Odometer Disclosure Requirements; Exemptions

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 580

[Docket No. 87-09, Notice 16]

RIN 2127-AG83

Odometer Disclosure Requirements; Exemptions

AGENCY: National Highway Traffic Safety Administration, DOT.

ACTION: Interim final rule; request for comments.

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SUMMARY: This interim final rule amends 49 CFR Part 580 by establishing

a new Sec. 580.17, by repromulgating the exemptions for certain

categories of vehicles from odometer disclosure requirements now

located in Sec. 580.6, and by moving the exemptions to the new

Sec. 580.17. This interim final rule also revises the authority

citation for part 580 to reflect Public Law 104-205.

The agency is taking this action pursuant to recent Federal

legislation affirming the agency's exemption authority. Pub. L. 104-205

(Sept. 30, 1996). The repromulgation is necessitated by a recent United

States Court of Appeals decision that has raised questions about

NHTSA's authority to exempt categories of vehicles from the Federal

odometer disclosure requirements.

This document is published as an interim final rule, to be

effective immediately on publication in the Federal Register. NHTSA is

requesting comments on this rule. At the close of the comment period,

NHTSA will publish a document responding to the comments and, if

appropriate, amending the provisions of this rule.

DATES: This rule is effective immediately upon publication in the

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Federal Register. Comments on this rule are due not later than October

14, 1997.

ADDRESSES: Written comments should refer to the docket number of this

notice and should be submitted to: Docket Section, National Highway

Traffic Safety Administration, 400 Seventh Street, SW, Room 5109,

Washington, DC 20590. (Docket hours are 9:30 a.m. through 4 p.m.)

FOR FURTHER INFORMATION CONTACT: Eileen Leahy, Office of the Chief

Counsel, National Highway Traffic Safety Administration, 400 Seventh

Street, SW, Room 5219, Washington, DC 20590. 202-366-5263.

SUPPLEMENTARY INFORMATION:

Background

In August 1988, to implement the Truth in Mileage Act of 1986

(``TIMA''), NHTSA amended the Federal odometer disclosure regulations

(49 CFR Part 580). 53 FR 29464 (Aug. 5, 1988). Part 580 had first been

promulgated in 1973 pursuant to Title IV of the Motor Vehicle

Information and Cost Savings Act of 1972. Pub. L. 92-513.

Between 1973 and 1988, NHTSA amended Part 580 in several respects.

Among the amendments it adopted were several which exempted certain

categories of vehicles from the requirement that there be a written

disclosure of the mileage when there was a transfer of ownership of the

vehicle. As of 1988, there were five categories of exempt vehicles:

those whose Gross Vehicle Weight Rating (GVWR) exceeded 16,000 pounds

(``heavy vehicle exemption''); non-self-propelled vehicles (e.g.,

trailers); vehicles over 25 years old (``older vehicle exemption'');

vehicles sold directly by a manufacturer to an agency of the Federal

government pursuant to contractual specifications; and vehicles being

transferred prior to their first purchase for purposes other than

resale. During this time period, several courts ruled on the validity

of the heavy vehicle exemption, with mixed results. See Mitchell v.

White Motor Corp., 627 F. Supp. 1241 (M. D. Tenn. 1986); Davis v. Dils

Motor Co. 566 F. Supp. 1360 (S. D. W.Va. 1983); Lair v. Lewis Service

Center, 428 F. Supp. 778 (D. Neb. 1977); W. W. Wallwork, Inc. v.

Duchscherer, 501 N.W. 2d 751 (N. D. 1993).

The agency considered these exemptions again when it proposed the

amendments to Part 580 to implement TIMA. It adopted them as part of

the 1988 amendments to Part 580, with no changes except for a reduction

in the age limit for the older vehicle exemption, from 25 to 10 years.

This change was adopted after NHTSA considered a number of the comments

on the NPRM that had advocated substantial reductions in the age of

vehicles that would qualify for this exemption. 53 FR 49472 (Aug. 5,

1988).

