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[Federal Register Volume 62, Number 176 (Thursday, September 11, 1997)]
[Rules and Regulations]
[Pages 47763-47765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23991]

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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

[[Page 47764]]

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.

[[Page 47765]]

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
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