[Federal Register Volume 74, Number 149 (Wednesday, August 5, 2009)]
[Rules and Regulations]
[Pages 38974-38985]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-18835]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 599

[ Docket No. NHTSA-2009-0120]
RIN 2127-AK54; Notice 1


Requirements and Procedures for Consumer Assistance To Recycle 
and Save Program

AGENCY: National Highway Traffic Safety Administration (NHTSA), 
Department of Transportation (DOT).

ACTION: Final rule.

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SUMMARY: This final rule amends the regulation implementing the 
Consumer Assistance to Recycle and Save (CARS) Program, published on 
July 29, 2009 in the Federal Register, under the CARS Act (Pub. L. 111-
32). The rule clarifies the insurance eligibility requirements for 
trade-in vehicles under the CARS program. The rule makes substantive 
changes and a conforming amendment related to the timing for disabling 
trade-in vehicle engines. The rule also makes a technical amendment to 
the requirements and procedures for identifying salvage auctions and 
disposal facilities. Finally, we provide a clarification related to the 
insurance requirement under the CARS Act.

DATES: This final rule is effective August 5, 2009. Petitions: If you 
wish to petition for reconsideration of this rule, your petition must 
be received by September 21, 2009.

ADDRESSES: If you submit a petition for reconsideration of this rule, 
you should refer in your petition to the docket number of this document 
and submit your petition to: Administrator, National Highway Traffic 
Safety Administration, 1200 New Jersey Avenue, SE., West Building, 
Washington, DC 20590.
    The petition will be placed in the public docket. Anyone is able to 
search the electronic form of all documents received into any of our 
dockets by the name of the individual submitting the document (or 
signing the document, if submitted on behalf of an association, 
business, labor union, etc.). You may review the complete User Notice 
and Privacy Notice for Regulations.gov at http://www.regulations.gov/search/footer/privacyanduse.jsp.

FOR FURTHER INFORMATION CONTACT: For questions, you may call David 
Bonelli, NHTSA Office of Chief Counsel, telephone (202) 366-5834.

SUPPLEMENTARY INFORMATION: This final rule amends the regulation 
implementing the Consumer Assistance to Recycle and Save (CARS) 
Program, published on July 29, 2009 (74 FR 37878), under the CARS Act 
(Pub. L. 111-32). The rule makes substantive changes and a conforming 
amendment related to the timing for disabling trade-in vehicle engines. 
The rule also makes a technical amendment to the requirements and 
procedures for identifying salvage auctions and disposal facilities. 
Finally, the agency clarifies the application of the insurance 
requirement under the CARS Act.

a. Engine Disablement

    The rule currently requires a dealer that receives an eligible 
trade-in vehicle under the CARS program to disable that vehicle's 
engine prior to submitting an application for reimbursement and prior 
to transferring the vehicle to a disposal facility. That requirement is

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implemented in sections 599.300(a), 599.300(d)(2), 599.300(e)(1)(i) and 
the certifications in Appendix A.
    The agency has determined that the requirement for a dealer to 
disable the engine prior to submitting an application for reimbursement 
could create an undue hardship for a dealer in some circumstances. For 
example, a dealer operating in good faith may conduct a non-compliant 
transaction under the CARS program and extend a credit that is 
disapproved for reimbursement after the sale or lease of a new vehicle 
to a customer. If the engine of the trade-in vehicle has already been 
disabled under these circumstances, as the rule currently requires, the 
dealer would not only forgo a CARS credit reimbursement, but also be 
unable to recoup the full value of the trade-in vehicle to mitigate its 
loss.
    With these considerations in mind, this final rule amends the 
provision relating to the timing of the dealer's disablement of the 
engine of the trade-in vehicle. The agency is removing the requirement 
that the dealer disable the engine prior to submitting an application 
for reimbursement and replacing it with a provision that allows engine 
disablement before or after submission of the application for 
reimbursement, but in all cases prior to leaving the dealership or 
property owned by or under the control of the dealership.
    Accordingly, we are amending section 599.300(a) to specify that the 
dealer must store the trade-in vehicle at the dealership or property 
owned by or under the control of the dealership until the engine is 
disabled. We are amending section 599.300(d) to remove the requirement 
for engine disablement prior to submission of the request for 
reimbursement and to insert a requirement that the dealer must disable 
the engine at its dealership or property owned by or under the control 
of the dealership not more than seven calendar days after the 
government reimburses the dealer for the value of the credit. The 
continued storage of the trade-in vehicle and the disablement of trade-
in vehicle's engine are conditions of the government's payment of the 
credit to the dealer that the dealer is obligated to satisfy.
    We are amending the certification in Appendix A to allow a dealer 
to certify, at the time of the submission of the application for 
reimbursement, that the dealer has either already disabled the engine 
at the dealership or property owned by or under the control of the 
dealership or will store the trade-in vehicle at the dealership or 
property owned by or under the control of the dealership and disable 
the engine at the dealership or property owned by or under the control 
of the dealership not more than seven calendar days after receiving 
electronic reimbursement for the credit. The amendment does not change 
the requirement that the dealer disable the engine before the trade-in 
vehicle is transferred to the disposal facility or salvage auction. The 
storage requirement enables the agency to inspect to see that the 
dealer has not shipped the trade-in vehicle prematurely. The rule makes 
a conforming change section 599.300(d)(3) to retain the requirement to 
mark the title prior to submission of the application for 
reimbursement. Finally, today's amendments do not affect the 
requirements for pre-July 24th trade-in vehicles under the program 
where the vehicle has already been transferred from the dealership.

