
[Federal Register: February 2, 2010 (Volume 75, Number 21)]
[Rules and Regulations]               
[Page 5248-5251]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02fe10-12]                         

-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 599

[Docket No. NHTSA-2009-0120; Notice 2]
RIN 2127-AK67

 
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.

-----------------------------------------------------------------------

SUMMARY: This final rule amends the regulations implementing the 
Consumer Assistance to Recycle and Save (CARS) program, published on 
July 29, 2009 in the Federal Register under the CARS Act. The rule 
change allows disposal facilities an additional 90 days, for a total of 
270 days, to crush or shred a vehicle traded in under the CARS program. 
This additional time will allow the public to benefit from the 
availability of lower cost used vehicle parts from vehicles traded in 
under the CARS program and will provide disposal facilities with an 
opportunity to derive more revenue from those vehicles prior to 
crushing or shredding.

DATES: This final rule is effective February 2, 2010. Petitions: If you 
wish to petition for reconsideration of this rule, your petition must 
be received by March 19, 2010.

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.

[[Page 5249]]


FOR FURTHER INFORMATION CONTACT: For questions, you may call David 
Jasinski, NHTSA Office of Chief Counsel, at (202) 366-5552.

SUPPLEMENTARY INFORMATION:

Current Rule and Notice of Proposed Rulemaking

    This final rule amends the regulations implementing the Consumer 
Assistance to Recycle and Save (CARS) program, published on July 29, 
2009 in the Federal Register (74 FR 37878) under the CARS Act (Pub. L. 
111-32). Those rules were amended by final rules published on August 5, 
2009 (74 FR 38974), and September 28, 2009 (74 FR 49338).
    On November 27, 2009, NHTSA published, in the Federal Register, a 
notice of proposed rulemaking (November 27 NPRM) (74 FR 62275). The 
November 27 NPRM proposed a rule change that would allow disposal 
facilities an additional 90 days, for a total of 270 days, to crush or 
shred a vehicle traded in under the CARS program. The additional time 
would allow the public to benefit from the availability of lower cost, 
used vehicle parts from CARS trade-in vehicles and would provide 
disposal facilities with an opportunity to derive more revenue from 
those vehicles prior to crushing or shredding, thereby providing 
additional economic benefit from the CARS program.
    Section 1302(c)(2) of the CARS Act grants the agency discretion to 
determine the appropriate time period by which a disposal facility must 
crush a vehicle. The rule currently requires a disposal facility that 
receives a vehicle traded in under the CARS program to crush or shred 
the vehicle within 180 days of receipt of the vehicle. 49 CFR 
599.401(a)(3). After consulting with representatives of disposal 
facilities, the agency determined that 180 days was an appropriate 
amount of time to allow a disposal facility to possess a car prior to 
crushing or shredding. This time period was based upon an estimate that 
250,000 vehicles would be traded in under the CARS program and that the 
program's duration would be four months.
    Due to the enormous popularity of the CARS program, the initial $1 
billion in available funds were quickly depleted and, on August 7, 
2009, Congress provided the CARS program with an additional $2 billion 
(Pub. L. 111-47). On August 25, 2009, approximately one month after the 
CARS program began, the agency stopped accepting new submissions 
because the additional funds were also depleted. By that time, nearly 
700,000 new vehicles had been sold under the CARS program.
    Shortly after CARS program transactions ceased and the majority of 
the dealers' transactions were reimbursed by NHTSA, a representative of 
disposal facilities requested a meeting with NHTSA officials to discuss 
the possibility of extending the 180-day time period for crushing or 
shredding a trade-in vehicle. Although disposal facilities initially 
expected to receive 250,000 CARS trade-in vehicles spread out over four 
months, disposal facilities actually received nearly 700,000 CARS 
trade-in vehicles. Further, the majority of the CARS trade-in vehicles 
were received within less than one month.
    At a September 29, 2009, meeting with disposal facility 
representatives,\1\ agency officials learned that some disposal 
facilities were experiencing substantial difficulty processing all of 
the CARS trade-in vehicles that were purchased from dealers or salvage 
auctions and that many disposal facilities anticipated significant 
difficulty in meeting the 180-day deadline to crush and shred these 
vehicles. The representatives also noted that the processing problems 
made it difficult for facilities to effectively inventory and sell 
parts from these vehicles, as authorized by the CARS Act. The disposal 
facilities suggested that, if they were able to hold a vehicle for more 
than 180 days prior to crushing or shredding, then consumers would have 
the benefit of cheaper used vehicle parts. The disposal facility 
representatives suggested that one year (an additional 180 days) would 
be a suitable time to ensure that the public received the maximum 
benefit from used vehicle parts while simultaneously ensuring that the 
vehicles are crushed or shredded within a reasonable time frame.
---------------------------------------------------------------------------

    \1\ A memorandum summarizing the meeting has been placed in the 
docket. (Docket No. NHTSA-2009-0120-0020).
---------------------------------------------------------------------------

