REGISTERED IMPORTER NEWSLETTER No. 16
National Highway Traffic Safety Administration
Office of Vehicle Safety Compliance
May 2000
SERVICE INSURANCE POLICIES
RIs are required to provide service insurance policies for each vehicle that they import or bring into compliance with the FMVSS to assure that recalls will be performed at no cost to owner of the vehicle. These policies should be placed in the glove box of every vehicle. If the vehicle does not have a glove box it should be given to the owner of the vehicle with other important vehicle documents. These policies must be written by an insurance company or by a company that is backed by an insurance company. The insurance company must be registered with a state as authorized to issue insurance policies and be totally independent of any RI to which it is providing policies. You should check with your provider to assure that it meets these requirements.
VEHICLE TITLES
Letters to Auto Enterprises and Akin, Gump, Strauss, Haur & Feld, L.L.P. were recently written addressing the sale of vehicles and when titles may be obtained for imported vehicles. To fully understand your duties and responsibilities concerning these subjects read the attached letters.
RI INFORMATION AT NHTSA WEB SITE
In the last Newsletter we identified where RI information would be moving to on the NHTSA web site: www.nhtsa.dot.gov/cars/rules/maninfo. The Registered Importer Information page contains the packages How to Become a Registered Importer and Registered Importer Procedures and Requirements, RI Newsletters, and a link for payment of RI fees by credit card.
RECALLS AT TIME OF IMPORTATION
Vehicles imported by an RI are deemed to have the same defect or noncompliance as the substantially similar U.S. certified vehicle unless the RI can demonstrate otherwise. In Newsletter 15 you were advised to attach documentation (manufacturer recall printout, letter from the manufacturer, etc.) to the Conformity Statement that shows that there are no outstanding recalls on the vehicle. If the documentation shows that the vehicle was covered by a recall, you must identify the recall number on the Conformity Statement and submit proof that the vehicle was remedied. On GM vehicles this check should be made in Canada since GM's U.S. database may not have record of this vehicle at this time. Hundreds of conformity packages have been returned to RIs for failure to meet this requirement.
RECALL NOTIFICATION
We have received numerous complaints of owners being notified by RIs that their vehicle is subject to a recall when, in fact, it is not subject to a recall. To assist RIs with their recall notification responsibility, NHTSA provides RIs with a list on a quarterly basis of vehicles which may be subject to recall. This list is based on the date the vehicle was manufactured. Since it is not based on the VIN, it is not conclusive. Before sending notification letters to vehicle owners the RI should check with the manufacturer to assure that the vehicle is subject to a recall.
PART 573 RECALL REPORTS
Currently RIs are required to submit quarterly hard copy Part 573 reports on vehicles that are subject to recall. Some RIs have indicated that they would prefer to submit this information electronically to make the reporting process easier. If you would prefer to submit this information electronically, in lieu of hard copy, please contact Ms. Rena Lee at 202-366-7982.
INCOMPLETE VEHICLES
A truck or tractor certified to the Canadian motor vehicle safety standards as an incomplete vehicle is not eligible for importation under VSA-82. If the vehicle has been completed but is not certified by the final stage manufacturer, the RI must submit a petition to establish that the vehicle is capable of being modified to comply with the FMVSS. The petition must present test data to support that the vehicle, as completed, complies with all applicable FMVSS.
SALVAGE VEHICLES
Vehicles that are salvage or repaired using another vehicle can no longer be considered as being certified by the original manufacturer. In these cases the vehicles have undergone such extensive reconstruction that the structural integrity on which the original vehicle was certified may no longer exist. Such vehicles imported from Canada, are not eligible under the Canadian VSA eligibility numbers. This type of vehicle would have to be petitioned to establish that the vehicle is capable of being modified to comply with the FMVSS. If approved, any subsequent conformity packages submitted to NHTSA must present test data to support that the vehicle, as reconstructed, complies with all applicable FMVSS.
RECORD RETENTION
Records must be maintained in the United States, at your facility, for a period of 8 years from the date of entry for any vehicle for which you submit a certificate of conformity. The RI must retain correspondence and other documents relating to the importation, modification, and substantiation of certification (including documentation that there are no outstanding recalls). A more detailed listing of the information you must retain is found in 49 CFR 592.6(b). We will be making audits to determine if RIs are retaining the required information. If an RI does not have the necessary information, it may be subject to appropriate disciplinary action by NHTSA.
PAYMENT OF FEES BY CREDIT CARD
We are introducing payment of RI fees on the internet. This will give you greater control over how your fees are paid and will allow you to pay using Visa, MasterCard, Discover or American Express. To use the system your browser will have to support 128-bit encryption and you will need the invoice number from your monthly statement. If you are interested in making your credit card payment on the web contact Ms. Rena Lee at 202-366-7982. In the coming months this may become the only method to pay by credit card.
