Final Decision That Certain Nonconforming Vehicles are Eligible for Importation

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. 96-114; Notice 2]

Final Decision That Certain Nonconforming Vehicles are Eligible

for Importation

AGENCY: National Highway Traffic Safety Administration, DOT.

ACTION: Final decision that certain nonconforming vehicles are eligible

for importation.

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SUMMARY: This document announces a final decision by the Administrator

of the National Highway Traffic Safety Administration (NHTSA) that

certain vehicles that do not comply with all applicable Federal motor

vehicle safety standards, but that are certified by their original

manufacturer as complying with all applicable Canadian motor vehicle

safety standards, are eligible for importation into the United States.

The vehicles in question either (1) Are substantially similar to

vehicles that were certified by their manufacturers as complying with

the U.S. safety standards and are capable of being readily altered to

conform to those standards, or (2) have safety features

[[Page 26349]]

that comply with, or are capable of being altered to comply with all

U.S. safety standards. This document also announces NHTSA's decision to

rescind the vehicle eligibility number that was formerly applicable to

all vehicles certified by their original manufacturer as complying with

Canadian safety standards (eligibility number VSA-1), and to assign

four separate eligibility numbers to Canadian certified vehicles, based

on those vehicles' classification and weight.

DATES: This decision is effective on May 13, 1997.

FOR FURTHER INFORMATION CONTACT: George Entwistle, Office of Vehicle

Safety Compliance, NHTSA (202-366-5306).

SUPPLEMENTARY INFORMATION:

Background

Under 49 U.S.C. Sec. 30141(a)(1)(A), a motor vehicle that was not

originally manufactured to conform to all applicable Federal motor

vehicle safety standards (FMVSS) shall be refused admission into the

United States unless NHTSA has decided that the vehicle is

substantially similar to a motor vehicle of the same model and model

year that was originally manufactured for import into and sale in the

United States and was certified as complying with all applicable FMVSS,

and also finds that the noncompliant vehicle is capable of being

readily altered to comply with all applicable FMVSS. Where there is no

substantially similar U.S.-certified motor vehicle, 49 U.S.C.

Sec. 30141(a)(1)(B) permits a nonconforming motor vehicle to be

admitted into the United States if NHTSA decides that its safety

features comply with, or are capable of being altered to comply with,

all applicable FMVSS.

On March 7, 1997, NHTSA published a notice in the Federal Register

at 62 FR 10614 announcing that it had made a tentative decision that

certain motor vehicles that do not comply with all applicable FMVSS,

but that are certified by their original manufacturer as complying with

all applicable Canadian Motor Vehicle Safety Standards, are eligible

for importation into the United States. The notice identified these

vehicles as:

(a) All passenger cars manufactured on or after September 1, 1996

and before September 1, 2002, that, as originally manufactured, are

equipped with an automatic restraint system that complies with Federal

Motor Vehicle Safety Standard (FMVSS) No. 208, and that comply with

FMVSS No. 214;

(b) All multipurpose passenger vehicles, trucks and buses

manufactured on or after September 1, 1993, and before September 1,

1998, that, as originally manufactured, comply with FMVSS Nos. 202,

208, and 216; and

(c) All multipurpose passenger vehicles, trucks and buses

manufactured on or after September 1, 1998, and before September 1,

2002, that, as originally manufactured, comply with FMVSS Nos. 202,

208, 214, and 216.

The reader is referred to the March 7 notice for a full discussion

of the factors leading to the tentative decision.

The notice also proposed to rescind Vehicle Eligibility Number VSA-

1, which NHTSA had established as the designator for importers to use

on the HS-7 Declaration Form accompanying entry to indicate the import

eligibility of all vehicles certified by their original manufacturer as

complying with all applicable Canadian motor vehicle safety standards

(CMVSS). In place of this designator, the notice proposed to assign

four separate eligibility numbers (VSA-80 through VSA-83) to Canadian-

certified vehicles, based on vehicle classification (i.e., passenger

car, multipurpose passenger vehicle, truck, bus, trailer, motorcycle)

and, in the case of multipurpose passenger vehicles, buses and trucks,

based also on vehicle weight. The reader is also referred to the March

7 notice for a full discussion of this proposal.

