98-26263. Odometer Disclosure Requirements; Exemptions  

  • [Federal Register Volume 63, Number 190 (Thursday, October 1, 1998)]
    [Rules and Regulations]
    [Pages 52630-52632]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 98-26263]
    
    
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    DEPARTMENT OF TRANSPORTATION
    
    National Highway Traffic Safety Administration
    
    49 CFR Part 580
    
    [NHTSA-98-4438]
    RIN 2127-AG83
    
    
    Odometer Disclosure Requirements; Exemptions
    
    AGENCY: National Highway Traffic Safety Administration, DOT.
    
    ACTION: Final rule.
    
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    SUMMARY: This document amends an exemption from the odometer disclosure 
    requirements for vehicles ``ten years old or older'' to clarify that 
    the term ``years'' refers to ``model years.'' 49 CFR 580.17(a)(3). The 
    rule also amends the exemption by including a formula for calculating 
    the most recent model year to which the exemption applies.
        The agency is taking this action following its consideration of 
    comments received from the public on the interim final rule that was 
    published in the Federal Register on September 11, 1997. 62 FR 47763, 
    Sept. 11, 1997.
        This document is published as a final rule to be effective on its 
    publication in the Federal Register.
    
    DATES: This rule is effective October 1, 1998.
    
    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 (Telephone: 202-366-5263).
    
    SUPPLEMENTARY INFORMATION:
    
    Background
    
        On September 11, 1997, the National Highway Traffic Safety 
    Administration (NHTSA) published in the Federal Register an interim 
    final rule, 62 FR 47763, that repromulgated the exemptions to the 
    odometer disclosure requirements of 49 CFR Part 580 under the new 
    authority provided by Section 332 of the Transportation and Related 
    Agencies Appropriations Act for Fiscal Year 1997. That notice also 
    solicited public comment on the exemptions themselves. In response to 
    that notice, the agency received comments from the following entities: 
    the State of South Dakota Department of Revenue; the National Auto 
    Auction Association (``NAAA''); ADT Automotive, Inc. (``ADT'') (an auto 
    auction owner/operator); the Colorado Independent Automobile Dealers 
    Association (``CIADA''); the State of Tennessee Department of Safety, 
    Titling & Registration Division; the State of Idaho Transportation 
    Department; the State of Texas Department of Public Safety; the State 
    of Washington Department of Licensing: the Secretary of State of the 
    State of Illinois; the Colorado Department of Public Safety; the 
    Oklahoma Tax Commission of the State of Oklahoma; the Oregon 
    Independent Auto Dealers Association (``OIADA''), the State of Georgia 
    Department of Revenue, Motor Vehicle Division; and the State of 
    California Department of Motor Vehicles. For convenience, the 
    commenters that are state motor vehicle administrators or titling 
    agencies will be referred to simply by the name of the state; and state 
    agency commenters collectively will be referred to as ``the States'' or 
    ``the State commenters.''
    
    Discussion
    
        The comments focused on a single area of concern: the confusion 
    that exists about how to apply the exemption for vehicles ``ten years 
    old or older.'' 49 CFR 580.17(a)(3). Of the fourteen commenters, seven 
    (NAAA, ADT, ID, CIADA, OIADA, Oklahoma and Georgia) expressed the view 
    that there was a need to make a change to clear up existing confusion; 
    while one (California) stated that changing the wording to ``ten model 
    years or older'' instead of ten years old or older would have only a 
    minimal impact, and two (Colorado and Washington State) stated that 
    changing the language of the regulation would have no impact on their 
    operations. Texas opposed changing the number of years from ten. 
    Illinois, South Dakota and Tennessee opposed making any change to the 
    status quo.
        None of those advocating an amendment suggested a change in the age 
    that would qualify a vehicle for the exemption. However, all of them 
    expressed a need to clear up confusion about when a vehicle becomes 
    ``10 years old'' and thus eligible for the exemption from the odometer 
    disclosure requirements, either by adding language to the rule, or by 
    changing the agency's interpretation setting forth the formula to be 
    applied to decide which vehicles are exempt. Three commenters, NAAA, 
    ADT and Idaho, supported a change of the wording of the exemption, to 
    ``10 model years old or older.'' CIADA and OIADA advocated that NHTSA 
    revise its interpretation of the exemption, from ``current calendar 
    year minus 10 equals the first model year for [which] a vehicle is 
    exempt'' to ``current calendar year minus 11 equals the first model 
    year for [which] a vehicle is exempt.''
        Two states, Oklahoma and Georgia, suggested that the best means of 
    eliminating the confusion that currently exists concerning the coverage 
    of the exemption would be to include the method of calculating the 
    newest model year to which the exemption would apply in the language of 
    the exemption itself, without changing the words now used to describe 
    qualifying vehicles: ten years old or older.
        Upon evaluating the comments, NHTSA concludes that the best way to 
    ensure that the exemption is understood correctly and applied uniformly 
    is to include the method of calculation as part of the exemption, as 
    Oklahoma and Georgia suggested. In this way, the means of calculating 
    the model year to which the exemption applies will be
    
