the United 
States, together with a sum representing 10 percent of the amount of 
the fees that were not timely paid.
    (2) When a registration has been suspended under paragraph (a)(2) 
or (a)(5) of this section, the registration will be reinstated after 
the expiration of the period of suspension specified by the 
Administrator, or such earlier date as the Administrator may 
subsequently decide is appropriate.
    (3) When a registration has been suspended under paragraph (a)(3) 
of this section, the registration will be reinstated when the 
Administrator decides that the Registered Importer has provided a 
street address to which mail to it is deliverable and a telephone 
number in its name that is in service.
    (4) When a registration has been suspended under paragraph (a)(4) 
of this section, the registration will be reinstated when the 
Administrator decides that the Registered Importer has provided all 
relevant documentation and information required by Sec.  592.6(q).
    (5) When a registration has been suspended under paragraph (b) of 
this section, the registration will be reinstated after the expiration 
of the period of suspension specified by the Administrator, or such 
earlier date as the Administrator may subsequently decide is 
appropriate.
    (6) When a suspended registration has been reinstated, NHTSA shall 
notify the Bureau of Customs and Border Protection promptly.
    (7) If a Registered Importer imports a motor vehicle on or after 
the date that its registration is suspended and before the date that 
the suspension ends, the Administrator may extend the suspension period 
by one day for each day that the Registered Importer has imported a 
motor vehicle during the time that its registration has been suspended.
    (d) Effect of suspension or revocation. (1) If a Registered 
Importer's registration is suspended or revoked, as of the date of 
suspension or revocation the entity will not be considered a Registered 
Importer, will not have the rights and authorities appertaining 
thereto, and must cease importing, and will not be allowed to import, 
vehicles for resale. The Registered Importer will not be refunded any 
annual or other fees it has paid for the fiscal year in which its 
registration is revoked. The Administrator shall notify the Bureau of 
Customs and Border Protection of any suspension or revocation of a 
registration not later than the first business day after such action is 
taken.
    (2) With respect to any vehicle for which it has not affixed a 
certification label and submitted a certificate of conformity to the 
Administrator under Sec.  592.6(d) at the time it is notified that its 
registration has been suspended or revoked, the Registered Importer 
must affix a certification label and submit a certificate of conformity 
within 120 days from the date of entry.
    (3) When a registration has been revoked or suspended, the 
Registered Importer must export within 30 days of the effective date of 
the suspension or revocation all vehicles that it imported to which it 
has not affixed a certification label and furnished a certificate of

[[Page 52100]]

conformity to the Administrator pursuant to Sec.  592.6(d).
    (4) With respect to any vehicle imported pursuant to Sec.  
591.5(f)(2)(ii) of this chapter that the Registered Importer has agreed 
to bring into compliance with all applicable standards and for which it 
has not certified and furnished a certificate of conformity to the 
Administrator, the Registered Importer must immediately notify the 
owner of the vehicle in writing that its registration has been 
suspended or revoked.
    (e) Continuing obligations. A Registered Importer whose 
registration is suspended or revoked remains obligated under Sec.  
592.6(i) to notify owners and to remedy noncompliances or safety 
related defects for each vehicle for which it has furnished a 
certificate of conformity to the Administrator.

0
14. Section 592.8 is amended by revising paragraph (a), the first 
sentence of paragraphs (c) and (d), and paragraph (e), to read as 
follows:


Sec.  592.8  Inspection; release of vehicle and bond.

    (a) With respect to any motor vehicle for which it must provide a 
certificate of conformity to the Administrator as required by Sec.  
592.6(d), a Registered Importer shall not obtain title, licensing, or 
registration of the motor vehicle for use on the public roads, or 
release custody of it for such titling, licensing, or registration, 
except in accordance with the provisions of this section.
* * * * *
    (c) Before the end of the 30th calendar day after receiving a 
complete certification under Sec.  592.6(d), the Administrator may 
notify the Registered Importer in writing that an inspection of the 
vehicle is required to verify the certification. * * *
    (d) The Administrator may by written notice request the Registered 
Importer to verify its certification of a motor vehicle before the end 
of the 30th calendar day after the date the Administrator receives a 
complete certification under Sec.  592.6(d). * * *
    (e) If the Registered Importer has received no written notice from 
the Administrator by the end of the 30th calendar day after it has 
furnished a complete certification under section 592.6(d) of this 
chapter, the Registered Importer may release the vehicle from custody, 
sell or offer it for sale, or have it titled, licensed, or registered 
for use on the public roads.
* * * * *

0
15. Section 592.9 is added to read:


Sec.  592.9  Forfeiture of bond.

