Defect and Noncompliance Reports; Defect and Noncompliance Notification

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 573 and 577

[Docket No. NHTSA-1998-3430; Notice 10] (formerly Docket 93-68)

RIN 2127-AG27

Defect and Noncompliance Reports; Defect and Noncompliance

Notification

May 12, 1999.

AGENCY: National Highway Traffic Safety Administration, DOT.

ACTION: Supplemental notice of proposed rulemaking.

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SUMMARY: The National Highway Traffic Safety Administration (NHTSA) is

seeking additional public comment with respect to its ongoing

rulemaking to implement the provisions of Chapter 301 of Title 49 of

the United States Code (U.S.C.) that require manufacturers of motor

vehicles and items of motor vehicle equipment to notify their dealers

when they or NHTSA decide that vehicles or items of equipment contain a

defect related to motor vehicle safety or do not comply with a Federal

motor vehicle safety standard. The amendment proposed herein would

require a manufacturer to furnish dealers with notification of a

safety-related defect or noncompliance in accordance with a schedule

that is to be submitted to the agency with the manufacturer's defect or

noncompliance report. The notification would have to be within a

reasonable time after the manufacturer decides that the defect or

noncompliance exists. However, if the agency finds that the public

interest requires dealers to be notified at an earlier date than that

proposed by the manufacturer, the manufacturer would be required to

notify its dealers in accordance with the agency's order. The proposed

amendment also sets forth the required content of the dealer

notification and the manner in which such notification is to be

accomplished.

DATES: Comments must be received on or before June 18, 1999.

ADDRESSES: Comments must refer to the docket notice numbers cited at

the beginning of this notice and be submitted to Docket Management,

Room PL-401, 400 Seventh Street, SW, Washington, DC 20590. Please

identify the proposed collection of information for which a comment is

provided, by referencing its OMB clearance number. It is requested, but

not required, that 2 copies of the comment be provided. The Docket

Section is open on weekdays from 10 a.m. to 5 p.m.

FOR FURTHER INFORMATION CONTACT: Jonathan D. White, Office of Defects

Investigation, National Highway Traffic Safety Administration, 400

Seventh Street, SW, Room 5319, Washington, DC 20590. Telephone: (202)

366-5226; FAX: (202) 366-7882.

SUPPLEMENTARY INFORMATION:

Background

On September 27, 1993, NHTSA published in the Federal Register a

Notice of Proposed Rulemaking (NPRM) proposing several amendments to

its regulations implementing the provisions of 49 U.S.C. Chapter 301

concerning manufacturers' obligations to provide notification and

remedy without charge for motor vehicles and items of motor vehicle

equipment found to contain a defect related to motor vehicle safety or

a noncompliance with a Federal motor vehicle safety standard (58 FR

50314). On April 5, 1995, the agency issued a final rule addressing

most aspects of that NPRM (60 FR 17254), and on January 4, 1996, it

amended several provisions of that final rule after receiving petitions

for reconsideration (61 FR 274). However, NHTSA decided to delay

issuance of the final rule on the subject of dealer notification

because it had not resolved all the issues raised by the comments on

that subject that had been submitted in response to the NPRM.

The agency has now fully considered those issues. However, because

it has tentatively decided to revise its original proposal

significantly, the agency has decided to issue a supplemental notice of

proposed rulemaking to obtain comments on the new proposal.

Statutory Framework

Under 49 U.S.C. 30118(c), a manufacturer of motor vehicles or

replacement equipment for motor vehicles must notify NHTSA and owners,

purchasers, and dealers if it decides in good faith that a safety-

related defect or noncompliance exists in its vehicles or items of

equipment. This notification must be accomplished within a reasonable

time after the manufacturer decides that the defect or noncompliance

exists. 49 U.S.C. 30119(c)(2). Similarly, if NHTSA decides, pursuant to

49 U.S.C. 30118(b), that vehicles or equipment items contain a safety-

related defect or noncompliance, the agency must order the manufacturer

to notify owners, purchasers, and dealers of the defect or

noncompliance by a date prescribed by NHTSA. 49 U.S.C. 30119(c)(1).

