Source: https://www.federalregister.gov/documents/2000/12/26/00-32527/motor-vehicle-safety-criminal-penalty-safe-harbor-provision
Timestamp: 2018-09-25 03:23:14
Document Index: 557023435

Matched Legal Cases: ['art 578', 'art 512', 'art 578', 'art 578', 'art 578', '§\u2009578', '§\u2009578', 'art\n5', '§\u2009578', '§\u2009578']

Federal Register :: Motor Vehicle Safety: Criminal Penalty Safe Harbor Provision
Motor Vehicle Safety: Criminal Penalty Safe Harbor Provision
65 FR 81414
81414-81419 (6 pages)
Docket No. NHTSA-2000-8510
2127-AI24
00-32527
B. Reasonable Time for Correction
C. Sufficient Manner of Correction
Reporting an improper Report or a Failure to Report.
https://www.federalregister.gov/d/00-32527 https://www.federalregister.gov/d/00-32527
This Interim Final Rule implements Section 5(b) of the Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act by specifying the time period and manner for correction of improper reports and failures to report to the Secretary of Transportation (Secretary) relating to safety defects in motor vehicles and motor vehicle equipment. Section 5(b) adds a new section, which provides for criminal liability in circumstances where a person violated reporting requirements with the intention of misleading the Secretary with respect to safety-related defects in motor vehicles or motor vehicle equipment that have caused death or serious bodily injury. To encourage the correction of incorrect or incomplete information that was reported or should have been reported to the Secretary, Section 5 includes a “safe harbor” provision that offers protection from criminal prosecution to persons who meet certain criteria. To qualify for this protection, the person must have lacked knowledge at the time of the violation that the violation would result in an accident causing death or serious bodily injury and must correct any improper reports or failures to report to the Secretary within a reasonable time. Section 5 directs the Secretary to establish by regulation what constitutes a “reasonable time” and a sufficient manner of “correction,” within 90 days of the enactment of the TREAD Act, which occurred on November 1, 2000.
You may submit your comments in writing to: Docket Management, Room PL-401, 400 Seventh Street, SW., Washington, DC, 20590. You may also submit your comments electronically by logging onto the Dockets Management System website at http://dms.dot.gov. Click on “Help & Information” or “Help/Info” to obtain instructions for filing the document electronically. Regardless of how you submit your comments, include the docket number of this document on your comments. You may call Docket Management at 202-366-9324. You may visit the Docket from 10:00 a.m. to 5:00 p.m., Monday through Friday.
Steven Cohen, Office of Chief Counsel, NCC-10, National Highway Traffic Safety Administration, 400 Seventh Street, SW., Washington, DC, 20590, Telephone (202) 366-5263, Fax: 202-366-3820.
On November 1, 2000, the TREAD Act, Public Law 106-414, was enacted in response, in part, to congressional concerns related to manufacturers' inadequate reporting to NHTSA of information regarding possible defects in motor vehicles and motor vehicle equipment, including tires. The TREAD Act expands 49 U.S.C. 30166, Inspections, investigations, and records, and provides for the Secretary to issue various rules thereunder. The authority to carry out Chapter 301 of Title 49 United States Code, under which the rules directed by the TREAD Act are to be issued, has been delegated to NHTSA's Administrator pursuant to 49 CFR 1.50.
Section 5(b) of the TREAD Act, adds a new section, 49 U.S.C. 30170, to Chapter 301. Section 30170(a)(1) establishes criminal liability for a “person who violates section 1001 of title 18 with respect to the reporting requirements of [49 U.S.C.] section 30166, with the specific intention of misleading the Secretary with respect to motor vehicle or motor vehicle equipment safety related defects that have caused death or serious bodily injury to an individual. . . .” Section 1001 of title 18 provides that whoever “. . . knowingly and willfully—(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; (2) makes any materially false, fictitious, or fraudulent statement or representation; or (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry” in a matter within the jurisdiction of the federal government is subject to a fine and imprisonment.
Section 30170(a)(2)(A) contains a “safe harbor” provision, which states that a
person described in paragraph (1) [of 49 U.S.C. 30170(a)] shall not be subject to criminal penalties * * * if (1) at the time of the violation, such person does not know that the violation would result in an accident causing death or serious bodily injury; and (2) the person corrects any improper reports or failure to report within a reasonable time.
