[Federal Register: July 29, 2009 (Volume 74, Number 144)]
[Rules and Regulations]
[Page 37877-37920]
[DOCID:fr29jy09-38]

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Part IV

Department of Transportation

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National Highway Traffic Safety Administration

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49 CFR Parts 512 and 599

Requirements and Procedures for Consumer Assistance To Recycle and Save
Program; Final Rule

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 512 and 599

[Docket No. NHTSA-2009-0120]
RIN 2127-AK53

Requirements and Procedures for Consumer Assistance To Recycle
and Save Program

AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).

ACTION: Final rule.

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SUMMARY: This final rule sets forth requirements and procedures for the
voluntary vehicle trade-in and purchase/lease program under the
Consumer Assistance to Recycle and Save Act of 2009. This program helps
consumers pay for a new, more fuel efficient car or truck from a
participating dealer when they trade in a less fuel efficient car or
truck. The rule establishes a process by which dealers can register in
order to participate in the program and establishes the criteria this
agency will use to determine which disposal facilities are eligible to
receive and either crush or shred the trade-in vehicles. It also sets
forth the criteria that trade-in vehicles and new vehicles must meet in
order for purchases and leases to qualify for assistance under this
program and establishes the requirements that must be met by consumers,
dealers, disposal facilities and others. Finally, the rule sets forth
enforcement procedures and provisions for punishing fraud and other
violations of the program requirements.

DATES: This final rule is effective July 29, 2009. Petitions: If you
wish to petition for reconsideration of this rule, your petition must
be received by September 14, 2009.

ADDRESSES: If you submit a petition for reconsideration of this rule,
you should refer in your petition to the docket number of this document
and submit your petition to: Administrator, National Highway Traffic
Safety Administration, 1200 New Jersey Avenue, SE., West Building,
Washington, DC 20590.
    The petition will be placed in the public docket. Anyone is able to
search the electronic form of all documents received into any of our
dockets by the name of the individual submitting the document (or
signing the document, if submitted on behalf of an association,
business, labor union, etc.). You may review the complete User Notice
and Privacy Notice for Regulations.gov at http://www.regulations.gov/
search/footer/privacyanduse.jsp.

FOR FURTHER INFORMATION CONTACT: You may obtain additional information
about the CARS program by calling the CARS Hotline at 1-866-CAR-7891.
It is dedicated to calls about the program. For non-legal issues, you
may call, Mr. Frank Borris, NHTSA Office of Enforcement, telephone
(202) 366-8089. For legal issues, you may call David Bonelli, NHTSA
Office of Chief Counsel, telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Questions and Comments From the Public About the CARS Program
III. Public Outreach and Consultation
IV. The Regulation
    a. Definitions (Sec.  599.102)
    b. Registration of Dealers (Sec.  599.200)
    c. Identification of Disposal Facilities (Sec.  599.201)
    d. Determining Eligibility of Trade-in Vehicles and New Vehicles
(Sec.  599.300)
    1. Vehicle Definitions
    2. Eligibility of Trade-in Vehicles
    3. Eligibility of New Vehicles
    e. Requirements for Qualifying Transactions (Sec. Sec.  599.300
and 301)
    1. Vehicle Categories and Credit Amounts
    2. Special Requirements for Trade-in Vehicles
    3. Restrictions and Limitations on Transactions
    f. Requirements for Dealer Reimbursement (Sec.  599.302-304)
    g. Disposal of Trade-In Vehicles (Sec.  599.400-403)
    h. Enforcement (Sec.  599.500-517)
    1. Prevention of Fraud
    2. Civil Penalties and Other Sanctions
V. Confidential Information and Privacy
    a. Determinations of the Confidentiality of CARS Data Based on
FOIA Exemptions 4 and 6
    b. Approach--Class Determinations vs. Individual Assessments
    c. Class Determinations Based on FOIA Exemption 4
    d. Data Submitted to NHTSA for the CARS Program
    1. Manufacturer Data
    2. Dealer Information and Transaction Data
    3. Disposal Facility and Destruction Data
    e. CARS Data Class Determinations Based on FOIA Exemption 4
    1. Manufacturer Assigned Dealer Identification
    2. Dealer Bank Name, ABA Routing Number, Bank Account Number
    3. CARS Dealer ID and CARS Authorization Codes
    f. Class Determination Based on FOIA Exemption 6
VI. Costs and Benefits
VII. Statutory Basis for This Action
VIII. Effective Date
IX. Regulatory Analyses and Notices

I. Background

    On June 24, 2009, the President signed into law the Consumer
Assistance to Recycle and Save Act of 2009 (the CARS Act or the Act)
(Pub. L. 111-32). The Act establishes, within the National Highway
Traffic Safety Administration (NHTSA or the agency), a temporary
program under which an owner of a motor vehicle meeting statutorily
specified criteria may trade in the vehicle and receive a monetary
credit from the dealer toward the purchase or lease of a new motor
vehicle meeting statutorily specified criteria.
    Generally, the trade-in vehicle must have a combined fuel economy,
as determined by the Environmental Protection Agency (EPA), below a
specified value and the new vehicle must have an EPA combined fuel
economy above a higher specified value. (Combined fuel economy is an
EPA calculation representing the weighted average of a vehicle's city
and highway fuel economy as determined according to the method
described in EPA regulations at 40 CFR 600.210-08(c)). The program
covers qualifying transactions that occur between July 1, 2009 and
November 1, 2009, so long as funds appropriated by Congress are not
exhausted. If all of the conditions of eligibility are met and the
dealer provides NHTSA with sufficient documentation relating to the
transaction, NHTSA will make an electronic payment to the dealer equal
to the amount of the credit extended by the dealer to the consumer, not
exceeding the statutorily authorized amount. The dealer must agree to
transfer the trade-in vehicle to a disposal facility that will crush or
shred it so that it will never be returned to the road, although parts
of the vehicle, other than the engine block and drive train (unless the
drive train is sold in separate parts), may be sold.
    The CARS Act requires the Secretary of Transportation, acting
through NHTSA, to issue final regulations within 30 days after
enactment (i.e., by July 24, 2009), ``notwithstanding'' the notice and
comment requirements of the Administrative Procedure Act (5 U.S.C.
553). The regulations must, among other things: (1) Provide for a means
of registering dealers for participation in the program; (2) establish
procedures for reimbursement of dealers participating in the program;
(3) require that dealers use the credit in addition to any other rebate
or discount advertised by the dealer or offered by the manufacturer and
prohibit the dealer from using the credit to offset any such other
rebate or

discount; (4) require that dealers disclose to the person trading in an
eligible vehicle the best estimate of the scrappage value of such
vehicle and permit dealers to retain $50 of the amount paid for the
scrappage value as payment for any administrative costs of
participation in the program; (5) establish requirements and procedures
for the disposal of eligible trade-in vehicles; and (6) provide for the
enforcement of penalties for violations of the program requirements.
    Separate from the rulemaking requirement, the CARS Act directs the
agency to establish a Web site to convey information about the program,
including instructions on how to determine if a vehicle is an eligible
trade-in vehicle, how to participate in the program and how to
determine if a dealer is participating in the program. The agency
established this Web site at http://www.cars.gov. Among other things,
the Web site contains an interactive tool for determining eligible
vehicles, a list of participating dealers and disposal facilities,
responses to frequently asked questions, and information on how to
determine the EPA combined fuel economy of trade-in vehicles and of new
vehicles. In addition, NHTSA set up a hotline ((866) 227-7891) to
answer questions about the program and, on July 2, 2009, published a
document in the Federal Register (74 FR 31812) providing additional
useful information, in advance of issuance of this final rule.
    The Act provides that the program covers eligible transactions
beginning on July 1, 2009, prior to today's final rule. NHTSA advised
the public through the July 2 Federal Register document, the Web site,
and the hotline that it was prudent to wait until the details of the
program were specified in today's final rule. Nevertheless, if
transactions occurring on or after July 1, 2009, but before today's
final rule, meet all of the requirements identified in this final rule,
registered dealers may follow the application procedures of the rule
and apply for reimbursement for those transactions. To expedite
processing, the rule relies, wherever possible, on electronic
submissions through secure agency Web sites.
    In order to implement this new program, NHTSA has had to quickly
create a new organization. NHTSA has established the Office of the Car
Allowance Rebate System within the Office of Enforcement. The new
office will consist of three divisions. The Transaction Oversight
Division will work closely with the contractor NHTSA has retained to
review incoming requests for payment from dealers to ensure that those
requests are reviewed correctly and in a timely way. The Data Analysis
and Reporting Division will review data generated in connection with
the program to help ensure the system's efficiency and detect problems
with the process or indications of potential compliance issues. That
division will also produce reports on all aspects of the system. The
Compliance Division will work to detect and deter possible
noncompliance related to the program and coordinate closely with
NHTSA's Office of Chief Counsel when possible violations are found.
That division will also coordinate closely with the DOT's Office of
Inspector General on issues related to possible fraud in connection
with the program.
    The agency also has decided to use the name Car Allowance Rebate
System (CARS) for its program implementing the Act. The use of the term
``rebate'' in the name NHTSA has chosen for the program is not intended
to have any effect on how CARS transactions are treated under State or
Federal tax laws. The CARS Act provides that the credit is not income
to the purchaser, but does not address any other possible tax issues.
NHTSA lacks expertise and authority in tax matters and makes no attempt
here to provide any guidance on those matters.

II. Questions and Comments From the Public About the CARS Program

    During the period between enactment of the CARS Act and publication
of today's rule, the agency received numerous questions and comments
about various provisions of the Act. The final rule seeks to address
these comments and questions, and details appear later in this
document. However, the agency provides here a brief summary discussion
of some of the issues raised. As noted earlier, NHTSA's Web site for
the CARS program contains responses to frequently asked questions by
members of the public.
    The CARS program assists consumers who trade in their older, less
fuel efficient vehicles for new, more fuel efficient vehicles. The
program is designed to remove these older, less fuel efficient vehicles
from the road, by requiring the trade-in vehicle to be crushed or
shredded. Some consumers were unaware that their trade-in vehicle must
be destroyed as a statutory condition of participating in this program.
Because of that condition, consumers purchasing or leasing a new
vehicle under this program should not expect to receive the full trade-
in value of their old vehicle when negotiating with a dealer.
    As detailed below, the program has different requirements for
different types of trade-in vehicles (e.g., passenger cars, SUVs and
vans, pickups, and trucks) because these vehicles have varying levels
of EPA combined fuel economy. In general, passenger cars have the
highest combined fuel economy. Therefore, even though a passenger car
may be quite old and/or in poor condition, it may not be an eligible
trade-in vehicle under the program because its combined fuel economy at
the time of its manufacture (as measured by the EPA) exceeds statutory
limits. Some consumers have expressed surprise at this result. However,
the agency must follow the requirements of the statute. Larger, older
pickups and SUVs, on the other hand, do not typically have very high
fuel economy. The statutory requirements for trading in these vehicles
are less strict than for trading in passenger cars. Consumers may find
that more of the vehicles in these categories are eligible as trade-in
vehicles under the program.
    Questions have arisen as to which persons are eligible to
participate in the program and whether a person can trade in a vehicle
owned by someone else, such as a family member. The agency has
concluded that individuals as well as legal entities, such as
corporations and partnerships, may participate in the program. However,
a person may not trade in a vehicle owned by someone else under the
program. The Act's one-year insurance requirement is satisfied so long
as the trade-in vehicle is insured, irrespective of the identity of the
person holding the insurance policy. The specifics of these
requirements are explained later in this document.
    The agency has received questions regarding the value and
disposition of the trade-in vehicle. The CARS Act specifies that while
many parts of the trade-in vehicle are permitted to be removed and
sold, in the end the residual vehicle, including the engine block, must
be crushed or shredded. Therefore, the trade-in value of the vehicle is
not likely to exceed its scrap value. Purchasers should not expect to
receive the same trade-in value as they might if the vehicle were to
remain on the road. The Act also requires dealers to disclose to
purchasers the scrap value of the trade-in vehicle at the time of the
trade-in and allows dealers to retain up to $50 of the scrap value of
the vehicle for their administrative costs of participation in the
program.
    Some consumers have expressed concern that the combined fuel
economy value of their vehicles, as determined on the http://
fueleconomy.gov Web site of the EPA, is