Section 30119(d)(4) of Title 49 specifies that manufacturers are to

notify their dealers ``by certified mail or quicker means if

available.''

These statutory provisions were originally enacted in 1974. Soon

afterwards, NHTSA promulgated regulations addressing the duty to notify

the agency and to notify owners and purchasers. 49 CFR Parts 573 and

577. However, the agency did not issue regulations addressing dealer

notification.

Under 49 U.S.C. 30120(i), which was enacted as part of the

Intermodal Surface Transportation Efficiency Act of 1991, if a

manufacturer has provided notification to a motor vehicle dealer that a

new motor vehicle or new item of replacement equipment in the dealer's

possession contains a safety-related defect or noncompliance, the

dealer may sell or lease the vehicle or equipment item only if the

defect or noncompliance has been remedied before delivery under the

sale or lease. This section was recently amended to clarify that this

requirement also applies to equipment dealers. See section 7106(a) of

the Transportation Equity Act for the 21st Century, Pub. L. 105-178

(June 9, 1998).

Under 49 U.S.C. 30116, motor vehicle manufacturers and distributors

who do not provide dealers with the parts to remedy a safety-related

defect or noncompliance, and all manufacturers of motor vehicle

equipment items that have been determined to contain such a defect or

noncompliance, must offer to repurchase all such vehicles and equipment

items that remain in distributor or dealer inventory at the price paid,

plus transportation and other charges.

Heretofore, NHTSA has not adopted regulations addressing the

provisions of section 30120(i) or section 30116.

Dealer Notification in the NPRM

With respect to dealer notification, the September 1993 NPRM

proposed that manufacturers conducting a safety recall provide their

dealers with a document that contained the information set forth in the

report submitted to the agency pursuant to 49 CFR Part 573, ``Defect

and Noncompliance Reports,'' within five working days after submitting

the report to NHTSA. If any of the required information was not known

at the time of the original notification, it would have to be sent to

the dealers as soon as possible after it became known by the

manufacturer. The NPRM also proposed recordkeeping requirements.

NHTSA received comments on the dealer notification proposals in

that

[[Page 27228]]

NPRM from manufacturer and dealer associations, individual

manufacturers, and Advocates for Highway and Auto Safety. After

considering those comments, NHTSA prepared a draft of a final rule.

Pursuant to the Paperwork Reduction Act, the agency published a Federal

Register notice requesting public comment on the potential paperwork

burdens associated with the proposed final rule. 62 FR 63598 (December

1, 1997). Although that notice did not set out the anticipated

regulatory language, it described the general approach that the agency

was planning to adopt in the final rule. Comments objecting to the

paperwork burdens and criticizing the agency's approach were submitted

by manufacturer and dealer associations. In addition, representatives

of those associations met with agency officials during March 1998 to

discuss these issues. Memoranda summarizing those meetings have been

placed in the docket for this rulemaking.

NHTSA's Revised Proposal

After considering the information presented in all of the comments

and at those meetings, the agency is now proposing a different

regulatory approach. In lieu of the fixed five-day period for dealer

notification contemplated in the NPRM, the agency is now proposing to

require manufacturers to notify their dealers of safety defects and

noncompliances in accordance with a schedule submitted to the agency

with the manufacturer's Part 573 report. Such a schedule will be

reviewable by NHTSA to assure that the notification will be within a

reasonable time.

This decision to permit greater flexibility than originally

proposed is based on NHTSA's recognition that the process of dealer

notification has worked well for over 20 years, notwithstanding the

absence of formal regulatory requirements. In conformity with the

statutory duty to notify dealers within a ``reasonable time'' (49

U.S.C. 30119(c)(2)), manufacturers have generally notified their

dealers of defects and noncompliances in a manner that has allowed

repairs to be performed promptly, with minimal disruption of the

dealers' operations.

