81 FR 10520 - Civil Penalty Factors
DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration Federal Register Volume 81, Issue 40 (March 1, 2016)
National Highway Traffic Safety Administration
Federal Register Volume 81, Issue 40 (March 1, 2016)
| Page Range | 10520-10529 | |
| FR Document | 2016-04311 |
[Federal Register Volume 81, Number 40 (Tuesday, March 1, 2016)] [Rules and Regulations] [Pages 10520-10529] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-04311] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION National Highway Traffic Safety Administration 49 CFR Part 578 [Docket No. NHTSA-2016-0023] RIN 2127-AL38 Civil Penalty Factors AGENCY: National Highway Traffic Safety Administration (NHTSA), Department of Transportation. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: This final rule provides NHTSA's interpretation of the civil penalty factors for determining the amount of a civil penalty or the amount of a compromise under the National Traffic and Motor Vehicle Safety Act (Safety Act). The Moving Ahead for Progress in the 21st Century Act (MAP-21) states that the Secretary of Transportation shall determine the amount of civil penalty or compromise under the Safety Act. MAP-21 identifies mandatory factors that the Secretary must consider and discretionary factors for the Secretary to consider as appropriate in making such determinations. MAP-21 directs NHTSA to issue a rule providing an interpretation of these penalty factors. This final rule also amends NHTSA's regulation to the increase penalties and damages for odometer fraud, and to include the statutory penalty for knowingly and willfully submitting materially false or misleading information to the Secretary after certifying the same information as accurate. In the NPRM, we proposed administrative procedures for NHTSA to follow when assessing civil penalties against persons who violate the Safety Act. We are not including those procedures in this final rule. Instead, NHTSA plans to address those procedures separately, in a rule to be issued soon. DATES: Effective date: This final rule is effective May 2, 2016. Petitions for reconsideration: Petitions for reconsideration of this final rule must be received not later than April 15, 2016. ADDRESSES: Any petitions for reconsideration should refer to the docket number of this document and be submitted to: Administrator, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE., West Building, Ground Floor, Docket Room W12-140, Washington, DC 20590. FOR FURTHER INFORMATION CONTACT: Thomas Healy, Office of the Chief Counsel, NHTSA, 1200 New Jersey Ave. SE., West Building, W41-211, Washington, DC 20590. Telephone: (202) 366-2992 Fax: (202) 366-3820. SUPPLEMENTARY INFORMATION: I. Executive Summary II. Background and Summary of Notice of Proposed Rulemaking A. Background B. Civil Penalties Procedures in NPRM C. Civil Penalty Factors in the NPRM III. The Final Rule A. General Penalty Factors B. Discretionary Penalty Factors IV. Codification of Other MAP-21 Penalty Changes in 49 CFR Part 578 V. Rulemaking Analyses and Notices I. Executive Summary The Moving Ahead for Progress in the 21st Century Act (MAP-21 or the Act) was signed into law on July 6, 2012 (Pub. L. 112-141). Section 31203(a) of MAP-21 amends the civil penalty provision of the Safety Act, as amended and recodified, 49 U.S.C. Chapter 301, by requiring the Secretary of Transportation to consider various factors in determining the amount of a civil penalty or compromise. The factors that the Secretary shall consider in determining the amount of civil penalty or compromise are codified in amendments to 49 U.S.C. 30165(c). Section 31203(b) of MAP-21 requires the Secretary to issue a final rule, in accordance with 5 U.S.C. 553, providing an interpretation of the penalty factors set forth in MAP-21. Pub. L. 112-141, Sec. 31203, 126 Stat. 758 (2012). This rule provides an interpretation of the civil penalty factors in 49 U.S.C. 30165(c) for NHTSA to consider in determining the amount of civil penalty or compromise. NHTSA issued an NPRM that proposed an interpretation of the penalty factors in Section 31203(b) of MAP-21 on September 21, 2015.\1\ The NPRM also included administrative procedures for NHTSA to follow when assessing civil penalties against persons who violate the Safety Act. We have decided not to include the administrative procedures for assessing civil penalties in this final rule. --------------------------------------------------------------------------- \1\ 80 FR 56944 (Sept. 21, 2015). --------------------------------------------------------------------------- On December 4, 2015, the Fixing America's Surface Transportation Act [[Page 10521]] (FAST Act), Public Law 114-94, was signed into law. Section 24110 of the FAST Act requires NHTSA to issue a final rule providing an interpretation of the penalty factors in Section 31203(b) of MAP-21 in order for increases in the maximum amount of civil penalties that NHTSA can collect for violations of the Safety Act to become effective. When the Secretary of Transportation certifies that NHTSA has issued a final rule providing an interpretation of the factors in Section 31203(b) of MAP-21, the maximum amount of civil penalty for each violation of the Safety Act increases from $7,000 per violation to $21,000 per violation and the maximum amount of civil penalties that NHTSA can collect for a related series of violations increases from $35,000,000 to $105,000,000. This final rule satisfies the requirements in the FAST Act necessary for the increases in the maximum amount of civil penalties that NHTSA can collect for violations of the Safety Act to become effective. II. Background and Summary of Notice of Proposed Rulemaking A. Background NHTSA historically has considered the gravity of the violation when compromising civil penalties. Consideration of the gravity of the violation has involved a variety of factors, depending on the case. The factors that NHTSA has considered have included the nature of the violation, the nature of a safety-related defect or noncompliance with Federal Motor Vehicle Safety Standards (``FMVSS''), the safety risk, the number of motor vehicles or items of motor vehicle equipment involved, the delay in submitting a defect and noncompliance information report, the information in the possession of the violator regarding the violation, other actions by the violator, and the relationship of the violation to the integrity and administration of the agency's programs.\2\ --------------------------------------------------------------------------- \2\ See, e.g., April 5, 2010 Demand Letter for TQ10-002 available at ftp://ftp.nhtsa.dot.gov/TQ10-002/TQ10-002%20Resumes/TQ10-002%20Closing%20Resume/TQ10-002%20Sticky%20Pedal%20Demand%20Letter%204-5-10%20FINAL%20Signed.pdf (In discussing the gravity of Toyota's apparent violations as severe and potentially life-threatening, the agency stated, ``Toyota determined that the accelerator pedals installed on a significant number of vehicles sold and leased in the United States contained a safety-related defect as evidenced by, among other things, its issuance of a Technical Instruction and production improvement information on September 29, 2009, in 31 countries across Europe. Toyota knew or should have known that the same or substantially similar accelerator pedals were installed on approximately 2.3 million vehicles sold or leased in the United States, and continued to sell and lease vehicles equipped with a defective accelerator pedal for months after this determination. Nonetheless, Toyota Motor Corporation affirmatively-and inexplicably-instructed Toyota Motor Engineering and Manufacturing North America, Inc. not to implement an Engineering Change Instruction in the U.S. market. Toyota gave this instruction despite the fact that it had issued similar or identical instructions in Canada and Europe and knew that the very same issues that prompted the European and Canadian actions existed on a significant number of vehicles in the United States. The result of these decisions by Toyota was to expose millions of American drivers, passengers and pedestrians to the dangers of driving with a defective accelerator pedal that could result, in Toyota's words, in `sticky accelerator pedals, sudden rpm increase and/or sudden vehicle acceleration.'''). --------------------------------------------------------------------------- In the past, NHTSA also has considered the size of the violator when compromising civil penalties. With respect to civil penalties involving small businesses, among the factors that have been considered are the violator's ability to pay, including its ability to pay over time, and any effect on the violator's ability to continue to do business. B. Civil Penalties Procedures in NPRM The NPRM stated that Section 31203 of MAP-21confirmed that NHTSA, through the authority delegated from the Secretary of Transportation pursuant to 49 CFR 1.95, may impose civil penalties as well as compromise them. NHTSA stated that the Secretary's authority to impose civil penalties is confirmed by both the language and the legislative history of MAP-21. The NPRM also proposed administrative procedures for NHTSA to follow in exercising the Secretary's authority to impose civil penalties. Given the passage of the FAST Act, and its requirements, NHTSA has decided to finalize the procedures for imposing civil penalties at a later time in order to allow NHTSA to issue the final rule providing an interpretation of the penalty factors in Section 31203 of MAP-21 in an expedited manner and to give the agency additional time to consider the comments it received regarding the administrative procedures. Issuing the final rule providing an interpretation of the penalty factors in MAP-21 in an expedited manner will allow NHTSA to more quickly enforce the increased maximum civil penalties in the FAST Act against violators of the Safety Act. Therefore, NHTSA has decided to include only the interpretation of the civil penalty factors in this final rule. C. Civil Penalty Factors in the NPRM The proposed interpretation of the penalty factors in MAP-21 was based on the language of the statute, informed by NHTSA's years of day- to-day enforcement experience, and the manner in which NHTSA has compromised penalties in the past. In the NPRM, we stated that MAP-21 included both general factors and nine discretionary factors for NHTSA to consider if appropriate. The NPRM provided an interpretation of the general and discretionary factors. For each of the nine discretionary penalty factors, we provided an explanation of NHTSA's proposed interpretation. We received four comments regarding our proposed interpretation of the penalty factors in the NPRM.\3\ Generally the commenters were supportive of NHTSA's proposed interpretation of the penalty factors. The commenters did comment on how the penalty factors should be applied and NHTSA's interpretation of some of the nine discretionary factors. All commenters submitted comments regarding how the agency should consider the ``knowledge of the person charged with the violation,'' when determining the amount of civil penalty or compromise. The comments are addressed below. --------------------------------------------------------------------------- \3\ We received comments regarding our proposed interpretation of the civil penalty factors in MAP-21 from Advocates for Highway and Auto Safety (``Advocates''), the Association of Global Automakers, Inc. (``Global''), the Alliance of Automobile Manufacturers (``the Alliance''), and the National Automobile Dealers Association (``NADA''). --------------------------------------------------------------------------- III. The Final Rule The MAP-21 legislation set forth civil penalty factors to be considered by NHTSA in determining the amount of a civil penalty or compromise. The general provision in the amended section 30165(c) calls for consideration of the nature, circumstances, extent and gravity of the violation. The term ``violation'' refers to any violation addressed by 49 U.S.C. 30165(a)(1), (2), (3), or (4). The Secretary has the discretion to consider the totality of the circumstances surrounding a violation. Comments NADA stated that NHTSA should consult with the United States Department of Justice on the appropriateness of NHTSA's proposed penalty factors because the Department of Justice understands how these civil penalty factors should be applied in civil actions. NADA also stated that NHTSA's interpretation of the penalty factors should provide both positive and negative impacts that the factors may have on the amount of a civil penalty sought by NHTSA for violations of the Safety Act. [[Page 10522]] Agency Response MAP-21 directs NHTSA, by delegation from the Secretary of Transportation, to issue a rule providing an interpretation of the civil penalty factors to consider in determining the amount of civil penalty or compromise. As we stated in the NPRM, NHTSA, through delegation from the Secretary, has the authority to assess and compromise civil penalties. NHTSA has addressed this comment because it works closely with the Justice Department on a range of civil and criminal enforcement matters. NHTSA's interpretation of the civil penalty factors is based on its day-to-day enforcement experience and previous experience compromising civil penalties for violations of the Safety Act, which includes its experience and counsel from the Justice Department. This is more than sufficient to provide the interpretation of the penalty factors in this final rule. NHTSA believes the interpretation of the penalty factors in this final rule provides both aggravating and mitigating factors and that the interpretation will provide useful information to manufacturers regarding actions that will help them avoid civil penalties. A. General Penalty Factors In the NPRM, NHTSA proposed to interpret the nature of the violation to mean the essential, fundamental character or constitution of the violation.