Importation of Vehicles and Equipment Subject to Federal Safety, Bumper, and Theft Prevention Standards; Registered Importers of Vehicles Not Originally Manufactured To Conform to the Federal Motor Vehicle Safety Standards |
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Topics: National Highway Traffic Safety Administration, Federal Motor Vehicle Safety Standards
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Ricardo Martinez
Federal Register
October 14, 1994
[Federal Register: October 14, 1994]
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DEPARTMENT OF TRANSPORTATION
49 CFR Parts 591 and 592
RIN 2127-AD00
[Docket No. 89-5; Notice 15]
Importation of Vehicles and Equipment Subject to Federal Safety,
Bumper, and Theft Prevention Standards; Registered Importers of
Vehicles Not Originally Manufactured To Conform to the Federal Motor
Vehicle Safety Standards
AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.
ACTION: Final rule.
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SUMMARY: This final rule responds to comments received on a request for
comments on an interim final rule which amended Part 591 to adopt a
continuous entry bond as an alternative to the single entry bond that
is required to accompany each nonconforming vehicle imported into the
United States for which a registered importer certifies compliance.
NHTSA is retaining the option of allowing the continuous entry bond,
though adopting modifications to it which commenters believed were
necessary to distinguish it from single entry bonds, and restricting it
to registered importers who import more than one motor vehicle at a
time. Importers who are not registered importers will continue to use
the single entry bond.
DATES: The final rule is effective November 14, 1994.
FOR FURTHER INFORMATION CONTACT: Taylor Vinson, Office of Chief
Counsel, NHTSA (202-366-5263).
SUPPLEMENTARY INFORMATION: On June 20, 1994, NHTSA adopted an interim
final rule on amendments to the entry bonds required by 49 CFR parts
591 and 592 to accompany the permanent importation of nonconforming
motor vehicles to ensure their eventual compliance with the Federal
motor vehicle safety standards (59 FR 31558). The reader is referred to
that notice for further information (though denominated Notice 13, the
notice was actually the 14th under Docket No. P89-5, and this notice,
Notice 15, restores the proper sequence).
In summary, it had been represented to NHTSA that bonding companies
were no longer issuing single entry bonds to registered importers (RIs)
covering individual vehicles, and that there was an immediate need for
relief. This relief would be the allowance of continuous entry bonds
which cover multiple entries of vehicles. For this reason, NHTSA
amended 49 CFR part 591 to permit continuous entry bonds with a value
of up to $1,000,000 as an alternative to single entry bonds. The
interim final rule specified that the bond form specified in appendix A
for single entries could be used, with plural references where
appropriate. A conforming amendment was made to the importation
procedures of part 592 to require a photocopy of the continuous entry
bond to accompany each vehicle covered by it at the time of
importation. NHTSA also requested comments on whether the alternative
should be made permanent.
Comments were received from Asset Protection Services (``Asset'')
which writes DOT bonds on behalf of International Fidelity Insurance
Company, Intercargo Insurance Company (``Intercargo'') which provides
surety bonds for the international trade community through Trade
Insurance Services, Inc., and The Surety Association of America
(``Surety''), which describes itself as ``a service organization
supported by more than 650 member companies which collectively write
the majority of all surety bonds written in the United States''.
There were three primary issues that concerned the commenters.
1. Whether There Should Be a Continuous Entry Bond
Asset and Intercargo opposed the continuous entry bond as an
alternative to the single entry bond. Surety was ``not opposed to the
idea'' but doubted whether RIs would use it in the form adopted, and
made ameliorative recommendations.
According to Asset, it is untrue that bonding companies are
refusing to write single entry bonds, and it named two new companies
which began writing these bonds during spring 1994, Intercargo, and
International Fidelity Insurance Company. In its view, there is no need
for a continuous entry bond.
Both Asset and Intercargo (in some detail) commented that
continuous entry bonds were undesirable. In Intercargo's view, it is
not possible to maintain an accurate running total of the bonded value
of vehicles secured by the bond, and this will inevitably encourage RIs
to abuse the bond by maintaining a running total in excess of the
penalty amount. It sees six principal problems arising from this.