    [[Page 52631]]
    
    readily available to anyone by reading the regulation, without having 
    to go to any outside source, such as the agency's interpretation 
    letters, for further information. Accordingly, the agency has decided 
    to include in section 580.17(a)(3) a statement that the current 
    calendar year minus 10 equals the most recent model year that is exempt 
    from disclosure requirements.
        After considering all of the comments, the agency has also decided 
    to amend section 580.17(a)(3) by changing the words ``vehicles 10 years 
    old or older'' to ``vehicles 10 model years old or older.'' Changing 
    ``year'' to ``model year'' does not effect a change from the applicable 
    NHTSA interpretations, which conclude that eligibility for the 
    exemption is to be based on a vehicle's model year rather than on its 
    actual chronological age based on the time that has elapsed since its 
    date of production.
        In the rule as amended today, the formula announced in that 
    interpretation remains the same. The formula arrives at the most recent 
    model year (i.e, the newest vehicles) to which the exemption applies by 
    subtracting ten model years from the current calendar year. For 
    example, during calendar year 1998 (i.e., from January 1 through 
    December 31, 1998), vehicles with a model year designation of 1988 or 
    earlier are exempt from the odometer disclosure requirements: 
    1998(current calendar year)--10 = 1988 (most recent model year exempt).
        Some commenters expressed concern that a formula that mixes model 
    year and calendar year might be confusing. However, the agency has 
    decided, after considering the alternatives, that this method is 
    actually easier to apply, because it avoids the need to determine the 
    date on which the model year begins (which, as some commenters pointed 
    out, can change from year to year, or from manufacturer to 
    manufacturer) or to ascertain the date on which an individual vehicle 
    was produced. Assigning the current calendar year as the base year 
    means that the states do not have to ascertain the beginning dates of 
    every manufacturer's model year before calculating whether a particular 
    vehicle is ten years old within the meaning of the exemption; using the 
    calendar year as the base also makes it easier to administer the 
    exemption because it eliminates potential confusion arising from 
    variations among the states in which month they use as the beginning 
    date of the vehicle registration year. Likewise, making the exemption 
    available by whole model year rather than according to the vehicle's 
    actual chronological age based on date of production means that states 
    and others involved in processing vehicle transfers will not need to 
    take the time to ascertain the date a vehicle was produced in order to 
    decide whether the exemption applies.
        By making no change in the substance of the exemption, this rule 
    also addresses the concerns of several state commenters who opposed 
    making any change in the language of the regulation because they 
    believe that this would result in a change in the scope of the 
    exemption, which would impose burdens in terms of costly changes in 
    computer systems, retraining of employees, and re-educating the public. 
    To the contrary, by including the formula in the rule, the amendment 
    should clear up the apparent confusion about which vehicles are in fact 
    entitled to the exemption. Under both the old wording (as elaborated in 
    NHTSA's interpretations) and the wording adopted in this rule, model 
    year 1988 is the most recent model year that is exempt from odometer 
    disclosure during calendar year 1998.
        The only circumstance in which a state would have to make changes 
    such as altering the computer system or retraining employees would be 
    if the state had not previously been performing the calculation 
    correctly. NHTSA believes that there are only three or four states in 
    which improper calculation of the exemption is a problem; and that even 
    in those states, the erroneous application of the exemption is often 
    localized in some Department of Motor Vehicles branch offices rather 
    than being statewide. In the latter case, the only action that the 
    state would need to take is retraining its employees; no changes to its 
    titling system would be necessary. The agency believes that the 
    positive impact that the new rule will have--improving the efficiency 
    of the process of titling vehicles by eliminating state-to-state 
    variation in the applicability of the ten-year-old vehicle exemption--
    more than outweighs the small burden that may be incurred by a handful 
    of states.
        The agency decided not to adopt the suggestion of CIADA to change 
    the calculation from ``current calendar year minus 10'' to ``current 
    calendar year minus 11.'' CIADA correctly points out that this change 
    would ensure that only vehicles whose chronological age (based on date 
    of manufacture) is at least 10 years old are exempt from the disclosure 
    requirements. However, the drawback of the CIADA proposal is that it is 
    a change from the previous NHTSA interpretation and, as such, would 
    require all the states to change their current systems for determining 
    which vehicles are exempt. Such a change would, as pointed out above, 
    require expenditure of resources for retraining employees, changing 
    computer systems and educating the public. It would also be likely to 
    continue the confusion that apparently exists about the proper method 
    of calculating the exemption. NHTSA concludes that the benefit to be 
    realized from requiring disclosure for a relatively small population of 
    additional vehicles is small and is far outweighed by the costs that 
    would be incurred by the states in implementing this proposal.
        Finally, the agency acknowledges the concerns of a number of the 
    state commenters who opposed adding the words ``model year'' to the 
    exemption. The major concerns expressed about this change were that it 
    would create, rather than reduce, confusion about how to apply the 
    exemption; and that it would require states, even those who are 
    properly applying the current exemption according to NHTSA's 
    interpretation, to make costly expenditures to re-educate their staff 
    and the public and to change their computer systems. As one commenter 
    said, this appears to penalize those states that were applying the 
    exemption properly.
        In response to these expressions of concern, NHTSA wishes to 
    reiterate that the changes it is making today will not require those 
    states that are already applying the exemption properly to alter their 
    current approach. The purpose of this rule is to make clear the law 
    that was already in effect for those who have not understood it 
    correctly. The addition of the words ``model year'' to the exemption 
    simply makes explicit in the wording of the exemption itself that which 
    was already implied (as evidenced by NHTSA's interpretation): that the 
    determination of whether a vehicle is exempt is to be based on the 
    model year of the vehicle rather than its chronological age. Contrary 
    to the fears expressed by some commenters, this approach does not 
    require a state titling office, or anyone else involved in the transfer 
    of a motor vehicle, to ascertain the vehicle's actual date of 
    manufacture to determine whether it is exempt.
    