\4\ This includes, but is not limited to, the nature of the defect (in a case involving a safety-related defect) or noncompliance. It also includes what the violation involves, for example, a violation of the Early Warning Reporting (``EWR'') requirements, the failure to provide timely notification of a safety- related defect or noncompliance, the failure to remedy, the lack of a reasonable basis for certification to the FMVSS, the sale of unremedied vehicles, or the failure to respond fully and timely to a request issued under 49 U.S.C. 30166. --------------------------------------------------------------------------- \4\ See e.g. Webster's Third New International Dictionary Unabridged, 1507 (defining nature as ``the essential character or constitution of something''); Black's Law Dictionary (10th ed. 2014) (defining nature as ``[a] fundamental quality that distinguishes one thing from another; the essence of something.''). --------------------------------------------------------------------------- Second, we proposed to interpret the circumstances of the violation to mean the context, facts, and conditions having bearing on the violation.\5\ This includes whether the manufacturer has been recalcitrant or shown disregard for its obligations under the Safety Act. --------------------------------------------------------------------------- \5\ See e.g. Ehlert v. United States, 422 F.2d 332, 335 (9th Cir. 1970) (Duniway, J. concurring) (stating that Webster's New International Dictionary, 2d ed. defines ``circumstances'' as ``conditions under which an act or event takes place or with respect to which a fact is determined.''). --------------------------------------------------------------------------- Third, we proposed to interpret the extent of the violation to mean the range of inclusiveness over which the violation extends including the scope, time frame, and/or the degree of the violation.\6\ This includes the number of violations and whether the violations are related or unrelated. --------------------------------------------------------------------------- \6\ See e.g. Webster's Third New International Dictionary Unabridged, 805 (defining extent as the ``range (as of inclusiveness or application) over which something extends.''). --------------------------------------------------------------------------- Finally, we proposed to interpret the gravity of the violation to mean the importance, significance, and/or seriousness of the violation.\7\ --------------------------------------------------------------------------- \7\ See e.g. Black's Law Dictionary (10th ed. 2014) (defining ``gravity'' as ``[s]eriousness of harm, an offense, etc., as judged from an objective, legal standpoint.''); Webster's Third New International Dictionary Unabridged, 993 (defining gravity as the importance, significance, or seriousness). --------------------------------------------------------------------------- Comments Global asserts that a good faith disagreement over whether a safety defect exists should not be used to show that a manufacturer has been recalcitrant or shown disregard for its Safety Act obligations. Agency Response A disagreement over whether a defect exists, even one in good faith, is not a mitigating factor in a civil penalty case, and Global's comments do not support otherwise. Manufacturers are aware that if they oppose NHTSA's request to conduct a recall because they disagree with NHTSA over the existence of a defect or non-compliance, they are at risk of civil penalties.\8\ Therefore, because we do not believe that disagreement over whether a defect exists is a mitigating factor regarding a manufacturer's liability for civil penalties and because we did not receive any other comments regarding the general factors, we are adopting the interpretation proposed in the NPRM. --------------------------------------------------------------------------- \8\ See United States v. General Motors Corp., 565 F.2d 754, 760-61 (D.C. Cir. 1977) (``One who refuses to pay when the law requires that he shall, acts at his peril, in the sense that he must be held to the acceptance of any lawful consequences attached to the refusal. It is no answer in such circumstances that he has acted in good faith.''). --------------------------------------------------------------------------- B. Discretionary Penalty Factors In the NPRM, we stated that the penalty factors listed in 49 U.S.C. 30165(c)(1) through (9) are discretionary factors that NHTSA may apply in determining the amount of civil penalty or compromise. Comments Global asserts that the nine factors listed in 49 U.S.C. 30165(c)(1)-(9) are mandatory and each factor must be considered by NHTSA if the factor is raised by a person subject to civil penalties for violations of the Safety Act. Global claims that the phrase ``determination shall include'' indicates the nine penalty factors are mandatory, not discretionary. Agency Response NHTSA continues to hold the position that the nine factors listed in 49 U.S.C. 30165(c)(1)-(9) are discretionary and Global's comments, and the record in this rulemaking, do not suggest otherwise. MAP-21 states that NHTSA's ``determination shall include, as appropriate'' the nine factors. NHTSA contends that by including the words ``as appropriate,'' Congress intended to provide NHTSA the discretion to determine which of the nine factors are relevant to a particular civil penalty case otherwise the phase ``as appropriate'' would be superfluous.\9\ Thus, the final rule continues to state that the nine factors in 49 U.S.C. 30165(c)(1)-(9) are discretionary. --------------------------------------------------------------------------- \9\ Clark v. Rameker, 134 S. Ct. 2242, 2248 (2014) (stating that ``a statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous''). --------------------------------------------------------------------------- 1. The Nature of the Defect or Noncompliance We proposed to interpret ``the nature of the defect or noncompliance,'' 49 U.S.C. 30165(c)(1), to mean the essential, fundamental characteristic or constitution of the safety-related defect or noncompliance. This is consistent with the dictionary definition of ``nature.'' \10\ ``Defect'' is defined at 49 U.S.C. 30102(a)(2) as including ``any defect in performance, construction, a component, or material or a motor vehicle or motor vehicle equipment.'' ``Noncompliance'' under this statutory factor includes a noncompliance with an FMVSS, as well as other violations subject to penalties under 49 U.S.C. 30165. Noncompliance may include, but is not limited to, noncompliance(s) with the FMVSS; the manufacture, sale, or importation of noncomplying motor vehicles and equipment or defective vehicles or equipment covered by a notice or order regarding the defect; failure to certify or have a reasonable [[Page 10523]] basis to certify that a motor vehicle or item of motor vehicle equipment complies with applicable motor vehicle safety standards; failure to maintain records as required; failure to provide timely notification of defects and noncompliances with the FMVSS; failure to follow the notification procedures set forth in 49 U.S.C. 30119 and regulations prescribed thereunder; failure to remedy defects and noncompliances pursuant to 49 U.S.C. 30120 and regulations prescribed thereunder; making safety devices and elements inoperative; failure to comply with regulations relating to school buses and school bus equipment; failure to comply with Early Warning Reporting requirements; and/or the failure to respond to an information request, Special Order, General Order, subpoena or other required reports.\11\ --------------------------------------------------------------------------- \10\ See e.g. Webster's Third New International Dictionary Unabridged, 1507 (defining nature as ``the essential character or constitution of something''); Black's Law Dictionary (9th ed. 2009) (defining nature as ``[a] fundamental quality that distinguishes one thing from another; the essence of something.''). \11\ The foregoing list is intended to be illustrative only, and is not exhaustive. --------------------------------------------------------------------------- When considering the nature of a safety-related defect or noncompliance with an FMVSS in a motor vehicle or motor vehicle equipment, NHTSA may examine the conditions or circumstances under which the defect or noncompliance arises, the performance problem, and actual and probable consequences of the defect or noncompliance. When considering the nature of the noncompliance with the Safety Act or a regulation promulgated thereunder, NHTSA may examine the circumstances surrounding the violation. For example, NHTSA has a process by which a manufacturer can petition for an exemption from the notification and remedy requirements of 49 U.S.C. 30118 and 30120 on the basis that a noncompliance is inconsequential to motor vehicle safety. 49 U.S.C. 30118(d) and 30120(h), 49 CFR part 556. In the NPRM we stated that if a petition for inconsequential noncompliance is granted, then it could serve as mitigation under this factor. Comments The Alliance asserts that the fact that a non-compliance is inconsequential to motor vehicle safety should not be a mitigating factor in determining the amount of a civil penalty. The Alliance believes that an inconsequential non-compliance should never be the subject of a civil penalty proceeding. NADA asserts that considering the nature of a defect or non- compliance involves weighing the relative seriousness of the defect or non-compliance. NADA believes that not all defects and non-compliances have the same significance to safety. Agency Response As a general matter, it is unlikely that NHTSA would grant a petition for inconsequential noncompliance and then seek a civil penalty for a violation of the Safety Act. However, NHTSA believes such a situation would be an example of a situation with a lower degree of seriousness, where reduced civil penalties would be appropriate. As stated in the NPRM, when considering the nature of a defect or noncompliance NHTSA will consider the conditions or circumstances under which the defect or noncompliance arises, the performance problem, and actual and probable consequences of the defect or noncompliance. We believe that these factors will give an indication of the seriousness of the defect or noncompliance. Therefore, no changes to the final rule are necessary in response to NADA's comment. 