    In the November 27 NPRM, the agency balanced the concerns of the 
disposal facilities and the public's interest in having access to 
cheaper used vehicle parts with two considerations that weighed against 
allowing more time to crush or shred trade-in vehicles. First, and most 
importantly, the agency was concerned about possible fraud. The CARS 
Act contains an explicit Congressional instruction to take measures to 
prevent fraud and the statute's clear environmental objective is to 
ensure that the fuel inefficient trade-in vehicles are never again used 
on the highway. The risk of fraud related to extending the deadline for 
crushing or shredding vehicles is mitigated substantially by the 
requirement that dealers disable the vehicles' engines within seven 
days after receipt of payment for the transaction and that vehicles be 
flagged by disposal facilities in the National Motor Vehicle Title 
Information System (NMVTIS) as scrap vehicles within seven days of 
receipt. Nevertheless, the risk of a vehicle returning to the highway 
is not fully eliminated until the vehicle is crushed or shredded.
    The agency was also concerned about the additional administrative 
burden that would result from extending the deadline for crushing or 
shredding vehicles. The agency is committed to enforcing the 
requirements of the CARS program, including the requirements that 
vehicles are not transferred prior to crushing or shredding, vehicles' 
engine blocks are not sold, and vehicles are crushed or shredded on 
site. The longer disposal facilities are allowed to keep vehicles on 
their lots prior to crushing, the longer the agency must devote 
resources to ensuring that disposal facilities comply with the 
requirements of the CARS program.
    After considering the relevant interests, the agency proposed to 
amend section 599.401(a)(3) to allow disposal facilities an additional 
90 days, for a total of 270 days, to crush or shred a vehicle. The 
agency stated that the 90 additional days struck an appropriate balance 
between the public benefit of having cheaper used vehicle parts from 
the vehicles traded in under the CARS program and the interest in 
minimizing fraud and the administrative burdens on the agency.
    As part of the certification forms currently required under section 
599.400 and Appendix E, a disposal facility must certify that a CARS 
program trade-in vehicle will be crushed or shredded within 180 days 
after receipt of the vehicle. Because NHTSA had already received the 
majority of the 700,000 Disposal Facility Certification Forms, it would 
be unnecessarily burdensome on both NHTSA and disposal facilities to 
require disposal facilities to submit new forms to NHTSA. Instead, 
NHTSA stated its intent to treat the certifications on the forms 
already submitted as if they required disposal facilities to crush or 
shred a vehicle within 270 days of receipt. NHTSA also proposed adding 
language to section 599.401 to formalize the de facto change to the 
existing certification.

[[Page 5250]]

Summary of Comments Received and Agency's Response

    NHTSA has considered all comments received by December 31, 2009. As 
of that date, NHTSA had received 84 comments on the proposed rule 
change. The overwhelming majority of comments received were from 
disposal facilities. NHTSA also received comments from a State 
automobile dealers association, State automobile recyclers 
associations, a national automobile recyclers association, and a 
national law enforcement support organization.
    Of the 84 comments received, 79 commenters expressed full support 
for the proposal to extend by 90 days the deadline for disposal 
facilities to crush or shred a CARS trade-in vehicle. The commenters 
cited many reasons for supporting the rule. The most often cited reason 
for favoring the proposed extension was the economic benefit of having 
cheaper used vehicle parts available to consumers. Commenters also 
cited the environmental benefits of the proposed rule associated with 
more re-use of used vehicle parts. Commenters also noted, as did NHTSA 
in the November 27 NPRM, that the original rule was based on the 
expectation that disposal facilities would receive 250,000 vehicles 
over four months. Instead, disposal facilities received nearly 700,000 
vehicles within less than one month. Many commenters noted that they 
hired more workers to process CARS trade-in vehicles. Finally, 
commenters supporting the proposed rule change also observed that 
winter weather conditions made the transport of mobile crushers to some 
parts of the country difficult.
    Four commenters did not fully support the proposed rule changes, 
expressing a preference for a longer extension of time for crushing or 
shredding CARS trade-in vehicles. The New Hampshire Automobile Dealers 
Association and Barger Auto Parts simply expressed a preference for 
having a full year to crush or shred a vehicle, but both stated that 
they supported the proposed 90-day extension. Motor Pro Auto Recycling 
stated that, because the funding for the CARS program was tripled, it 
would be unfair not to at least double the amount of time required for 
crushing or shredding. One individual observed that, in North Dakota, 
the winter climate makes it difficult to move vehicles in disposal 
facilities and that it would be ideal if facilities had until the end 
of the summer of 2010 to crush or shred vehicles.
    We have made no changes to the proposed rule based on these 
comments. Although we considered the reasons offered by the commenters 
in support of a longer period by which to crush or shred vehicles, 
nothing has altered the balance of interests discussed above and in the 
November 27 NPRM. The disposal facilities' economic interests and the 
public benefits must be balanced against the risk of fraud and the 
administrative burden of maintaining the CARS program. After 
consideration of all comments, the agency still believes that the 90-
day extension strikes the appropriate balance.
    One commenter, Howard Nusbaum, Administrator of the National 
Salvage Vehicle Reporting Program, expressed support for the 90-day 
extension as a reasoned compromise between the interests of the 
disposal facilities and the agency. However, Mr. Nusbaum offered two 
additional comments related to the involvement of salvage auctions in 
the disposal process. First, Mr. Nusbaum noted that there is no set 
time period by which salvage auctions must transfer CARS trade-in 
vehicles to disposal facilities. Mr. Nusbaum observed that the CARS 
program is, therefore, open-ended.
    Second, Mr. Nusbaum noted that NHTSA does not know what is 
happening to a CARS trade-in vehicle between the time it is transferred 
from a dealer to a salvage auction and the time it is transferred from 
the salvage auction to the disposal facility. Mr. Nusbaum also observed 
that a salvage auction cannot submit a disposal facility's 
certification form prior to selling the vehicle, leaving the 
enforcement of a disposal facility's eligibility to participate in a 
salvage auction up to the auction. According to Mr. Nusbaum, the 
current rules create a gap in the audit trail that introduces an 
opportunity for fraud by making it difficult for NHTSA to know that a 
salvage auction is properly disposing of a vehicle. Mr. Nusbaum 
recommends setting a final end date for the CARS program, which would 
limit the amount of time salvage auctions could hold CARS trade-in 
vehicles.
    NHTSA has made no changes to the proposed rule based on this 
comment. Mr. Nusbaum expressed support for the proposed 90-day 
extension. The remainder of his comments relate to issues that are not 
within the scope of the November 27 NPRM. Therefore, we will not 
address them in this rulemaking document. However, NHTSA will treat Mr. 
Nusbaum's comments as a petition for rulemaking and will address them 
in a forthcoming notice to be published in the Federal Register.
    For the reasons discussed above and in the November 27 NPRM, and 
having considered all of the comments received, NHTSA will adopt 
without change the amendments proposed in the November 27 NPRM.