not an accurate measure of the actual fuel economy they experience. EPA
determines these values for each make, model, and model year with
regard to each vehicle at the time of its manufacture. These consumers
contend that if another means were used to calculate combined fuel
economy, their vehicle would be an eligible trade-in vehicle under the
program. The CARS Act is prescriptive in this regard, and requires
NHTSA to use the EPA calculation, and not any other calculation, to
determine whether a trade-in vehicle is eligible under the program.
    Some consumers have asked whether they may participate in more than
one reimbursed transaction, either singly or as joint-registered owners
of a vehicle. The CARS Act specifies that each person may receive only
one credit and that only one credit may be issued to the joint-
registered owners of a single trade-in vehicle under the program.
Consequently, a person may participate in a transaction that receives a
credit under this program only once.
    The CARS Act is specific as to the characteristics of the vehicle
that may be traded in and the characteristics of the new vehicle that
may be purchased or leased, and these two requirements are
interdependent (i.e., whether a new vehicle is eligible under the
program depends, in part, on the characteristics of the trade-in
vehicle). For example, the trade-in requirements for a large work truck
differ from those of passenger cars under the program. Similarly, some
vehicles--notably motorcycles--simply are not eligible under the CARS
Act, either as trade-in vehicles or for purchase or lease, even though
consumers have noted that transactions involving those vehicles might
reduce fuel use and improve the environment.

III. Public Outreach and Consultation

    The extremely short time afforded by the Act to develop and
complete this rulemaking precluded publishing a proposed rule for
notice and comment. Therefore, the agency took a variety of steps to
obtain public input as it moved forward to develop this rule. It
established a Web site that invited public inquiries. As it received
inquiries, it posted a steadily growing list of questions and answers,
which in turn led to additional inquiries. It hosted a ``webinar'' that
elicited hundreds of inquiries. In addition, it met with
representatives of a wide variety of environmental interest groups.
    The agency also directly consulted with organizations representing
original equipment manufacturers (OEMs), including the Alliance of
Automobile Manufacturers and the Association of International
Automobile Manufacturers, to obtain information on franchised
dealerships. The agency involved the OEMs because they possess
comprehensive and readily available lists of new vehicle dealers
licensed under State law. As detailed below, the agency is using lists
of franchised dealers provided by the OEMs to aid in the process of
registering dealers under the program.
    NHTSA met with automobile dealers and dealer organizations,
including the National Automobile Dealers Association and the American
International Automobile Dealers Association, to better understand the
typical vehicle trade-in and purchase/lease transaction. The agency
consulted with groups representing disposal facilities, salvage
auctions, and reporting entities, including the American Salvage Pool
Association, the Automotive Recyclers Association, CoPart, Mannheim,
Insurance Auto Auctions, the Institute of Scrap Recycling Industries,
Inc., and the National Salvage Vehicle Reporting Program, to learn
about the processes involved in recycling and scrapping old vehicles.
The information learned by the agency from dealer and disposal facility
organizations was critical to an informed rulemaking process.
    The agency also consulted with officials from Texas, California and
Germany. These officials provided valuable information to the agency,
based on their experience administering and enforcing similar vehicle
purchase and trade-in programs. Each of these officials cautioned NHTSA
that it would need to be vigilant to guard against fraud.
    Finally, as required under the CARS Act, the agency coordinated
with appropriate Federal agencies. With respect to the National Motor
Vehicle Title Information System (NMVTIS), the agency met with the
Department of Justice and its NMVTIS program administrator, the
American Association of Motor Vehicle Administrators, to develop
procedures for updating the NMVTIS to reflect the crushing or shredding
of trade-in vehicles under the program. The agency consulted with the
EPA on the listing of categories of eligible vehicles and on the
listing of disposal facilities and requirements and procedures for the
proper disposal of refrigerants, antifreeze, mercury switches, and
other substances prior to crushing or shredding the trade-in vehicle.
The agency also consulted with EPA concerning a method to disable the
engines of the vehicles that are traded in.
    Memoranda providing the dates and summaries of meetings with these
organizations and various other groups are included in the docket for
this rule.

IV. The Regulation

    As directed by the CARS Act, today's final rule sets forth
requirements and procedures for registering participating dealers and
listing participating disposal facilities, reimbursing dealers for
qualifying transactions, disposing of trade-in vehicles, and enforcing
penalties for program violations.
    The rule is being issued without first providing a notice and an
opportunity for public comment. As noted above, the Act provides that
the rule shall be issued within 30 days after enactment,
``notwithstanding'' the requirements of 5 U.S.C. 553, the Federal law
requiring notice and comment. Further, given that schedule and the
necessity of quickly beginning to implement this 4-month program with a
statutorily fixed end date, the agency finds for good cause that
providing notice and comment is impracticable and contrary to the
public interest. Drafting and issuing a proposed rule, providing a
period for public comment, and addressing those comments in the final
rule would have been highly impracticable in the time available and
would have substantially delayed issuance of this final rule beyond the
legislatively mandated issuance date of July 24. We think the public
interest is best served by issuing this rule on the mandated date so
that its requirements are known and can be followed by all
participants. This is especially true because transactions since July 1
have been potentially eligible for credits under this program.
    The CARS Act prescribes a rulemaking period of just 30 days before
the program is to be fully implemented and capable of accommodating a
potentially very large number of transactions. Mindful of this
requirement, the agency placed significant emphasis on efficient
transaction processes and data exchange. To that end, most of the
transactional requirements imposed by today's rule are met through
electronic online submissions. Where this is so, the rule identifies
the particular data or information required in the electronic
submission and, in one case, refers to an appendix with a facsimile of
the electronic form for easy reference.
    The Act requires the agency to develop certain lists to assist
consumers and dealers (e.g., a comprehensive list of new fuel efficient
vehicles meeting the program requirements, a list of disposal

entities to which dealers may transfer eligible trade-in vehicles).
Here, the rule makes use of references to the CARS Web site for
convenient reference to these helpful lists.
    Much of the CARS Act is specific and directive. However, where a
statutory term or provision is not clear or gives the agency
discretion, the rule generally strikes the balance in favor of an
interpretation that promotes smooth and expeditious completion of
transactions or one that decreases opportunities for fraud.

a. Definitions (Sec.  599.102)

    The CARS Act defines a dealer as a person licensed by a ``State''
and identifies an eligible trade-in vehicle in terms of its insurance
and registration status under ``State'' law. Read together, these
statutory provisions restrict the transactions that are eligible for a
credit under the CARS program. More specifically, a dealer must be a
United States dealer and a trade-in vehicle must be insured and
registered in the United States. However, nothing in the Act excludes
U.S. territories from the reach of the program. Consequently, in
section 599.102, the agency has defined ``State'' to include the 50
United States, the District of Columbia, Puerto Rico, the Virgin
Islands, Guam, American Samoa, and the Commonwealth of the Northern
Mariana Islands.
    The CARS Act uses the term ``person'' to describe those eligible to
purchase or lease a new vehicle under the Program. See Sections 1302(c-
d). In the absence of a definition of this term in the CARS Act, the
agency relies on the universal definition that appears in 1 U.S.C. 1,
which includes corporations, companies, associations, firms,
partnerships, societies, and joint stock companies, as well as
individuals. The agency adopts this definition for the term ``person''
in Section 599.102, and also defines a ``purchaser'' in that section as
a person purchasing or leasing a new vehicle under the CARS program. Of
course, each person is subject to the statutory restriction that
precludes participation by any person in this program more than once.

b. Registration of Dealers (Sec.  599.200)

    The Act requires the agency to provide for a means of registering
dealers for participation in the program. (Section 1302(d)(1)). A
dealer is defined under the Act as a person licensed by a State who
engages in the sale of new automobiles to ultimate purchasers (Section
1302(i)(6)), a definition we have restated in Section 599.102. After
consultation with dealer and OEM organizations, the agency is
implementing the dealer registration requirement through a several step
process. First, on June 30, 2009, the agency requested and later
received a list of franchised dealers from their respective OEMs,
including each dealer's legal business name, doing-business-as name,
mailing address, point of contact, and OEM franchise identifier.\1\ OEM
franchised dealers, as a group, satisfy the requirement for State
licensing. The agency has learned that, without an active OEM franchise
agreement, a dealer is unable to offer manufacturer purchasing
incentives and may not be able, in some cases, to extend the full
manufacturer warranty to the new vehicles it sells. For this reason,
the agency includes the requirement for a currently active OEM
franchise agreement as part of the dealer registration process. (The
OEMs have agreed to update this list weekly, to add newly franchised
dealerships and remove dealerships that are no longer under franchise
agreement.) The agency then contacted all listed dealers by mail,
providing instructions on how to register under the program. Dealers
received separate letters and were instructed to register separately
for each make of vehicle they sell. Section 599.200(b) identifies the
required dealer qualifications for registration, which flow from the
statutory requirement for State licensing and from the need to perform
transactions electronically. OEM franchised dealers should easily
satisfy these requirements.
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    \1\ The agency chose to involve the OEMs in this process to
eliminate the opportunity for unscrupulous individuals or entities
to identify themselves as franchised dealers.
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    As set forth in section 599.200(c), dealers that have been
contacted by mail by the agency and that wish to participate must
register to do so electronically, using the authorization code and
following the instructions provided in the mailing, and fill out an
electronic screen providing, among other things, name and contact
information and bank account and routing data for receiving payment
under the program.\2\ The agency will review this information to ensure
completeness, and verify that the dealer has a still active franchise
agreement (based on the continuously updated list provided by OEMs).
Section 599.200(d) sets forth the procedures for approving and
disapproving registration applications. Section 599.200(d)(1) provides
that, where an application for registration is approved, the agency
will notify the dealer of approval by e-mail, providing a user
identification and password with which to conduct transactions, and add
the dealer to the list of registered dealers on its Web site at http://
www.cars.gov. Consumers may consult this list to identify registered
dealers in their locality. Section 599.200(d)(2) provides that, where
an application for registration is rejected, the agency will notify the
dealer by e-mail, and provide the reasons for rejection. The agency
anticipates that, unless rejected, confirmation of registration and
addition to the list should occur within 2 to 4 business days after a
dealer submits the required information.
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    \2\ The registration process was made available to dealers
beginning on July 24, 2009.
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    Section 599.200(e)(1) provides that the agency may automatically
revoke a registration as a matter of course for termination or
discontinuance of a franchise but the dealer's registration may be
reinstated upon a dealer's showing of proper and adequate license to
sell new vehicles to ultimate purchasers. Section 599.200(e)(2) states
that the agency may suspend or revoke a dealer's registration under the
procedures in Section 599.504. Section 599.200(f) requires a registered
dealer to immediately notify the agency of any change in the
registration information it submitted or any change in the status of
its State license or franchise. Finally, section 599.200(g)
accommodates transactions that occurred after July 1, 2009, but prior
to the publication of today's final rule, by permitting registration
after a qualifying sale or lease transaction has occurred.\3\
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    \3\ As discussed later in this document, other requirements
apply to these earlier transactions as well.
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    The agency believes that this process is the most efficient and
appropriate method to register dealers consistent with the requirements
of the CARS Act. The Act requires that a dealer be licensed under State
law, and the list provided by OEMs ensures that this is so. Using this
list also allows the agency to verify dealer registration information
in a timely manner. Since the OEMs have agreed to provide weekly
updated lists, this process also will allow for registration of newly
franchised dealers as they come into existence and the discontinuance
of registrations for dealers that are no longer franchised. Newly
franchised dealers will be contacted by mail with an authorization
code, as the agency becomes aware of them from the weekly updated
lists. A dealer whose franchise has been discontinued will be removed
from the agency's list, and will no longer be eligible to receive
credits for transactions under the program.