2. Knowledge by the Respondent of Its Obligations Under This Chapter In the NPRM, we proposed to interpret the ``knowledge by the . . . [respondent] of its obligations under this chapter,'' 49 U.S.C. 30165(c)(2), as all knowledge, legal and factual, actual, presumed and constructive, of the respondent of its obligations under 49 U.S.C. Chapter 301. We proposed that if a respondent is other than an individual, including but not limited to a corporation or a partnership, then the knowledge of an employee or employees of that non-natural person be imputed to that non-natural person. We proposed to interpret the knowledge of an agent as being imputed to a principal. We proposed that a non-natural person, such as a corporation, with multiple employees will be charged with the knowledge of each employee, regardless of whether the employees have communicated that knowledge among each other or to a decision maker for the non-natural person. We stated in the NPRM, that under this proposed interpretation of ``knowledge,'' delays resulting from, or caused by, a manufacturer's internal reporting processes would not excuse a manufacturer's failure to report a defect or noncompliance to NHTSA. We stated that NHTSA may examine such factors as whether the respondent began producing parts to remedy a particular defect or noncompliance with an FMVSS prior to reporting the defect or noncompliance with an FMVSS to NHTSA. NHTSA may also consider communication between the respondent (e.g. a manufacturer) and other entities such as dealers and owners in determining its knowledge of a violation. NHTSA may consider the information NHTSA provided to the respondent, including notification of apparent noncompliance, information on the recall process, information on governing regulations, and information on consequences of failure to comply with regulatory requirements. NHTSA may also consider whether the respondent has been proactive in discerning other potential safety issues, and whether it has attempted to mislead the agency or conceal its full information, including its knowledge of a defect or noncompliance. Comments Advocates supports NHTSA proposal that knowledge of employees be attributed to the corporation regardless of whether employees have communicated such knowledge to the corporation. The Alliance does not believe that it is reasonable to input the knowledge of employees to the corporation in determining whether a manufacturer fulfilled its regulatory obligations in a timely matter. The Alliance states that manufacturers must be allowed to follow reasonable processes for processing information and given time to conduct internal investigations. Therefore, in evaluating whether a company fulfilled its regulatory obligations, NHTSA should evaluate the reasonableness of the company's internal business process for, and the circumstances of, each matter at issue. Global states that there are circumstances when the knowledge of employees should not be attributed to the corporation such as when an employee acts illegally or against corporate policy. The extent to which a manufacturer has received or not received appropriate information from the supply chain should be a mitigating factor. Global does not believe that production of parts or communications to the field should automatically suggest knowledge of a safety defect because a manufacturer may initiate these activities while still investigating whether the issue is a safety defect. Global also believes that legitimate misunderstanding of laws and regulations should be a mitigating factor. NADA believes that NHTSA should take into account the fact that a person's lack of knowledge may be excusable. Agency Response NHTSA agrees that in instances in which the significance of a piece of information, by itself, would not necessarily establish a defect or noncompliance, an individual [[Page 10524]] employee's knowledge of this information is less relevant than the corporation's processes for gathering information and communicating it to decision makers within the company. NHTSA agrees with the Alliance that in assessing the knowledge of a corporation, NHTSA should assess the corporation's process for gathering information in support of internal investigations of potential safety issues and making decisions regarding defects and noncompliances. In making such an assessment, NHTSA will consider whether the corporation's processes are designed to gather information and provide it to decision makers in a timely manner, whether employees are trained on these processes and how to follow them, whether the corporation conducts periodic reviews of its processes to ensure that its employees are following the processes, and whether the process was followed in the instance of the violation of the Safety Act that gave rise to the civil penalty case at hand. NHTSA believes that there are cases in which it is appropriate to impute knowledge to the corporation when an employee has acted illegally or against corporate policy. Whether NHTSA attributes the illegal or unauthorized actions of employees to the corporation will depend on the employee's position within the company, the degree to which the corporation monitored for illegal or unauthorized activity by employees, the degree to which employees were made aware of their regulatory responsibilities, and the seriousness of the defect or noncompliance at issue. NHTSA agrees with Global that in assessing the knowledge of a corporation NHTSA should consider the information that a corporation received from the supply chain. This includes the extent to which the corporation has policies that require suppliers to make information available and the extent that it monitors suppliers' compliance with these policies. NHTSA believes that ordering or producing replacement parts and communications to the field can show that a manufacturer had knowledge of a defect or noncompliance. Whether this fact, by itself, is dispositive of a corporation's knowledge of a defect or noncompliance will depend on the other actions taken by a corporation to investigate a defect or noncompliance and the timing of those actions. A corporation's misunderstanding of its regulatory responsibilities will rarely be a mitigating factor in a civil penalty case. In the NPRM, however, NHTSA did state that it would consider whether an entity was a new manufacturer in assessing the entity's knowledge. In the case of a new manufacturer, a corporation's misunderstanding regarding its regulatory responsibilities could be a mitigating factor, depending on the circumstances. In view of the comments, and on this record, NHTSA is amending the language in the final rule to clarify that the agency has the discretion to attribute knowledge of employees to the corporation when appropriate but is not required to do so. 3. The Severity of the Risk of Injury We proposed to interpret the ``severity of the risk of injury,'' 49 U.S.C. 30165(c)(3), as the gravity of exposure to potential injury, including the potential for injury or death of drivers, passengers, other motorists, pedestrians and others. The severity of the risk includes the likelihood of an injury occurring and the population group exposed to that risk. We stated that the severity of the risk of injury may depend on the component of a motor vehicle that is defective or noncompliant with an FMVSS. Comments Global believes that the absence of injuries should be considered a mitigating factor in severity of the risk of injury. NADA believes that when considering ``the severity of the risk of injury'' of a violation of the Safety Act, NHTSA should take into account whether the violation is likely to cause a crash that could lead to an injury or death versus whether the violation is likely to lead to an increase in the likelihood of injury or death should a crash occur (crash causation versus reduced injury/death prevention. Agency Response NHTSA disagrees that the absence of injury should be a mitigating factor when considering the risk of injury. NHTSA believes that it is possible, especially in the case of a defect or noncompliance in a small number of vehicles, for the risk of injury from a defect or noncompliance to be high even if the defect or noncompliance has not yet caused any injuries, and no commenter provided credible evidence, or applicable law, to suggest otherwise. NHTSA does not believe that it would be appropriate, when considering the risk of injury caused by a defect or noncompliance, to differentiate on the basis of whether a defect or noncompliance increases the risk of a crash versus whether the defect or noncompliance increases the likelihood that a death or injury will occur as a result of a crash. NHTSA contends that both types of defects or non-compliances have the potential to be equally severe. After considering the comments we have decided to finalize the proposed interpretation of this factor. 4. The Occurrence or Absence of Injury NHTSA proposed to interpret ``the occurrence or absence of injury,'' 49 U.S.C. 30165(c)(4), as whether injuries or deaths have occurred as a result of a defect, noncompliance, or other violation of the Safety Act or implementing regulations. NHTSA proposed also to consider allegations of death or injury. When appropriate, NHTSA may consider deaths or injuries that are alleged to have occurred as a result of a defect, noncompliance, or other violation of the Safety Act or implementing regulations regardless of whether NHTSA has been able to establish that the defect, noncompliance, or violation was the definitive cause of the death or injury. In evaluating this factor, it is important to emphasize that the absence of deaths or injuries is not dispositive of the existence of a defect or noncompliance or a person's liability for civil penalties. Advocates supports the agency's proposal that the absence of death or injury is not dispositive of the existence of defect or liability for civil penalties. In light of the comments we received regarding this factor, we are finalizing the proposed interpretation. 5. The Number of Motor Vehicles or Items of Motor Vehicle Equipment Distributed With the Defect or Noncompliance NHTSA proposed to interpret ``the number of motor vehicles or items of motor vehicle equipment distributed with the defect or noncompliance,'' 49 U.S.C. 30165(c)(5), as referring to the total number of vehicles or items of motor vehicle equipment distributed with the defect or noncompliance with an FMVSS, or the percentage of the vehicles or items of motor vehicle equipment of the subject population with the defect or noncompliance with an FMVSS. We proposed that NHTSA may look not only at absolute numbers of motor vehicles or items of motor vehicle equipment. Rather it may also take into account the portion of a vehicle or equipment population with the defect, noncompliance, or other violation. In applying this factor, NHTSA may also consider the portion of motor vehicles that contain the defect or noncompliance with an FMVSS as a percentage of the manufacturer's total annual production of vehicles if [[Page 10525]] multiple make, model and model years of motor vehicles are affected by the defect or noncompliance with an FMVSS. Further, we proposed that NHTSA may choose to make a distinction between those defective or noncompliant products distributed in commerce that consumers received, and those defective or noncompliant products distributed in commerce that consumers have not received. We did not receive any comments regarding our proposed interpretation of this factor so we are finalizing the proposed interpretation of this factor. 6. Actions Taken by the Respondent To Identify, Investigate, or Mitigate the Condition In the NPRM, NHTSA proposed to interpret ``actions taken by the . . . [respondent] to identify, investigate, or mitigate the condition,'' 49 U.S.C. 30165(c)(6), as actions actually taken, the time frame when those actions were taken, what those actions involved and how they ameliorated or otherwise related to the condition, what remained after those actions were taken, and the speed with which the actions were taken. NHTSA proposed that in assessing a respondent's ``actions,'' a failure to act may also be considered. We stated that, under this factor, NHTSA may consider whether the respondent has been diligent in endeavoring to meet the requirements of the Safety Act and regulations thereunder, including whether it has set up processes to facilitate timely and accurate reporting, and whether it has audited such systems. NHTSA may also take into account the investigative activities the respondent has undertaken relating to the scope of the issues identified by NHTSA. The agency may also consider whether the respondent delayed in reporting a safety-related defect or a noncompliance with an FMVSS (a person is required to file a 49 CFR part 573 report not more than five working days after a person knew or should have known of the safety-related defect or noncompliance with an FMVSS). NHTSA may also consider whether the respondent remedied the safety-related defect or noncompliance with an FMVSS in a timely manner. For instance, NHTSA may consider whether a recall remedy is adequate, whether a new safety-related defect or noncompliance with an FMVSS arose from an inadequate recall remedy, and whether the scope of a recall was adequate. NHTSA may also consider the timeliness and adequacy of the respondent's communications with owners and dealers. Comments Global believes that a manufacturer's internal procedures should be considered when considering ``actions taken to identify investigate, or mitigate the condition.'' Agency Response As stated above, when considering the actions taken by the respondent, NHTSA may consider whether the respondent has set up systems to facilitate timely and accurate reporting, and whether it has audited such systems. NHTSA also stated that when considering the knowledge of the respondent, it will consider whether employees have been trained on those systems, and whether those systems were followed. It is equally appropriate to consider the aforementioned factors when assessing the actions taken to by the respondent to identify, investigate or mitigate the defect or noncompliance. Therefore, NHTSA has revising the proposed rule to make clear that we will consider a corporation's internal processes for reporting information to NHTSA and investigating potential safety issues under this factor. 