Two of these problems relate to the effect upon Customs that
Intercargo presumes would occur from continuous bonds. It argues that
Customs must confirm that the original of the copy presented at the
time of entry is on file with NHTSA, that the bond was validly executed
by both the principal and surety and that the bond is still effective.
Further, monitoring outstanding liability against the continuous bond
will cause Customs to expend more manpower.
NHTSA does not agree with this assessment of the effect of
continuous bonds upon the U.S. Customs Service. Although Customs did
not comment upon the interim final rule (nor did any RI for that
matter), the role that Customs has performed with respect to NHTSA
bonds has been limited, by Customs' choice, to verification that a bond
is present and to forward to NHTSA the entry documents with bond
attached. Customs has not sought to verify the accuracy of the bond,
nor has NHTSA asked it to.
A third undesirable aspect of the interim final rule, according to
Intercargo, is that the facsimile signatures on a photocopied bond that
accompany a vehicle are not binding, and, hence, that the United States
will be at risk since it cannot enforce an invalid bond.
The purpose of the photocopy is to assure NHTSA that the vehicle
being imported is covered by a bond, not that the photocopy itself is a
valid bond. Obviously, the signatures on the original bond will be
genuine and, for NHTSA's purposes, it is irrelevant that the signatures
on the copy it receives with the entry declaration are facsimiles.
A fourth reason that Intercargo finds continuous entry bonds
objectionable is that ``there is no adequate means to determine the
value of all vehicles released under the continuous entry bond for
which compliance has not yet been accepted by NHTSA''. This also
burdens Customs because ``[w]hile one Customs Import Specialist may be
able to manually keep track this accumulation under the bond * * * that
person is not notified of acceptance of the certification by NHTSA.''
Once again, Intercargo has attributed to Customs a role that it
will not play when continuous entry bonds are used. It will be up to
the principal and surety, who holds the original bond, to track the
coverage of the bond and to ensure that it is not exceeded.
A fifth reason is that the inability to adequately control the
accumulated bond value of vehicles secured by the continuous bond
places the United States at risk, due to the lack of control when
claims exceed surety bond amounts.
NHTSA deems it unlikely that claims will be made covering all
vehicles covered by a continuous entry bond. RIs have an incentive to
make a good faith effort to conform the vehicles for which they are
responsible, or to redeliver them for export, because they are required
to renew their status on a yearly basis.
Finally, Intercargo raises the argument that ``the uncertainty as
to how many vehicles are secured by the bond could cause the Surety
market to refuse to offer this bond, refuse to enter the market, or
refuse to remain in the market.''
NHTSA doubts that ``the Surety market'' is a monolith acting as one
unit, and has faith that the attractiveness of continuous entry bonds
to RIs will ensure that they will be offered by other companies if
Intercargo does not provide this type of service. Surety, which
represents 650 member companies, conditionally supported continuous
entry bonds, and NHTSA believes that it has addressed that commenter's
reservations (see discussion below). And even if all companies withdraw
from offering continuous entry bonds, the single entry bond will remain
available according to Asset.
NHTSA does not understand how the importer of a single motor
vehicle could be the principal on a continuous entry bond that is
intended to cover more than one vehicle. Given the fact that single
entry bonds apparently remain available, contrary to NHTSA's
understanding when it adopted the interim final rule, NHTSA believes
that an individual who imports a nonconforming vehicle for personal use
pursuant to a contract with a RI to conform them, should continue to
use the single entry bond. This should address some of the concerns of
the commenters as well. Consequently, the form of continuous entry bond
that NHTSA is adopting (see discussion below) is intended for use by
RIs who are the direct importers of the vehicle(s) covered by the
continuous entry bond, whether they are the owners of the vehicles or
whether they are importing them on behalf of another person whose
intended disposition is commercial.
2. Whether $1,000,000 Is an Appropriate Amount
Surety questions whether small businesses such as RIs would be able
to qualify for a bond in this amount and whether they would actually
need to be bonded for an amount this high.
The interim final rule did not specify that, if a continuous entry
bond was used, it must have a ceiling of $1,000,000. Rather, it
provided for them to be allowed, with a ceiling of this amount. This
does not prohibit continuous entry bonds with lesser ceilings based
upon the individual RI's ability to qualify and its own individual
needs (a ceiling of $1,000,000 would cover 60-some vehicles valued
around $15,000 each).