Where manufacturers have concluded that a defect or noncompliance

presented an immediate safety risk, they have notified their dealers as

soon as the defect or noncompliance determination was made, and have

directed the dealers to stop sales (and leases) until the problem is

corrected. On occasion, however, NHTSA and a manufacturer have

disagreed about when notification should occur or whether immediate

notification and immediate cessation of sales is appropriate. For this

reason, the agency needs to know the manufacturer's proposed schedule

for dealer notification so it can assess the safety implications of

that schedule. Therefore, NHTSA is proposing a new section

573.5(c)(8)(iii), which would require the manufacturer to include the

estimated date of its dealer notification in its Part 573 defect or

noncompliance report, in the same manner as section 573.5(c)(8)(ii)

currently requires the submission of the manufacturer's proposed

schedule for its owner notification and remedy campaign. In addition,

to eliminate the possibility that any disagreements between NHTSA and

the manufacturers concerning the notification date of dealers, NHTSA is

proposing a new section 577.7(c)(1), requires manufacturers to comply

with a NHTSA order to notify their dealers on a specific date, if the

agency has found that notification at that time is in the public

interest. In making such determinations, the agency will consider such

factors as the severity of the safety risk; the likelihood of

occurrence of the defect or noncompliance; availability of an interim

remedial action by the owner; whether an initial dealer inspection

would identify suspect vehicles or equipment items; the time frame in

which the defect will manifest itself; whether there will be a delay in

the availability of the remedy from the manufacturer; and, in those

recalls where a delay is expected, the anticipated length of such

delay.

The foregoing applies to recalls following defect and noncompliance

determinations by the manufacturer, pursuant to 49 U.S.C. 30118(c).

Consistent with 49 U.S.C. 30119(c)(1), NHTSA has proposed in section

577.7(d) that where a recall is ordered by the Administrator pursuant

to 49 U.S.C. 30118(b), the notification to dealers must be given on or

before the date prescribed in the Administrator's order.

NHTSA is aware that this proposal could be construed by some as a

step back from the proposal in the NPRM, which would have required

manufacturers to notify dealers of all recalls within five working days

of notifying NHTSA. However, the agency now believes that such a

requirement could have several perverse effects. First, it could

encourage manufactures to delay notifying NHTSA of a defect or

noncompliance determination until the remedy was developed and a

sufficient number of repair parts stockpiled. This would be

particularly prejudicial in cases where owners could take steps to

minimize the safety risk associated with the defect during the time the

remedy was being developed.

Second, the proposal in the NPRM could encourage dealers to create

their own inspection and remedy procedures in order to be able to sell

otherwise embargoed vehicles quickly if the manufacturer's remedy were

not available. The agency believes that dealers would be less likely to

do this if embargoes were only required in those recalls that involved

serious, imminent safety problems, because of the obvious safety risk

and potential financial liability.

Finally, the agency notes that in many recalls, the safety

consequences of the defect are unlikely to arise until the vehicle has

been in service for an extended period of time; e.g., where the problem

is caused by corrosion or metal fatigue. In such recalls, where repair

parts are scarce, the proposal in the NPRM could encourage dealers to

use those parts to fix vehicles in inventory rather than vehicles in

service, even though the vehicles in service would be more likely to

experience a safety problem as a result of the defect.

Another proposed change from the original NPRM is that

manufacturers would not be required to include in the notification to

dealers all of the information required to be submitted to NHTSA in the

manufacturer's Part 573 report. See 49 CFR 573.5(c). Rather, as set out

in new proposed section 577.11(a), the notice to dealers would only

have to include the following: a statement that identifies the

notification as being part of a safety recall campaign, an

identification of the vehicles or items of equipment covered by the

recall, a description of the defect or noncompliance, and a brief

evaluation of the risk to motor vehicle safety related to the defect or

noncompliance. The notification would also have to include a complete

description of the recall remedy and the estimated date on which the

remedy will be available. Information required by this paragraph that

is not available at the time of the dealer notification would have to

be provided to dealers as it becomes available.