7. The Appropriateness of Such Penalty in Relation to the Size of the Business of the Respondent, Including the Potential for Undue Adverse Economic Impacts NHTSA takes the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) into account prior to setting any final penalty amount.\12\ This policy will continue in light of the MAP-21 amendments to 49 U.S.C. 30165(c). --------------------------------------------------------------------------- \12\ See NHTSA, Civil Penalty Policy Under the Small Business Regulatory Enforcement Fairness Act, 62 FR 37115 (July 10, 1997). --------------------------------------------------------------------------- Upon a showing by a violator that it is a small entity, NHTSA will make appropriate adjustments to the proposed penalty or settlement amount (although certain exceptions may apply).\13\ If the respondent asserts it is a ``small business,'' NHTSA expects the respondent to provide the supporting documentation. Under the Small Business Administration's standards, an entity is considered ``small'' if it is independently owned and operated and is not dominant in its field of operation,\14\ or if its number of employees or the dollar volume of its business does not exceed specific thresholds.\15\ For example, 13 CFR Section 121.201 specifically identifies as ``small entities'' manufacturers of motor vehicles, passenger car bodies, and motor homes that employ 1,000 people or less, manufacturers of motor vehicle parts and accessories that employ 750 people or less, automobile and tire wholesalers that employ 100 people or less, new car dealers that employ 200 people or less and automotive parts and accessory stores with annual receipts less than $15 million. --------------------------------------------------------------------------- \13\ Id. at 37117. \14\ Id. at 37115. \15\ Id. --------------------------------------------------------------------------- We proposed to interpret ``potential for undue adverse economic impacts,'' 49 U.S.C. 30165(c)(7), as the possibility that payment of a civil penalty amount would affect the ability of the respondent to continue to operate. We also stated that NHTSA may consider a respondent's ability to pay, including in installments over time, and any effect of a penalty on that person's ability to continue to do business. The ability of a business to pay a penalty is not dictated by its size. In some cases for small businesses, however, these two considerations may relate to one another. NHTSA also may consider relevant financial factors such as capitalization, liquidity, solvency, and profitability to determine a small business' ability to pay a penalty. NHTSA may also consider whether the business has been deliberately undercapitalized. The burden to present sufficient evidence relating to a charged business' size and ability to pay rests on that business. More generally, in cases where the respondent claims that it is financially unable to pay the civil penalty or that the penalty would have undue adverse economic impacts, the burden of proof is on the respondent. In the case of closely-held or privately-held companies, NHTSA may provide the respondent the opportunity to submit personal financial documentation for consideration. Comments Advocates supports the agency's proposal that the respondent is responsible for establishing the severity of the impact of the financial penalty. Global believes that NHTSA's proposed factor for considering undue adverse economic impacts only reflects the most extreme economic impacts. Global believes that for cases involving less severe violations, NHTSA should consider economic hardship to the company's competitive position caused by a civil penalty. Agency Response NHTSA believes that for less severe violations consideration of other factors under 49 U.S.C. 30165(c) will reduce the amount of potential penalty and also the financial impact of the penalty. For [[Page 10526]] less serve violations, NHTSA will also still consider whether the company should be permitted to pay the civil penalty over time. For these reasons, we are adopting the proposed interpretation of this factor in the NPRM without changes. 8. Whether the Respondent Has Been Assessed Civil Penalties Under This Section During the Most Recent 5 Years We proposed to interpret ``whether the [respondent] has been assessed civil penalties under this section during the most recent 5 years,'' 49 U.S.C. 30165(c)(8), as including an assessment of civil penalties, a settlement agreement containing a penalty, or a consent order or a lawsuit involving a penalty or payment of a civil penalty in the most recent 5 years from the date of the alleged violation, regardless of whether there was any admission of a violation or of liability under 49 U.S.C. 30165. Comment Advocates believes that repeated violations of the Safety Act merit the imposition of the maximum fine permitted by law. Global requests that NHTSA consider the significance of previous violations of the Safety Act and whether previous violations are related to the violation at issue. Global believes that in some instances prior penalties many have no bearing on whether an enhanced penalty should be imposed. Agency Response NHTSA believes that repeated violations of the Safety Act, even if they are unrelated, can be indicative of a company's failure to foster a culture of safety and compliance. Therefore, NHTSA will continue to take into account all previous civil penalties paid by a company in the last five years regardless of whether they are related to the present violation giving rise to liability for civil penalties. 9. Other Appropriate Factors We proposed to interpret other appropriate factors as factors not specifically identified in Section 31203(a) of MAP-21 which are appropriately considered, including both aggravating and mitigating factors. Such factors may include, but are not limited to: a. A history of violations. NHTSA may increase penalties for repeated violations of the Safety Act or implementing regulations, or for a pattern or practice of violations. b. An economic gain from the violation. NHTSA may consider whether the respondent benefitted economically from a violation, including a delay in complying with the Safety Act, a failure to comply with the Safety Act, or a delay or failure to comply with the regulations thereunder. c. Effect of the respondent's conduct on the integrity of programs administered by NHTSA. The Agency's programs depend in large part on timely and accurate reporting and certification by manufacturers. Therefore, NHTSA may consider whether a person has been forthright with the Agency. NHTSA may also consider whether a person has attempted to mislead the Agency or conceal relevant information. For instance, NHTSA may consider whether a manufacturer has provided accurate and timely statements consistent with its Early Warning Reporting obligations. NHTSA may also consider whether a registered importer has provided accurate conformity packages and/or other information consistent with 49 U.S.C. 30141-30147 and the implementing regulations. d. Responding to requests for information or remedial action. NHTSA may consider a person's failure to respond in a timely and complete fashion to requests from NHTSA for information or for remedial action. NHTSA may also consider whether the agency needed to make multiple requests to receive requested information. Comments NADA stated that under this factor NHTSA should include potential penalty waivers for first time violators and consider the speed with which a person who has violated the Safety Act acts to remedy the violation. Agency Response NHTSA does not believe that it would be appropriate to establish penalty waivers for first time violators in the contest of this rulemaking. Often when NHTSA seeks a civil penalty from an entity for the first time, it is because a significant violation has occurred or because the entity has exhibited a pattern of repeated violations. NHTSA will consider the speed with which a violator has acted to remedy a violation when considering an entity's response to a request for remedial action from NHTSA. IV. Codification of Other MAP-21 Penalty Changes in 49 CFR Part 578 MAP-21 increased the penalties and damages for odometer fraud. MAP- 21 31206, 126 Stat. 761. MAP-21 also established civil penalties for violations of corporate responsibility provisions in 49 U.S.C. 30166 of $5,000 per day and a maximum penalty of $1,000,000. MAP-21 31304(b), 126 Stat. 764. These new penalties and increased penalties and damages are all currently in effect. NHTSA is amending its penalty regulation, 49 CFR 578.6, to conform it to the MAP-21 amendments. V. Rulemaking Analyses and Notices Executive Order 12866, Executive Order 13563, and DOT Regulatory Policies and Procedures NHTSA has considered the impact of this rulemaking action under Executive Order 12866, Executive Order 13563, and the Department of Transportation's regulatory policies and procedures. This rulemaking document was not reviewed under Executive Order 12866 or Executive Order 13563. This action provides an interpretation for how NHTSA will apply the civil penalty factors in 49 U.S.C. 30165. Because this rulemaking only seeks to explain the process by which the agency determines and resolves civil penalties and does not change the number of entities subject to civil penalties, the impacts of the rule are limited. Therefore, this rulemaking has been determined to be not ``significant'' under the Department of Transportation's regulatory policies and procedures and the policies of the Office of Management and Budget. Regulatory Flexibility Act We have also considered the impacts of this notice under the Regulatory Flexibility Act. I certify that this rule is not expected to have a significant economic impact on a substantial number of small entities. The following provides the factual basis for this certification under 5 U.S.C. 605(b). The amendments almost exclusively affect manufacturers of motor vehicles and motor vehicle equipment. SBA uses size standards based on the North American Industry Classification System (``NAICS''), Subsector 336--Transportation Equipment Manufacturing, which provides a small business size standard of 1,000 employees or fewer for automobile manufacturing businesses. Other motor vehicle-related industries have lower size requirements that range between 100 and 750 employees. For example, according to the SBA coding system, businesses that manufacture truck trailers, travel trailers/campers, and vehicular lighting equipment, qualify as small businesses if they employ 500 or fewer employees. Many small businesses are subject to the penalty provisions of 49 U.S.C. 30165 and therefore may be in some way [[Page 10527]] affected by the civil penalty factors in this final rule. However, the impacts of this rulemaking on small businesses are minimal, as NHTSA will continue to consider the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).\16\ --------------------------------------------------------------------------- \16\ See NHTSA, Civil Penalty Policy Under the Small Business Regulatory Enforcement Fairness Act, 62 FR 37115 (July 10, 1997). --------------------------------------------------------------------------- Small Business Regulatory Enforcement Fairness Act (SBREFA) This final rule would not materially affect our civil penalty policy toward small businesses. Because NHTSA will continue to consider SBREFA and consider the business' size including the potential that a civil penalty would have undue adverse economic impacts on a small business before assessing or compromising a civil penalty, the impacts of this rulemaking on small businesses are minimal. Executive Order 13132 (Federalism) Executive Order 13132 requires NHTSA 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.'' ``Policies that have federalism implications'' is defined in the Executive Order 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.'' Under Executive Order 13132, the agency may not issue a regulation with Federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, the agency consults with State and local governments, or the agency consults with State and local officials early in the process of developing the proposed regulation. This final rule will not 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, as specified in Executive Order 13132. This rule generally would apply to private motor vehicle and motor vehicle equipment manufacturers (including importers), entities that sell motor vehicles and equipment and motor vehicle repair businesses. Thus, Executive Order 13132 is not implicated and consultation with State and local officials is not required. Unfunded Mandates Reform Act of 1995 The Unfunded Mandates Reform Act of 1995, Public Law 104-4, requires agencies to prepare a written assessment of the cost, benefits and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually. Because this rulemaking would not have a $100 million effect, no Unfunded Mandates assessment will be prepared. Executive Order 12988 (Civil Justice Reform) With respect to the review of the promulgation of a new regulation, section 3(b) of Executive Order 12988, ``Civil Justice Reform'' (61 FR 4729; Feb. 7, 1996), requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect; (2) clearly specifies the effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct, while promoting simplification and burden reduction; (4) clearly specifies the retroactive effect, if any; (5) specifies whether administrative proceedings are to be required before parties file suit in court; (6) adequately defines key terms; and (7) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. This document is consistent with that requirement. The rule lists the mandatory and discretionary factors for NHTSA to consider when determining the amount of civil penalty or compromise. This rule would not have retroactive effect. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1980, we state that there are no requirements for information collection associated with this rulemaking action. 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 578 Administrative practice and procedure, Motor vehicles, Motor vehicle safety, Imports, Rubber and rubber products, Penalties, Tires. Regulatory Text For the reasons set forth in the preamble, NHTSA amends 49 CFR part 578 as follows: PART 578--CIVIL AND CRIMINAL PENALTIES 0 1. The authority citation for part 578 is revised to read as follows: Authority: Pub. L. 101-410, Pub. L. 104-134, Pub. L. 112-141, 49 U.S.C. 322, 30165, 30170, 30505, 32308, 32309, 32507, 32709, 32710, 32902, 32912, and 33115 as amended; delegation of authority at 49 CFR 1.81 and 1.95. 0 2. Revise Sec. Sec. 578.1, 578.2 and 578.3 to read as follows: Sec. 578.1 Scope This part specifies the civil penalties for violations of statutes and regulations administered by the National Highway Traffic Safety Administration (NHTSA), as adjusted for inflation. This part also sets forth NHTSA's interpretation of the civil penalty factors listed in 49 U.S.C. 30165(c). In addition, this part 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). Sec. 578.2 Purpose. One purpose of this part is to effectuate the remedial impact of civil penalties and to foster compliance with the law by specifying the civil penalties for statutory and regulatory violations, as adjusted for inflation. Another purpose of this part is to set forth NHTSA's interpretation of the civil penalty factors listed in 49 U.S.C. 30165(c). A third 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). [[Page 10528]] Sec. 578.3 Applicability. 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 or a regulation prescribed thereunder. This part applies to civil penalty factors under section 30165(c) 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. 0 3. Amend Sec. 578.4 by adding in alphabetical order definitions of ``person'' and ``respondent'' to read as follows: Sec. 578.4 Definitions. * * * * * Person means any individual, corporation, company, limited liability company, trust, association, firm, partnership, society, joint stock company, or any other entity. Respondent means any person charged with liability for a civil penalty for a violation of sections 30112, 30115, 30117 through 30122, 30123(a), 30125(c), 30127, 30141 through 30147, or 30166 of Title 49 of the United States Code or a regulation prescribed under any of those sections. 0 4. Amend Sec. 578.6 by adding paragraph (a)(4) and revising paragraph (f) to read as follows: Sec. 578.6 Civil penalties for violations of specified provisions of Title 49 of the United States Code. (a) * * * (4) Section 30166(o). A person who knowingly and willfully submits materially false or misleading information to the Secretary, after certifying the same as accurate under the process established pursuant to section 30166(o), shall be subject to a civil penalty of not more than $5,000 per day. The maximum penalty under this paragraph for a related series of daily violations is $1,000,000. * * * * * (f) Odometer tampering and disclosure. (1) A person that violates 49 U.S.C. Chapter 327 or a regulation prescribed or order issued thereunder is liable to the United States Government for a civil penalty of not more than $10,000 for each violation. A separate violation occurs for each motor vehicle or device involved in the violation. The maximum civil penalty under this paragraph for a related series of violations is $1,000,000. (2) A person that violates 49 U.S.C. Chapter 327 or a regulation prescribed or order issued thereunder, with intent to defraud, is liable for three times the actual damages or $10,000, whichever is greater. * * * * * 0 5. Add Sec. 578.8 to read as follows: Sec. 578.8 Civil penalty factors under 49 U.S.C. Chapter 301. (a) General civil penalty factors. This subsection interprets the terms nature, circumstances, extent, and gravity of the violation consistent with the factors in 49 U.S.C. 30165(c). (1) Nature of the violation means the essential, fundamental character or constitution of the violation. It includes but is not limited to the nature of a safety-related defect or noncompliance. It also includes what the violation involves. (2) Circumstances of the violation means the context, facts, and conditions having bearing on the violation. (3) Extent of the violation means the range of inclusiveness over which the violation extends including the scope, time frame and/or the degree of the violation. This includes the number of violations and whether the violations are related or unrelated. (4) Gravity of the violation means the importance, significance, and/or seriousness of the violation. (b) Discretionary civil penalty factors. Paragraph (b) of this section interprets the nine discretionary factors in 49 U.S.C. 30165(c)(1) through (9) that NHTSA may apply in making civil penalty amount determinations. (1) The nature of the defect or noncompliance means the essential, fundamental characteristic or constitution of the defect or noncompliance. ``Defect'' is as defined in 49 U.S.C. 30102(a)(2). ``Noncompliance'' under this factor includes a noncompliance with a Federal Motor Vehicle Safety Standard (``FMVSS''), as well as other violations subject to penalties under 49 U.S.C. 30165. When considering the nature of a safety-related defect or noncompliance with an FMVSS, NHTSA may examine the conditions or circumstances under which the defect or noncompliance arises, the performance problem, and actual and probable consequences of the defect or noncompliance. When considering the nature of the noncompliance with the Safety Act or a regulation promulgated thereunder, NHTSA may also examine the circumstances surrounding the violation. (2) Knowledge by the respondent of its obligations under this chapter means all knowledge, legal and factual, actual, presumed and constructive, of the respondent of its obligations under 49 U.S.C. Chapter 301. If a respondent is other than a natural person, including but not limited to a corporation or a partnership, then the knowledge of an employee or employees of that non-natural person may be imputed to that non-natural person. The knowledge of an agent may be imputed to a principal. A person, such as a corporation, with multiple employees may be charged with the knowledge of each employee, regardless of whether the employees have communicated that knowledge among each other, or to a decision maker for the non-natural person. (3) The severity of the risk of injury means the gravity of exposure to potential injury and includes the potential for injury or death of drivers, passengers, other motorists, pedestrians, and others. The severity of the risk includes the likelihood of an injury occurring and the population group exposed. (4) The occurrence or absence of injury means whether injuries or deaths have occurred as a result of a defect, noncompliance, or other violation of 49 U.S.C. Chapter 301 or Chapter 5 of Title 49 of the Code of Federal Regulations. NHTSA may also take into consideration allegations of death or injury. The absence of deaths or injuries shall not be dispositive of manufacturer's liability for civil penalties. (5) The number of motor vehicles or items of motor vehicle equipment distributed with the defect or noncompliance means the total number of vehicles or items of motor vehicle equipment distributed with the defect or noncompliance with an FMVSS or the percentage of vehicles or items of motor vehicle equipment of the subject population with the defect or noncompliance with an FMVSS. If multiple make, model and model years of motor vehicles are affected by the defect or noncompliance with an FMVSS, NHTSA may also consider the percentage of motor vehicles that contain the defect or noncompliance with an FMVSS as a percentage of the manufacturer's total annual production of vehicles. NHTSA may choose to make distinction between those defective or noncompliant products distributed in commerce that consumers received, and those defective or noncompliant products distributed in commerce that consumers have not received. (6) Actions taken by the respondent to identify, investigate, or mitigate the condition means actions actually taken, the time frame when those actions were taken, what those actions involved and how they ameliorated or otherwise related to the condition, what remained after those actions were taken, and the [[Page 10529]] speed with which the actions were taken. A failure to act may also be considered. NHTSA may also consider whether the respondent has set up processes to facilitate timely and accurate reporting and timely investigation of potential safety issues, whether it has audited such processes, whether it has provided training to employees on the processes, and whether such processes were followed. (7) The appropriateness of such penalty in relation to the size of the business of the respondent, including the potential for undue adverse economic impacts. NHTSA takes the Small Business Regulatory Enforcement Fairness Act of 1996 into account. Upon a showing that a violator is a small entity, NHTSA may include, but is not limited to, requiring the small entity to correct the violation within a reasonable correction period, considering whether the violation was discovered through the participation by the small entity in a compliance assistance program sponsored by the agency, considering whether the small entity has been subject to multiple enforcement actions by the agency, considering whether the violations involve willful or criminal conduct, considering whether the violations pose serious health, safety or environmental threats, and requiring a good faith effort to comply with the law. NHTSA may also consider the effect of the penalty on ability of the person to continue to operate. NHTSA may consider a person's ability to pay, including in installments over time, any effect of a penalty on the respondent's ability to continue to do business, and relevant financial factors such as liquidity, solvency, and profitability. NHTSA may also consider whether the business has been deliberately undercapitalized. (8) Whether the respondent has been assessed civil penalties under this section during the most recent 5 years means whether the respondent has been assessed civil penalties, including a settlement agreement containing a penalty, a consent order or a lawsuit involving a penalty or payment of a civil penalty in the most recent 5 years from the date of the alleged violation, regardless of whether there was any admission of a violation or of liability, under 49 U.S.C. 30165. (9) Other appropriate factors means other factors not identified above, including but not limited to aggravating and mitigating factors relating to the violation, such as whether there is a history of violations, whether a person benefitted economically from a violation, the effect of the respondent's conduct on the integrity of programs administered by NHTSA, and whether there was a failure to respond in a complete and timely manner to requests for information or remedial action. Issued in Washington, DC on February 17, 2016 under authority delegated pursuant to 49 CFR 1.95. Mark R. Rosekind, Administrator. [FR Doc. 2016-04311 Filed 2-29-16; 8:45 am] BILLING CODE 4910-59-P
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FOR FURTHER INFORMATION CONTACT: 1852.235–73 [Amended] ADDRESSES: Any petitions for
Manuel Quinones, NASA, Office of ■ 5. Amend section 1852.235–73(b) by reconsideration should refer to the
Procurement, Contract and Grant Policy removing the words ‘‘NPR 2200.2, docket number of this document and be
Division, via email at Guidelines’’ and adding ‘‘NPR 2200.2, submitted to: Administrator, National
manuel.quinones@nasa.gov, or Requirements’’ in their place. Highway Traffic Safety Administration,
telephone (202) 358–2143. [FR Doc. 2016–04444 Filed 2–29–16; 8:45 am]
1200 New Jersey Avenue SE., West
SUPPLEMENTARY INFORMATION: Building, Ground Floor, Docket Room
BILLING CODE 7510–13–P
W12–140, Washington, DC 20590.