Asset comments without further explanation that ``[t]he bond limits
of up to $1,000,000 without the effective controls now in place will
probably prove intolerable.'' As noted above, the regulation permits
sureties to set ceilings on continuous entry bonds related to their
assessment of principals in amounts less than $1,000,000.
3. Whether the Bond Form Adopted is Appropriate
In the final rule, NHTSA specified that the language of the
continuous entry bond could be that required for single entries
(appendix A to part 591), with plural wording used where appropriate,
i.e., ``vehicles'' for ``vehicle''. Though opposing continuous entry
bonds, both Intercargo and Surety recommended changes which they felt
were required were NHTSA to decide to continue to offer the option of
continuous entry bonds.
Intercargo, and, in less detail, Security, pointed out that
adopting the single entry bond form language per se could result in
interpretations requiring an RI to make all vehicles subject to
inspection that are covered by the continuous entry bond, as well as
redelivery of all of them. Similarly, when there has been no redelivery
of a single vehicle and the RI is obligated to ``pay the amount of this
obligation'', the amount of the continuous entry bond will far exceed
the value of the individual vehicle to be redelivered. NHTSA considers
these comments well taken, and is adopting a specific form for a
continuous entry bond, which will be designated as appendix B.
Intercargo believes that ``the regulations must provide a means for
the principal or the surety to terminate the bond'', saying that it is
impracticable to consider that any surety will commit itself to an
obligation that does not have an expiration date or a means to
terminate its guarantee commitment. Surety also recommended that the
bond include a cancellation clause. To implement this recommendation,
Intercargo submitted a suggested amendment to Sec. 591.8 Conformance
bond and conditions under which a principal would submit a written
request to NHTSA to terminate a continuous entry bond, and a surety
would be able to terminate its bond with or without the principal's
consent.
NHTSA disagrees with Intercargo's view that provisions governing
termination of continuous entry bonds must be part of the importation
regulation. The provision for termination of a bond is a business
matter to be resolved between the principal and the surety. If its
continuous entry bond is terminated, the principal (RI) remains
responsible for providing a bond, either continuous or single entry,
for any vehicle for which it must furnish a certificate of conformity.
However, in view of Intercargo's comment, the continuous entry bond
form which has been set forth in Appendix B allows the insertion by the
parties thereto of termination provisions at its end. Finally, for the
reasons discussed above, NHTSA has not set forth terminology in the
bond which recognizes a principal other than a RI.
4. Amendments Necessitated by Recodification
NHTSA is also revising Secs. 591.4, 591.10(b) and (c), 592.1,
592.4, 592.6(g)(2)(i), 592.7(c), and 592.8(g), as well as the authority
sections of these parts, to reflect the codification in Title 49 on
July 5, 1994, of the provisions of the National Traffic and Motor
Vehicle Safety Act and the Motor Vehicle Information and Cost Savings
Act.
Effective Date
Because of the need to ensure an uninterrupted flow of commerce
that the interim final rule has provided, it is hereby found that an
effective date earlier than 180 days after issuance is in the public
interest, and the final rule is effective 30 days after publication in
the Federal Register.
Rulemaking Analyses
A. Executive Order 12866 (Federal Regulation) and DOT Regulatory
Policies and Procedures
This notice, like the interim final rule that preceded it, was not
reviewed under EO 12866. After considering the impacts of this
rulemaking action, NHTSA has determined that the action is not
significant within the meaning of the Department of Transportation
regulatory policies and procedures. The only substantive change that
this final rule makes in the interim final rule is to set forth the
form of the continuous entry bond. The number of RIs affected by the
final rule is less than 35. The cost impacts of this regulatory action
are cost savings to the RIs in procuring bonds (an estimated $20 per
vehicle), and nonquantifiable cost savings in the paper work involved
to obtain single-entry bonds. The impacts are so minimal as not to
warrant the preparation of a full regulatory evaluation.
B. Regulatory Flexibility Act
The agency has also considered the effects of this action in
relation to the Regulatory Flexibility Act. The RIs, which number less
than 35, are small businesses within the meaning of the Regulatory
Flexibility Act. However, for the reasons discussed above under E.O.