This safe harbor applies only to criminal liability related to 49 U.S.C. 30170(a)(1). Section 30170(a)(2)(B) requires the Secretary to “establish by regulation what constitutes a reasonable time for the purposes of [49 U.S.C. 30170(a)(2)(A)] and what manner of correction is sufficient for the purposes of [49 U.S.C. 30170(a)(2)(A)].”
NHTSA is promulgating this regulation on a reasonable time and on the manner of correction as an interim final rule to comply with 49 U.S.C. 30170(a)(2)(B)'s mandate that the final rule be issued “within 90 days of the date of the enactment of this section.” In order to implement the statutorily-mandated final rule concerning the safe harbor from criminal penalties under 49 U.S.C. 30170, we are amending 49 CFR Start Printed Page 81415Part 578. As an interim final rule, the regulation will be effective 30 days after the date of publication in the Federal Register. However, comments may be submitted for a period of 60 days from the date of publication in the Federal Register. NHTSA will review and respond to all timely comments.
49 U.S.C. 30170 creates a new criminal liability that is dependent on a violation of 18 U.S.C. 1001. The TREAD Act does not provide for the Secretary to engage in rulemaking with respect to the elements of 18 U.S.C. 1001 or the elements of the new 49 U.S.C. 30170. Accordingly, this rule does not do so.
The TREAD Act requires NHTSA to establish by regulation what constitutes a “reasonable time” for a person to correct any improper reports or failure to report. To delineate what constitutes a reasonable time, NHTSA considered its own rules and experiences with the current motor vehicle and motor vehicle equipment defects program. NHTSA also inquired about potentially comparable safe harbor rules and policies used by other federal agencies. NHTSA considered the Environmental Protection Agency's (EPA) evaluation of its Audit Policy, 64 FR 26745 (May 17, 1999), and the Final Policy Statement for its Audit Policy: “Incentives for Self-policing: Discovery, Disclosure, Correction and Prevention of Violation,” 65 FR 19618 (April 11, 2000); the Internal Revenue Service Chief Counsel's Directives Manual: Voluntary Disclosure, CCDM 31.3.3; and the Federal Aviation Administration's (FAA) Advisory Circulars on Aviation Safety Action Programs, AC120-66A, the Voluntary Disclosure Reporting Program, AC00-58, and the Aviation Safety Reporting Program, AC00-46D.
In considering the number of days available for compliance with the reasonable time requirement by a person seeking protection under the safe harbor provision, NHTSA considered various factors. First, the agency's mission under Chapter 301 is motor vehicle safety. Consistent with its mission, the agency needs to collect complete and accurate information in order to decide whether to open investigations of potential defects, to conduct those investigations efficiently and expeditiously, and to assure appropriate oversight of ongoing recalls. The reasonable time period should minimize the time that NHTSA is performing its safety responsibilities using an incorrect or incomplete factual record. Similarly, the time period must generate an urgency that will compel potential correctors to come forward before it expires. NHTSA has determined that this is best done by offering the protection of the safe harbor provision for a period that is not longer than reasonably necessary for such a person to decide to come forward and to do so.
Second, NHTSA does not intend to discourage the submission of corrected reports and reports that should have been submitted but were not submitted. This is not a new concept. Historically, NHTSA has allowed late submissions of information required under section 30166 where a late submission is justified. In order to encourage the use of the safe harbor provision, the time period must be long enough for the provision to be usable in real world situations. This includes allowing enough time for persons who would be willing to take corrective actions under the safe harbor provision to accept the responsibility associated with it and to come forward. We are mindful that the correction of a false report may involve complexities that do not arise in the instance of the initial report. There may be some contentious review and consultation within the company and/or with counsel, which may be compounded where a person may have to obtain or check information maintained by various corporate organizations and possibly contractors, and additional time may be required to prepare fully correct statements that conflict with the manufacturer's statement of record.
NHTSA has concluded that, in order to satisfy the “reasonable time” element of the safe harbor provision, the person seeking protection from criminal liability must correct each improper (i.e., incorrect, incomplete, or misleading) report required by 49 U.S.C. 30166, or a regulation, requirement, request or order issued thereunder, not more than twenty-one (21) calendar days after the date of the report to the agency and must correct each failure to report not more than twenty-one (21) calendar days after the information or documents were due to be sent to or received by the agency, as the case may be, pursuant to 49 U.S.C. 30166 or a regulation, requirement, request or order issued thereunder. These reports include, for example, answers and documents submitted in response to information requests propounded by NHTSA's Office of Defects Investigation or Special Orders issued by NHTSA's Chief Counsel, as well as information required to be submitted under the “early warning” provisions of the TREAD Act and the regulations to be issued thereunder.