b. Technical Amendments

    The final rule currently requires salvage auctions, as a condition 
of participation in the program, to transfer trade-in vehicles only to 
a disposal facility listed on the agency's website at cars.gov/disposal 
or to a facility that disposes of vehicles in Puerto Rico, the Virgin 
Islands, Guam, American Samoa, or the Commonwealth of the Northern 
Mariana Islands. Section 599.201(a)(1) of the regulation incorrectly 
stated that a salvage auction may transfer the vehicle to a disposal 
facility identified in Section 599.201(b)(2) or (b)(3). The correct 
citations are Section 599.201(a)(2) or (a)(3). Today's amendment makes 
that correction.
    The agency is amending the Dealer Certifications (Appendix A). We 
are removing the reference to the ``engine block'' and replacing it 
with the ``engine'' for conformity with the language in the regulation. 
In this same dealer certification, the phrase ``render inoperative'' is 
being replaced with the word ``disable.'' This change, too, allows the 
dealer certification form in Appendix A to conform to the language used 
throughout the rule. These changes do not change the meaning of the 
rule. The procedures of Appendix B, Engine Disablement Procedures for 
the CARS Program, continue to apply. These dealer certification changes 
will also be made to the electronic certification screen a dealer sees 
while entering a transaction. It may take some time to amend the 
electronic form. However, the new certifications are now available in 
the Summary of Sale sheet, which should be used immediately. The 
certifications on this form will control and the superseded 
certification on the electronic form will not be binding.
    Finally, the agency is amending the Disposal Facility Certification 
Form (Appendix E) by replacing incorrect information in one of the 
input fields. We are removing ``End of Life Vehicle Solution (ELVS) 
Identification No. (if assigned)'' and replacing it with ``NHTSA 
Disposal Facility Identification No. (if assigned).'' The requested 
number is a unique identifier assigned by NHTSA to the disposal 
facility identified on the CARS website--it is not assigned by the ELVS 
program. This correction should resolve the instances of misdirected 
inquiries from dealers seeking a number from the ELVS program.

c. Insurance Eligibility Requirements

    In addressing the requirement under the CARS Act that the trade-in 
vehicle be ``continuously insured consistent with the applicable State 
law,'' the agency stated in the preamble to the rule its interpretation 
that the Act requires all transactions to meet the continuous one-year 
insurance condition as a threshold matter with respect to any trade-in 
vehicle under the CARS program. Upon further consideration of the 
statutory language and because the prior interpretation has only been 
in effect a few days, the agency has concluded that, in those States 
with no insurance requirement, the rule's requirement unfairly 
penalizes consumers who are in compliance with State law. Therefore, 
today's interpretation exempts trade-in vehicles registered in New 
Hampshire and Wisconsin from the one-year insurance requirement because 
both New Hampshire and Wisconsin have no insurance requirement under 
State Law. As this interpretation is not inconsistent with the existing 
regulatory text, no change to the rule is necessary; however, the 
dealer and purchaser certifications (Appendix A) are being amended to 
make today's interpretation clear.

Statutory Basis for This Action

    This final rule makes amendments to implement the Consumer 
Assistance to Recycle and Save Act (CARS Act) (Pub. L. 111-32), which 
directs the Secretary to issue final regulations.

APA Requirements and Effective Date

    The rule is being issued without first providing a notice and an 
opportunity for public comment. Section 1302(d) of the CARS Act 
provides that ``notwithstanding'' the requirements of section 553 of 
title 5, United States Code, the Secretary shall promulgate

[[Page 38976]]

final regulations to implement the Program not later than 30 days after 
the date of the enactment of this Act. Given that schedule and the fact 
that this 4-month program with a statutorily fixed end date has already 
begun, the agency finds for good cause that providing notice and 
comment is impracticable and contrary to the public interest for these 
changes to the final rule. Drafting and issuing a proposed rule, 
providing a period for public comment, and addressing those comments in 
the final rule would have been highly impracticable in the time 
available and would have substantially delayed issuance of this final 
rule. Because sales of new vehicles under the program have begun in 
what appears to be high volume, we believe it is necessary to provide 
these amendments and clarification immediately so that no one will be 
harmed in making transactions.
    Because of the CARS Act schedule and the fact that the 4-month 
program has already begun, the agency finds that it has good cause to 
make this rule effective fewer than 30 days after the publication in 
the Federal Register. In view of the fact that sales of new vehicles 
under the program have begun in what appears to be high volume, we 
believe it is necessary to provide these amendments and clarifications 
immediately so that no one will be harmed in making transactions. We 
also note that, other than the technical provisions, this rule is 
relieving restrictions in the original final rule. It would, therefore, 
be inconsistent with Congressional intent, impracticable, and contrary 
to the public interest, to delay the effective date of the regulation, 
which would, in turn, adversely affect effective implementation of the 
program.
    Accordingly, the effective date of this final rule is August 5, 
2009.