12866 and the DOT Policies and Procedures, I certify that this action
would not have a significant economic impact upon ``a substantial
number of small entities.'' The interim final rule appeared necessary
to allow them to continue in business; the final rule allows them the
option of choosing a continuous entry bond even if single entry bonds
are available to them. Governmental jurisdictions will not be affected
at all since they are generally neither importers nor purchasers of
nonconforming imported motor vehicles.
C. Executive Order 12612 (Federalism)
The agency has analyzed this action in accordance with the
principles and criteria contained in Executive Order 12612
``Federalism'' and determined that the action does not have sufficient
federalism implications to warrant the preparation of a Federalism
Assessment.
D. National Environmental Policy Act
NHTSA has analyzed this action for purposes of the National
Environmental Policy Act. The action will not have a significant effect
upon the environment because it is anticipated that the annual volume
of motor vehicles imported will not vary significantly from that
existing before promulgation of the rule.
E. Civil Justice Reform
This final rule will not have any retroactive effect. Under 49
U.S.C. 30103 (formerly section 103(d) of the National Traffic and Motor
Vehicle Safety Act, 15 U.S.C. 1392(d)), whenever a Federal motor
vehicle safety standard is in effect, a state may not adopt or maintain
a safety standard applicable to the same aspect of performance which is
not identical to the Federal standard. A procedure is set forth in 49
U.S.C. 30161 (formerly Section 105 of the Act, 15 U.S.C. 1394)) for
judicial review of final rules establishing, amending or revoking
Federal motor vehicle safety standards. That section does not require
submission of a petition for reconsideration or other administrative
proceedings before parties may file suit in court.
List of Subjects in 49 CFR Parts 591 and 592
Imports, Motor vehicle safety, Motor vehicles.
In consideration of the foregoing, 49 CFR parts 591 and 592 are
amended as follows:
PART 591--IMPORTATION OF VEHICLES AND EQUIPMENT SUBJECT TO FEDERAL
SAFETY, BUMPER, AND THEFT PREVENTION STANDARDS
1. The authority citation for part 591 is revised to read as
follows:
Authority: Pub. L. 100-562, 49 U.S.C. 322(a), 30117; delegation
of authority at 49 CFR 1.50.
2. Section 591.4 is amended by revising the introductory text to
read as follows:
Sec. 591.4 Definitions.
All terms used in this part that are defined in 49 U.S.C. 30102,
32101, 32301, 32502, and 33101 are used as defined in those sections
except that the term ``model year'' is used as defined in part 593 of
this chapter.
* * * * *
3. Section 591.6 is amended by revising paragraph (c) to read as
set forth below:
Sec. 591.6 Documents accompanying declarations.
* * * * *
(c) A declaration made pursuant to Sec. 591.5(f), and under a
single entry bond, shall be accompanied by a bond in the form shown in
Appendix A to this part, in an amount equal to 150% of the dutiable
value of the vehicle, or, if under a continuous entry bond, shall be
accompanied by a photocopy of a bond in the form shown in Appendix B to
this part and by Customs Form CF 7501, for the conformance of the
vehicle(s) with all applicable Federal motor vehicle safety and bumper
standards, or, if conformance is not achieved, for the delivery of such
vehicle to the Secretary of the Treasury for export at no cost to the
United States, or for its abandonment.
* * * * *
4. Section 591.10 is amended by revising paragraphs (b) and (c) to
read as follows:
Sec. 591.10 Offer of cash deposits or obligations of the United States
in lieu of sureties on bonds.
* * * * *
(b) At the time the importer deposits any obligation of the United
States, other than United States money, with the Administrator, (s)he
shall deliver a duly executed power of attorney and agreement, in the
form shown in Appendix C to this part, authorizing the Administrator or
delegate of the Administrator, in case of any default in the
performance of any of the conditions of the bond, to sell the
obligation so deposited, and to apply the proceeds of sale, in whole or
in part, to the satisfaction of any penalties for violations of 49
U.S.C. 30112 and 49 U.S.C. 32506 arising by reasons of default.
(c) If the importer deposits money of the United States with the
Administrator, the Administrator, or delegate of the Administrator, may
apply the cash, in whole or in part, to the satisfaction of any
penalties for violations of 49 U.S.C. 30112 and 49 U.S.C. 32506 arising
by reason of default.