The time period of “not more than 21 days” is similar to the window of opportunity of “within 21 days (or within such shorter time as may be required by law)” offered by the EPA in Section D(3) of its recently amended Audit Policy, which the EPA published as a Final Policy Statement at 65 FR 19618 (April 11, 2000). Under its Audit Policy, the EPA will waive or substantially reduce the “gravity” based component of civil penalties for violators of environmental requirements who discover, disclose, and correct these violations (the EPA's Audit Policy provides no basis for waiving civil liability associated with the “economic benefits” of an environmental violation or for any criminal liability). NHTSA did not include any language referring to shorter time periods from other legal requirements in this rule because Chapter 301 does not contain shorter periods that are applicable.
The time period of 21 days in the final Audit Policy, as published at 65 FR 19618 (April 11, 2000), is different from the original time period of 10 days used by the EPA in the previous version of its Audit Policy, as published at 60 FR 66705 (December 22, 1995). The EPA's recent changes to Audit Policy were based on its evaluation of the Audit Policy in use for the preceding three years, which the EPA published at 64 FR 26745 (May 17, 1999). One result of this evaluation was that the EPA increased the time period for coming forward to report violations from 10 days to 21 days after discovery of the violation because it found that “the 10-day time frame [was] a common reason for ineligibility under the [initial] Policy” and thus that “the 10-day disclosure period may be a significant impediment to increased use of the Audit Policy” by violators who otherwise would have come forward or did come forward soon after the 10 day period expired. The EPA's study of its Audit Policy concluded the “10 days is not sufficient time to analyze and decide whether to disclose potential violations, especially for larger corporations with several layers of management.” NHTSA believes that the EPA's appraisal of what time period constitutes a “reasonable time” for correction is reasonably applicable to the safe harbor provision of Section 30170(a)(2).
Finally, NHTSA believes that the starting point for calculating the 21-day period should be consistent with the underlying predicate crime. The predicate crime involves a violation of 18 U.S.C. 1001. As noted above, the Start Printed Page 81416standard under 18 U.S.C. 1001 is knowingly and willfully. Also, 49 U.S.C. 30170 applies to a person who acts “with the specific intention of misleading the Secretary.” Thus, any person subject to possible criminal liability under 49 U.S.C. 30170 would have known of the impropriety at the time that the person executed the improper report or failed to report to NHTSA. In light of this knowledge, the time period will run from date of the report to NHTSA or the date of the failure to report to NHTSA.
In order for the correction to be timely, it must be received by NHTSA on or before the 21st day, not merely mailed or otherwise sent before that day. NHTSA has also determined that the integrity of the process and the 21-day due date requires that submissions be made by a means which permits the sender to verify promptly that the correction was in fact received by NHTSA and the day it was received by NHTSA. These means include certified mail, an overnight delivery service, or delivery by hand.
The TREAD Act requires NHTSA to establish by regulation what constitutes a “correction” for a person to obtain protection under the safe harbor provision. To delineate what constitutes a correction, NHTSA considered its own rules and experiences with the current motor vehicle and motor vehicle equipment defects program. NHTSA has concluded that, in order for a correction of improper reports or a failure to report to be sufficient under the safe harbor provision's protections from criminal penalties, it must accomplish the following: (1) Identify with specificity all items of information and documents that were improper or were not provided and (2) correct all reporting improprieties and/or failures for which the protections of the safe harbor provision are sought, including providing NHTSA with all missing or corrected documents and information. Therefore, each person seeking protection from criminal penalties under 49 U.S.C. 30170 must sign and submit to NHTSA one or more reports identifying each previous item of information and/or document that was improper or not provided to NHTSA and is related to a required submission under 49 U.S.C. 30166, or a regulation, requirement, request or order issued thereunder, for which protection is sought. This report must also identify the specific predicate under which the missing or improper report should have been submitted (e.g., the report was required by a specific regulation, a NHTSA Information Request, a NHTSA Special Order, etc.). Further, the report must include or be accompanied by the complete and correct information and documents that should have been submitted.
Because NHTSA collects a range of information under 49 U.S.C. 30166, corrections could be made by a wide range of persons. For a corporation to make a correction, it must be signed by an authorized person (ordinarily the individual officer or employee who submitted the information and/or who should have provided missing information, or someone in the company with authority to make such a submission). If the person making the correction cannot submit the correct information, the individual must provide a full detailed description of that information or of the content of those documents and the reason why he or she cannot provide them to NHTSA (e.g., the information or documents are not in the individual's possession or control).