c. Identification of Disposal Facilities (Sec.  599.201)

    Under the Act, the agency is required to provide a list of entities
to which dealers may transfer eligible trade-in vehicles for disposal.
(Section 1302(d)(5)). The Act also requires the Secretary to coordinate
with the Attorney General to ensure that the National Motor Vehicle
Title Information System (NMVTIS) is timely updated to reflect the
crushing or shredding of trade-in vehicles and appropriate
reclassification of their titles. (Section 1302(c)(2)(C)).
    The agency met with groups representing auto recyclers and other
disposal facilities and salvage auctions, as well as officials from
AAMVA and the Department of Justice responsible for administering the
NMVTIS, to get an understanding of the vehicle salvage and disposal
process. From those meetings, the agency learned that there is a wide
range of entities involved in various aspects of the vehicle salvage
and disposal business. The agency also consulted with the EPA about the
CARS program and the requirement to produce a list of disposal
facilities for disposition of the trade-in vehicles. Mindful of
environmental issues, NHTSA sought to identify a universe of disposal
facilities that was attentive to these concerns, while achieving the
objectives of the CARS program.
    In the course of these consultations and based on advice from EPA,
the agency identified the National Vehicle Mercury Switch Recovery
Program (NVMSRP) as a comprehensive source of disposal facilities
generally committed to meeting State and Federal environmental laws.
The NVMSRP was established in 2006 under a memorandum of understanding
(MOU) among the EPA, environmental groups, manufacturers and disposal
facilities, to recover and recycle mercury switches from end-of-life
vehicles before they are scrapped, crushed or shredded. This purpose is
in alignment with the CARS Act's requirement for proper vehicle
disposition, including the removal of mercury switches. The MOU
authorizes the End of Life Vehicle Solutions (ELVS), a corporation
established by vehicle manufacturers to carry out responsibilities of
the NVMSRP, including establishing a process for participants to enroll
in the program and maintaining a database of participants who recover
and submit mercury switches.
    Participants may enroll in the program by registering with ELVS.
Information about ELVS can be found on its Web site at http://
www.elvsolutions.org. Currently, approximately 7,700 disposal
facilities are participants, and EPA estimates that approximately 1,500
of these facilities actively turn in the switches. The agency has
determined that disposal facilities that are participants on the ELVS
list present the best assurance of compliance with State and Federal
environmental laws.
    With this in mind, NHTSA has identified disposal facilities that
are ELVS participants for listing as approved disposal facilities under
this program, and these disposal facilities are listed on the agency's
Web site at http://www.cars.gov/disposal. However, some entities on
this list may dispose of mercury switches as part of their business
(for example, auto repair businesses) but do not actually engage in
dismantling or recycling of vehicles. Therefore, the fact that a
facility is on the list does not automatically ensure that it is
equipped to dispose of vehicles properly. To be eligible for
participation in the CARS Program, a facility on the ELVS list must be
able to crush or shred motor vehicles, either with its own equipment or
by use of a mobile crusher. NHTSA was not able to obtain accurate lists
of all entities that have this capacity within the time allowed, but is
informed that many of the entities on the ELVS list are capable of at
least obtaining the services of a mobile crusher. Dealers will have to
inquire of specific entities concerning their capacity to crush or
shred the vehicle. Any facility that does participate will have to
certify that it has that capacity to crush or shred and will dispose of
the vehicle through crushing or shredding.
    These facilities must additionally agree to turn in mercury
switches in accordance with the NVMSRP from any CARS trade-in vehicles
they accept (to the extent the vehicles have such switches), by
certifying that they will do so. In addition, because the CARS Act
directs the agency to ensure that pollutants are removed from vehicles
and properly disposed of, that vehicles are crushed or shredded, and
that NMVITS is updated to reflect the disposition of the vehicle, as a
condition of participation in the program, the listed participants must
also agree to remove pollutants from the CARS trade-in vehicles in
compliance with State and Federal law, crush or shred the vehicle,
update NMVTIS to reflect the disposition of the vehicle, and certify to
having done so. The certification requires the disposal facility to
certify that it will dispose of refrigerants, antifreeze, lead
products, mercury switches, and other toxic or hazardous vehicle
components prior to crushing or shredding, in accordance with
applicable Federal and State requirements. The rule does not impose
additional requirements; for example, it does not require removal of
all lead products such as lead solder connections that are ordinarily
not removed during the shredding process.
    NHTSA is aware, from consultations with EPA, that the State of
Maine and the U.S. territories are not participants in the NVMSRP and
that the ELVS list contains no disposal facilities in these areas.
Maine has its own program for recycling mercury switches, which is
comparable to the NVMSRP. Under Maine law, a vehicle may not be crushed
without first removing and properly disposing of mercury switches, and
disposal facilities are covered by that law. NHTSA obtained a list of
disposal facilities in Maine from the State Bureau of Motor Vehicles,
and these facilities are included along with the ELVS facilities from
other states, on the agency's Web site at http://www.cars.gov/disposal.
As a condition of participating, these Maine facilities must make the
same certifications as required of the ELVS facilities.
    In the case of the U. S. Territories, the agency is informed that
participation in ELVS is currently impracticable for cost reasons
related to sending mercury switches to the Continental United States.
Therefore, the rule does not include disposal facilities on the list
for the Territories, but allows dealers to select disposal facilities
within the territories that are able to make the same certifications
required of the ELVS and Maine facilities.
    The agency plans to update this disposal facility list
periodically, to add entities that become ELVS participants and to
remove entities that are no longer ELVS participants or for other
reasons discussed elsewhere in this document. The rule requires dealers
to consult this list on the CARS Web site at the time of the transfer
of the trade-in vehicle, as an entity that does not appear on the list
on that date is not eligible to receive the vehicle for crushing or
shredding.\4\
---------------------------------------------------------------------------

    \4\ Participants in the CARS program are cautioned to consult
the list on NHTSA's CARS Web site, http://www.cars.gov/disposal, for
eligible disposal facilities, not the list on the ELVS Web site.
---------------------------------------------------------------------------

    One issue that has arisen is the participation of entities that
shred vehicles in the CARS process. Shredders turn crushed vehicles
into materials useful in various industrial processes. Shredders are
relatively few in number, with less than 300 shredding machines
distributed nationwide. Disposal facilities with shredders may be ELVS
participants and, if they are, they can

participate fully in the CARS program. To the extent these facilities
are not ELVS participants, they may still play a role in the ultimate
disposition of the vehicle. The final rule places no restrictions on a
trade-in vehicle once it is crushed. Once crushed, the agency assumes
the vehicle will be transferred to a shredder so that its materials can
be recycled. The rule does not require any tracking of this ultimate
shredding of a crushed vehicle, so the entity receiving the crushed
vehicle for shredding does not have to submit a CARS certification
form.
    Because of the requirement, discussed later in this document, that
dealers must disable the trade-in vehicle's engine prior to
transferring the vehicle to a disposal facility, the agency believes
that the statutory interest in ensuring that the vehicle is not
returned to use on the road in this or any other country is largely met
before it leaves the dealer's possession. Prior engine disablement
reduces the likelihood that a trade-in vehicle will be returned to use
as an on-road automobile. With the extra assurance provided by engine
disablement, the smooth operation of the program is better served if
limitations on participation in the disposal stream are kept to a
minimum, ensuring a reasonable geographic distribution of entities that
may receive trade-in vehicles from dealers under the program.
    With these points in mind, the agency consulted with
representatives of the salvage auction industry. The agency believes it
is practicable to provide for the participation of salvage auctions in
the transfer of trade-in vehicles to disposal facilities under the CARS
program, in order to broaden the avenues of disposal available to
dealers. Therefore, salvage auctions may receive a CARS trade-in
vehicle, provided that, as a condition of participation, these entities
agree to limit their auction sales of CARS trade-in vehicles to the
disposal facilities described above that appear on the agency's list.
We believe that including listed disposal facilities, and requiring
salvage auctions to sell at auction the scrap trade-in vehicles only to
approved disposal facilities strikes the appropriate balance between
program and environmental accountability, on the one hand, and
geographic distribution and dealer access, on the other.
    NHTSA was unable to develop a comprehensive list of salvage
auctions within the time allowed. Although we heard from
representatives of some of the largest auctions and their associations
(including CoPart, Mannheim, the Insurance Auto Auctions, and the
Automotive Salvage Pool Association), we concluded that simply listing
their members, absent more information, would not be appropriate.
However, we understand from representatives of those organizations and
companies that they and their members are willing to restrict the sale
of CARS trade-in vehicles to just those entities on the CARS program
disposal facility list and make the necessary certifications about the
disposal of those vehicles. Any other salvage auctions willing to abide
by these restrictions and submit the necessary forms and certifications
under penalty of law may participate in the CARS program. All
participants must understand the specific requirements of this rule and
the substantial penalties they may incur if they violate it or submit
false information in connection with the program. Also, all who
participate must understand that their records, premises, and CARS
vehicles in their possession are subject to inspection by NHTSA and the
DOT Office of Inspector General.
    Section 599.201 implements the requirements for identification of
salvage auctions and disposal facilities. Section 599.201(a) identifies
the participating entities, including salvage auctions, disposal
facilities listed on the agency's Web site, and disposal facilities in
the U.S. territories. Section 599.201(b) describes the conditions these
entities must follow in order to participate in the program.

d. Determining Eligibility of Trade-in Vehicles and New Vehicles (Sec.
599.300)

    The CARS Act prescribes detailed requirements concerning eligible
trade-in vehicles and eligible new vehicles for qualifying transactions
under the Program. This final rule implements these requirements in
close adherence to the statutory language.
1. Vehicle Definitions
    The CARS Act divides eligible trade-in vehicles and new vehicles
into four groups: passenger automobiles, category 1 trucks, category 2
trucks, and category 3 trucks.\5\ The term ``passenger automobile'' and
its definition are taken from the agency's fuel economy statute. The
definition excludes vehicles that NHTSA has determined are (1) not
manufactured primarily for transporting persons and (2) vehicles that
are capable of off-highway operation. Vehicles not manufactured
primarily for transporting persons include pickup trucks and certain
vehicles that permit expanded use of the vehicle for cargo-carrying
purposes, including vehicles which are designed to transport more than
10 persons; provide temporary living quarters, transport property on an
open bed, provide greater cargo-carrying than passenger-carrying
volume, or permit expanded use of the automobile for cargo-carrying
purposes or other nonpassenger-carrying purposes. (See 49 CFR
523.5(a)).
---------------------------------------------------------------------------

    \5\ Section 1302(i) of the CARS Act defines those categories
largely with reference to statutory categories of vehicles subject
to the Corporate Average Fuel Economy (CAFE) Standards as follows:
``passenger automobile'' means a passenger automobile, as defined in
section 32901(a)(18) of title 49, United States Code, that has a
combined fuel economy value of at least 22 miles per gallon;
``category 1 truck'' means a non-passenger automobile, as defined in
section 32901(a)(17) of title 49, United States Code, that has a
combined fuel economy value of at least 18 miles per gallon, except
that such term does not include a category 2 truck; ``category 2
truck'' means a large van or a large pickup, as categorized by the
Secretary using the method used by the Environmental Protection
Agency and described in the report entitled ``Light-Duty Automotive
Technology and Fuel Economy Trends: 1975 through 2008''; ``category
3 truck'' means a work truck, as defined in section 32901(a)(19) of
title 49, United States Code. Under regulations implementing the
CAFE program (see 49 CFR Part 523), ``passenger automobiles''
currently include all passenger cars and ``non-passenger
automobiles'' include all SUVs, vans and pickup trucks up to 8,500
pounds GVWR.
---------------------------------------------------------------------------

