[Federal Register Volume 69, Number 211 (Tuesday, November 2, 2004)]
[Notices]
[Pages 63535-63537]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24426]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Proposed Collection; 
Comment Request; Extension

AGENCY: Federal Trade Commission (``FTC'').

ACTION: Notice.

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SUMMARY: The information collection requirements described below will 
be submitted to the Office of Management and Budget (``OMB'') for 
review, as required by the Paperwork Reduction Act (``PRA''). The FTC 
is seeking public comments on its proposal to extend through September 
30, 2007, the current PRA clearance for information collection 
requirements contained in its Used Motor Vehicle Trade Regulation Rule 
(``Used Car Rule'' or ``Rule''). That clearance was scheduled to expire 
on September 30, 2004. On September 14, 2004, the OMB granted the FTC's 
request for a short-term extension to November 30, 2004, to allow for 
this second opportunity to comment.

DATES: Comments must be submitted on or before December 2, 2004.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Used Car Rule: Paperwork comment, P048817,'' 
to facilitate the organization of comments. A comment filed in paper 
form should include this reference both in the text and on the 
envelope, and should be mailed or delivered to the following address: 
Federal Trade Commission/Office of the Secretary, Room H-159 (Annex T), 
600 Pennsylvania Avenue, NW., Washington, DC 20580. If the comment 
contains any material for which confidential treatment is requested, it 
must be filed in paper (rather than electronic) form, and the first 
page of the document must be clearly labeled ``Confidential.'' \1\ The 
FTC is requesting that any comment filed in paper form be sent by 
courier or overnight service, if possible, because U.S. postal mail in 
the Washington area and at the Commission is subject to delay due to 
heightened security precautions. Comments filed in electronic form 
(except comments containing any confidential material) should be sent 
to the following e-mail address: [email protected].
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be 
accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments will be 
considered by the Commission, and will be available to the public on 
the FTC Web site, to the extent practicable, at http://www.ftc.gov. As 
a matter of discretion, the FTC makes every effort to remove home 
contact information for individuals from the public comments it 
receives before placing those comments on the FTC Web site. More 
information, including routine uses permitted by the Privacy Act, may 
be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Requests for additional information or 
copies of the proposed information requirements should be addressed to 
John C. Hallerud, Attorney, Midwest Region, Federal Trade Commission, 
55 East Monroe, Suite 1860, Chicago, Illinois 60603, (312) 960-5634.

SUPPLEMENTARY INFORMATION: On July 28, 2004, the FTC sought comment on 
the information collections associated with the Used Car Rule, 16 CFR 
part 455 (OMB Control Number 3084-0108). See 69 FR 45059. One comment 
was received from the National Automobile Dealers Association 
(``NADA'') and is discussed below. Pursuant to OMB regulations that 
implement the PRA (5 CFR part 1320), the FTC is providing this second 
opportunity for public comment while seeking OMB approval to extend the 
existing paperwork clearance for the rule.
    The Used Car Rule facilitates informed purchasing decisions by 
consumers by requiring used car dealers to disclose information about 
warranty coverage, if any, and the mechanical condition of used cars 
they offer for sale. The Rule requires that used car dealers display a 
Buyers Guide that, among other things, discloses information about 
warranty coverage on each used car offered for sale.

Burden Statement

    Estimated total annual hours burden: 2,012,250 hours.
    The Rule has no recordkeeping requirements. The estimated burden 
relating solely to disclosure requirements is 2,012,250 hours. As 
explained in more detail below, this estimate is based on the number of 
used car dealers (approximately 76,000 \2\ ), the number of used cars 
sold by dealers annually (approximately 30,000,000 \3\ ), and the time 
needed to fulfill the information collection tasks required by the 
Rule.\4\ Staff revises its prior annual burden estimate of 1,925,000 
hours to reflect a decrease in the approximate number of dealers and to 
reflect additional time that dealerships may need to comply with the 
Rule's requirement that dealers complete and post Spanish language 
Buyers Guides when sales are conducted in Spanish.
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    \2\ The Used Car Market Report 2004 (``Manheim Market Report''), 
p. 45, published by Manheim, 6205 Peachtree Dunwoody Road, Atlanta, 
Georgia 30328, citing NADA and CNW Marketing/Research. The Manheim 
Market Report estimates the number of dealerships in 2003 as 75,725. 
Staff has rounded that number to 76,000, which is slightly lower 
than the estimate of 80,000 dealers used in the prior Paperwork 
Reduction Act notice. The Manheim Market Report is available online 
at: http://www.manheimnews.com/UCMR/reports/UCMR2004dy7r9901resources/index.html.
    \3\ Manheim Market Report, p. 45. The Manheim Market Report 
estimates the number of used cars sold by dealers in 2003 as 
29,903,000. Staff has rounded that number to 30,000,000, the same 
estimate used in the prior Paperwork Reduction Act notice.
    \4\ A relatively small number of dealers opt to contract with 
outside companies to perform the various tasks associated with 
complying with the Rule. Staff assumes that outside contractors 
would require about the same amount of time and incur similar cost 
as dealers to perform these tasks. Accordingly, the hour and cost 
burden totals shown, while referring to ``dealers,'' incorporate the 
time and cost borne by outside companies in performing the tasks 
associated with the Rule.
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    The Rule requires that used car dealers display a one-page, double-
sided Buyers Guide in the window of each used car they offer for sale. 
The component tasks associated with the Rule's required display of 
Buyers Guides include: (1) Ordering and stocking Buyers Guide forms; 
(2) entering applicable data on Buyers Guides; (3) posting the Buyers 
Guides on vehicles; (4) making any necessary revisions in Buyers 
Guides; and (5) complying with the Rule's requirements for sales 
conducted in Spanish.