To help effectuate 49 U.S.C. 30120(i), new section 577.11(b)

provides that the dealer notification would have to contain an advisory

stating that dealers are prohibited by Federal law from selling or

leasing a new motor vehicle or new item of replacement equipment

covered by the notification until the defect or noncompliance is

remedied. Similarly, to assist in the implementation of 49 U.S.C.

30116, new

[[Page 27229]]

section 577.11 (c) provides that, for equipment items, the notification

must also inform the dealer of the manufacturer's offer to repurchase

the defective or noncomplying equipment that remain in the dealer's

inventory at the price paid plus transportation and other charges.

NHTSA has tentatively concluded that such language is not necessary

with respect to notifications regarding defects and noncompliances in

vehicles, since vehicle manufacturers generally provide their dealers

with parts needed to remedy the defect or noncompliance, thus obviating

the duty to repurchase.

The NPRM did not propose to require manufacturers to include these

advisories in the notification sent to dealers. However, the statutory

provisions were referenced in the NPRM, and the proposed advisories

were alluded to in the Paperwork Reduction Act notice. All interested

persons will now have the opportunity to comment on these provisions.

The NPRM would have required manufacturers to maintain records to

confirm that they notified their dealers of the defect or noncompliance

and that the dealers received the notification. The agency has decided

that it would be unduly burdensome, and perhaps impracticable, to

require manufacturers to keep records reflecting that each dealer

received the notification. Therefore, proposed new section 577.11(d)

requires only that the manufacturer be able to verify that it has sent

the notification to its dealers and the date of such notification.

In response to comments by an association of equipment

manufacturers, NHTSA is proposing two provisions to ease the burden on

those manufacturers. First, proposed section 577.7(c)(2)(ii) provides

that if a manufacturer of replacement equipment or tires sells its

products to a group of retailers or distributors through a central

office, notification to that central office will be deemed to be

notification to the entire group. Second, proposed section

577.7(c)(2)(iii) would allow manufacturers that provide their products

to retail outlets through independent distributors to use that

distribution network for dealer notification purposes, if the

distributors agree to transmit the notification to all applicable

retail dealers within five working days of their receipt of the

manufacturer's notification. However, the manufacturer would bear the

legal responsibility for ensuring that all of its dealers and retail

outlets receive the required notification in a timely manner.

Finally, NHTSA is also amending sections 577.1, ``Scope,'' and

577.2, ``Purpose,'' to reflect the new dealer notification requirements

added to Part 577.

Rulemaking Analyses and Notices

1. Executive Order 12866 (Federal Regulation) and DOT Regulatory

Policies and Procedures

NHTSA has considered the impact of this rulemaking under Executive

Order 12866 and the Department of Transportation's regulatory policies

and procedures, and determined that it is not a ``significant

regulatory action'' within the meaning of Sec. 3 of E.O. 12866 and is

not ``significant'' within the meaning of the Department of

Transportation regulatory policies and procedures.

Manufacturers are currently required by statute to notify their

dealers of safety defects and noncompliances. 49 U.S.C. 30118(b) and

(c). Such notification must be within a ``reasonable time.'' 49 U.S.C.

30119(c)(2). This final rule restates that requirement, adding only

that in the event that NHTSA disagrees with the manufacturer's

assessment of what time period is reasonable, the agency's

determination will control.

The agency anticipates, based on past experience, that there will

be few disagreements on this issue. In any event, an agency order

directing the manufacturer to accelerate its dealer notification will

not impose any additional costs directly on the manufacturer, since the

notification would eventually have to be made anyway.