    Vehicles that are capable of off-highway operation include three
groups of vehicles. (See 49 CFR 523.5(b)). The first includes vehicles
that have 4-wheel drive and have at least four out of five specified
physical characteristics relating to ground clearance.\6\ The second
includes vehicles that are rated at more than 6,000 pounds gross
vehicle weight and have at least four out of five specified physical
characteristics relating to ground clearance, but do not have 4-wheel
drive. The third includes 2-wheel drive SUVs (regardless of GVWR) which
came in a 4-wheel drive version that met four of five specified
physical characteristics related to ground clearance. Beginning with
the 2011 model year, NHTSA will reclassify this third group of vehicles
as passenger cars. See Average Fuel Economy Standards--Passenger Cars
and Light Trucks--Model Year 2011, Section XI (Vehicle Classification);
74 FR 14419, March 30, 2009. Although neither specified nor prohibited
in the CARS Act, the agency has concluded that it is most appropriate
to define passenger

cars using the NHTSA regulations and policy which are applicable to
2010 and earlier model year vehicles. Therefore, the third group of
vehicles will continue to be classified as trucks for CARS purposes
(and will be excluded from the definition of a passenger automobile).
---------------------------------------------------------------------------

    \6\ The five ground clearance characteristics are: (1) An
approach angle of not less than 28 degrees; (2) a breakover angle of
not less than 14 degrees; (3) a departure angle of not less than 20
degrees; (4) a running clearance of not less than 20 centimeters;
and (5) front and rear axle clearances of not less than 18
centimeters each. These characteristics are calculated when the
automobile is at curb weight, on a level surface, with the front
wheels parallel to the automobile's longitudinal centerline, and the
tires inflated to the manufacturer's recommended pressure. See 49
CFR Part 523.5(b)(2).
---------------------------------------------------------------------------

    A ``category 1 truck'' is a non-passenger automobile. This category
includes sport utility vehicles (SUVs), medium-duty passenger
vehicles,\7\ small and medium pickup trucks, minivans, and small and
medium passenger and cargo vans. It does not include vehicles that are
defined as category 2 trucks.\8\
---------------------------------------------------------------------------

    \7\ Medium-duty passenger vehicles are defined in 49 CFR 523.2.
    \8\ As noted in footnote 2, the statutory definition of the term
``category 2 truck'' is based on the categorization method used by
the Environmental Protection Agency and described in the report
entitled ``Light-Duty Automotive Technology and Fuel Economy Trends:
1975 through 2008.'' (A copy of this report has been placed in the
docket for this rule.) Based on that method of categorization, large
vans and pickup trucks, which would otherwise fall within category
1, instead fall within category 2. The method is based primarily on
published wheelbase data according to the following criteria: A
small pickup is less than 105'', a midsize pickup is 105'' to 115'',
a large pickup is more than 115''; A small van is less than 109'', a
midsize van is 109'' to 124'', a large van is more than 124''; A
small SUV is less than 100'', a midsize SUV is 100'' to 110'', a
large SUV is more than 110''. This classification scheme is similar
to that used in many trade and consumer publications.
    For those vehicle nameplates with a variety of wheelbases, the
size classification was determined by considering only the smallest
wheelbase produced. The classification of a vehicle for this report
is based on the author's engineering judgment and is not a
replacement for definitions used in implementing automotive
standards legislation. [Emphasis added.]
---------------------------------------------------------------------------

    A ``category 2 truck'' is a large van or a large pickup truck,
based upon the length of the wheelbase (more than 115 inches for pickup
trucks and more than 124 inches for vans). If the vehicle nameplate
contains a variety of wheelbases, the size classification is determined
by considering only the shortest wheelbase produced. In addition, some
pickup trucks and cargo vans which exceed these thresholds are treated
as category 3 trucks instead of category 2 trucks.
    A ``category 3 truck'' is a work truck and is rated between 8,500
and 10,000 pounds gross vehicle weight. This category includes very
large pickup trucks (those with cargo beds 72 inches or more in length)
and very large cargo vans.
    As previously stated, for category 1 and 2 trucks with a variety of
wheelbases, the size classification is determined by considering only
the shortest wheelbase produced. If a secondary manufacturer modifies
and introduces into commerce a vehicle with only a limited portion of
the wheelbases offered by the original equipment manufacturer (OEM),
the size classification for the secondary manufacturer will be
determined by (and consistent with) the size classification determined
for the OEM. For example, if General Motors produces 2008 model year
Chevrolet Colorado pickup trucks with wheelbases of 111, 119 and 126
inches, Colorado pickup trucks would be classified as category 1 trucks
for CARS purposes (because the shortest wheelbase Colorado pickup truck
was less than or equal to 115 inches). If a secondary manufacturer
introduces into commerce 2008 model year Colorado ZZZ vehicles (high
performance Colorado pickups with 126 inch wheelbase only), Colorado
ZZZ models would also be classified as a category 1 pickup trucks.
    The rule defines these four groups of vehicles in section 599.102
and makes use of these categories throughout sections 599.300(f) and
599.300(g).
2. Eligibility of Trade-in Vehicles
    The CARS Act establishes four criteria for an eligible trade-in
vehicle. The trade-in vehicle must:
    (1) Be in drivable condition;
    (2) Have been continuously insured, in accordance with State law,
and registered in the same owner's name for the one-year period
immediately prior to the trade-in;
    (3) Have been manufactured not earlier than 25 years before the
date of trade-in \9\ and, in the case of a category 3 vehicle, also be
from a model year not later than model year 2001; and
---------------------------------------------------------------------------

    \9\ This means that all pre-model year 1984 vehicles, and most
model year 1984 vehicles, are not eligible as trade-in vehicles.
---------------------------------------------------------------------------

    (4) Have a combined fuel economy value of 18 miles per gallon or
less,\10\ if it is a passenger automobile, a category 1 truck, or a
category 2 truck.\11\
---------------------------------------------------------------------------

    \10\ As discussed in later in this preamble, under
``Requirements for qualifying transactions,'' the combined fuel
economy of the trade-in vehicle must satisfy the statutory
requirements related to the difference between its fuel economy and
that of the new vehicle, as well as meeting this 18 miles per gallon
absolute threshold.
    \11\ There is no minimum for category 3 trucks because they do
not have fuel economy ratings.

The agency must have a means of evaluating these criteria as it
determines whether a transaction qualifies under this program.
(i) ``Drivable Condition''
    The agency intends that ``drivable condition'' be demonstrated by
several means. First, it must be confirmed by the trade-in vehicle
being operated, under its own power, by the dealer on public roads on
the date the vehicle is traded in. The dealer must then certify to the
operation of the vehicle when it submits its request for reimbursement.
Separately, the person trading in the vehicle must certify that it is
in drivable condition. This latter certification also must be submitted
by the dealer with its application requesting reimbursement. This
approach is adopted in section 599.300(b)(1) of the final rule, and the
required dealer and purchaser certifications are contained in the
Summary of Sale/Lease and Certifications (Appendix A, certifications
section). Note that the Summary of Sale/Lease and Certifications form
has two components--a section for the dealer to input information
summarizing the terms of the sale or lease transaction and a section
containing certifications that must be made by both the dealer and the
purchaser. The section summarizing the transaction is discussed later
in this notice.
(ii) Insurance
    In addressing the requirement that the trade-in vehicle be
``continuously insured consistent with the applicable State law'' for a
period of not less than one year prior to the transaction, the agency
notes the complication that not all States require vehicle owners to
purchase automobile insurance coverage. Several States provide vehicle
owners with the option, for example, to post a surety bond, leave a
cash deposit or self-insure in lieu of purchasing automobile insurance.
Two States have little or no insurance requirements.
    The agency recognizes that insurance requirements differ throughout
the country. However, the agency believes that the Act requires the
continuous one-year insurance condition to be met as a threshold
matter, with respect to any trade-in vehicle under the program. In a
State where the conditions and requirements of insurance are specified
in law (e.g., liability minimums, deductible requirements), the
insurance coverage would then need to be in accordance with those
conditions and requirements. To qualify under this requirement, a
purchaser must provide proof of insurance covering the trade-in vehicle
for a period of at least one year prior to the date of the trade-in.
    The agency is aware that, in some cases, consumers may have
insurance cards that state clearly the period of insurance coverage,
while in other cases, an insurance card is unavailable or does not
convey the period-of-coverage information. To provide for an
alternative, the agency consulted with several insurance associations,
including the Insurance Information Institute, American Insurance

Association, National Association of Mutual Insurance Companies, and
Property Casualty Insurers Association of America. These entities
agreed to assist the agency through their member insurance companies.
They indicated that purchasers could contact their insurers to obtain
proof of insurance in a form that provides the details needed to
identify the insured vehicle and the one year period of coverage
required under the program.
    To implement this process, the agency is requiring the owner of the
trade-in vehicle to provide proof, at the time the vehicle is traded
in, that the trade-in vehicle has been insured continuously for one
year prior to the trade-in. This proof may take one of three forms. The
proof may consist of one or more insurance cards containing the make,
model, model year, and vehicle identification number (VIN) of the
insured vehicle, but only if, taken together, the cards display on
their face a continuous one-year period of insurance coverage. The
proof may also consist of insurance policy documents (e.g.,
declarations pages) showing the same information. Finally, the proof
may consist of a signed letter, on insurance company letterhead,
identifying the same vehicle identification information (i.e., make,
model, model year, and VIN) of the insured vehicle and the period of
continuous coverage, which must be for at least one year prior to the
date of the trade-in. In addition, for each of the three options, the
consumer must certify that the trade-in vehicle has been continuously
insured for the requisite period. This proof of insurance, along with
the consumer certification, must be submitted by the dealer in its
application to the agency requesting reimbursement. Section
599.300(b)(2) and Appendix A, certifications section, implement these
requirements.
(iii) Registration
    The requirement that the trade-in vehicle be registered to the same
owner for a continuous period of one year prior to the transaction
requires clarification. The agency interprets this provision as
requiring the trade-in vehicle to be registered to and owned by the
person purchasing or leasing the new vehicle under the program. In a
transaction involving more than one person, the trade-in vehicle must
have been registered to and owned by at least one of the persons
purchasing or leasing the vehicle under the program.
    To qualify under this requirement, the purchaser will need to
provide proof of registration covering the trade-in vehicle for a
period of at least one year prior to the date of the trade-in. The
agency recognizes that this proof of registration presents
complications for purchasers. In several States, registration cards or
documents do not indicate a period of coverage of more than one year.
In some of these States, purchasers have a difficult time obtaining
prior registration information from the State. Seeking a less
burdensome alternative, the agency evaluated the capabilities of
commercial vehicle information services, such as Polk and Experian, to
determine the type of vehicle information that is readily available to
consumers. The agency discovered that purchasers may obtain a history
of vehicle registration information from these services.
    To implement this process, the agency has determined that proof of
registration may be demonstrated by any of the following: a current
State registration document or series of registration documents in the
name of the purchaser evidencing registration for a period of not less
than one year immediately prior to the trade-in; a current State
registration document showing registration in the name of the purchaser
and a document of title that confers title on the purchaser not less
than one year immediately prior to the trade-in; or a current State
registration document showing registration in the name of the purchaser
and a document from a commercially available vehicle history provider
evidencing registration for a period of not less than one year
immediately prior to the trade-in. Changes in ownership during this
period to delete a co-owner due to death or divorce do not interrupt
the continuity of the registration, so long as the purchaser has been
shown as an owner on the registration for the entire period. In
addition, for each of the three options, the consumer must certify that
the trade-in vehicle was continuously registered for the requisite
period. This proof of registration, along with the consumer
certification, must be submitted by the dealer in its application to
the agency requesting reimbursement. Section 599.300(b)(3) and Appendix
A, certifications section, implements these requirements.
(iv) Manufacture Date
    The requirement that the trade-in vehicle be manufactured not
earlier than 25 years before the date of trade-in is straightforward,
and is implemented in section 599.300(b)(4). Ordinarily, the model year
of the vehicle, which appears on the title, will serve to satisfy this
requirement. Where that information is inconclusive (e.g., certain
model year 1984 and 1985 vehicles), the month and year of manufacture
may be retrieved from the safety standard certification label that
appears on the frame or edge of the driver's door in most vehicles. The
rule allows the 25-year period to be satisfied provided it falls any
time within the month that the vehicle is traded in. Section 599.300(f)
implements the additional requirement, in the case of a category 3
vehicle, that the trade-in vehicle be manufactured not later than model
year 2001. The dealer must certify that the trade-in vehicle meets this
manufacturing date requirement. (Appendix A, certifications section).
(v) Combined Fuel Economy
    The specified combined fuel economy rating of 18 mpg or less for
the trade-in vehicle (excepting category 3 vehicles) is implemented
throughout sections 599.300(f) and 599.300(g).\12\ Under the Act,
combined fuel economy for an eligible trade-in vehicle is defined as
the number posted under the words ``Estimated New EPA MPG'' and above
the word ``Combined'' for vehicles of model year 1984 through 2007, or
posted under the words ``New EPA MPG'' and above the word ``Combined''
for vehicles of model year 2008 or later on the fueleconomy.gov Web
site of the Environmental Protection Agency for the make, model, and
year of such vehicle. (Section 1302(i)(5)(B)). The agency adopts this
definition in section 599.102, but includes language limiting its
application to combined fuel economy based on gasoline. This treatment
of trade-in vehicles is consistent with the CARS Act requirements for
defining the combined fuel economy of new vehicles.\13\
---------------------------------------------------------------------------