[[Page 63536]]

    1. Ordering and Stocking Buyers Guides: Dealers should need no more 
than an average of one hour per year to obtain Buyers Guide forms, 
which are readily available from many commercial printers or can be 
produced by an office word-processing or desk-top publishing system.\5\ 
Based on a universe of 76,000 dealers, the annual hours burden for 
producing or obtaining and stocking Buyers Guides is 76,000 hours.
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    \5\ The Buyers Guide is also available online from the FTC's Web 
site, http://www.ftc.gov, at: http://www.ftc.gov/bcp/conline/edcams/automobiles/index.html.
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    2. Entering Data on Buyers Guides: The amount of time required to 
enter applicable data on Buyers Guides may vary substantially, 
depending on whether a dealer has automated the process. For used cars 
sold ``as is,'' copying vehicle-specific data from dealer inventories 
to the Buyers Guide forms and checking off the ``no warranty'' box may 
take two minutes per vehicle if done by hand, and only seconds for 
those dealers who have automated the process. Staff estimates that this 
task, on average, will require 1.5 minutes. Similarly, for used cars 
sold under warranty, the time required to check off the warranty box 
and add warranty information will depend on whether or not the dealer 
uses an automated process. Staff estimates that these tasks will take, 
on average, an additional one minute, for an average total time of 2.5 
minutes for used cars sold under warranty.
    Based on input from industry sources, staff estimates that 
approximately 60% of used cars sold by dealers are sold ``as is,'' with 
the remainder sold under warranty. Thus, staff estimates the time 
required to enter data for used cars sold without warranty is 450,000 
hours (30,000,000 x 60% x 1.5 minutes / 60 minutes/hour) and 500,000 
hours for used cars sold under warranty (30,000,000 x 40% x 2.5 minutes 
/ 60 minutes/hour), for an overall total of 950,000 hours.
    NADA comments that ``[m]any dealerships are small operations, with 
limited staff, so it may well take over the suggested 2.5 minutes per 
vehicle'' to complete the Buyers Guides. As indicated above, however, 
variations among dealers, such as whether or not they use an automated 
process, have already been factored in to staff's estimates of the 
average time per vehicle required to complete the forms. NADA also 
comments that ``[e]ven if the process [of completing Buyers Guides] is 
automated, data must initially be entered into the system correctly, 
prior to completing and printing out'' the Buyers Guides. Staff 
believes that the data necessary to complete the Buyers Guides is 
information that a dealership would necessarily keep for reasons 
independent of completing Buyers Guides, such as records for inventory 
purposes. The time needed to transfer such data to Buyers Guides would 
likely be negligible. Staff therefore leaves its estimate of this 
component of the estimated annual hours burden unchanged.
    3. Posting Buyers Guides on Vehicles: Although the time required to 
post the Buyers Guides on each used car may vary substantially, FTC 
staff estimates that, on average, dealers will spend 1.75 minutes per 
vehicle to match the correct Buyers Guide to the vehicle and place it 
in or on the vehicle. NADA comments that these tasks may take longer 
than the estimate, but does not provide an alternative. NADA also 
indicates that many dealers are small operations with limited staff but 
those factors would not affect the time per vehicle needed to comply 
with the Rule. Moreover, NADA comments about the time needed to affix 
Buyers Guides to vehicles, but that concern is overstated in light of 
the 1995 amendments to the Rule that gave dealers more flexibility in 
posting Buyers Guides. Staff therefore retains its prior annual hours 
burden of this component. For the 30,000,000 vehicles sold, the burden 
associated with this task is 875,000 hours. To the extent dealers are 
able to integrate this process into other activities performed in their 
ordinary course of business, this estimate likely overstates the actual 
burden.
    4. Revising Buyers Guides as Necessary: If negotiations between 
buyer and seller over warranty coverage produce a sale on terms other 
than those originally entered on the Buyers Guide, the dealer must 
revise the Guide to reflect the actual terms of sale. According to the 
rulemaking record, bargaining over warranty coverage rarely occurs. 