Statutory Basis for This Action

    This proposed rule would make amendments to regulations 
implementing the Consumer Assistance to Recycle and Save Act (CARS Act) 
(Pub. L. 111-32), which directs the Secretary to issue regulations 
implementing the Act.

APA Requirements and Effective Date

    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 final regulations to implement the Program 
not later than 30 days after the date of the enactment of the CARS Act. 
The agency considered public notice and comment impracticable and used 
the statutory authority in the CARS Act to issue the CARS program 
regulations and two subsequent amendments.
    In the interest of openness and public participation, the agency 
determined that a 20-day public notice and comment period was warranted 
in the November 27 NPRM. Because the transaction submission portal was 
opened on July 27, 2009, the first vehicles would have been received by 
disposal facilities shortly thereafter. Therefore, the deadline for 
crushing or shredding some vehicles traded in under the CARS program 
would be as soon as approximately February 1, 2010 under the current 
regulations.
    Although the agency recognizes that some vehicles traded in under 
the CARS program have already been crushed or shredded voluntarily well 
in advance of the 180 day deadline, basic fairness requires that all 
vehicles traded in under the CARS program and not yet crushed or 
shredded be subject to the same deadline for crushing or shredding.
    Therefore, to ensure consistency, this final rule extending the 
deadline for crushing or shredding a trade in vehicle is effective 
immediately upon publication in the Federal Register. The 90-day 
extension from 180 days to 270 days would apply to all vehicles not yet 
crushed or shredded pursuant to the CARS program.

Regulatory Analyses and Notices

    We have considered the impact of this rulemaking action under 
Executive

[[Page 5251]]

Order 12866 and the Department of Transportation's regulatory policies 
and procedures. This rulemaking document was not reviewed by the Office 
of Management and Budget under Executive Order 12866, ``Regulatory 
Planning and Review.'' This action is limited to the proposed extension 
contained herein, and has been determined to be not ``significant'' 
under the Department of Transportation's regulatory policies and 
procedures.
    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 findings in those analyses.

Regulatory Identifier Number (RIN)

    The Department of Transportation assigns a regulation 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

    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 DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (65 FR 19477-78).

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 599.401 is amended by revising paragraph (a)(3) and adding 
paragraph (d) to read as follows:


Sec.  599.401  Requirements and limitations for disposal facilities 
that receive trade-in vehicles under the CARS program.

    (a) * * *
    (3) Crush or shred the trade-in vehicle onsite, including the 
engine block and the drive train (unless with respect to the drive 
train, the transmission, drive shaft, and rear end are sold 
separately), using its own machinery or a mobile crusher, within 270 
days after receipt of the vehicle from the dealer or salvage auction;
* * * * *
    (d) A completed Disposal Facility Certification Form (Appendix E to 
this part) for an individual transaction, which includes a 
certification by the disposal facility that the trade-in vehicle will 
be crushed or shredded within 180 days of receipt by the disposal 
facility, is deemed to be amended to include an extension of time such 
that the trade-in vehicle will be crushed or shredded within 270 days 
of receipt by the disposal facility.

    Issued on: January 28, 2010.
David L. Strickland,
Administrator.
[FR Doc. 2010-2194 Filed 2-1-10; 8:45 am]
BILLING CODE 4910-59-P