NHTSA recognizes that an embargo on dealer sales of defective or

noncompliant vehicles and equipment imposes costs, and that these costs

could be relatively high if a large number of vehicles or equipment

items is affected or if there is a significant delay in developing and

implementing a remedy for the defect or noncompliance. In the first

instance, such costs would be borne by dealers, since they might have

to maintain inventory that could not be sold. However, the ultimate

burden would almost certainly be borne by the manufacturers, either

through contractual provisions or pursuant to 49 U.S.C. 30116, which

requires manufacturers to provide, among other things, ``reasonable

reimbursement of at least one percent a month of the price paid

prorated from the date of notice of noncompliance or defect . . . .''

To the extent that agency orders issued pursuant to this rule

impose additional costs, those costs would be outweighed by the safety

benefit of ensuring that dealers do not sell or lease new motor

vehicles or new items of replacement equipment containing safety-

related defects or noncompliances before the defect or noncompliance

has been remedied, as required by 49 U.S.C. 30120(i). Moreover, any

impacts are likely to be minimal, because manufacturers will have an

incentive to develop and provide a remedy as soon as possible.

2. Regulatory Flexibility Act

The agency has also considered the effects of this rulemaking

action under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). I

certify that this proposed rule will not, if promulgated, have a

significant economic impact on a substantial number of small entities.

The proposed new regulatory requirements would apply directly only

to manufacturers of motor vehicles and items of motor vehicle

equipment, which for the most part are not small businesses. Moreover,

manufacturers are already required by statute to notify their dealers

of defects and noncompliances. The only effect of the regulation is to

require that, in relatively rare cases, manufacturers will be required

to send notification to dealers earlier than the manufacturer had

proposed in its Part 573 Report. Since manufacturers will generally

have all of the required information at the time the notification is

required, and can submit other required information as it becomes

available, there should be no additional direct burden on manufacturers

associated with this rule.

As noted above, a notification that required an embargo on sales

could have an adverse effect on dealers, which often are small

businesses, in that the dealers would be prohibited from selling or

leasing defective or noncompliant vehicles or equipment items that had

not been remedied. However, for the reasons described above, the costs

associated with such a delay would almost certainly be borne by the

manufacturer. In any case, such costs are the result of requirements

imposed by 49 U.S.C. 30120(i), not this rule. Moreover, any impacts are

likely to be minimal, because manufacturers will have an incentive to

develop and provide a remedy as soon as possible. Finally, any such

impacts would be offset by the safety benefits associated with

preventing the sale or lease of defective or noncompliant vehicles or

equipment items.

[[Page 27230]]

3. National Environmental Policy Act

In accordance with the National Environmental Policy Act of 1969,

the agency has analyzed the environmental impacts of this rulemaking

action and determined that implementation of this action would not have

a significant impact on the quality of the human environment. The new

notification requirements would not introduce any new or harmful matter

into the environment.

4. Paperwork Reduction Act

This proposal contains provisions which are considered to be

information collection requirements as that term is defined by the

Office of Management and Budget (OMB) in 5 CFR part 1320. The reporting

requirements associated with this proposed rule are subject to approval

by OMB in accordance with 44 U. S. C. Chapter 3500. The agency needs

this information in order to avoid unreasonable delays in dealers'

receiving notification that vehicles or equipment in their inventory

contain safety-related defects or noncompliances requiring a remedy.

The agency will use this information to take appropriate action in

those cases where the manufacturer's estimated dealer notification date

seems to be inappropriate in relation to the severity of the recalled

defect or noncompliance condition. Manufacturers will need to provide

the agency with the estimated dealer notification date for each recall

that they conduct. Manufacturers will only have to make the necessary

changes to the dealer notification letter one time, since these changes

will be replicated in all subsequent dealer notifications. The

respondents affected by this proposal are manufacturers of motor

vehicles and motor vehicle equipment. The respondents do not need to

complete any standardized forms in order to be in compliance with this

proposal. The agency estimates that the total number of burden hours

for all manufacturers affected by this proposal would be 250, with an

average burden hour for each of 500 involved respondents of \1/2\ hour.

The agency estimates that the total cost burden for all manufacturers

affected by this proposal would be $12,500 (250 burden hours x $50

per hour respondent labor cost), with an average cost burden for each

of 500 involved respondents of $25.