In 1994, the United States Court of Appeals for the Ninth Circuit

ruled that NHTSA lacked authority to adopt heavy vehicle exemption in

Orca Bay Seafoods v. Northwest Truck Sales, Inc., 32 F.3d 433 (9th Cir.

1994). In response to the Orca Bay decision, Congress included as part

of the Department of Transportation and Related Agencies Appropriations

Act for Fiscal Year 1997 (``1997 DOT Appropriations Act'') a provision

which states that ``notwithstanding any other provision of law, the

Secretary may use funds appropriated under this Act, or any subsequent

Act, to administer and implement the exemption provisions of 49 CFR

580.6 and to adopt or amend exemptions from the disclosure requirements

for any class or category of vehicles that the Secretary deems

appropriate.'' Section 332, Pub. L. 104-205 (Sept. 30, 1996).

On March 31, 1997, the United States Court of Appeals for the

Seventh Circuit held that the older vehicle exemption in Part 580 was

invalid because NHTSA did not have statutory authority to exempt

categories of vehicles from the odometer disclosure requirements.

Diersen v. Chicago Car Exchange, 110 F.3d 481 (1997), rehearing denied,

1997 USApp LEXIS 11334 (7th Cir. May 13, 1997). The court's opinion did

not mention section 332 of the 1997 DOT Appropriations Act.

Discussion

Since the Diersen decision, NHTSA has received a number of

inquiries from state motor vehicle administrators, vehicle auction

companies, representatives of dealer associations and others asking

whether the exemptions in 49 CFR 580.6 are still valid, and whether or

not odometer disclosure statements are now required for the vehicles

exempted by that Section. These inquiries show that there is widespread

confusion among buyers and sellers of vehicles, as well as those

responsible for issuing vehicle titles, as to when an odometer

disclosure statement is required. The effect is most acute in the

states located within the jurisdiction of the Seventh Circuit

(Illinois, Indiana and Wisconsin) and Ninth Circuit (....); but given

the interstate nature of many vehicle transfers, the uncertainty

affects all states.

In view of the potential harm this uncertainty could cause to the

effectiveness of TIMA, and to the titling process in general, NHTSA has

concluded that there is an immediate need to clarify the legal status

of the exemptions to Part 580. Accordingly, NHTSA is publishing this

interim final rule today, and making it effective immediately upon

publication. The interim final rule repromulgates the exemptions

formerly contained in section 580.6 in a new section (numbered 580.17),

relying on the authority of the 1997 DOT Appropriations Act. This

legislation evidences Congress intent that NHTSA have the authority to

adopt and amend exemptions to the odometer disclosure requirements of

Part 580. In repromulgating the exemptions, the agency reaffirms that

the exemptions are consistent with the purposes of TIMA and that

effective administration of TIMA will be served best both by

maintaining continuity in the exemptions that are recognized, and by

ensuring consistency among the states. The agency is requesting

comments from the public, as well as from entities that are affected by

the exemptions, such as state motor vehicle administrators, automobile

auctions, vehicle manufacturers, lease companies and dealers. The

comments should address such issues as the relative costs and benefits

of retaining or eliminating all or some of the exemptions; and the

effect, if any, that retaining or eliminating all or some exemptions

would have on reducing odometer fraud.

Pursuant to 5 U.S.C. Sec. 553(b)(B), the agency concludes that

there is good cause for adopting this interim final rule without prior

notice and opportunity for public comment. Prior notice and public

comment are unnecessary in this case because the rule merely

repromulgates rules that have already been subject to the notice and

comment procedures of 5 U.S.C. Sec. 553(b). The need stated above for

prompt agency action to clarify the legal status of these exemptions in

light of the confusion caused by the Seventh Circuit's decision in

Diersen also makes prior notice and opportunity for comment

impracticable. As the agency has described above, the public interest

now lies in immediate resolution of the uncertainty caused by that

decision; further delay would only exacerbate the harmful effects of

that confusion.

This rule is exempt under 5 U.S.C. Sec. 553(d)(1) from the general

requirement that rules be published not less than 30 days prior to

their effective date because it grants an exemption. Accordingly, this

rule will be effective immediately upon publication in the Federal

Register.