* * * * *
5. The heading of appendix A is revised to read as follows:
Appendix A--Section 591.5(f) Single Entry Bond
* * * * *
6. Appendix B is added to read as follows:
Appendix B--Section 591.5(f) Continuous Entry Bond
Department of Transportation
National Highway Traffic Safety Administration
BOND TO ENSURE CONFORMANCE WITH MOTOR VEHICLE SAFETY AND BUMPER
STANDARDS
(To redeliver vehicles, to produce documents, to perform conditions
of release, such as to bring vehicles into conformance with all
applicable Federal motor vehicle safety and bumper standards)
Know All People by These Presents That [principal's name,
mailing address which includes city, state, ZIP code, and state of
incorporation if a corporation], as principal, and [surety's name,
mailing address which includes city, state, ZIP code and state of
incorporation] are held and firmly bound unto the United States of
America in the sum of [bond amount in words] dollars (Sec. [bond
amount in numbers]) which represents 150% of the entered value of
the following described motor vehicle(s) as determined by the U.S.
Customs Service: [model year, make, series, engine and chassis
number of each vehicle] for the payment of which we bind ourselves,
our heirs, executors, administrators, successors, and assigns
(jointly and severally), firmly by these presents
Witness our hands and seals this ________ day of ________,
199____
Whereas, motor vehicles may be entered under the provisions of
49 U.S.C. 30112 and 49 U.S.C. 32506; and
Whereas, pursuant to 49 CFR part 591, a regulation promulgated
under the provisions of 49 U.S.C. 30112, the above-bounden principal
desires to import permanently the motor vehicle(s) described above,
which (is a)(are) motor vehicle(s) that (was)(were) not originally
manufactured to conform with the Federal motor vehicle safety and
bumper standards; and
Whereas, pursuant to 49 CFR part 592, a regulation promulgated
under the provisions of 49 U.S.C. 30112, the above bounden principal
has been granted the status of Registered Importer of motor vehicles
not originally manufactured to conform with the Federal motor
vehicle safety standards; and
Whereas, pursuant to 49 CFR part 593, a regulation promulgated
under the provisions of 49 U.S.C. 30112, the Administrator of the
National Highway Traffic Safety Administration has determined that
the motor vehicle(s) described above (is)(are) eligible for
importation into the United States; and
Whereas, the motor vehicle(s) described above (has)(have) been
imported at the port of [ name of port of entry], and entered at
said port for consumption on entry No. ____________ dated ________,
199____,
Now, therefore, the condition of this obligation is such that--
(1) The above-bounden principal (``the principal''), in
consideration of the permanent admission into the United States of
the motor vehicle(s) described above, voluntarily undertakes and
agrees to have such vehicle(s) brought into conformity with all
applicable Federal motor vehicle safety and bumper standards within
a reasonable time after such importation, as specified by the
Administrator of the National Highway Traffic Safety Administration
(the ``Administrator'');
(2) For each vehicle described above (``such vehicle''), the
principal shall then file, with the Administrator, a certificate
that such vehicle complies with each Federal motor vehicle safety
standard in the year that such vehicle was manufactured and which
applies in such year to such vehicle, and that such vehicle complies
with the Federal bumper standard (if applicable);
(3) The principal shall not release custody of any vehicle to
any person for license or registration for use on public roads,
streets, or highways, or license or register the vehicle from the
date of entry until 30 calendar days after it has certified
compliance of such vehicle to the Administrator, unless the
Administrator notifies the principal before 30 days that (s)he has
accepted such certification and such vehicle and all liability under
this bond for such vehicle may be released, except that no such
release shall be permitted, before or after the 30th calendar day,
if the principal has received written notice from the Administrator
that no inspection of such vehicle will be required, or that there
is reason to believe that such certification is false or contains a
misrepresentation.