NADA comments that it believes that negotiations over warranty coverage 
are not a rare occurrence but does not quantify the frequency of such 
negotiations or describe the basis for its belief. Therefore, at this 
time, staff declines to depart from the original rulemaking record's 
conclusions and retains its prior estimate of this component of the 
annual hours burden. Accordingly, allowing for revision in 2% of sales, 
at two minutes per revision, staff estimates that dealers will spend 
20,000 hours annually revising Buyers Guides.
    5. Spanish Language Sales: The Rule requires that contract 
disclosures be made in Spanish if a sale is conducted in Spanish.\6\ 
The Rule permits the posting of both an English language and Spanish 
language Buyers Guide to comply with this requirement.\7\ NADA comments 
that the increasing number of Spanish-speaking customers in many 
communities may increase the annual hours burden, because ``dealers 
often display two Buyers Guides on all of their vehicles, one in 
English and one in Spanish, to avoid the possibility of a compliance 
violation.''
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    \6\ 16 CFR 455.5.
    \7\ Id.
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    Census figures suggest that approximately 5% of the United States 
population speaks Spanish at home, without also speaking fluent 
English.\8\ Staff therefore projects that approximately 5% of used car 
sales will be conducted in Spanish. Assuming dealers choose to comply 
with the Rule by posting both English and Spanish Buyers Guides, then 
there will be the additional burden of completing and posting a second 
Buyers Guide for 5% of sales. The annual hours burden associated with 
completing and posting Buyers Guides is 1,825,000 hours (950,000 hours 
for entering data on buyers guides + 875,000 hours for posting); thus, 
staff estimates the additional burden due to Spanish language sales is 
91,250 hours (5% x 1,825,000 hours).\9\ The other components of the 
annual hours burden, i.e., purchasing Buyers Guides and revising the 
guides for changes in warranty coverage, would remain unchanged.
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    \8\ U.S. Census Bureau, ``Facts for Features, Hispanic Heritage 
Month 2004: Sept. 15-Oct. 15'' (July 15, 2004), http://www.census.gov/Press-Release/www/releases/archives/facts_for_features_special_editions/001344.html
    \9\ Dealers also may comply with the Rule's Spanish language 
requirements by substituting a Spanish Buyers Guide when the sale 
will be conducted in Spanish. Complying in this manner should take 
roughly as long as revising a Buyers Guide because of changes in 
warranty coverage, i.e., approximately two minutes per sale. If 
dealers perform this task in 5% of their sales, the annual 
additional hours burden is 50,000 hours. Since dealers will probably 
use different methods to comply with the Rule's Spanish language 
requirements depending upon the frequency of Spanish language sales 
in their geographic areas, the hours burden estimated in the text 
likely overstates the hours burden and the actual burden falls 
somewhere between the estimate in the text and the estimate in this 
footnote.
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    Estimated annual cost burden: $30,632,000 consisting of $21,632,000 
in labor costs and $9,000,000 in non-labor costs.
    Labor costs: Labor costs are derived by applying appropriate hourly 
cost figures to the burden hours described above. Staff has determined 
that all of the tasks associated with ordering forms, entering data on 
Buyers Guides,

[[Page 63537]]

posting Buyers Guides on vehicles, and revising them as needed are 
typically done by clerical or low-level administrative personnel. Using 
a clerical cost rate of $10.75 per hour and an estimate of 2,012,250 
burden hours for disclosure requirements, the total labor cost burden 
would be approximately $21,632,000 (rounded to the nearest thousand).
    Capital or other non-labor costs: The cost of the Buyers Guide form 
itself is estimated to be 30 cents per form, so that forms for 30 
million vehicles would cost dealers $9,000,000. In making this 
estimate, staff conservatively assumes that all dealers will purchase 
preprinted forms instead of producing them internally, although dealers 
may produce them at minimal expense using current office automation 
technology. Capital and start-up costs associated with the Rule are 
minimal.

William E. Kovacic,
General Counsel.
[FR Doc. 04-24426 Filed 11-1-04; 8:45 am]
BILLING CODE 6750-01-P