For further information contact Mr. Walter Culbreath, Office of

Information Resources Management, NAD-40, NHTSA, 400 Seventh Street,

SW, Washington, DC 20590 (Telephone: 202-366-1566). Individuals and

organizations may submit comments on the proposed information

collection requirements by June 18, 1999, and should direct them to:

Docket Management, Room PL-401, 400 Seventh Street, SW, Washington, DC

20590, referencing the docket notice numbers cited at the beginning of

this notice.

Pursuant to the Paperwork Reduction Act of 1995, and OMB's

regulation at 5 CFR 1320.5(b)(2), NHTSA informs the potential

individuals and organizations who are to respond to the collection of

information that they are not required to respond to the collection of

information unless it displays a currently valid OMB control number.

The proposed amendment requiring notification of NHTSA adds to an

information collection requirement in 49 CFR part 573 that has already

been approved by OMB. The OMB control number for that collection of

information is 2127-0004. The proposed amendment of 49 CFR part 577 to

require manufacturers to include certain information in the

notification of defect or noncompliance sent to dealers is a new

information collection requirement (since the Paperwork Reduction Act

did not apply to such third-party information collections prior to

1995). Accordingly, it does not have an OMB control number. The agency

intends to obtain a valid OMB control number prior to the promulgation

of the final rule.

5. Executive Order 12612 (Federalism)

This action has been analyzed in accordance with the principles and

criteria contained in Executive Order 12612, and it has been determined

that the rulemaking does not have sufficient federalism implications to

warrant the preparation of a Federalism Assessment.

6. Executive Order 13084 (Consultation/Coordination with Indian Tribal

Governments)

This action has been analyzed in accordance with the principles and

criteria contained in Executive Order 13084, and it has been determined

that the proposed rulemaking would not significantly or uniquely affect

Indian tribal governments.

7. Unfunded Mandates Reform

This proposed rule would not impose any unfunded mandates under the

Unfunded Mandates Reform Act of 1995 or under Executive Order 12875. It

does not result in costs of $100 million or more to either State, local

or tribal governments, in the aggregate, or to the private sector; and

is the least burdensome alternative that achieves the objective of the

proposed rule.

8. Civil Justice Reform Act

The proposed rule would not have a retroactive or preemptive

effect. Judicial review of the proposed rule would be obtainable under

5 U.S.C. section 702. That section does not require that a petition for

reconsideration be filed prior to seeking judicial review.

List of Subjects

49 CFR Part 573

Motor vehicle safety, Reporting and recordkeeping requirements.

49 CFR Part 577

Motor vehicle safety, Reporting and recordkeeping requirements.

In consideration of the foregoing, it is proposed that Parts 573

and 577 of Title 49 of the Code of Federal Regulations be amended as

follows:

PART 573--DEFECT AND NONCOMPLIANCE REPORTS

1. Section 573.5 would be amended by redesignating paragraphs

(c)(8)(iii) and (c)(8)(iv) as paragraphs (c)(8)(iv) and (c)(8)(v),

respectively, and by adding new paragraph (c)(8)(iii) to read as

follows:

Sec. 573.5 Defect and noncompliance information report.

* * * * *

(c) * * *

(8) * * *

(iii) The estimated date on which it will send notifications to

dealers that there is a safety-related defect or noncompliance. If a

manufacturer subsequently becomes aware that such notification will be

delayed by more than two weeks, it shall promptly advise the agency of

the delay and the reasons therefor, and furnish a revised estimate.

* * * * *

PART 577--DEFECT AND NONCOMPLIANCE NOTIFICATION

2. Section 577.1 would be revised to read as follows:

Sec. 577.1 Scope.

This part sets forth requirements for notification to owners and

dealers of motor vehicles and items of replacement equipment about a

defect that relates to motor vehicle safety or a noncompliance with a

Federal motor vehicle safety standard.