In accordance with 49 U.S.C. Sec. 30141(b), the notice solicited

public comments on the tentative decision that NHTSA had made and on

the agency's proposal to assign new import eligibility numbers to

Canadian-certified vehicles. Four comments were submitted in response

to the notice. The first of these was submitted by members of the North

American Automotive Trade Association (NAATA). In their comment, the

NAATA members requested NHTSA to be as expedient as possible in making

a final decision regarding the import eligibility of Canadian-certified

passenger cars manufactured on or after September 1, 1996 that comply

with FMVSS Nos. 208 and 214. The NAATA members also requested the

agency to preserve for Canadian market vehicles a waiver from the fee

established at 49 CFR 594.8 for importing a vehicle pursuant to an

eligibility decision by the NHTSA Administrator. In support of this

request, the NAATA members contended that NHTSA incurs no additional

administrative overhead or burden in processing these vehicles, in

comparison to the agency's processing of Canadian market vehicles that

have previously been determined eligible for importation. Additionally,

the NAATA members characterized the proposed change in eligibility

numbers for Canadian-certified vehicles as being merely clerical in

nature, and not resulting in any actual change to ``the entry or

compliance package approval process.''

The second comment was submitted by Philip Trupiano of Auto

Enterprises, Inc. of Clawson, Michigan, a Registered Importer of

nonconforming vehicles. In his comment, Mr. Trupiano also requested the

agency to expedite its eligibility decision with respect to Canadian-

certified passenger cars manufactured on or after September 1, 1996.

Mr. Trupiano further expressed the opinion that NHTSA should not

establish September 1, 2002, or any other date for the expiration of

import eligibility on Canadian market vehicles. Mr. Trupiano observed

that the notice reflected the agency's intent ``to issue new decisions

covering vehicles manufactured on or after September 1, 2002 within a

sufficient period before that date is reached.'' In Mr. Trupiano's

opinion, NHTSA's ability to honor this intent is undermined by the fact

that it has taken the agency more than seven months from September 1,

1996 to issue a final decision of import eligibility with respect to

Canadian-certified passenger cars manufactured on or after that date.

Mr. Trupiano noted that NHTSA proposed September 1, 2002 as the

next cutoff because that is the date on which revised interior impact

protection requirements that are to be phased in under FMVSS No. 201,

Occupant Protection in Interior, and that are not found in the

corresponding CMVSS, will become effective for all passenger cars and

for multi-purpose passenger vehicles, trucks, and buses with a gross

vehicle weight rating of 10,000 pounds or less. To eliminate the need

for NHTSA to issue a new eligibility decision following the proposed

September 1, 2002 cutoff, Mr. Trupiano suggested that the agency could

make compliance with FMVSS No. 201 a condition for the import

eligibility of all affected vehicles manufactured on or after September

1, 1996.

Although Mr. Trupiano stated that he has no objection to the

proposed assignment of new eligibility numbers to Canadian-certified

vehicles, he expressed the opinion that such a change is unnecessary in

view of the fact that Registered Importers provide information on

vehicle classification in the certificates of conformity that they

submit to NHTSA to obtain the release of bonds posted for noncomplying

vehicle.

Additionally, Mr. Trupiano requested the agency to clarify in

writing that

[[Page 26350]]

vehicles entered under the proposed eligibility numbers would be exempt

from the fee prescribed under 49 CFR 594.8. Mr. Trupiano contended,

without providing any supporting analysis, that the imposition of such

a fee on Canadian-certified vehicles would be in violation of the North

American Free Trade Agreement (NAFTA). Mr. Trupiano further expressed

the understanding that Canadian-certified vehicles are not subject to

the fee prescribed under 49 CFR 594.8 because of an agreement between

NHTSA and the Canadian government reflected in a letter dated March 16,

1990 from Canadian Ambassador D.H. Burney to Jerry R. Curry, who was

then NHTSA Administrator, and a response from Administrator Curry to

Ambassador Burney dated April 24, 1990. Copies of these letters, which

were attached to Mr. Trupiano's comments, have been placed in the

public docket for this eligibility decision. Mr. Trupiano interprets

this correspondence as containing an agreement on NHTSA's behalf to

waive importation fees on Canadian market vehicles which ``cannot be

unilaterally changed.''