NO CONTRACTING OUT
An RI cannot contract out any of the modification work that brings the vehicle into conformity. If an RI signs a contract with a prospective importer and later determines that it does not have the expertise to modify the vehicle, the RI must export the vehicle. After the vehicle has been exported, another RI with the expertise may import the vehicle. The vehicle may not be directly transferred to another RI which has the expertise to modify the vehicle.
EPA CERTIFICATION
RIs are eligible to modify vehicles certified to the safety standards of a country other than Canada. In most cases these vehicles do not meet EPA requirements. If a vehicle does not meet EPA requirements, the vehicle must also go to an Independent Commercial Importer (ICI) in addition to the RI. If you are not an ICI, you should become associated with one to coordinate the modification of the vehicle to the requirements of both agencies. If you are not an ICI and plan to modify vehicles certified to a country other than Canada, please contact Ms. Kathy Rice at (202) 366-5291 before June 15 with the name of the ICI that you are associated.
FMVSS NO. 201 UPPER, Occupant protection in interior impact
In 1995 FMVSS No. 201 was amended requiring vehicles to provide protection when an occupant's head strikes upper interior components. Manufacturers have been meeting this phased-in requirement by introducing certain models that meet this requirement. If the substantially similar US vehicle is certified as meeting this requirement then the imported vehicle must also meet this requirement. A listing of the vehicles that are certified to FMVSS No. 201U may be found in the NHTSA brochure BUYING A SAFER CAR 2000 (HS 808988). This brochure may be ordered by selecting information on Vehicle Safety from the following NHTSA web page.
Attachments, NHTSA letters to
Attachment 1
April 17, 2000
Mr. Philip Trupiano
President
Auto Enterprises
28801 Universal Drive
Warren, MI 48092
Dear Mr. Trupiano:
This is in reply to your letter of November 11, 1999, to Taylor Vinson of this Office asking for an interpretation of 49 U.S.C. 30146 as implemented by 49 CFR 592.8.
You have informed us that "Auto Enterprises, Inc., and some of the customers on behalf of whom Auto Enterprises is performing importing services, wish to obtain United States titles for re-sale purposes only for vehicles imported into the United States during the period that the vehicles are still within the custody and control of Auto Enterprises." Specifically, you want "to obtain such titles for re-sale purposes prior to the time that the performance bond . . . is released." You asked:
May a Registered Importer, or the customer on whose behalf the vehicle is imported, obtain a title for re-sale purposes for a vehicle which it has imported, prior to the time that the applicable performance bond has been released by the Administrator?
As you know, pursuant to 49 U.S.C. 30146(a)(1), a Registered Importer (RI) "may license or register an imported motor vehicle for use on the public streets, roads, or highways, or release custody of a motor vehicle . . . to a person for license or registration for use on the public streets, roads, or highways, only after 30 days after" the RI has certified to NHTSA that the vehicle complies with all applicable Federal motor vehicle safety standards. We are unsure of precisely what you are referring to by "a title for re-sale purposes." However, we do not construe the statutory provisions as prohibiting a RI from obtaining a title in its own name to a vehicle it has imported for resale, while the vehicle is still bound by its performance bond, in order to expedite the subsequent licensing or registration of that vehicle for on-road use after the bond has been released.
You have also asked if "the customer on whose behalf the vehicle is imported" may obtain a title for re-sale purposes before the bond is released. The answer is no; the title may not be in the name of the customer. One of the conditions of the bond is that the vehicle it covers be exported or abandoned to the United States in the event that an insufficient showing of conformity is made and the bond and the vehicle are not released (49 U.S.C. 30141(d)(1), as implemented by 49 CFR 591.8(e), and Appendices A and B, and 49 CFR 592,6(a)). If the RI has transferred or reassigned title to the vehicle to "the customer on whose behalf the vehicle is imported" before the bond has been released, the RI could not fulfill its duty to export or abandon the nonconforming vehicle because it would no longer own the vehicle. In that instance, NHTSA's sole remedy would be to foreclose on the bond. This is insufficient to fulfill the safety purpose of the statute and the bond which is to ensure that imported noncomplying vehicles be brought into compliance before being licensed for use, and used, on the public roads.
I hope that this answers your question.
Sincerely,
Frank Seales, Jr.
Chief Counsel
Attachment 2
April 19, 2000
Mr. John M. Dowd
Mr. James C. Osborne, Jr.
Ms. Elizabeth C. Peterson
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1333 New Hampshire Avenue, N.W.
Suite 400
Washington, DC 20036
Re: American Vehicle Importers, Inc.