We have considered the impact of this rulemaking action under E.O. 12866 and the Department of Transportation's regulatory policies and procedures. This rulemaking was not reviewed under E.O. 12866, “Regulatory Planning and Review.” This rulemaking is not considered “significant” under the Department of Transportation's regulatory policies and procedures. The impacts of this rule are expected to be so minimal as not to warrant preparation of a full regulatory evaluation because this provision only involves a safe harbor for criminal sanctions associated with a criminal provision that NHTSA does not expect to be invoked often.
We have also considered the impact of this notice under the Regulatory Flexibility Act. I certify that this rule will have no significant economic impact on a substantial number of small entities. As stated above, this provision only involves a safe harbor for criminal penalties which NHTSA does not expect to be invoked often.
We have analyzed this proposal for the National Environmental Policy Act and determined that it would not have any significant impact on the quality of the human environment.
NHTSA has determined that this interim final rule will impose new collection of information burdens within meaning of the Paperwork Reduction Act of 1995 (PRA). Pursuant to 5 CFR 1320.13, Emergency processing, NHTSA is asking OMB for a temporary emergency clearance for this collection. In this interim final rule, NHTSA begins the process of requesting a 3-year clearance for this collection.
Under the PRA, before an agency submits a proposed collection of information to OMB for approval, it must publish a document in the Federal Register providing a 60-day comment period and otherwise consult with members of the public and affected agencies concerning each proposed collection of information. The OMB has promulgated regulations describing what must be included in such a document. Under OMB's regulations (5 CFR 1320.8(d)), an agency must ask for public comment on the following:
In compliance with these requirements, NHTSA asks public comment on the collection of information in this interim final rule.
OMB Clearance Number— None assigned.
Summary of the Collection of Information—Any person seeking protection from criminal liability under 49 U.S.C. 30170 related to an improper report or failure to report pursuant to 49 Start Printed Page 81417U.S.C. 30166, or a regulation, requirement, request or order issued thereunder, will be required to report the following information to NHTSA: (1) Each improper item of information or document and each failure to report an item of information or document that was required under 49 U.S.C. 30166, or a regulation, requirement, request or order issued thereunder, (2) the specific predicate under which the missing or improper report should have been provided, and (3) complete and correct reports that include all information that should have been submitted, including relevant documents that were not previously submitted to NHTSA or, if the person cannot do so, provide a full detailed description of that information or of the content of those documents and the reason why the individual cannot provide them to NHTSA.
Description of the Need for the Information and Use of the Information—This information collection was mandated by Section 5 of the TREAD Act. The information collected will provide NHTSA with information the agency should have received previously and will also promptly provide the agency with correct information to do its analyses, such as, for example, conducting tests or drawing conclusions about possible safety-related defects. NHTSA anticipates using this information to help it to accomplish its statutory assignment of identifying safety-related defects in motor vehicles and motor vehicle equipment and, when appropriate, seeking safety recalls.
Description of the Likely Respondents, Including Estimated Number and Proposed Frequency of Response to the Collection of Information—This new collection of information would apply to any person who seeks a “safe harbor” from potential criminal liability for knowingly and willfully acting with the specific intention of misleading the Secretary by an act or omission that violates section 1001 of title 18 with respect to the reporting requirements of 49 U.S.C. 30166, regarding a safety-related defect in motor vehicles or motor vehicle equipment that caused death or serious bodily injury to an individual. Thus, the collection of information could apply to the manufacturers, and any officers or employees thereof, who respond or have a duty to respond to an information provision requirement pursuant to 49 U.S.C. 30166 or a regulation, requirement, request or order issued thereunder.
We believe that there will be very few criminal prosecutions under section 30170, given its elements. Accordingly, it is not likely to be a substantial motivating force for a submission of a proper report. We estimate that no more than nine such persons a year would invoke this new collection of information, and we do not anticipate receiving more that one report a year from any particular person.
Estimate of the Total Annual Reporting and Recordkeeping Burdens Resulting From the Collection of Information—As stated before, we estimate that no more than nine persons a year would be subject to this new collection of information. Incrementally, we estimate that on average it will take no longer than two hours for a person to compile and submit the information we are requiring to be reported. Therefore, the total burden hours on the public per year is estimated to be a maximum of 18 hours.
Since nothing in this rule would require those persons who submit reports pursuant to this rule to keep copies of any records or reports submitted to us, recordkeeping costs imposed would be zero hours and zero costs.