The third comment was submitted by Brian Osler, Executive Director

and Counsel to NAATA. In his comment, Mr. Osler expressed agreement

with the agency's tentative decision to extend import eligibility to

Canadian market vehicles manufactured on or after September 1, 1996

that are in compliance with FMVSS Nos. 208 and 214. Mr. Osler took

exception, however, to the proposed eligibility cutoff date of

September 1, 2002, contending, as did Mr. Trupiano, that this will

result in future delays that will cause economic hardship. Mr. Osler

predicted that NHTSA's ``administrative requirements'' will prevent the

agency from honoring its commitment to issue a new eligibility decision

within a reasonable period before the September 1, 2002 cutoff date is

reached. To eliminate the need for a future decision, Mr. Osler

recommended that the tentative decision be revised along the lines

suggested by Mr. Trupiano. Mr. Osler also shared Mr. Trupiano's opinion

that NHTSA has an obligation to adopt this approach under Article 908

of NAFTA, which he characterized as requiring the agency to conduct

FMVSS conformity assessments as expeditiously as possible. Mr. Osler

additionally urged NHTSA to state in writing that vehicles imported

under the proposed eligibility numbers are exempt from the fees

prescribed under 49 CFR 594.8, and contended that this is ``necessary

to ensure that NHTSA does not unduly restrict trade as contemplated by

the Free Trade Agreement.'' Mr. Osler also characterized the

correspondence between Administrator Curry and Ambassador Burney as

reflecting the agency's agreement not to ``impose fees that would

unduly restrict trade between Canada and the United States.''

The fourth comment was submitted by Lawrence A. Beyer, an attorney

who represents several Registered Importers. In his comment, Mr. Beyer

also expressed general agreement with the tentative decision, but

voiced concern that the assignment of new eligibility numbers for

Canadian-certified vehicles could be a ploy for eliminating the fee

waiver that has applied to these vehicles when imported under

eligibility number VSA-1. Mr. Beyer contended that if the agency is so

motivated, its actions would contradict a requirement in 49 CFR Part

594 for fees to be set at the beginning of the fiscal year. Mr. Beyer

further suggested that if NHTSA intends to change the fee structure for

Canadian imports, the agency should publish a separate notice in the

Federal Register concerning the matter, so that those who stand to be

impacted will have a fair opportunity to comment.

NHTSA has considered each of the issues that these comments have

raised. The agency has taken note of the concerns the commenters have

expressed regarding the timing of this final decision. That timing was

influenced, in part, by information that NHTSA obtained from Registered

Importers indicating that Model Year 1997 vehicles would begin to be

retired from Canadian rental fleets in March and April of this year,

reducing the need for an earlier decision regarding the import

eligibility of those vehicles. Contrary to the assumptions expressed by

certain of the commenters, the timing of this decision has no bearing

on any future such actions that NHTSA may take. As stated in the notice

of tentative decision, the agency intends to issue new eligibility

decisions covering vehicles for which the September 1, 2002 cutoff date

was proposed within a sufficient period before that date is reached.

The alternative suggested by certain of the commenters of specifying

compliance with FMVSS No. 201 as a condition for the import eligibility

of vehicles manufactured on or after September 1, 1996 is less

acceptable to the agency. Should Canada adopt the revised interior

impact protection requirements that are to be phased in under FMVSS No.

201 by September 1, 2002, there will be no need for compliance with

this standard to be made a specific condition for import eligibility.

Since those requirements have yet to be phased in, FMVSS No. 201 is at

present substantially similar to its Canadian counterpart, precluding

the need for compliance with the standard to be made a specific

condition for the import eligibility of vehicles manufactured on or

after September 1, 1996.

Contrary to the assumption expressed by one of the commenters,

NHTSA did not propose to assign new vehicle eligibility numbers to

Canadian-certified vehicles as a means to circumvent any purported fee

exemption for those vehicles. As stated in the notice of tentative

determination, the agency instead proposed separate eligibility numbers

based on vehicle classification, and, in the case of multipurpose

passenger vehicles, trucks, and buses, by weight, so that the

eligibility decisions that pertain to Canadian-certified vehicles can

be more readily modified in the event that any future discrepancies

arise between Canadian and U.S. standards that affect only certain

classes of vehicles. The use of a single eligibility number to cover

all vehicle classes made it difficult to keep track of past

modifications to these eligibility decisions. Contrary to the opinion

of one commenter, the need for separate eligibility numbers is not

undermined by the existence of vehicle classification information in

the certificates of conformity that Registered Importers submit to

NHTSA. The agency is not proposing separate eligibility numbers so that

it can monitor the volume of Canadian imports by vehicle class, but

instead to facilitate any future modifications to the eligibility

determinations that may become necessary.