3. Section 577.2 would be amended by adding a new sentence at the

end to read as follows:

Sec. 577.2 Purpose.

* * * It is also to ensure that dealers of motor vehicles and items

of

[[Page 27231]]

replacement equipment are made aware of the existence of defects and

noncompliances and of their rights and responsibilities with regard

thereto.

4. Section 577.7 would be amended by adding new paragraphs (c) and

(d) to read as follows:

Sec. 577.7 Time and manner of notification.

* * * * *

(c) The dealer notification required by Sec. 577.11 shall--

(1) Be furnished within a reasonable time after the manufacturer

decides that a defect that relates to motor vehicle safety or a

noncompliance exists, in accordance with the schedule submitted to the

agency pursuant to 49 CFR 573.5(c)(8)(iii). The manufacturer's proposed

schedule may be reviewed by the Administrator. The Administrator may

order a manufacturer to send the notification to dealers on a specific

date where the Administrator finds, after consideration of available

information, that such notification is in the public interest. The

factors that the Administrator may consider include, but are not

limited to, the severity of the safety risk; the likelihood of

occurrence of the defect or noncompliance; whether a dealer inspection

would identify vehicles or equipment items that contain the defect or

noncompliance; whether there will be a delay in the availability of the

remedy from the manufacturer; and, in those recalls where a delay is

expected, the anticipated length of such delay.

(2) Be accomplished--

(i) In the case of a notification required to be sent by a motor

vehicle manufacturer, by certified mail, verifiable electronic means,

or other more expeditious and verifiable means to all dealers.

(ii) In the case of a notification required to be sent by a

manufacturer of replacement equipment or tires, by certified mail,

verifiable electronic means, or other more expeditious and verifiable

means to all retailers, dealers, and purchasers of such equipment for

purposes of re-sale. Where the manufacturer sold the recalled equipment

to a group of retailers or distributors through a central office,

notification to that central office will suffice for notification to

the group.

(iii) In those cases where a manufacturer uses independent

distributors to provide products and information to retail outlets, the

manufacturer may satisfy its dealer notification responsibilities by

providing the information required by this section to its distributors,

if those distributors agree to transmit it to all applicable retail

dealers within five additional working days. The manufacturer shall

retain the legal responsibility for ensuring that its dealers receive

the information in a timely manner.

(d) Notwithstanding paragraph (c)(1) of this section, where the

recall is being conducted pursuant to an order issued by the

Administrator under 49 U.S.C. 30118(b), the notification to dealers

shall be given on or before the date prescribed in the Administrator's

order.

5. A new section 577.11 would be added to read as follows:

Sec. 577.11 Dealer notification.

(a) The notification to dealers of a safety-related defect or

noncompliance with a Federal motor vehicle safety standard shall

contain a clear statement that identifies the notification as being

part of a safety recall campaign, an identification of the vehicles or

items of equipment covered by the recall, a description of the defect

or noncompliance, and a brief evaluation of the risk to motor vehicle

safety related to the defect or noncompliance. The notification shall

also include a complete description of the recall remedy, and the

estimated date on which the remedy will be available. Information

required by this paragraph that is not available at the time of the

dealer notification shall be provided to dealers as it becomes

available.

(b) The notification shall also include an advisory stating that it

is a violation of Federal law for a dealer to sell or lease new

vehicles or new items of replacement equipment covered by the

notification until the defect or noncompliance is remedied.

(c) For notifications of defects or noncompliances in items of

motor vehicle equipment, the notification shall contain the

manufacturer's offer to repurchase the items that remain in the

dealer's inventory at the price paid by the dealer, plus transportation

charges and reasonable reimbursement of at least one per cent a month

prorated from the date of notification to the date of repurchase.

(d) The manufacturer must be able to verify that it sent the

required notification to each of its dealers and the date of that

notification.

Kenneth N. Weinstein,

Associate Administrator for Safety Assurance.

[FR Doc. 99-12616 Filed 5-18-99; 8:45 am]

BILLING CODE 4910-59-P