Executive Order 13132 on “Federalism” requires us to develop an accountable process to ensure “meaningful and timely input” by State and local officials in the development of “regulatory policies that have federalism implications.” The E.O. defines this phrase to include regulations “that have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This rule, which defines terms in a safe harbor provision for criminal penalties for a person who acts with the specific intention of misleading the Secretary regarding safety defects in motor vehicles or motor vehicle equipment, will not have substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in E.O. 13132. This rule making does not have those implications because it applies to those persons who are required by 49 U.S.C. 30166 to provide information to NHTSA.
If you have any responses to these questions, please include them in your comments.
NHTSA is promulgating this regulation on a reasonable time and on the manner of correction as an interim final rule to comply with Section 5(b)'s mandate that the final rule be issued “within 90 days of the enactment of the [TREAD Act].” As an interim final rule, the regulation contained herein will be effective 30 days after the date of publication in the Federal Register. However, as described below, comments may be submitted for a period of 60 days from the date of publication in the Federal Register. NHTSA will review and respond to all timely comments, as appropriate.
In developing this interim final rule, we tried to address the anticipated Start Printed Page 81418concerns of all our stakeholders. Your comments will help us improve this rule. We invite you to provide different views on it, new approaches we have not considered, new data, how this rule may affect you, or other relevant information. We welcome your views on all aspects of this rule, but request comments on specific issues throughout this document. We grouped these specific requests near the end of the sections in which we discuss the relevant issues. Your comments will be most effective if you follow the suggestions below:
If you estimate potential numbers of reports or costs, explain how you arrived at the estimate.
If you wish to submit any information under a claim of confidentiality, you should submit copies of your complete submission, including the information you claim to be confidential business information, to the Chief Counsel (NCC-30), NHTSA, at the address given above under FOR FURTHER INFORMATION CONTACT. In addition, you should submit two copies, from which you have deleted the claimed confidential business information, to Docket Management at the address given above under ADDRESSES. When you send a comment containing information claimed to be confidential business information, you should include a cover letter setting forth the information specified in our confidential business information regulation. (49 CFR Part 512.)
In consideration of the foregoing, 49 CFR part 578 is amended as follows:
1. The authority citation for Part 578 of Title 49 is revised to read as follows:
Authority: Pub. L. 101-410, Pub. L. 104-134, Pub. L. 106-414, 49 U.S.C. 30165, 49 U.S.C. 30170, 30505, 32308, 32309, 32507, 32709, 32710, 32912, and 33115; delegation of authority at 49 CFR 1.50.
2. The heading of Part 578 is revised to read as follows:
3. Section 578.1 is revised to read as follows:
§ 578.1
This part specifies the civil penalties for violations of statutes administered by the National Highway Traffic Safety Administration, as adjusted for inflation. This part also sets forth the requirements regarding the reasonable time and the manner of correction for a person seeking safe harbor protection from criminal liability under 49 U.S.C. 30170(a).
4. Section 578.2 is revised to read as follows:
§ 578.2
One purpose of this part is to preserve the remedial impact of civil penalties and to foster compliance with the law by specifying the civil penalties for statutory violations, as adjusted for inflation. The other purpose of this part is to set forth the requirements regarding the reasonable time and the manner of correction for a person seeking safe harbor protection from criminal liability under 49 U.S.C. 30170(a).
Start Printed Page 81419 Start Amendment Part
5. Section 578.3 is revised to read as follows:
This part applies to civil penalties for violations of Chapters 301, 305, 323, 325, 327, 329, and 331 of Title 49 of the United States Code. This part also applies to the criminal penalty safe harbor provision of section 30170 of Title 49 of the United States Code.
6. Section 578.4 is amended by revising the definition of “civil penalty” to read as follows:
§ 578.4
7. A new section 578.7 is added to read as follows:
§ 578.7
(b) Reasonable time. A correction is considered to have been performed within a reasonable time if the person seeking protection from criminal liability makes the correction to any improper (i.e., incorrect, incomplete, or misleading) report not more than twenty-one (21) calendar days after the date of the report to the agency and corrects any failure to report not more than twenty-one (21) calendar days after the report was due to be sent to or received by the agency, as the case may be, pursuant to 49 U.S.C. 30166, including a regulation, requirement, request or order issued thereunder. In order to meet these reasonable time requirements, all submissions required by this section must be received by NHTSA within the time period specified in this paragraph, and not merely mailed or otherwise sent within that time period.
[FR Doc. 00-32527 Filed 12-22-00; 8:45 am]