I. Background FOR FURTHER INFORMATION CONTACT:
As part NASA’s retrospective review DEPARTMENT OF TRANSPORTATION Thomas Healy, Office of the Chief
of existing regulations pursuant to Counsel, NHTSA, 1200 New Jersey Ave.
section 6 of Executive Order 13563, National Highway Traffic Safety SE., West Building, W41–211,
Improving Regulation and Regulatory Administration Washington, DC 20590. Telephone:
Review, NASA conducted a review of it (202) 366–2992 Fax: (202) 366–3820.
regulations and noted several minor 49 CFR Part 578 SUPPLEMENTARY INFORMATION:
inconsistencies requiring correction. A I. Executive Summary
summary of changes follows: [Docket No. NHTSA–2016–0023]
II. Background and Summary of Notice of
• Revise section 1812.301(G) to match RIN 2127–AL38 Proposed Rulemaking
clause title at 1852.219–75. A. Background
• Revise section 1819.708–70 match Civil Penalty Factors B. Civil Penalties Procedures in NPRM
clause title at 1852.219–75. C. Civil Penalty Factors in the NPRM
AGENCY: National Highway Traffic III. The Final Rule
• Revise section 1852.235–73(b) to Safety Administration (NHTSA), A. General Penalty Factors
update title of the regulation NPR Department of Transportation. B. Discretionary Penalty Factors
2200.2. ACTION: Final rule. IV. Codification of Other MAP–21 Penalty
List of Subject in 48 CFR Parts 1812, Changes in 49 CFR Part 578
SUMMARY: This final rule provides V. Rulemaking Analyses and Notices
1819, and 1852
NHTSA’s interpretation of the civil
Government procurement. penalty factors for determining the I. Executive Summary
amount of a civil penalty or the amount The Moving Ahead for Progress in the
Manuel Quinones, of a compromise under the National 21st Century Act (MAP–21 or the Act)
Traffic and Motor Vehicle Safety Act was signed into law on July 6, 2012
NASA FAR Supplement Manager.
(Safety Act). The Moving Ahead for (Pub. L. 112–141). Section 31203(a) of
Accordingly, 48 CFR parts 1812, 1819, Progress in the 21st Century Act (MAP– MAP–21 amends the civil penalty
and 1852 are amended as follows: 21) states that the Secretary of provision of the Safety Act, as amended
■ 1. The authority citation for parts Transportation shall determine the and recodified, 49 U.S.C. Chapter 301,
1812 and 1819 is revised to read as amount of civil penalty or compromise by requiring the Secretary of
follows: under the Safety Act. MAP–21 identifies Transportation to consider various
mandatory factors that the Secretary factors in determining the amount of a
Authority: 51 U.S.C. 20113(a) and 48 CFR
chapter 1. must consider and discretionary factors civil penalty or compromise. The factors
for the Secretary to consider as that the Secretary shall consider in
PART 1812—ACQUISITION OF appropriate in making such determining the amount of civil penalty
COMMERCIAL ITEMS determinations. MAP–21 directs or compromise are codified in
NHTSA to issue a rule providing an amendments to 49 U.S.C. 30165(c).
1852.301 [Amended] interpretation of these penalty factors. Section 31203(b) of MAP–21 requires
■ 2. Amend 1812.301(f)(i)(G) by This final rule also amends NHTSA’s the Secretary to issue a final rule, in
removing the words ‘‘Small Business regulation to the increase penalties and accordance with 5 U.S.C. 553, providing
Subcontracting Reporting’’ and adding damages for odometer fraud, and to an interpretation of the penalty factors
‘‘Individual Subcontracting Reports’’ in include the statutory penalty for set forth in MAP–21. Pub. L. 112–141,
their place. knowingly and willfully submitting § 31203, 126 Stat. 758 (2012). This rule
materially false or misleading provides an interpretation of the civil
PART 1819—SMALL BUSINESS information to the Secretary after penalty factors in 49 U.S.C. 30165(c) for
PROGRAMS certifying the same information as NHTSA to consider in determining the
accurate. amount of civil penalty or compromise.
1819.708–70 [Amended] In the NPRM, we proposed NHTSA issued an NPRM that
■ 3. Amend section 1819.708–70(b) by administrative procedures for NHTSA to proposed an interpretation of the
removing the words ‘‘Individual follow when assessing civil penalties penalty factors in Section 31203(b) of
Subcontracts Reporting’’ and adding against persons who violate the Safety MAP–21 on September 21, 2015.1 The
‘‘Individual Subcontracting Reports’’ in Act. We are not including those NPRM also included administrative
their place. procedures in this final rule. Instead, procedures for NHTSA to follow when
NHTSA plans to address those assessing civil penalties against persons
asabaliauskas on DSK5VPTVN1PROD with RULES
PART 1852—SOLICITATION procedures separately, in a rule to be who violate the Safety Act. We have
PROVISIONS AND CONTRACT issued soon. decided not to include the
CLAUSES DATES: Effective date: This final rule is administrative procedures for assessing
effective May 2, 2016. civil penalties in this final rule.
■ 4. The authority citation for part 1852 Petitions for reconsideration: Petitions On December 4, 2015, the Fixing
continues to read as follows: for reconsideration of this final rule America’s Surface Transportation Act
Authority: 51 U.S.C. 20113(a) and 48 CFR must be received not later than April 15,
chapter 1. 2016. 1 80 FR 56944 (Sept. 21, 2015).
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Agency Response whether the manufacturer has been Comments
MAP–21 directs NHTSA, by recalcitrant or shown disregard for its Global asserts that the nine factors
delegation from the Secretary of obligations under the Safety Act. listed in 49 U.S.C. 30165(c)(1)–(9) are
Transportation, to issue a rule providing Third, we proposed to interpret the mandatory and each factor must be
an interpretation of the civil penalty extent of the violation to mean the range considered by NHTSA if the factor is
factors to consider in determining the of inclusiveness over which the raised by a person subject to civil
amount of civil penalty or compromise. violation extends including the scope, penalties for violations of the Safety
As we stated in the NPRM, NHTSA, time frame, and/or the degree of the Act. Global claims that the phrase
through delegation from the Secretary, violation.6 This includes the number of ‘‘determination shall include’’ indicates
has the authority to assess and violations and whether the violations the nine penalty factors are mandatory,
compromise civil penalties. are related or unrelated. not discretionary.
NHTSA has addressed this comment Finally, we proposed to interpret the
gravity of the violation to mean the Agency Response
because it works closely with the Justice
Department on a range of civil and importance, significance, and/or NHTSA continues to hold the
criminal enforcement matters. NHTSA’s seriousness of the violation.7 position that the nine factors listed in 49
interpretation of the civil penalty factors U.S.C. 30165(c)(1)–(9) are discretionary
Comments
is based on its day-to-day enforcement and Global’s comments, and the record
experience and previous experience Global asserts that a good faith in this rulemaking, do not suggest
compromising civil penalties for disagreement over whether a safety otherwise. MAP–21 states that NHTSA’s
violations of the Safety Act, which defect exists should not be used to show ‘‘determination shall include, as
includes its experience and counsel that a manufacturer has been appropriate’’ the nine factors. NHTSA
from the Justice Department. This is recalcitrant or shown disregard for its contends that by including the words
more than sufficient to provide the Safety Act obligations. ‘‘as appropriate,’’ Congress intended to
interpretation of the penalty factors in provide NHTSA the discretion to
Agency Response
this final rule. determine which of the nine factors are
NHTSA believes the interpretation of A disagreement over whether a defect relevant to a particular civil penalty
the penalty factors in this final rule exists, even one in good faith, is not a case otherwise the phase ‘‘as
provides both aggravating and mitigating factor in a civil penalty case, appropriate’’ would be superfluous.9
mitigating factors and that the and Global’s comments do not support Thus, the final rule continues to state
interpretation will provide useful otherwise. Manufacturers are aware that that the nine factors in 49 U.S.C.
information to manufacturers regarding if they oppose NHTSA’s request to 30165(c)(1)–(9) are discretionary.
actions that will help them avoid civil conduct a recall because they disagree 1. The Nature of the Defect or
penalties. with NHTSA over the existence of a Noncompliance
defect or non-compliance, they are at
A. General Penalty Factors We proposed to interpret ‘‘the nature
risk of civil penalties.8 Therefore,
In the NPRM, NHTSA proposed to because we do not believe that of the defect or noncompliance,’’ 49
interpret the nature of the violation to disagreement over whether a defect U.S.C. 30165(c)(1), to mean the
mean the essential, fundamental exists is a mitigating factor regarding a essential, fundamental characteristic or
character or constitution of the manufacturer’s liability for civil constitution of the safety-related defect
violation.4 This includes, but is not penalties and because we did not or noncompliance. This is consistent
limited to, the nature of the defect (in receive any other comments regarding with the dictionary definition of
a case involving a safety-related defect) the general factors, we are adopting the ‘‘nature.’’ 10 ‘‘Defect’’ is defined at 49
or noncompliance. It also includes what interpretation proposed in the NPRM. U.S.C. 30102(a)(2) as including ‘‘any
the violation involves, for example, a defect in performance, construction, a
violation of the Early Warning Reporting B. Discretionary Penalty Factors component, or material or a motor
(‘‘EWR’’) requirements, the failure to In the NPRM, we stated that the vehicle or motor vehicle equipment.’’
provide timely notification of a safety- penalty factors listed in 49 U.S.C. ‘‘Noncompliance’’ under this statutory
related defect or noncompliance, the 30165(c)(1) through (9) are discretionary factor includes a noncompliance with
failure to remedy, the lack of a factors that NHTSA may apply in an FMVSS, as well as other violations
reasonable basis for certification to the determining the amount of civil penalty subject to penalties under 49 U.S.C.
FMVSS, the sale of unremedied or compromise. 30165. Noncompliance may include, but
vehicles, or the failure to respond fully is not limited to, noncompliance(s) with
and timely to a request issued under 49 which an act or event takes place or with respect the FMVSS; the manufacture, sale, or
U.S.C. 30166. to which a fact is determined.’’). importation of noncomplying motor
Second, we proposed to interpret the 6 See e.g. Webster’s Third New International vehicles and equipment or defective
circumstances of the violation to mean Dictionary Unabridged, 805 (defining extent as the vehicles or equipment covered by a
‘‘range (as of inclusiveness or application) over
the context, facts, and conditions having which something extends.’’).
notice or order regarding the defect;
bearing on the violation.5 This includes 7 See e.g. Black’s Law Dictionary (10th ed. 2014) failure to certify or have a reasonable
(defining ‘‘gravity’’ as ‘‘[s]eriousness of harm, an
4 See e.g. Webster’s Third New International offense, etc., as judged from an objective, legal 9 Clark v. Rameker, 134 S. Ct. 2242, 2248 (2014)
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Dictionary Unabridged, 1507 (defining nature as standpoint.’’); Webster’s Third New International (stating that ‘‘a statute should be construed so that
‘‘the essential character or constitution of Dictionary Unabridged, 993 (defining gravity as the effect is given to all its provisions, so that no part
something’’); Black’s Law Dictionary (10th ed. 2014) importance, significance, or seriousness). will be inoperative or superfluous’’).