    \12\ The trade-in vehicle is also subject to statutory
requirements related to the difference between its combined fuel
economy and that of the new vehicle.
    \13\ As described later in this document, the combined fuel
economy of new vehicles is derived from the Monroney label, which
lists only fuel economy based on gasoline.
---------------------------------------------------------------------------

    EPA changed the way it calculated fuel economy ratings starting in
Model Year 2008, and has estimated the revised ratings for Model Years
1985-2007. Therefore, as described above, eligibility is determined by
the revised ratings rather than the original EPA sticker on the
vehicle. Since the revised ratings reflect a lower fuel economy,
vehicles that would not be eligible under their original EPA rating may
qualify for trade-in.
3. Eligibility of New Vehicles
    The Act specifies that a new vehicle must be a passenger
automobile, a category 1 truck, a category 2 truck, or

a category 3 truck. The characteristics of these vehicles were
described earlier under Section c.1, ``Vehicle Definitions,'' and they
are defined in section 599.102. To further assist consumers in
determining the eligibility of new vehicles, the CARS Web site, at
http://www.cars.gov, contains an interactive tool. Consumers may
identify their trade-in vehicle, select a new vehicle, and determine
whether the transaction qualifies for a credit (and the amount of the
credit) under the program.
    In addition to the definitional categories, the new vehicle
purchased or leased under the program must achieve a minimum combined
fuel economy level. For new passenger automobiles the combined fuel
economy must be at least 22 miles per gallon, for category 1 trucks it
must be at least 18 miles per gallon, and for category 2 trucks it must
be at least 15 miles per gallon. Category 3 trucks have no minimum fuel
economy requirement. Under the Act, combined fuel economy for new
vehicles is defined as the number, expressed in miles per gallon,
centered below the words ``Combined Fuel Economy'' on the label
required to be affixed or caused to be affixed on a new automobile
pursuant to subpart D of part 600 of title 40 Code of Federal
Regulations (``Monroney Label''). (Section 1302(i)(5)(A)). The agency
adopts this definition, without change, in section 599.102.
    The new vehicle must also have a manufacturer's suggested retail
price (MSRP) of $45,000 or less to be eligible for purchase or lease
under the program. The agency interprets this requirement to be the
base MSRP--the price on the Monroney label affixed to the vehicle
before any dealer accessories, optional equipment, taxes or destination
charges are added to the price. This interpretation is consistent with
the Automobile Information Disclosure Act, which identifies the retail
price separately from the retail delivered price with optional
equipment. See 15 U.S.C. 1232(f)(1). To implement this approach, we
have added a definition of the term MSRP in section 599.102 and stated
the limitation in section 599.300(c)(2).
    The CARS Act allows the new vehicle to be either purchased or
leased. In the case of a lease, the Act requires the lease to be for a
period of not less than 5 years. The agency implements this requirement
in section 599.300(c)(1). Additionally, the agency has added a
definition of ``lease'' in section 599.102, specifying its minimum
duration and making clear that a lease that incorporates a balloon
payment at any time prior to five years does not meet the statutory
requirement.

e. Requirements for Qualifying Transactions (Sec. Sec.  599.300 and
301)

1. Vehicle Categories and Credit Amounts
    The preceding section described eligibility requirements for the
trade-in vehicle and for the purchased or leased new vehicle. Under the
CARS Act, a transaction does not qualify for a credit unless the trade-
in vehicle and the new vehicle, considered together, satisfy all
requirements. In addition, the amount of the credit (either $3,500 or
$4,500) is dependent on the category and fuel economy of the two
vehicles making up the transaction.
    For example, in a transaction involving a trade-in vehicle that is
a passenger automobile, a category 1 truck, or a category 2 truck and a
new vehicle that is a passenger automobile, each meeting the
eligibility criteria discussed in the last section, if the new vehicle
has a combined fuel economy that is 4 to 9 miles per gallon higher than
the trade-in vehicle, the credit is $3,500. If the new vehicle has a
combined fuel economy that is at least 10 miles per gallon higher than
the trade-in vehicle, the credit is $4,500.
    If the transaction involves a trade-in vehicle that is a passenger
automobile, a category 1 truck, or a category 2 truck and a new vehicle
that is a category 1 truck each meeting the eligibility criteria, a
gain of 2 to 4 miles per gallon results in a credit of $3,500; a gain
of at least 5 miles per gallon results in a credit of $4,500.
    In the case of a new category 2 or category 3 truck, the trade-in
vehicle categories are different. For a new category 2 truck, the
trade-in vehicle must be a category 2 or a category 3 truck. If the
transaction involves two category 2 trucks each meeting the eligibility
criteria, a gain of 1 mile per gallon results in a credit of $3,500; a
gain of at least 2 miles per gallon results in a credit of $4,500. A
category 3 truck that is traded in for a new category 2 truck is
entitled to a $3,500 credit, without fuel economy restriction.
(Category 3 trucks are not rated for fuel economy by EPA.) A category 3
truck that is traded in for another category 3 truck is entitled to a
$3,500 credit if the new vehicle is ``smaller or similar in size.'' In
view of the fact that Congress has not spoken directly to the precise
meaning of this term, consistent with available information, NHTSA has
incorporated this statutory requirement as satisfied if the gross
vehicle weight rating of the new category 3 truck is no greater than
that of the trade-in category 3 truck.
    The full universe of qualifying transactions, together with the
corresponding amount of the credit, is set forth in sections 599.300(f)
and 599.300(g).
    The CARS Act limits the amount of funds that can be used to provide
credits for purchases or leases of work trucks (category 3 trucks) to
7.5 percent of the funds appropriated for the program. Once that limit
is reached, NHTSA will stop making payments for these transactions. The
total amount available for the program is $1 billion, with $50 million
available to the agency to administer the program. NHTSA intends to
provide ongoing information about the balance of funds remaining
available for these and all other categories of transactions under the
program.\14\
---------------------------------------------------------------------------

    \14\ NHTSA intends to maintain an up-to-date running balance of
available funds on the Web site at http://www.cars.gov.
---------------------------------------------------------------------------

2. Special Requirements for Trade-in Vehicles
    The CARS Act requires dealers to disclose to purchasers trading in
an eligible vehicle the best estimate of the scrap value of the
vehicle, and permits the dealer to retain $50 of any amount paid to the
dealer for scrappage of the vehicle as payment for the administrative
costs of participation in the program. The agency has restated this
requirement in section 599.300(d)(1) and in the dealer certifications
in Appendix A, certifications section.
    The CARS Act requires a dealer that receives an eligible trade-in
vehicle under the program to certify to the Secretary of
Transportation, as prescribed by rule, that the dealer will transfer
the vehicle (including the engine block), ``in such manner as the
Secretary prescribes,'' to a entity that will ensure that the vehicle
will be crushed or shredded, and will not be sold, leased, or
exchanged. While Congress authorized the agency to promulgate a rule,
it did not define ``manner'' or otherwise speak directly to its
meaning. NHTSA interprets ``manner'' \15\ to include the methods

applied by the dealer and the condition of the vehicle transferred by
the dealer. Specifically, the agency is prescribing in today's rule
that the dealer is to transfer the trade-in vehicle with its engine
permanently disabled, as detailed below.
---------------------------------------------------------------------------

    \15\ We note that a definition of manner is ``the mode or method
in which something is done or happens.'' Webster's Third New
International Dictionary 1376 (2002). Among the definitions of mode
are ``a condition or state of being,'' ``a particular form or
variety of something'' and ``a manner of doing something or of
performing a particular function or activity.'' Ibid. at 1451. We
further note generally that, to the extent that there are
ambiguities or questions of interpretation in statutes within an
agency's jurisdiction to administer, Congress has delegated
authority to the agency to fill the statutory gap or make an
interpretation in a reasonable fashion.
---------------------------------------------------------------------------

    In enacting the CARS Act, the Congress was concerned about fraud.
See Section 1302(a)(4). The agency is aware of the significant
disparity in value that exists between a vehicle that is in ``drivable
condition,'' as the trade-in vehicle must be under this program, and a
vehicle that is scrapped and ultimately destroyed, which is the
required disposition for that trade-in vehicle. A substantial
opportunity exists for fraudulent diversion of the trade-in vehicle,
largely because its still-functioning engine makes it attractive to
return the vehicle to the road rather than relegate it to the scrap
yard.\16\ Moreover, continued use of the trade-in vehicle completely
defeats the environmental purpose of the CARS Act, which is to remove
these vehicles from the road permanently.
---------------------------------------------------------------------------

    \16\ We understand that this very kind of continued use of the
vehicle as an automobile has occurred in at least Germany's program
despite certifications that the vehicle had been disposed of.
---------------------------------------------------------------------------