As the commenters recognized, the notice of tentative decision was

entirely silent with respect to the issue of fees for Canadian imports.

NHTSA did not introduce the subject because its intent was to have an

eligibility decision in place as soon as possible to cover vehicles

manufactured on or after September 1, 1996, without the delays that a

controversy over fees could engender. In point of fact, there is no

existing ``waiver'' of fees for Canadian vehicles. The importers of

these vehicles must pay the fee for reimbursement of the U.S. Customs

Service's bond processing costs established under 49 CFR 594.9.

The fee for importing a vehicle pursuant to a determination by the

Administrator found at 49 CFR 594.8 is imposed, as that section states,

to cover the direct and indirect costs incurred by NHTSA in making the

eligibility determination. This fee is now set at

[[Page 26351]]

$134, and, as stated at 49 CFR 594.8(a), is payable by each importer of

a vehicle covered by an import eligibility determination made under 49

CFR Part 593.

At the time that it was first established, the fee for importing a

motor vehicle pursuant to an eligibility determination on the

Administrator's initiative based on the existence of a substantially

similar U.S.-certified vehicle was $1,560, to be paid only by the

importer of the first vehicle covered by the determination. See 54 FR

40100, 40108 (September 29, 1989). Consistent with this provision, in

the notice announcing its first final determination of import

eligibility for Canadian-certified vehicles, published on August 13,

1990 at 55 FR 32988, NHTSA stated that the $1,560 fee then required

under 49 CFR 593.8 would ``be payable only once, and by the first

importer of any Canadian vehicle covered by this determination.'' 55 FR

32990.

In his correspondence with the Canadian Ambassador that is cited by

several of the commenters, former NHTSA Administrator Curry stated that

``the fee of $1,560 would cover the blanket determination of all

passenger cars, and would not be applied to each individual make and

model year of passenger car,'' thereby ``effectively moot[ing] Canada's

. . . request that Canadian market passenger cars be exempted from the

determination fee.'' It is worth noting that this letter neither stated

nor otherwise acknowledged the existence of any exemption from

importation fees for Canadian vehicles. The letter in fact stated that

the Ambassador's request for such an exemption could not be granted in

that the fees established by the agency were specifically required by

the Imported Vehicle Safety Compliance Act of 1988, Pub. L. 100-562.

Although NHTSA has continued to collect the other fees established

under 49 CFR Part 594 from the importers of Canadian-certified

vehicles, the agency has not been collecting the fee prescribed under

section 594.8 from those importers because that fee has already been

paid by the first person to import a Canadian-certified vehicle under

an eligibility decision made by the agency. That payment in theory

reimbursed NHTSA for its costs in making the import eligibility

decision. As a consequence, NHTSA has stated at various junctures that

the fee for importing a vehicle pursuant to an Administrator's

determination would not apply to Canadian vehicles covered by

eligibility number VSA-1. See, e.g., 58 FR 41681, 41682 (August 5,

1993) and 61 FR 51043, 51044 (September 30, 1996).

Even though NHTSA is now rescinding eligibility number VSA-1, and

replacing it with four separate eligibility numbers based on vehicle

classification and weight, the agency does not intend to collect the

importation fee established under 49 CFR 594.8 from the importers of

vehicles covered by those eligibility numbers. First, the agency

recognizes that the assignment of new eligibility numbers for Canadian-

certified vehicles does not constitute a new import eligibility

determination with respect to those vehicles that would justify

imposition of the fee required under 49 CFR 594.8. However, even if

payment of that fee could be justified, given the volume of

nonconforming Canadian imports (which exceeded 15,000 vehicles in

calendar year 1995 alone), the only fee that could be assessed on a

``per-vehicle'' basis to reimburse the agency for its costs in making

eligibility decisions regarding those vehicles would be too minuscule

to justify its imposition.

NHTSA is currently considering, however, proposing fees pursuant to

49 U.S.C. Sec. 30141(a)(3) to reimburse the agency's costs associated

with making decisions as to whether particular vehicles may be released

by registered importers, i.e, the costs for the review and processing

of certificates of conformity submitted by registered importers to

document that vehicles that were not originally manufactured to conform

to all applicable FMVSS have been brought into conformity with those

standards. Such fees would apply to all vehicles for which conformity

certificates are submitted to NHTSA, including vehicles imported from

Canada.