    A Registered Importer is required by Sec.  591.6 of this chapter to 
furnish a bond with respect to each motor vehicle that it imports. The 
conditions of the bond are set forth in Sec.  591.8 of this chapter. 
Failure to fulfill any one of these conditions may result in forfeiture 
of the bond. A bond may be forfeited if the Registered Importer:
    (a) Fails to bring the motor vehicle covered by the bond into 
compliance with all applicable standards issued under part 571 and part 
581 of this chapter within 120 days from the date of entry;
    (b) Fails to file with the Administrator a certificate that the 
motor vehicle complies with each Federal motor vehicle safety, bumper, 
and theft prevention standard in effect at the time the vehicle was 
manufactured and which applies to the vehicle;
    (c) Fails to cause a motor vehicle to be available for inspection 
if it has received written notice from the Administrator that an 
inspection is required;
    (d) Releases the motor vehicle before the Administrator accepts the 
certification and any modification thereof, if it has received written 
notice from the Administrator that there is reason to believe that the 
certification is false or contains a misrepresentation;
    (e) Before the bond is released, releases custody of the motor 
vehicle to any person for license or registration for use on public 
roads, streets, and highways, or licenses or registers the vehicle, 
including titling the vehicle in the name of another person, unless 30 
calendar days have elapsed after the Registered Importer has filed a 
complete certification under Sec.  592.6(d), and the Registered 
Importer has not received written notice pursuant to paragraph (a)(3) 
or (a)(4) of this section. For purposes of this part, a vehicle is 
deemed to be released from custody if it is not located at a duly 
identified facility of the Registered Importer and the Registered 
Importer has not notified the Administrator in writing of the vehicle's 
location or, if written notice has been provided, if the Administrator 
is unable to inspect the vehicle, or if the Registered Importer has 
transferred title to any other person regardless of the vehicle's 
location; or
    (f) Fails to deliver the vehicle, or cause it to be delivered, to 
the custody of the Bureau of Customs and Border Protection at any port 
of entry, for export or abandonment to the United States, and to 
execute all documents necessary to accomplish such purposes, if the 
Administrator has furnished it written notice that the vehicle has been 
found not to comply with all applicable Federal motor vehicle safety 
standards along with a demand that the vehicle be delivered for export 
or abandoned to the United States.

PART 594--SCHEDULE OF FEES AUTHORIZED BY 49 U.S.C. 30141

0
16. The authority citation for part 594 continues to read as follows:

    Authority: Pub. L. 100-562, 49 U.S.C. 30141; 31 U.S.C. 9701; 
delegation of authority at 49 CFR 1.50.


0
17. Section 594.5 is amended as follows:
    (a) By removing paragraphs (e) and (g); and
    (b) By redesignating paragraph (h) as paragraph (e); and
    (c) by redesignating paragraph (i) as paragraph (g) and revising 
it; and
    (d) by revising paragraph (f).
    The addition and revisions read as follows:


Sec.  594.5  Establishment and payment of fees.

* * * * *
    (f) The Administrator will furnish each Registered Importer with a 
monthly invoice of the fees owed by the Registered Importer for 
reimbursement for bond processing costs and for the review and 
processing of conformity certificates and information regarding 
importation of motor vehicles as provided in Section 592.4 of this 
chapter. A person who for personal use imports a vehicle covered by a 
determination of the Administrator must pay the fee specified in either 
Sec.  594.8(b) or (c), as appropriate, to the Registered Importer, and 
the invoice will also include these fees. The Registered Importer must 
pay the fees within 15 days of the date of the invoice.
    (g) Fee payments must be by certified check, cashier's check, money 
order, credit card, or Electronic Funds Transfer System, made payable 
to the Treasurer of the United States.
    18. Section 594.9 is amended by revising paragraph (a) to read as 
follows:


Sec.  594.9  Fee for reimbursement of bond processing costs.

    (a) Each Registered Importer must pay a fee based upon the direct 
and indirect costs of processing each bond furnished to the Secretary 
of Homeland Security on behalf of the Administrator with respect to 
each vehicle for which it furnishes a certificate of conformity 
pursuant to Sec.  592.6(d) of this chapter.
* * * * *


[[Page 52101]]


    Issued on: August 9, 2004.
Jeffrey W. Runge,
Administrator.
[FR Doc. 04-18833 Filed 8-23-04; 8:45 am]
BILLING CODE 4910-59-P