Regulatory Analyses and Notices

    Because of the public and Congressional interest in the CARS 
program, this rulemaking is considered significant under Executive 
Order 12866 and the Department of Transportation's Regulatory Policies 
and Procedures. It was reviewed by the Office of Management and Budget. 
The agency has discussed the relevant requirements of the Regulatory 
Flexibility Act, Executive Order 13132 (Federalism), Executive Order 
12988 (Civil Justice Reform), the National Environmental Policy Act, 
the Paperwork Reduction Act, and the Unfunded Mandates Reform Act in 
the July 29, 2009 final rule cited above. This rule does not change the 
finding in those analyses.
Regulatory Identifier Number (RIN)
    The Department of Transportation assigns a regulatory identifier 
number (RIN) to each regulatory action listed in the Unified Agenda of 
Federal Regulations. The Regulatory Information Service Center 
publishes the Unified Agenda in April and October of each year. You may 
use the RIN contained in the heading at the beginning of this document 
to find this action in the Unified Agenda.
Privacy Act
    Please note that anyone is able to search the electronic form of 
all comments received into any of our dockets by the name of the 
individual submitting the comment (or signing the comment, if submitted 
on behalf of an association, business, labor union, etc.). You may 
review the complete User Notice and Privacy Notice for Regulations.gov 
at http://www.regulations.gov/search/footer/privacyanduse.jsp.

List of Subjects in 49 CFR Part 599

    Fuel Economy, Motor Vehicle Safety.

0
In consideration of the foregoing, NHTSA hereby amends 49 CFR part 599 
as set forth below.

PART 599--REQUIREMENTS AND PROCEDURES FOR CONSUMER ASSISTANCE TO 
RECYCLE AND SAVE ACT PROGRAM

0
1. The authority citation for Part 599 continues to read as follows:

    Authority:  49 U.S.C. 32901, Notes; delegation of authority at 
49 CFR 1.50.


0
2. Section 599.201 is amended by revising paragraph (a)(1) to read as 
follows:


Sec.  599.201  Identification of salvage auctions and disposal 
facilities.

    (a) * * *
    (1) A salvage auction that will transfer trade-in vehicles received 
under this program only to a disposal facility identified in paragraph 
(a)(2) or (a)(3) of this section.
* * * * *

0
3. Section 599.300 is amended by revising paragraphs (a), (d) 
introductory text, (d)(2), and (d)(3), to read as follows:


Sec.  599.300  Requirements for qualifying transactions.

    (a) In general. To qualify for a credit under the CARS Program, a 
dealer must sell or lease a new vehicle that meets eligibility 
requirements to a purchaser, obtain a trade-in vehicle that meets 
eligibility requirements from the purchaser, satisfy combined fuel 
economy requirements for both the new and trade-in vehicles, store the 
trade-in vehicle at the dealership or property owned by or under the 
control of the dealership until the engine is disabled, disable the 
engine of the trade-in vehicle at the dealership or property owned by 
or under the control of the dealership, satisfy the limitations and 
restrictions of the program, arrange for disposal of the trade-in 
vehicle at a qualifying disposal facility or through a qualifying 
salvage auction, and register and submit a complete application for 
reimbursement to NHTSA, demonstrating that it meets all the 
requirements of this part.
* * * * *
    (d) Trade-In Vehicle--Disclosure of Scrap Value, Engine 
Disablement, and Title Marking. As part of a qualifying transaction 
under this part, the dealer shall:
* * * * *
    (2) Except as provided in paragraph (e) of this section, store the 
trade-in vehicle at the dealership or property owned by or under the 
control of the dealership until its engine is disabled following the 
procedures set forth in Appendix B to this part, disable the engine of 
the trade-in vehicle at the dealership or property owned by or under 
the control of the dealership following the procedures set forth in 
Appendix B to this part, and certify, as provided in Appendix A to this 
part, dealer certifications section, that either the engine of the 
trade-in vehicle has been disabled at the dealership or property owned 
by or under the control of the dealership, or that the trade-in vehicle 
will be stored at the dealership or property owned by or under the 
control of the dealership until the engine is disabled and the engine 
of the trade-in vehicle will be disabled by the dealer at the 
dealership or property owned by or under the control of the dealership 
not more than seven calendar days after the dealer's receipt of payment 
for the transaction; and
    (3) Prior to submitting an application for reimbursement under 
Sec.  599.302, legibly mark the front and back of the trade-in 
vehicle's title in prominent letters that do not obscure the owner's 
name, VIN, or other writing as follows: ``Junk Automobile, CARS.gov.''
* * * * *

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4. Revise Appendix A to Part 599 to read as follows:
BILLING CODE 4910-59-P

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5. Revise Appendix E to Part 599 to read as follows:

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    Issued on: July 31, 2009.
Ronald L. Medford,
Acting Deputy, Administrator.
 [FR Doc. E9-18835 Filed 8-3-09; 4:15 pm]
BILLING CODE 4910-59-C