(defining nature as ‘‘[a] fundamental quality that 8 See United States v. General Motors Corp., 565 10 See e.g. Webster’s Third New International
distinguishes one thing from another; the essence F.2d 754, 760–61 (D.C. Cir. 1977) (‘‘One who Dictionary Unabridged, 1507 (defining nature as
of something.’’). refuses to pay when the law requires that he shall, ‘‘the essential character or constitution of
5 See e.g. Ehlert v. United States, 422 F.2d 332, acts at his peril, in the sense that he must be held something’’); Black’s Law Dictionary (9th ed. 2009)
335 (9th Cir. 1970) (Duniway, J. concurring) (stating to the acceptance of any lawful consequences (defining nature as ‘‘[a] fundamental quality that
that Webster’s New International Dictionary, 2d ed. attached to the refusal. It is no answer in such distinguishes one thing from another; the essence
defines ‘‘circumstances’’ as ‘‘conditions under circumstances that he has acted in good faith.’’). of something.’’).
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![Federal Register / Vol. 81, No. 40 / Tuesday, March 1, 2016 / Rules and Regulations 10523
basis to certify that a motor vehicle or Agency Response violation. NHTSA may consider the
item of motor vehicle equipment As a general matter, it is unlikely that information NHTSA provided to the
complies with applicable motor vehicle NHTSA would grant a petition for respondent, including notification of
safety standards; failure to maintain inconsequential noncompliance and apparent noncompliance, information
records as required; failure to provide then seek a civil penalty for a violation on the recall process, information on
timely notification of defects and of the Safety Act. However, NHTSA governing regulations, and information
noncompliances with the FMVSS; believes such a situation would be an on consequences of failure to comply
failure to follow the notification example of a situation with a lower with regulatory requirements. NHTSA
procedures set forth in 49 U.S.C. 30119 may also consider whether the
degree of seriousness, where reduced
and regulations prescribed thereunder; respondent has been proactive in
civil penalties would be appropriate.
failure to remedy defects and As stated in the NPRM, when discerning other potential safety issues,
noncompliances pursuant to 49 U.S.C. and whether it has attempted to mislead
considering the nature of a defect or
30120 and regulations prescribed the agency or conceal its full
noncompliance NHTSA will consider
thereunder; making safety devices and information, including its knowledge of
the conditions or circumstances under
elements inoperative; failure to comply a defect or noncompliance.
which the defect or noncompliance
with regulations relating to school buses arises, the performance problem, and Comments
and school bus equipment; failure to actual and probable consequences of the
comply with Early Warning Reporting Advocates supports NHTSA proposal
defect or noncompliance. We believe that knowledge of employees be
requirements; and/or the failure to that these factors will give an indication
respond to an information request, attributed to the corporation regardless
of the seriousness of the defect or of whether employees have
Special Order, General Order, subpoena noncompliance. Therefore, no changes
or other required reports.11 communicated such knowledge to the
to the final rule are necessary in corporation.
When considering the nature of a
response to NADA’s comment. The Alliance does not believe that it
safety-related defect or noncompliance
with an FMVSS in a motor vehicle or 2. Knowledge by the Respondent of Its is reasonable to input the knowledge of
motor vehicle equipment, NHTSA may Obligations Under This Chapter employees to the corporation in
examine the conditions or determining whether a manufacturer
In the NPRM, we proposed to fulfilled its regulatory obligations in a
circumstances under which the defect interpret the ‘‘knowledge by the . . .
or noncompliance arises, the timely matter. The Alliance states that
[respondent] of its obligations under manufacturers must be allowed to
performance problem, and actual and this chapter,’’ 49 U.S.C. 30165(c)(2), as
probable consequences of the defect or follow reasonable processes for
all knowledge, legal and factual, actual, processing information and given time
noncompliance. When considering the presumed and constructive, of the
nature of the noncompliance with the to conduct internal investigations.
respondent of its obligations under 49 Therefore, in evaluating whether a
Safety Act or a regulation promulgated U.S.C. Chapter 301. We proposed that if
thereunder, NHTSA may examine the company fulfilled its regulatory
a respondent is other than an obligations, NHTSA should evaluate the
circumstances surrounding the individual, including but not limited to
violation. reasonableness of the company’s
a corporation or a partnership, then the internal business process for, and the
For example, NHTSA has a process by
knowledge of an employee or employees circumstances of, each matter at issue.
which a manufacturer can petition for
of that non-natural person be imputed to Global states that there are
an exemption from the notification and
that non-natural person. We proposed to circumstances when the knowledge of
remedy requirements of 49 U.S.C. 30118
interpret the knowledge of an agent as employees should not be attributed to
and 30120 on the basis that a
being imputed to a principal. We the corporation such as when an
noncompliance is inconsequential to
proposed that a non-natural person, employee acts illegally or against
motor vehicle safety. 49 U.S.C. 30118(d)
such as a corporation, with multiple corporate policy. The extent to which a
and 30120(h), 49 CFR part 556. In the
employees will be charged with the manufacturer has received or not
NPRM we stated that if a petition for
knowledge of each employee, regardless received appropriate information from
inconsequential noncompliance is
of whether the employees have the supply chain should be a mitigating
granted, then it could serve as
communicated that knowledge among factor. Global does not believe that
mitigation under this factor.
each other or to a decision maker for the production of parts or communications
Comments non-natural person. to the field should automatically suggest
The Alliance asserts that the fact that We stated in the NPRM, that under knowledge of a safety defect because a
a non-compliance is inconsequential to this proposed interpretation of manufacturer may initiate these
motor vehicle safety should not be a ‘‘knowledge,’’ delays resulting from, or activities while still investigating
mitigating factor in determining the caused by, a manufacturer’s internal whether the issue is a safety defect.
amount of a civil penalty. The Alliance reporting processes would not excuse a Global also believes that legitimate
believes that an inconsequential non- manufacturer’s failure to report a defect misunderstanding of laws and
compliance should never be the subject or noncompliance to NHTSA. We stated regulations should be a mitigating
of a civil penalty proceeding. that NHTSA may examine such factors factor.
NADA asserts that considering the as whether the respondent began NADA believes that NHTSA should
nature of a defect or non-compliance producing parts to remedy a particular take into account the fact that a person’s
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involves weighing the relative defect or noncompliance with an lack of knowledge may be excusable.
seriousness of the defect or non- FMVSS prior to reporting the defect or
noncompliance with an FMVSS to Agency Response
compliance. NADA believes that not all
defects and non-compliances have the NHTSA. NHTSA may also consider NHTSA agrees that in instances in
same significance to safety. communication between the respondent which the significance of a piece of
(e.g. a manufacturer) and other entities information, by itself, would not
11 The foregoing list is intended to be illustrative such as dealers and owners in necessarily establish a defect or
only, and is not exhaustive. determining its knowledge of a noncompliance, an individual
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![Federal Register / Vol. 81, No. 40 / Tuesday, March 1, 2016 / Rules and Regulations 10525
multiple make, model and model years Comments motor vehicles, passenger car bodies,
of motor vehicles are affected by the Global believes that a manufacturer’s and motor homes that employ 1,000
defect or noncompliance with an internal procedures should be people or less, manufacturers of motor
FMVSS. considered when considering ‘‘actions vehicle parts and accessories that
Further, we proposed that NHTSA taken to identify investigate, or mitigate employ 750 people or less, automobile
may choose to make a distinction the condition.’’ and tire wholesalers that employ 100
between those defective or people or less, new car dealers that
noncompliant products distributed in Agency Response employ 200 people or less and
commerce that consumers received, and As stated above, when considering the automotive parts and accessory stores
those defective or noncompliant actions taken by the respondent, with annual receipts less than $15
products distributed in commerce that NHTSA may consider whether the million.
consumers have not received. respondent has set up systems to We proposed to interpret ‘‘potential
We did not receive any comments facilitate timely and accurate reporting, for undue adverse economic impacts,’’
regarding our proposed interpretation of and whether it has audited such 49 U.S.C. 30165(c)(7), as the possibility
this factor so we are finalizing the systems. NHTSA also stated that when that payment of a civil penalty amount
proposed interpretation of this factor. would affect the ability of the
considering the knowledge of the
6. Actions Taken by the Respondent To respondent, it will consider whether respondent to continue to operate. We
Identify, Investigate, or Mitigate the employees have been trained on those also stated that NHTSA may consider a
Condition systems, and whether those systems respondent’s ability to pay, including in
were followed. It is equally appropriate installments over time, and any effect of
In the NPRM, NHTSA proposed to a penalty on that person’s ability to
interpret ‘‘actions taken by the . . . to consider the aforementioned factors
when assessing the actions taken to by continue to do business. The ability of
[respondent] to identify, investigate, or a business to pay a penalty is not
mitigate the condition,’’ 49 U.S.C. the respondent to identify, investigate or
dictated by its size. In some cases for
30165(c)(6), as actions actually taken, mitigate the defect or noncompliance.
small businesses, however, these two
the time frame when those actions were Therefore, NHTSA has revising the
considerations may relate to one
taken, what those actions involved and proposed rule to make clear that we will
another. NHTSA also may consider
how they ameliorated or otherwise consider a corporation’s internal
relevant financial factors such as
related to the condition, what remained processes for reporting information to
capitalization, liquidity, solvency, and
after those actions were taken, and the NHTSA and investigating potential
profitability to determine a small
speed with which the actions were safety issues under this factor.
business’ ability to pay a penalty.
taken. NHTSA proposed that in 7. The Appropriateness of Such Penalty NHTSA may also consider whether the
assessing a respondent’s ‘‘actions,’’ a in Relation to the Size of the Business business has been deliberately
failure to act may also be considered. of the Respondent, Including the undercapitalized. The burden to present
We stated that, under this factor, Potential for Undue Adverse Economic sufficient evidence relating to a charged
NHTSA may consider whether the Impacts business’ size and ability to pay rests on
respondent has been diligent in that business. More generally, in cases
endeavoring to meet the requirements of NHTSA takes the Small Business
Regulatory Enforcement Fairness Act of where the respondent claims that it is
the Safety Act and regulations financially unable to pay the civil
thereunder, including whether it has set 1996 (SBREFA) into account prior to
setting any final penalty amount.12 This penalty or that the penalty would have
up processes to facilitate timely and
policy will continue in light of the undue adverse economic impacts, the
accurate reporting, and whether it has
MAP–21 amendments to 49 U.S.C. burden of proof is on the respondent. In
audited such systems. NHTSA may also
30165(c). the case of closely-held or privately-
take into account the investigative
Upon a showing by a violator that it held companies, NHTSA may provide
activities the respondent has undertaken
is a small entity, NHTSA will make the respondent the opportunity to
relating to the scope of the issues
appropriate adjustments to the proposed submit personal financial
identified by NHTSA. The agency may
penalty or settlement amount (although documentation for consideration.