Dear Messrs. Dowd and Osborne, and Ms. Peterson:
We are replying to your letter of December 23, 1999, addressed to myself, and to Messrs. Guerci, Vinson, and Entwistle of this agency submitting a proposal to resolve the matters discussed at your meeting with us on December 21. This meeting concerned the practices of your client, American Vehicle Importers, Inc. ("AVI") with respect to statutes and regulations enforced by the Office of Vehicle Safety Compliance ("OVSC").
I will address the items in your letter in the order you have raised them. Your initial remark ascribes to us the acknowledgment that "the current regulations do not prohibit a Registered Importer ('RI') from moving an imported vehicle to an auction lot prior to receipt of a Bond Release for a vehicle." This is coupled with your realization that we may need to know the location of the vehicle during the period before the bond is released in order to be able to inspect it for conformance, and you state that AVI will inform OVSC of the location where the vehicles may be inspected. We agree that the current regulations do not specifically prohibit a RI from placing bonded vehicles on an auction lot, and that AVI's informing us of the location of bonded vehicles should facilitate our ability to inspect them. However, AVI must also ensure that we have unfettered access to these vehicles on an auction lot in the same manner as we would were they retained on AVI's property, at all times until receipt of the bond release. That is to say, we must be admitted to inspect bonded vehicles stored on an auction lot during all business hours. We will require the same information location from all RIs that do not store bonded vehicles on the lots identified in their registration application.
You contend "that the regulation, which prohibits an RI from licensing or registering the vehicle or 'releas[ing] custody of the vehicle to any person for license or registration for use on public streets . . .' prior to receipt of a Bond Release, do not preclude the vehicle's sale at a wholesale auction prior to receipt of the Bond Release." We disagree with you on this point. One of the conditions of the bond is that the vehicle it covers be exported or abandoned to the United States in the event that an insufficient showing of conformity is made and the bond and the vehicle are not released (49 U.S.C. 30141(d)(1) as implemented by 49 CFR 591.8(e) and Appendices A and B, and 49 CFR 592.6(a)). If a bonded vehicle has been sold at auction, wholesale or otherwise, before the bond has been released, we could not be certain that the RI could fulfill its duty to export or abandon the nonconforming vehicle because it would no longer own the vehicle. In that instance, NHTSA's sole remedy would be to foreclose on the bond. This is insufficient to fulfill the safety purpose of the statute and the bond, which is to ensure that imported noncomplying vehicles be brought into compliance before being licensed for use, and used, on the public roads. We note, however, your statement that "AVI will agree to await receipt of a Bond Release before selling its imported vehicles at a wholesale auction," and your opinion that all RI s should be preluded from selling their vehicles before receiving a bond release. To address your concern, we do intend to enforce the law equally, and we have informed RIs that they must not sell bonded vehicles while the bond is in effect, whether at auctions, to dealers, or to individuals.
Your final concern regards titling of bonded vehicles. You assert that we acknowledged that "the current regulations do not prohibit the titling of an imported vehicle prior to release of the bond on the vehicle." You refer to the letter of November 11, 1999, by Philip Trupiano, the president of Auto Enterprises, Inc. (and a principal of AVI), requesting an interpretation whether a RI may obtain a title for re-sale purposes before this agency has released the applicable performance bond. I enclose a copy of the Chief Counsel's recent response to Mr. Trupiano. As he advised Mr. Trupiano, we do not interpret 49 U.S.C. 30146(a)(1) as precluding a RI from obtaining a title to a bonded vehicle in its own name before the bond is released. However, for the reasons explained in that letter, we have concluded that a RI may not have a vehicle retitled to another entity pending bond release.
With respect to other issues, you ask that OVSC commit to release the bond on a vehicle no more than seven days after receipt of conformance certification. While OVSC will not make such a "commitment," which, in any event, would not be enforceable, our policy has been, and will be, to process conformance certification packages expeditiously and in the order in which they are received. During the past three months, the average period between receipt of a RI's conformance package and bond release has been reduced to five days.
You also ask that OVSC engage in further discussions regarding implementation of a software program presented to OVSC by AVI and Avalon Risk Management. OVSC is willing to consider any software program, provided that the developer of the program agrees to waive all proprietary rights if the program is implemented. With regard to AVI's proposal to work with OVSC "to develop a procedure by which Vehicle Identification Numbers are inspected and verified prior to entry into the U.S," we believe that the U.S. Customs Service would be a more appropriate Federal agency to work with, particularly regarding procedures intended to identify stolen vehicles before their entry into the U.S.
Finally, we agree with you that fundamental fairness requires us to interpret and enforce the law equally against all RIs. To assure that RIs understand their duties and responsibilities, we will discuss these matters in Newsletter No. 16, currently being prepared to be sent to the RI community.
Sincerely,
Kenneth N. Weinstein
Associate Administrator
for Safety Assurance