Final Decision

Accordingly, the Administrator of NHTSA hereby decides that:

(a) All passenger cars manufactured on or after September 1, 1996 and

before September 1, 2002, that, as originally manufactured, are

equipped with an automatic restraint system that complies with Federal

Motor Vehicle Safety Standard (FMVSS) No. 208, and that comply with

FMVSS No. 214;

(b) All multipurpose passenger vehicles, trucks and buses manufactured

on or after September 1, 1993, and before September 1, 1998, that, as

originally manufactured, comply with FMVSS Nos. 202, 208, and 216; and

(c) All multipurpose passenger vehicles, trucks and buses manufactured

on or after September 1, 1998, and before September 1, 2002, that, as

originally manufactured, comply with FMVSS Nos. 202, 208, 214, and 216;

that are certified by their original manufacturer as complying with all

applicable Canadian motor vehicle safety standards, are eligible for

importation into the United States on the basis that either:

1. they are substantially similar to vehicles of the same make,

model, and model year originally manufactured for importation into and

sale in the United States, or originally manufactured in the United

States for sale there, and certified as complying with all applicable

FMVSS, and are capable of being readily altered to conform to all

applicable FMVSS; or

2. They have safety features that comply with, or are capable of

being altered to comply with, all applicable FMVSS.

Vehicle Eligibility Number

The importer of a vehicle admissible under any final decision must

indicate on the Form HS-7 accompanying entry the appropriate vehicle

eligibility number indicating that the vehicle is eligible for entry.

Vehicle Eligibility Number VSA-1 has previously covered all eligible

vehicles certified by their original manufacturer as complying with all

applicable CMVSS. NHTSA hereby rescinds that eligibility number and

assigns the following eligibility numbers to the vehicles it covered,

and to those admissible under this notice of final decision:

Vehicles Certified by Their Original Manufacturer as Complying with all

Applicable Canadian Motor Vehicle Safety Standards

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Number Vehicles

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VSA-80......................... (a) All passenger cars less than 25

years old that were manufactured

before September 1, 1989;

(b) All passenger cars manufactured on

or after September 1, 1989, and before

September 1, 1996, that, as originally

manufactured, are equipped with an

automatic restraint system that

complies with Federal Motor Vehicle

Safety Standard (FMVSS) No. 208;

[[Page 26352]]

(c) All passenger cars manufactured on

or after September 1, 1996 and before

September 1, 2002, that, as originally

manufactured, are equipped with an

automatic restraint system that

complies with FMVSS Nos. 208, and that

comply with FMVSS No. 214.

VSA-81......................... (a) All multipurpose passenger

vehicles, trucks, and buses with a

GVWR of 4536 kg. (10,000 lbs.) or less

that are less than 25 years old and

that were manufactured before

September 1, 1991;

(b) All multipurpose passenger

vehicles, trucks, and buses with a

GVWR of 4536 kg. (10,000 lbs.) or less

that were manufactured on and after

September 1, 1991, and before

September 1, 1993, and that, as

originally manufactured, comply with

FMVSS Nos. 202 and 208;

(c) All multipurpose passenger

vehicles, trucks and buses with a GVWR

of 4536 kg. (10,000 lbs.) or less that

were manufactured on or after

September 1, 1993, and before

September 1, 1998, and that, as

originally manufactured, comply with

FMVSS Nos. 202, 208, and 216;

(d) All multipurpose passenger

vehicles, trucks and buses with a GVWR

of 4536 kg. (10,000 lbs.) or less,

that were manufactured on or after

September 1, 1998, and before

September 1, 2002, and that, as

originally manufactured, comply with

the requirements of FMVSS Nos. 202,

208, 214, and 216.

VSA-82......................... All multipurpose passenger vehicles,

trucks and buses with a GVWR greater

than 4536 kg. (10,000 lbs.) that are

less than 25 years old.

VSA-83......................... All trailers, and all motorcycles that

are less than 25 years old.

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Authority: 49 U.S.C. 30141 (a)(1)(A) and (b)(1); 49 CFR 593.8;

delegation of authority at 49 CFR 1.50.

Issued on: May 7, 1997.

Ricardo Martinez,

Administrator.

[FR Doc. 97-12488 Filed 5-12-97; 8:45 am]

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