also consider whether the respondent
delayed in reporting a safety-related certain exceptions may apply).13 If the Comments
defect or a noncompliance with an respondent asserts it is a ‘‘small
Advocates supports the agency’s
FMVSS (a person is required to file a 49 business,’’ NHTSA expects the
proposal that the respondent is
CFR part 573 report not more than five respondent to provide the supporting
responsible for establishing the severity
working days after a person knew or documentation. Under the Small
of the impact of the financial penalty.
should have known of the safety-related Business Administration’s standards, an Global believes that NHTSA’s
defect or noncompliance with an entity is considered ‘‘small’’ if it is proposed factor for considering undue
FMVSS). NHTSA may also consider independently owned and operated and adverse economic impacts only reflects
whether the respondent remedied the is not dominant in its field of the most extreme economic impacts.
safety-related defect or noncompliance operation,14 or if its number of Global believes that for cases involving
with an FMVSS in a timely manner. For employees or the dollar volume of its less severe violations, NHTSA should
instance, NHTSA may consider whether business does not exceed specific consider economic hardship to the
a recall remedy is adequate, whether a thresholds.15 For example, 13 CFR company’s competitive position caused
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new safety-related defect or Section 121.201 specifically identifies by a civil penalty.
noncompliance with an FMVSS arose as ‘‘small entities’’ manufacturers of
from an inadequate recall remedy, and Agency Response
12 See NHTSA, Civil Penalty Policy Under the
whether the scope of a recall was NHTSA believes that for less severe
Small Business Regulatory Enforcement Fairness
adequate. NHTSA may also consider the Act, 62 FR 37115 (July 10, 1997). violations consideration of other factors
timeliness and adequacy of the 13 Id. at 37117. under 49 U.S.C. 30165(c) will reduce
respondent’s communications with 14 Id. at 37115. the amount of potential penalty and also
owners and dealers. 15 Id. the financial impact of the penalty. For
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![10526 Federal Register / Vol. 81, No. 40 / Tuesday, March 1, 2016 / Rules and Regulations
less serve violations, NHTSA will also whether the respondent benefitted 49 U.S.C. 30166 of $5,000 per day and
still consider whether the company economically from a violation, a maximum penalty of $1,000,000.
should be permitted to pay the civil including a delay in complying with the MAP–21 31304(b), 126 Stat. 764. These
penalty over time. For these reasons, we Safety Act, a failure to comply with the new penalties and increased penalties
are adopting the proposed interpretation Safety Act, or a delay or failure to and damages are all currently in effect.
of this factor in the NPRM without comply with the regulations thereunder. NHTSA is amending its penalty
changes. c. Effect of the respondent’s conduct regulation, 49 CFR 578.6, to conform it
on the integrity of programs to the MAP–21 amendments.
8. Whether the Respondent Has Been administered by NHTSA. The Agency’s
Assessed Civil Penalties Under This programs depend in large part on timely V. Rulemaking Analyses and Notices
Section During the Most Recent 5 Years and accurate reporting and certification Executive Order 12866, Executive Order
We proposed to interpret ‘‘whether by manufacturers. Therefore, NHTSA 13563, and DOT Regulatory Policies and
the [respondent] has been assessed civil may consider whether a person has been Procedures
penalties under this section during the forthright with the Agency. NHTSA may NHTSA has considered the impact of
most recent 5 years,’’ 49 U.S.C. also consider whether a person has this rulemaking action under Executive
30165(c)(8), as including an assessment attempted to mislead the Agency or Order 12866, Executive Order 13563,
of civil penalties, a settlement conceal relevant information. For and the Department of Transportation’s
agreement containing a penalty, or a instance, NHTSA may consider whether regulatory policies and procedures. This
consent order or a lawsuit involving a a manufacturer has provided accurate rulemaking document was not reviewed
penalty or payment of a civil penalty in and timely statements consistent with under Executive Order 12866 or
the most recent 5 years from the date of its Early Warning Reporting obligations. Executive Order 13563. This action
the alleged violation, regardless of NHTSA may also consider whether a provides an interpretation for how
whether there was any admission of a registered importer has provided NHTSA will apply the civil penalty
violation or of liability under 49 U.S.C. accurate conformity packages and/or factors in 49 U.S.C. 30165. Because this
30165. other information consistent with 49 rulemaking only seeks to explain the
Comment U.S.C. 30141–30147 and the process by which the agency determines
implementing regulations. and resolves civil penalties and does not
Advocates believes that repeated d. Responding to requests for
violations of the Safety Act merit the change the number of entities subject to
information or remedial action. NHTSA
imposition of the maximum fine civil penalties, the impacts of the rule
may consider a person’s failure to
permitted by law. are limited. Therefore, this rulemaking
respond in a timely and complete
Global requests that NHTSA consider has been determined to be not
fashion to requests from NHTSA for
the significance of previous violations of ‘‘significant’’ under the Department of
information or for remedial action.
the Safety Act and whether previous Transportation’s regulatory policies and
NHTSA may also consider whether the
violations are related to the violation at procedures and the policies of the Office
agency needed to make multiple
issue. Global believes that in some of Management and Budget.
requests to receive requested
instances prior penalties many have no information. Regulatory Flexibility Act
bearing on whether an enhanced
penalty should be imposed. Comments We have also considered the impacts
NADA stated that under this factor of this notice under the Regulatory
Agency Response Flexibility Act. I certify that this rule is
NHTSA should include potential
NHTSA believes that repeated penalty waivers for first time violators not expected to have a significant
violations of the Safety Act, even if they and consider the speed with which a economic impact on a substantial
are unrelated, can be indicative of a person who has violated the Safety Act number of small entities. The following
company’s failure to foster a culture of acts to remedy the violation. provides the factual basis for this
safety and compliance. Therefore, certification under 5 U.S.C. 605(b). The
NHTSA will continue to take into Agency Response amendments almost exclusively affect
account all previous civil penalties paid NHTSA does not believe that it would manufacturers of motor vehicles and
by a company in the last five years be appropriate to establish penalty motor vehicle equipment.
regardless of whether they are related to waivers for first time violators in the SBA uses size standards based on the
the present violation giving rise to contest of this rulemaking. Often when North American Industry Classification
liability for civil penalties. NHTSA seeks a civil penalty from an System (‘‘NAICS’’), Subsector 336—
entity for the first time, it is because a Transportation Equipment
9. Other Appropriate Factors Manufacturing, which provides a small
significant violation has occurred or
We proposed to interpret other because the entity has exhibited a business size standard of 1,000
appropriate factors as factors not pattern of repeated violations. employees or fewer for automobile
specifically identified in Section NHTSA will consider the speed with manufacturing businesses. Other motor
31203(a) of MAP–21 which are which a violator has acted to remedy a vehicle-related industries have lower
appropriately considered, including violation when considering an entity’s size requirements that range between
both aggravating and mitigating factors. response to a request for remedial action 100 and 750 employees.
Such factors may include, but are not from NHTSA. For example, according to the SBA
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limited to: coding system, businesses that
a. A history of violations. NHTSA IV. Codification of Other MAP–21 manufacture truck trailers, travel
may increase penalties for repeated Penalty Changes in 49 CFR Part 578 trailers/campers, and vehicular lighting
violations of the Safety Act or MAP–21 increased the penalties and equipment, qualify as small businesses
implementing regulations, or for a damages for odometer fraud. MAP–21 if they employ 500 or fewer employees.
pattern or practice of violations. 31206, 126 Stat. 761. MAP–21 also Many small businesses are subject to the
b. An economic gain from the established civil penalties for violations penalty provisions of 49 U.S.C. 30165
violation. NHTSA may consider of corporate responsibility provisions in and therefore may be in some way
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![Federal Register / Vol. 81, No. 40 / Tuesday, March 1, 2016 / Rules and Regulations 10529
speed with which the actions were whether the small entity has been involving a penalty or payment of a civil
taken. A failure to act may also be subject to multiple enforcement actions penalty in the most recent 5 years from
considered. NHTSA may also consider by the agency, considering whether the the date of the alleged violation,
whether the respondent has set up violations involve willful or criminal regardless of whether there was any
processes to facilitate timely and conduct, considering whether the admission of a violation or of liability,
accurate reporting and timely violations pose serious health, safety or under 49 U.S.C. 30165.
investigation of potential safety issues, environmental threats, and requiring a (9) Other appropriate factors means
whether it has audited such processes, good faith effort to comply with the law. other factors not identified above,
whether it has provided training to NHTSA may also consider the effect of including but not limited to aggravating
employees on the processes, and the penalty on ability of the person to and mitigating factors relating to the
whether such processes were followed. continue to operate. NHTSA may violation, such as whether there is a
(7) The appropriateness of such consider a person’s ability to pay, history of violations, whether a person
penalty in relation to the size of the including in installments over time, any benefitted economically from a
business of the respondent, including effect of a penalty on the respondent’s violation, the effect of the respondent’s
the potential for undue adverse ability to continue to do business, and conduct on the integrity of programs
economic impacts. NHTSA takes the relevant financial factors such as administered by NHTSA, and whether
Small Business Regulatory Enforcement liquidity, solvency, and profitability. there was a failure to respond in a
Fairness Act of 1996 into account. Upon NHTSA may also consider whether the complete and timely manner to requests
a showing that a violator is a small business has been deliberately for information or remedial action.
entity, NHTSA may include, but is not undercapitalized.
limited to, requiring the small entity to (8) Whether the respondent has been Issued in Washington, DC on February 17,
correct the violation within a reasonable assessed civil penalties under this 2016 under authority delegated pursuant to
49 CFR 1.95.
correction period, considering whether section during the most recent 5 years
the violation was discovered through means whether the respondent has been Mark R. Rosekind,
the participation by the small entity in assessed civil penalties, including a Administrator.
a compliance assistance program settlement agreement containing a [FR Doc. 2016–04311 Filed 2–29–16; 8:45 am]
sponsored by the agency, considering penalty, a consent order or a lawsuit BILLING CODE 4910–59–P
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Document Created: 2018-02-02 14:59:53
Document Modified: 2018-02-02 14:59:53
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | Effective date: This final rule is effective May 2, 2016. | |
| Contact | Thomas Healy, Office of the Chief Counsel, NHTSA, 1200 New Jersey Ave. SE., West Building, W41-211, Washington, DC 20590. Telephone: (202) 366-2992 Fax: (202) 366-3820. | |
| FR Citation | 81 FR 10520 | |
| RIN Number | 2127-AL38 | |
| CFR Associated | Administrative Practice and Procedure; Motor Vehicles; Motor Vehicle Safety; Imports; Rubber and Rubber Products; Penalties and Tires |
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