    Statutory Authority
    
        The agency published the interim final rule under the authority of 
    Section 332 of the Department of Transportation and Related Agencies 
    Appropriations Act for Fiscal Year 1997, P.L. 104-205. Section 332 
    provided that funds provided by the Act could be used for the purpose 
    of permitting exemptions from the odometer disclosure requirements of 
    Part 580.
    
    [[Page 52632]]
    
        Subsequently, Congress addressed the issue of exemptions more 
    completely in the Transportation Equity Act for the 21st Century, P.L. 
    105-178 (TEA 21). To resolve any lingering uncertainties about the 
    validity of exemptions issued under Part 580, Section 7105(b) of TEA 21 
    amended Section 32705(a) of title 49, United States Code, by adding the 
    following new paragraph:
    
        (5) The Secretary may exempt such classes or categories of 
    vehicles as the Secretary deems appropriate from these requirements. 
    Until such time as the Secretary amends or modifies the regulations 
    set forth in 49 CFR 580.6, such regulations shall have full force 
    and effect.
    
        In making final the transition from section 580.6 to section 
    580.17, which was initiated by the interim final rule, the agency's 
    repromulgation of the exemptions implements the provisions of paragraph 
    32705(a)(5). The amendments relating to ``model years,'' and to the 
    method for calculating the most recent model year to which an exemption 
    applies, are made under the authority provided by the paragraph to 
    amend or modify exemptions.
    
    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 rule does not have sufficient federalism implications to warrant 
    the preparation of a Federalism Assessment. The final rule merely 
    clarifies the scope of the existing exemption from the odometer 
    disclosure requirements, and does not alter the effect on the states of 
    existing statutory or regulatory requirements.
    
    Rulemaking Analyses
    
    A. Executive Order 12886 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 
    12866 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 
    substantial economic impact on a substantial number of small entities. 
    Because it merely clarifies an existing exemption from 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 final rule is not a collection of information as that term is 
    defined by OMB in 5 CFR part 1320. It clarifies one of the existing 
    exemptions to the odometer disclosure requirements in 49 CFR part 580. 
    That exemption does 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 Act
    
        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 
    disconnecting, altering or tampering with an odometer with an intent to 
    defraud. Agency regulations issued under 49 U.S.C. Chapter 327 are 
    subject to judicial review pursuant to 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 challenging 
    regulations promulgated under Chapter 327.
    
    List of Subjects in 49 CFR Part 580
    
        Consumer protection, Motor vehicles, Odometers.
    
        In consideration of the foregoing, the interim rule amending 49 CFR 
    part 580 that was published at 62 FR 47763 on September 11, 1998, is 
    adopted as a final rule with the following change:
    
    PART 580--ODOMETER DISCLOSURE REQUIREMENTS
    
        1. Revise the authority citation for Part 580 to read as follows:
    
        Authority: 49 U.S.C. 32705; delegation of authority at 49 CFR 
    1.50(f) and 501.8(e)(1).
    
        2. Amend Sec. 580.17 to revise paragraph (a)(3) to read as follows:
    
    
    Sec. 580.17  Exemptions.
    
    * * * * *
        (a) * * *
        (3) A vehicle that was manufactured in a model year beginning at 
    least ten years before January 1 of the calendar year in which the 
    transfer occurs; or
    
        Example to paragraph (a)(3): For vehicle transfers occurring 
    during calendar year 1998, model year 1988 or older vehicles are 
    exempt.
    * * * * *
        Issued on: September 24, 1998.
    Ricardo Martinez,
    Administrator.
    [FR Doc. 98-26263 Filed 9-30-98; 8:45 am]
    BILLING CODE 4910-59-P
    
    
    

Document Information

Effective Date:
10/1/1998
Published:
10/01/1998
Department:
National Highway Traffic Safety Administration
Entry Type:
Rule
Action:
Final rule.
Document Number:
98-26263
Dates:
This rule is effective October 1, 1998.
Pages:
52630-52632 (3 pages)
Docket Numbers:
NHTSA-98-4438
RINs:
2127-AG83: Exemptions to Odometer Disclosure Requirements
RIN Links:
https://www.federalregister.gov/regulations/2127-AG83/exemptions-to-odometer-disclosure-requirements
PDF File:
98-26263.pdf
CFR: (1)
49 CFR 580.17