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Federalism Assessment

The agency has analyzed this rule in accordance with the principles

and criteria contained in Executive Order 12612, and has determined

that the interim final rule does not have sufficient federalism

implications to warrant the preparation of a Federalism Assessment. The

interim final rule merely repromulgates existing exemptions to the

odometer disclosure requirements, and does not alter the effect on the

states of existing statutory or regulatory requirements.

Rulemaking Analyses

A. Executive Order 12866 and DOT Regulatory Policies and Procedures

NHTSA has analyzed this rule and determined that it is neither

``major'' nor ``significant'' within the meaning of Executive Order

12886 or of Department of Transportation regulatory policies and

procedures. Because the agency estimates that this rule would not have

a significant impact, it has not prepared a regulatory evaluation.

B. Regulatory Flexibility Act

The agency has also considered the effects of this action under the

Regulatory Flexibility Act. I certify that this action will not have a

substantial economic impact upon a substantial number of small

entities. Because it is limited to amending the statutory authority for

existing exemptions to agency regulations, it does not affect the

impact of those regulations on small businesses.

C. National Environmental Policy Act

The agency has analyzed this rule under the National Environmental

Policy Act and determined that it will not have a significant impact on

the human environment. Accordingly, it has not prepared an

environmental impact statement.

D. Paperwork Reduction Act

The interim final rule is not a collection of information as that

term is defined by OMB in 5 CFR Part 1320. It amends the statutory

authority for exemptions to the odometer disclosure requirements in 49

CFR Part 580. Those exemptions do not require the collection of any

information. The information collection requirements established by

Part 580 have been approved by OMB. (OMB 2127-0047).

E. Civil Justice Reform

This rule will not have any retroactive effect. States may not

adopt laws on disconnecting, altering, or tampering with an odometer

with intent to defraud that are inconsistent with 49 U.S.C. Chapter

327. 49 U.S.C. Chapter 327 does not exempt persons from complying with

state laws on disconnecting, altering or tampering with an odometer

with intent to defraud. Agency regulations issued under 49 U.S.C.

Chapter 327 are subject to judicial review under 5 U.S.C. 704. There is

no requirement for a petition for reconsideration or other

administrative proceeding before a party may file a suit in court.

List of Subjects in 49 CFR Part 580

Odometers, consumer protection.

In consideration of the foregoing, 49 CFR Part 580 is amended as

follows:

PART 580--ODOMETER DISCLOSURE REQUIREMENTS

1. The authority citation for 49 CFR Part 580 is revised to read as

follows:

Authority: 49 U.S.C. 32705; Sec. 332, Public Law No. 104-205;

delegation of authority at 49 CFR 1.50(f) and 501.8(e)(1).

Sec. 580.6 [Redesignated as Sec. 580.17]

2. Section 580.6 is redesignated as Sec. 580.17 and republished

without change to read as follows:

Sec. 580.17 Exemptions.

Notwithstanding the requirements of Secs. 580.5 and 580.7:

(a) A transferor or a lessee of any of the following motor vehicles

need not disclose the vehicle's odometer mileage:

(1) A vehicle having a Gross Vehicle Weight Rating, as defined in

Sec. 571.3 of this title, of more than 16,000 pounds;

(2) A vehicle that is not self-propelled;

(3) A vehicle that is ten years old or older; or

(4) A vehicle sold directly by the manufacturer to any agency of

the United States in conformity with contractual specifications.

(b) A transferor of a new vehicle prior to its first transfer for

purposes other than resale need not disclose the vehicle's odometer

mileage.

(c) A lessor of any of the vehicles listed in paragraph (a) of this

section need not notify the lessee of any of these vehicles of the

disclosure requirements of Sec. 580.7.

Issued: September 5, 1997.

Ricardo Martinez,

Administrator.

[FR Doc. 97-23991 Filed 9-5-97; 4:50 pm]

BILLING CODE 4910-59-P