    The CARS Act contains an explicit Congressional instruction to take
measures to prevent fraud and the statute's clear environmental
objective is to ensure that the fuel inefficient parts of the vehicle
are never again used on the highway. Taking the above considerations
into account, including the Secretary's authority to prescribe the
manner in which the trade-in vehicle, including its engine block, is
transferred to a disposal facility, the agency has determined that the
prudent course of action, consistent with Congressional concerns about
crushing or shredding, resale and fraud, is to require permanent
disablement of the trade-in vehicle's engine block as a part of the
qualifying transaction under this program.
    In this context, we note that the statutory term engine block is
not defined and that Congress did not speak directly to its meaning. In
general, the term engine block may refer to the block casting, or to a
short block or long block. The short and long blocks contain the block
casting and, among others, a crank shaft, connecting rods, bearings and
pistons. Long blocks also include the cylinder head(s) and the cam(s).
In a pushrod engine, the short block contains the cam. We interpret
``engine block'' to mean the part of the engine containing the
cylinders and typically incorporating water cooling jackets and also
including the crank, rods, pistons, bearings, cam(s) and cylinder
heads. In the case of a rotary engine, the block includes the rotor
housing and rotor. In light of the statute's purpose of removing fuel
inefficient vehicles from the nation's highways, which of course are
powered by engines that consume substantial amounts of fuel the agency
believes it is reasonable to read the word ``engine block'' in a way
that includes engine parts traditionally considered part of the ``long
block.'' We do not believe that parts from the engine such as the
pistons and cylinder head that could be removed and used to reconstruct
the engine from the trade in-vehicle should remain available to
recreate the fuel consuming engine. Finally, the engine disabling
procedure using sodium silicate can not be performed if the engine
parts such as the head(s) are removed.
    The agency has determined that a quick, inexpensive, and
environmentally safe process exists to disable the engine of the trade-
in vehicle while in the dealer's possession. Removing the engine oil
from the crankcase, replacing it with a 40 percent solution of sodium
silicate (a substance used in similar concentrations in many common
vehicle applications, including patching mufflers and radiators), and
running the engine for a short period of time at low speeds renders the
engine inoperable. Generally, this will require just two quarts of the
sodium silicate solution. The retail price for two quarts of this
solution (enough to disable the largest engine under the program) is
under $7, and the time involved should not substantially exceed that of
a typical oil change. The agency has tested this method at its Vehicle
Research and Test Center and found it safe, quick, and effective. As
with many materials used in the vehicle service area of a dealership,
certain common precautions need to be taken when using sodium silicate.
The same is true with regard to workers who may come in contact with
the substance during the crushing or shredding of the engine block. We
have discussed the matter with the EPA and the Occupational Safety and
Health Administration (OSHA) and are aware of no detrimental effects
related to the disposal of the engine block with this material in it.
    The agency considered several possible methods of rendering the
engine inoperable. The agency was looking for a method that was safe
for workers involved, completely effective, environmentally sound, and
relatively inexpensive for a dealer to use. NHTSA's Vehicle Research
and Test Center (VRTC) tested various methods and prepared a report
(placed in the docket) summarizing the tests. VRTC evaluated four
options: (1) The use of sodium silicate solution in the manner the
agency has now adopted; (2) destroying the oil filter sealing land and
threaded fastener boss; (3) drilling a hole in the engine block; and
(4) running the engine without oil. VRTC concluded that the sodium
silicate method was the best option. The other methods all had
significant problems related to their effectiveness, practical
limitations based on vehicle variations, and/or safety risks for
workers involved.
    Sodium Silicate solution is a mixture of water and sodium silicate
solids. When, after draining the oil, it is introduced into the engine
oil system, the oil pump is able to distribute the solution throughout
the engine oiling system. The heat of the operating engine then
dehydrates the solution leaving solid sodium silicate distributed
throughout the engine's oiled surfaces and moving parts. These solids
quickly abrade the bearings causing the engine to seize while damaging
the moving parts of the engine and coating all of the oil passages.
Only a small amount of sodium silicate remains in solution after
completion of the process. Many of the engine parts will be unaffected
by this process such as: intake and exhaust manifolds, bolt-on
components, and fuel system components.
    The agency reviewed available information about sodium silicate and
its properties, including a toxicology report and material safety data
sheets that are available in the docket. Sodium silicate is a commonly
used substance found in a wide range of products, including even
dishwasher detergent. The Food and Drug Administration lists it as a
GRAS (Generally Regarded as Safe) substance. It is used to treat
hazardous wastes, and is frequently used in the automotive industry as
a rust inhibitor in cooling systems, and to seal leaks in cooling
systems, head gaskets, and exhaust systems. Neither our review of
available information nor our discussions with other agencies (EPA and
OSHA) gave the agency reason to be concerned about the use of sodium
silicate as a significant health or environmental issue.
    It is important to note that there are many varieties of sodium
silicates, which are differentiated by weight ratio (the ratio of the
silicon dioxide and sodium oxide that make up the compound). The weight
ratios range from 1.0 to 3.5, with the higher ratio formulations being
less irritating for humans and less corrosive in an engine environment.
The material that dealers will be required to use under this rule

is at the higher end of the range--3.2--which means that it is far less
of a potential health or environmental issue than other lower range
formulations of the product.
    Like many household and workplace products, sodium silicate
solution can be harmful if swallowed or inhaled and can cause
irritation to the eyes or respiratory tract if used improperly.
Employers whose employees may come in contact with the material need to
provide them with adequate warning of these risks and appropriate
protection. Because sodium silicate has been used in automotive repair
for decades, it has long been present both in repair shops and in
vehicles at various stages of recycling. It is reasonable to assume,
therefore, that dealerships, scrap yards, and shredder facilities are
well equipped to take appropriate measures to protect their workers.
    Nor did we find reason to have significant concerns about the
environmental effects of sodium silicate in this application. The EPA
does not regulate it as a hazardous substance. Given the high weight
ratio of the formulation that will be used to disable the engines, the
risk of its causing corrosion is very low. In a report prepared for the
agency, a toxicology expert reviewed the process required by this rule
concluded: ``Provided adequate safety equipment is used by personnel in
dealerships and shredder operations, and dust control measures are
employed at shredder operations to minimize airborne particulates, the
use of sodium silicate solutions to disable automobile engines is not
expected to adversely affect occupationally exposed workers, nor are
sodium silicate particulates expected to harm the environment.'' \17\
---------------------------------------------------------------------------

    \17\ Expert Report of Margaret H. Whittaker, Ph.D., M.P.H.,
D.A.B.T., July 23, 2009.
---------------------------------------------------------------------------

    The agency has decided to implement this process in the rule,
requiring a dealer that receives an eligible trade-in vehicle under the
CARS program to disable that vehicle's engine prior to transferring the
vehicle to a disposal facility, and to provide a certification to the
agency that it has done so at the time the dealer submits its request
for reimbursement. Section 599.300(d)(2) specifies the requirement for
the dealer to disable the engine, Appendix B sets forth, in a simple
and precise manner, the procedures that the dealer must follow to
disable the engine and the workplace precautions that should be taken,
and Appendix A, certifications section, contains the required dealer
certification.
    The rule contains one exception to the general requirement that the
dealer disable the engine prior to transferring the vehicle to the
disposal facility. With regard to transactions that occurred prior to
the effective date of this rule, the dealer may have already
transferred the vehicle to a disposal facility, whether or not using a
salvage auction to transfer the vehicle. In that case, the rule permits
the dealer to locate the vehicle at the disposal facility and either
disable the engine at that location or, if the vehicle, including the
engine block and drive train (unless the transmission, drive shaft, and
rear end are sold separately), has already been crushed or shredded, to
obtain proof, in the form of the affidavit, from the disposal facility
that the crushing or shredding has occurred. Section 599.300(e)
implements this exception. The agency is making this allowance only to
accommodate dealers who, rather than waiting for the final rule to be
issued as the agency had advised, proceeded to conduct transactions
that were otherwise completely in accordance with this final rule.
Dealers should note that all other requirements of this rule, except
for the disposal facility certifications, apply to these transactions.
    Although there was not time to provide notice and an opportunity to
comment prior to issuance of this final rule, NHTSA did engage in
extensive outreach prior to its issuance with representatives of those
entities most knowledgeable about the subject matter. In those
discussions, the method NHTSA has now chosen for disabling the engine
block was identified as an option NHTSA might adopt. Several of the
organizations that participated in the discussions wrote to NHTSA
concerning that methodology. (These letters are in the docket.)
    In its letter of July 21, 2009, NADA contends that Congress did not
assign the task of making the engine inoperable to the dealers, and
that if required to accomplish this task the dealers should be
compensated. As discussed above, the agency interprets the CARS Act as
giving NHTSA substantial discretion in determining the manner in which
the vehicle, including the engine block, is to be transferred for
ultimate disposal. We believe that having the engine permanently
disabled at the dealer greatly reduces the risk of fraud and helps
ensure that the statute's environmental objectives will be achieved. We
believe that the dealers can disable the engine using the prescribed
method at very low cost, which we estimate to be no greater than $30.
It is possible that the total of the cost of performing this task and
the dealer's other costs related to the program may exceed the $50 the
dealer is allowed to retain from the trade-in's scrappage value to
cover its administrative costs. Nevertheless, we think the importance
of having this task performed by the dealer is sufficient reason to
require dealers to perform it. The CARS Act does not preclude NHTSA
from imposing costs necessary to the proper implementation of the
program.
    The Automotive Recyclers Association (ARA), which represents more
than 4,500 scrap and junk yards, wrote to NHTSA on July 20. ARA argues
that the use of sodium silicate will damage more than the engine block
and jeopardize the resale of parts such as pistons, cams, and cylinder
heads. ARA apparently believes that ``block'' has only one meaning,
i.e., the so-called ``short block,'' which generally refers only to the
cast iron or aluminum casting. As discussed above, NHTSA has defined
``engine block'' in a way that includes the engine parts that ARA
contends are not part of the block. NHTSA's definition is a reasonable
reading of the term ``block,'' and is consistent with a Congressional
purpose to prevent these fuel inefficient engines from ever being
operated again. Moreover, even if ARA's more restrictive reading of
``block'' were to prevail, the statute merely permits the disposal
facility to sell parts that are not part of the block; it does not
preclude NHTSA from requiring measures that might affect some of those
parts. ARA also contends that use of sodium silicate would contaminate
the recycling of motor oil. ARA seems not to understand that, under the
procedure set out in this rule, the dealer would drain the oil and
recycle it as it would normally do.
    The Institute of Scrap Recycling Industries (ISRI) represents,
among others, companies that shred vehicles that have previously been
crushed, either at their facility or at another disposal facility that
lacks a shredder. ISRI wrote to NHTSA on July 20. ISRI contends, based
on the judgment of its own director of environmental management, that
the use of sodium silicate could pose hazards to workers at shredders
and could cause certain metals to corrode, which could lead to excess
metal ions in storm water runoff, which in turn could make storm water
compliance more challenging. ISRI's contentions appear to be based on
an incorrect assumption as to the quantity of sodium silicate that
would be in each CARS trade-in vehicle; the procedure in most cases
will require no more than two quarts, while ISRI assumes three to four
quarts. ISRI asserts that a substantial portion of the material will