(4) And if the principal has received written notice from the
Administrator that an inspection of such vehicle is required, the
principal shall cause such vehicle to be available for inspection,
and such vehicle and all liability under this bond for such vehicle
shall be promptly released after completion of an inspection showing
no failure to comply. However, if the inspection shows a failure to
comply, such vehicle and all liability under this bond for such
vehicle shall not be released until such time as the failure to
comply ceases to exist;
(5) And if the principal has received written notice from the
Administrator that there is reason to believe that such certificate
is false or contains a misrepresentation, such vehicle and all
liability under this bond for such vehicle shall not be released
until the Administrator is satisfied with such certification and any
modification thereof;
(6) And if the principal has received written notice from the
Administrator that such vehicle has been found not to comply with
all applicable Federal motor vehicle safety and bumper standards,
and written demand that such vehicle be abandoned to the Untied
States, or delivered to the Secretary of the Treasury for export (at
no cost to the United States), the principal shall abandon such
vehicle to the United States, or shall deliver such vehicle, or
cause such vehicle to be delivered to, the custody of the District
Director of Customs of the port of entry listed above, or any other
port of entry, and shall execute all documents necessary for
exportation of such vehicle from the United States, at no cost to
the United States; or in default of abandonment or redelivery after
proper notice by the Administrator for the principal, the principal
shall pay to the Administrator an amount equal to 150% of the
entered value of such vehicle as determined by the U.S. Customs
Service;
Then this obligation shall be void; otherwise it shall remain in
full force and effect. [At this point the terms agreed upon between
the principal and surety for termination of the obligation may be
entered]
Signed, sealed and delivered in the presence of
Principal: (name and address)
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(signature)
----------------------------------------------------------------------
(printed name and title)
(Seal)
Surety: (name and address)
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(signature)
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(printed name and title)
PART 592--REGISTERED IMPORTERS OF VEHICLES NOT ORIGINALLY
MANUFACTURED TO CONFORM TO THE FEDERAL MOTOR VEHICLE SAFETY
STANDARDS
7. The authority citation for part 592 is revised to read as
follows:
Authority: Pub. L. 100-562, 49 U.S.C. 322(a), 30117; delegation
of authority at 49 CFR 1.50.
8. Section 592.1 is revised to read as follows:
Sec. 592.1 Scope.
This part establishes procedures under 49 U.S.C. 30141(c) for the
registration of importers of motor vehicles that were not originally
manufactured to comply with all applicable Federal motor vehicle safety
standards. This part also establishes the duties of Registered
Importers.
9. The introductory text of Sec. 592.4 is revised to read as
follows:
Sec. 592.4 Definitions.
All terms in this part that are defined in 49 U.S.C. 30102 and
30125 are used as defined therein.
* * * * *
10. Section 592.6 is amended by revising paragraph (g)(2)(i) to
read as follows:
Sec. 592.6 Duties of a registered importer.
* * * * *
(g) * * *
(2) * * *
(i) The requirement of 49 U.S.C. 30120 that remedy shall be
provided without charge shall not apply if the noncompliance or safety
related defect exists in a motor vehicle whose first sale after
importation occurred more than 8 calendar years before notification
respecting the failure to comply is furnished pursuant to part 577 of
this chapter, except that if a safety related defect exists and is
attributable to the original manufacturer and not the Registered
Importer, the requirements of 49 U.S.C. 30120 shall not apply to a
motor vehicle whose date of first purchase, if known, or if not known,
whose date of manufacture as determined by the Administrator, is more
than 8 years from the date on which notification is furnished pursuant
to part 577 of this chapter.
* * * * *
11. Section 592.7 is amended by revising the first sentence of
paragraph (c) to read as follows:
Sec. 592.7 Revocation, suspension, and reinstatement of registration.
* * * * *
(c) The Administrator may suspend a registration if a Registered
Importer fails to comply with any requirement set forth in 49 U.S.C.
30141(c), Sec. 592.5(c), or Sec. 592.6, or if (s)he denies an
application filed under Sec. 592.5(d). * * *
12. Section 592.8 is amended by revising paragraph (g) to read as
follows:
Sec. 592.8 Inspection; release of vehicle and bond.
* * * * *
(g) Release of the performance bond shall constitute acceptance of
certification or completion of inspection of the vehicle concerned, but
shall not preclude a subsequent decision by the Administrator pursuant
to 49 U.S.C. 30118 that the vehicle fails to conform to any applicable
Federal motor vehicle safety standard.
Issued on: October 7, 1994.
Ricardo Martinez,
Administrator.
[FR Doc. 94-25495 Filed 10-13-94; 8:45 am]
BILLING CODE 4910-59-P