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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

# AGENCY:

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

# ACTION:

Final rule.

# 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                           ( print page 38975)                        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                           ( print 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

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

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.

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

§ 599.201

(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.

* * * * *

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

§ 599.300

                            (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 § 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.”

* * * * *

4. Revise Appendix A to Part 599 to read as follows: 
      ( print page 38977)          ( print page 38978)          ( print page 38979)          ( print page 38980)          ( print page 38981)    
5. Revise Appendix E to Part 599 to read as follows: 
      ( print page 38982)          ( print page 38983)          ( print page 38984)    
      ( print page 38985)    
Issued on: July 31, 2009.

Ronald L. Medford,

Acting Deputy, Administrator.

BILLING CODE 4910-59-P

 [FR Doc. E9-18835 Filed 8-3-09; 4:15 pm]

BILLING CODE 4910-59-C