remain unreacted after the procedure, which is not the case.
    As discussed previously, NHTSA has no reason to believe that the
use of sodium silicate will expose any workers, including those at
shredders, to unreasonable risks. Those who manage the shredders will
simply need to require their employees to take the precautions
necessary to protect themselves from exposure to sodium silicate.
Presumably those who work at shredders are appropriately trained and
equipped to deal with hazards that may be related to the materials with
which they are working. More importantly, sodium silicate has been
present in motor vehicles for decades because of its common use in the
repair of mufflers, radiators--and engines. We assume that shredders
have taken note of the presence of the material before now. The use of
dust respirators would be advisable.
    With regard to the potential environmental risks, ISRI has not made
an effective case, and NHTSA has no reason to believe that any such
risk exists with regard to sodium silicate. The heart of ISRI's
argument is that the unreacted portion of the sodium silicate could
cause corrosion of metals during the shredding process. As noted above,
the formulation of sodium silicate used in the engine disablement
procedure is among those least likely to have a severe corrosive
effect. In fact, sodium silicate is used in vehicle cooling systems to
inhibit corrosion and is used in metal pipes to help prevent corrosion
that could increase lead levels in drinking water. In any event, the
agency has no reason to believe that the untoward environmental effects
that ISRI suggests may occur are a realistic possibility.
    The rule also requires that, prior to submitting a copy of the
title along with its request for reimbursement, the dealer clearly mark
the title on both sides with the words, ``Junk Automobile, CARS.gov.''
Section 599.300(d)(3) implements this requirement. The marking must be
placed so as not to obscure the vehicle owner's name, VIN, or other
writing. Having this special label or brand on the title will inform
all who subsequently handle it that the vehicle is a trade-in under
this program and should not be registered or titled for further use as
an automobile. State registration officials should pay special
attention to this marking on a title because it indicates that the
vehicle has been traded in under the CARS program with the
understanding that it would never again be used as an automobile in
this or any other country and is suitable only to be used for scrap or
parts.
3. Restrictions and Limitations on Transactions
    The CARS Act places some restrictions and limitations on qualifying
transactions under the program. Section 1302(c)(1)(A) of the Act
provides that a credit may be issued only for a qualifying transaction
that occurs between July 1, 2009 and November 1, 2009. Additionally,
section1302(c)(1)(B) provides that not more than 1 credit may be issued
for a single person and not more than 1 credit may be issued for the
joint registered owners of a single eligible trade-in vehicle, and
Sec.  1302(c)(1)(C) provides that only 1 credit issued under the
Program may be applied toward the purchase or qualifying lease of a
single new vehicle. Reading these requirements together, the agency has
determined that only one credit may be issued for each transaction
under the program and that once a person participates in a transaction,
whether as an individual owner or a joint-registered owner of either an
eligible trade-in vehicle, a new vehicle, or both, the person may not
receive another credit or be named in a transaction receiving a credit
under the program. These time and transaction limitations are specified
in sections 599.301(a), (b), and (c).
    One additional restriction, although not specifically stated in the
CARS Act, flows naturally from its operation. The agency has concluded
that in order to be entitled to reimbursement under the program, a
dealer must obtain clear title to the trade-in vehicle. Without clear
title, the dealer is not in a position to make the statutorily required
legal certification as to disposal of the trade-in vehicle that serves
as a prerequisite to reimbursement. Similarly, disposal facilities
would generally be unable to crush or shred the trade-in vehicle, as
required under the Act. The agency is informed that in many new car
purchases involving trade-in vehicles, the title to the trade-in
vehicle is not immediately available, either because it is held by a
lienholder or for some other reason. Nevertheless, the dealer proceeds
with the transaction, even though title is obtained and transferred to
the dealer at a later time. In some small percentage of such
transactions, the dealer is unable to obtain clear title to the trade-
in vehicle. Were that to occur under this program, the dealer would not
be able to ensure that the trade-in vehicle would be disposed of in
accordance with the Act. If NHTSA had already reimbursed the dealer for
the credit amount, NHTSA would have provided the credit under
circumstances beyond its authority under the statute and would have to
recover the funds. NHTSA does not believe it has a duty to fund any
such tentative deal and will not do so. Such a transaction does not
qualify for reimbursement under the program until the dealer obtains
the title (assuming that other eligibility criteria are met).
Consequently, the dealer may not submit an application for
reimbursement (discussed later in this document) until title to the
trade-in vehicle, free of all liens and encumbrances, is transferred to
it. If the title to the trade-in vehicle has been lost, the owner will
need to acquire duplicate title from the State. Section 599.301(d)
implements this requirement for transfer of the trade-in title.
    The agency recognizes that five States--Georgia, Maine, New
Hampshire, Rhode Island and Vermont--do not issue titles in
transactions involving some older vehicles that may be eligible for
trade-in under this program. In some of these States, liens may be
documented on the registrations. In these States and for these
vehicles, a current registration in the name of the person intending to
purchase the new vehicle, with no evidence of lien, and a bill of sale
conferring ownership of the trade-in vehicle from the purchaser of the
new vehicle to the dealer, serves in lieu of the title. Section
599.301(e) of the rule allows use of a current registration and bill of
sale in lieu of a title in these limited situations.

f. Requirements for Dealer Reimbursement (Sec. Sec.  599.302-304)

    As a precondition for reimbursing a dealer for a qualifying
transaction under the Program, NHTSA must have a means of verifying
that all the statutory conditions have been met. The rule requires a
dealer to submit an application for reimbursement to NHTSA, containing
the information and certifications necessary for NHTSA to do so. The
dealer must use its user account and password (discussed earlier) to
access a secure Web site and submit an application. The application
consists of an electronic transaction form (portion reproduced in
Appendix C) that requires inputting of information into relevant
fields, attaching electronic copies of supporting documents, and making
applicable certifications.
    The electronic form requires the dealer to input and attach several
pieces of information about the vehicle purchaser, trade-in vehicle,
and new vehicle. For a purchaser, a dealer must collect individual or
entity name, address and State or corporate identification number
(e.g., driver's license number, State identification

number, corporate tax identification number). This information is used
to verify the identity of the purchaser and to confirm no prior
participation in the program. For the trade-in vehicle and new vehicle,
the dealer must input characteristics of the vehicle (e.g., make,
model, model year, combined fuel economy, odometer reading, VIN, base
MSRP, engine and transmission description), and input and attach
evidence of vehicle insurance, registration and title. This information
is used to determine that each of these vehicles is eligible under the
Program and that the transaction meets the requirements for fuel
economy improvement.
    The dealer must also attach additional information to verify the
transaction, including a copy of the purchase contract or lease
agreement, the Manufacturer's Certificate of Origin or Manufacturer's
Statement of Origin, and certifications from the salvage auction or
disposal facility. The dealer must also complete and attach a Summary
of Sale/Lease and Certifications Form (Appendix A, certifications
section). This form conveys that the dealer has extended a CARS credit,
as well as any other rebate and manufacturer incentive, and has
disclosed the scrappage value of the trade-in vehicle to the purchaser.
The form also sets forth required dealer and purchaser certifications.
The dealer and purchaser must sign this form, attesting that each has
followed the requirements of the CARS Act and its implementing
regulations. In addition to the certifications on this form, the dealer
must also make required certifications listed on the electronic
transaction form. Finally, the agency requests that the dealer attach a
completed customer survey (Appendix D). This survey should be presented
to the customer for completion prior to the submission of an
application for reimbursement. The information in the survey is
important for the agency to meet its Congressional reporting
requirement. The requirements associated with dealer applications are
implemented in section 599.302.
    Upon receipt of the application, the agency will review the
application to determine whether it is complete and satisfies all the
requirements of a qualifying transaction. An application that meets the
requirements of the CARS Program will be approved for payment and the
agency will reimburse the dealer, by electronic transfer to the account
identified under the registration process in section 599.200.
    If an application is incomplete or otherwise fails to meet all the
requirements of for a qualifying transaction, the application will be
rejected and the submitter will be informed electronically of the
reason for rejection. A dealer may correct and resubmit a rejected
application for reimbursement without penalty, but the application will
be treated as a new application as of the date it is resubmitted. The
requirements concerning application review and payment of dealers are
implemented in sections 599.303 and 304.

g. Disposal of Trade-In Vehicles (Sec. Sec.  599.400-403)

    In addressing the trade-in vehicle disposal process (Section
III.b., Identification of Disposal Facilities), the agency decided to
include disposal facilities participating in the ELVS program
(currently numbering approximately 7,700) \18\ on the list of
facilities that may participate in the disposal process, subject to
certain conditions and certifications. As a condition of accepting
transfer of the trade-in vehicle, the disposal facility must certify
that it meets all applicable State and Federal laws and has a currently
active State license to operate as a disposal facility in that State.
The disposal facility must also certify that it will not sell, lease,
exchange, or otherwise dispose of the vehicle for use as an automobile
in the United States or any other country, that the vehicle will be
crushed or shredded onsite within six months after the date of its
transfer from the dealer, and that the vehicle will not be transferred
to another disposal facility prior to being crushed or shredded.
Finally, it must certify that it will update NMVTIS, within 7 days
after receiving the trade-in vehicle and again within 7 days after
crushing or shredding the vehicle. During the six-month period prior to
the required crushing or shredding of the trade-in vehicle, the
disposal facility may sell any parts of the vehicle other than the
engine block \19\ or drive train (unless the drive train is dismantled
and sold in parts). These requirements for disposal facilities are
implemented in sections 599.400(b) and 401 and Appendix E.
---------------------------------------------------------------------------

    \18\ The agency also decided to include certain disposal
facilities in the State of Maine, as explained earlier in this
document. The list does not include disposal facilities for the
territories. However, disposal facilities in the territories must
make the certification discussed in this paragraph.
    \19\ Section 599.102 contains a definition of the term ``engine
block.''
---------------------------------------------------------------------------

    The agency also has determined that, in lieu of direct transfer to
a disposal facility that appears on the agency's list, the dealer may
opt to transfer the trade-in vehicle to a salvage auction, subject to
certain conditions and certifications. As a condition of accepting
transfer of the trade-in vehicle, the salvage auction must certify that
it meets all applicable State and Federal laws and has a currently
active State license to conduct business as a salvage auction in that
State. The salvage auction must also certify that it will not sell,
lease, exchange, or otherwise dispose of the vehicle for use as an
automobile in the United States or any other country. It must certify
that it will limit participation in the auction of a trade-in vehicle
under the CARS program to a disposal facility that currently appears on
the agency's CARS list of disposal facilities and will obtain from the
disposal facility the same certification the disposal facility would
have provided upon direct transfer of a trade-in vehicle from the
dealer, and provide that certification to NHTSA. Finally, the salvage
auction must certify that it will update NMVTIS, within 3 days after
receipt of the trade-in vehicle from the dealer, or prior to auction,
whichever is earlier. These requirements for salvage auctions are
implemented in sections 599.400(c) and 402 and Appendix F. Finally, a
dealer receiving certifications from a disposal facility or a salvage
auction under these procedures is required to send them to the agency
within 7 days of receipt. Section 599.403 sets forth this requirement.
    It is important to note that the requirement under the CARS Act and
its implementing regulations for disposal facilities and salvage
auctions participating in the CARS program to update NMVTIS are
distinct from the monthly reporting requirement imposed on junk and
salvage yards pursuant to 49 U.S.C. 30504. In accordance with
regulations implemented by the Department of Justice at 28 CFR 25.56,
any individual or entity engaged in the business of operating a junk
yard or salvage yard within the United States shall provide, or cause
to be provided on its behalf, to the operator of NMVTIS and in a format
acceptable to the operator, an inventory of all junk automobiles or
salvage automobiles obtained in whole or in part by that entity in the
prior month. Updates by junk and salvage yards to NMVTIS under the CARS
Act and its implementing regulations, however, may fulfill this
separate NMVTIS monthly reporting requirement regarding such vehicles,
provided the updates contain all of the information required by the
Department of Justice under 28 CFR Part 25.
    The procedures described above allow a trade-in vehicle to be
transferred no more than two times subsequent to the

dealer taking title and prior to its crushing or shredding, either
directly to an entity currently appearing on the list of eligible
disposal facilities, where the vehicle must remain until it is crushed
or shredded, or to a salvage auction that subsequently transfers the
vehicle to that entity. This approach for the vehicle disposal process
is adopted in Subpart D and the required certifications appear in
Appendices E and F. Nothing in the rule proscribes further transfer of
a crushed vehicle to another disposal facility, including a shredder.

h. Enforcement (Sec. Sec.  599.500-517)

1. Prevention of Fraud
    The funds Congress provided for the CARS program are intended only
for qualifying transactions, and the requirement to destroy the trade-
in vehicle is an important part of the program. To protect the
taxpaying public, NHTSA will enforce the Act and this implementing
regulation strictly and will work with the DOT Inspector General, the
Department of Justice, and other government agencies to punish
violations and fraud.
    In the rule being issued today, NHTSA has taken a number of steps
to minimize the potential for fraud in the first instance. Among other
things, NHTSA has created a system that will provide payments only for
qualifying transactions under the CARS program. NHTSA will make
electronic funds transfers only to a registered dealer that has
submitted the required proof and made the required certifications under
penalty of law. The rule establishes a registration system to identify
licensed, franchised new vehicle dealers and to obtain the information
necessary for making secure electronic transfers. Only registered
dealers will have access to the payment system.
    At the time of the transaction at the dealer, a purchaser who is
trading in a vehicle will need to provide evidence of ownership and
proof that the vehicle has been continuously registered to that owner
and insured throughout the last 12 months. To prevent repeated use of
the program by the same person, the consumer will need to provide
evidence of identity and permit that information to become part of the
documentation of the transaction.
    We believe that dealers will have every reason to avoid entering
into a transaction for which the dealer cannot be reimbursed under this
program. Dealers will be expected to verify that the trade-in vehicle
and the vehicle being purchased or leased are both eligible under the
program. For both vehicles, the dealer will need to verify the combined
fuel economy. With regard to the trade-in vehicle, the dealer will need
to verify that the registration and insurance information is accurate
and that the vehicle is in drivable condition.
    Also, this rule provides measures to ensure that the trade-in
vehicle is never used again as an automobile in this or any other
country. These measures include requiring the dealer to disable the
trade-in vehicle's engine prior to transferring the vehicle, requiring
binding certifications from all entities involved in handling these
vehicles, updating the NMVTIS system at all crucial junctures to ensure
the availability of information about the vehicle's status, and
labeling the title of those vehicles as ``junk automobiles'' to defer
further sale of them as vehicles authorized for on-road use.
    The process set out in this rule includes obtaining certifications
from purchasers, dealers, salvage auctions, and disposal facilities
involved with CARS transactions. Those certifications will be made on
paper or electronic forms that make clear that there are significant
penalties for submitting false information. NHTSA, working with DOT's
Office of Inspector General and the Department of Justice, will
vigorously pursue actions against anyone it believes has submitted
false information in connection with this program.
    The agency will conduct inspections of records, premises and
vehicles to detect possible violations. Should NHTSA identify a
violation or fraud, we intend to enforce the CARS Act's requirements
vigorously. The public is encouraged to contact NHTSA if it suspects
any fraud is occurring in connection with the CARS program. Please call
1-866-CAR-7891, which is NHTSA's dedicated hotline for calls about the
program, Monday-Friday 8 a.m. to 10 p.m., TTY: 1-800-424-9153.
    Anyone who thinks illegal activity related to this program has
occurred may also call the Hotline of the Office of the Inspector
General (OIG) at the U.S. Department of Transportation. The toll free
number is 1-800-424-9071. The OIG Hotline is an important tool for
reporting allegations of fraud, waste, abuse, or mismanagement in the
Department's programs or operations, including the CARS program. The
Hotline is set-up to receive allegations in a variety of forms,
including by e-mail (hotline@oig.dot.gov), regular mail (DOT Inspector
General, P.O. Box 708, Fredericksburg, VA 22404), fax<PHONE_NUMBER>),
and the toll free number identified above. The OIG Hotline is open 24
hours a day, seven days a week.
    Those who think the Internet has been used to commit a crime
related to this program may also contact the Internet Crime Complaint
Center (IC3), a partnership among the Federal Bureau of Investigation
http://www.fbi.gov (FBI), the National White Collar Crime Center http:/
/www.nw3c.org/ (NW3C), and the Bureau of Justice Assistance http://
www.ojp.usdoj.gov/BJA/ (BJA). IC3's mission is to serve as a vehicle to
receive, develop, and refer criminal complaints regarding the rapidly
expanding arena of cyber crime. The IC3 gives the victims of cyber
crime a convenient and easy-to-use reporting mechanism that alerts
authorities of suspected criminal or civil violations.
2. Civil Penalties and Other Sanctions
    While NHTSA expects that the vast majority of activities under the
CARS Act will comply with it and the implementing regulations, NHTSA
intends to penalize violators. Section 1302(d)(6) of the CARS Act
requires NHTSA's regulations implementing the program to provide for
the enforcement of the penalties described in Section 1302(e). Section
1302(e)(1) provides that it shall be unlawful for any person to violate
any provision under this section (i.e., under the CARS Act) or any
regulations issued pursuant to the CARS Act.
    Section 1302(e)(2) provides that any person who commits a violation
described in Section 1302(e)(1) shall be liable to the United States
Government for a civil penalty of not more than $15,000 for each
violation, and that the Secretary shall have the authority to assess
and compromise such penalties and to require from any entity the
records and inspections necessary to enforce this program. In
determining the amount of the civil penalty, the severity of the
violation and the intent and history of the person committing the
violation shall be taken into account.
    As authorized by Section 1302(e)(2) of the CARS Act, which grants
NHTSA the authority to require from any entity the records and
inspections necessary to enforce this program, NHTSA will use
information gathering mechanisms comparable to those it currently
employs under other statutes the agency administers.
    In the rule being issued today, NHTSA has established
administrative procedures to assess civil penalties quickly and fairly
once a likely violation is identified. These procedures are set forth
at subpart E. Under these procedures, any person may report an apparent
violation to NHTSA. When a

report of an apparent violation is received, or when an apparent
violation has been detected by any person working for NHTSA, the matter
may be investigated or evaluated by NHTSA enforcement personnel. If
NHTSA enforcement personnel believe that a violation may have occurred,
a report of the investigation will be prepared and sent to the NHTSA
Chief Counsel for review. The Chief Counsel will review the report to
determine if there is sufficient information to establish a likely
violation. If the Chief Counsel determines that a violation has likely
occurred, the Chief Counsel may issue a Notice of Violation to the
party, or make other enforcement recommendations, such as suspensions
or revocations. The alleged violator will have an opportunity to
present its views to NHTSA and reach a settlement of the civil penalty
case. If the alleged violator instead requests a hearing, the Chief
Counsel will forward a case file to a Hearing Officer, with a
recommended action. The Hearing Officer's functions are separate from
those of NHTSA's enforcement personnel and Chief Counsel, and the
Hearing Officer has no other responsibility, direct or supervisory, for
the investigation of cases referred for the assessment of civil
penalties.
    A party receiving the Notice of Violation may pay the proposed
penalty or decline the Notice of Violation. If the Notice of Violation
is timely declined, the regulations provide for a hearing prior to a
final assessment of a penalty by the Hearing Officer. Failure to either
pay the proposed penalty on the Notice of Violation or request a
hearing within 30 days of the date shown on the Notice of Violation
will result in a finding of default, and NHTSA will assess the civil
penalty in the amount proposed on the Notice of Violation without a
hearing.
    The hearings will be held at the headquarters of the U.S.
Department of Transportation in Washington, DC, either telephonically
or in person, before a Hearing Officer. Unlike another statute
administered by NHTSA, the CARS Act does not require a hearing on the
record before assessing civil penalties. For example, Section 508(a)(1)
of the Motor Vehicle Information and Cost Savings Act (formerly 15
U.S.C. 2008 (1994), and now codified at 49 U.S.C. 32911), provided that
if fuel economy calculations indicate that any manufacturer has
violated specified provisions, the Secretary shall commence a
proceeding. Section 508(a)(2) of the Cost Savings Act then went on to
state that, if on the record after opportunity for agency hearing, the
Secretary determines that such manufacturer has violated provisions,
the Secretary shall assess the penalties provided for under subsection
(b). This provision was recodified at 49 U.S.C. 32911(b) and 32912 so
as to clearly provide for ``an opportunity for a hearing on the
record'' to decide whether a violation has been committed. In view of
the language in the Cost Savings Act, NHTSA adopted regulations
establishing formal Administrative Procedure Act (APA) adjudicative
hearing procedures before an administrative law judge (ALJ), which may
result in civil penalties. See 49 CFR Part 511, Adjudicative
Procedures. In view of the absence of any statutory requirement in the
CARS Act for an on-the-record hearing or, in fact, for any hearing, as
set forth in the regulatory text, the formal APA adjudication
procedures set forth at 5 U.S.C. 554, 556 and 557 do not apply to civil
penalty proceedings under the CARS Act and NHTSA need not employ an ALJ
as the hearing officer. There is no right to discovery. In receiving
evidence, the Hearing Officer is not bound by strict rules of evidence.
At the conclusion of the hearing, the Hearing Officer assesses civil
penalties, if appropriate. If civil penalties are in excess of
$100,000.00, the Hearing Officer's decision may be appealed to the
NHTSA Administrator.
    NHTSA also has the authority under the CARS Act to compromise
(i.e., settle) civil penalties, and parties receiving notices of
violations will be given the opportunity early in the process to settle
with the Government, should they choose to do so. Finally, we note that
these penalties are not exclusive. For example, violators could also
face penalties under the False Claims Act or criminal prosecution.

V. Confidential Information and Privacy

    Administration of the CARS program requires that information about
qualifying transactions be submitted to NHTSA from different entities
and individuals. Some of this data is sensitive. As discussed below,
NHTSA is amending its existing regulations governing confidential
treatment, found at 49 CFR Part 512, to address these issues.

a. Determinations of the Confidentiality of CARS Data Based on FOIA
Exemptions 4 and 6

    The confidentiality of most CARS data is based on Freedom of
Information Act (FOIA) Exemptions 4 and 6, 5 U.S.C. 552(b)(4) and
(b)(6). FOIA Exemption 4 allows withholding of trade secrets and
commercial or financial information obtained from a person and
privileged or confidential. Under Exemption 4, the standard for
assessing the confidentiality of information that parties are required
to submit to the government is whether disclosure of the information is
likely to have either of the following effects: (1) To impair the
Government's ability to obtain necessary information in the future; or
(2) to cause substantial competitive harm to the competitive position
of the person from whom the information was obtained.\20\ National
Parks & Conservation Ass'n v. Morton, 498 F.2d 765, 770 (D.C. Cir.
1974). Because of the nature of the information at issue here, our
discussion is limited to examination of the competitive harm test even
though other standards could justify non-disclosure.\21\
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    \20\ The term ``trade secrets'' has been narrowly defined by the
Court of Appeals for the District of Columbia Circuit for the
purpose of FOIA Exemption 4 as encompassing a secret, commercially
valuable plan, formula, process, or device that is used for the
making, preparing, compounding, or processing of trade commodities
and that can be said to be the end product of either innovation or
substantial effort. Public Citizen Health Research Group v. FDA, 704
F.2d 1280, 1288 (D.C. Cir. 1983).
    \21\ Impairment to the Government's ability to obtain the
information in the future serves as an independent basis for
withholding under Exemption 4. See National Parks, 498 F.2d at 770.
Case law also strongly points to the availability of a ``third
prong'' protecting other governmental interests, such as compliance
and program effectiveness. See Critical Mass v. NRC, 975 F.2d 871,
879 (D.C. Cir. 1992) (noting that Exemption 4 can protect interests
beyond impairment and competitive harm. See also 9 to 5 Org. for
Women Office Workers v. Bd. of Governors of the Fed. Res. System,
721 F.2d 1, 11 (1st Cir. 1983) (adopting a third prong under
Exemption 4 based on the government's interest in administrative
efficiency and effectiveness).
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    Under the competitive harm test of National Parks, there must be
actual competition and a likelihood of substantial competitive injury
from disclosure of the information. CNA Financial Corp. v. Donovan, 830
F.2d 1132, 1152 (D.C. Cir. 1987). This standard requires only that
disclosure of information would ``likely'' cause competitive harm.
McDonnell Douglas Corp. v. U.S. Dept. of the Air Force, 375 F.3d 1182,
1187 (D.C. Cir. 2004); see also Occidental Petroleum Corp. v. SEC, 873
F.2d 325, 341 (D.C. Cir. 1989). Under this test, the agency assesses
the likelihood of substantial injury; it does not make that assessment
and then further balance it against other matters such as the public's
interest in the information. Public Citizen Health Research Group v.
FDA, 185 F.3d 898, 904-05 (D.C. Cir. 1999).
    Exemption 6 of the FOIA addresses the withholding of ``personnel
and

medical files and similar files the disclosure of which would
constitute a clearly unwarranted invasion of personal privacy'' to the
subject of those files. See 5 U.S.C. 52(b)(6). The first inquiry in
examining withholding information under Exemption 6 is a determination
of what data is at stake and the nature and degree of any privacy
interest in the information. The second step is an assessment of the
public interest in disclosure. Under Exemption 6, the concept of public
interest is limited to shedding light on the government's performance
of its statutory duties. U.S. Dep't of Justice v. Reporters Comm. for
Freedom of the Press, 489 U.S. 749, 773 (1989); National Ass'n of
Retired Federal Employees v. Horner, 879 F.2d 873, 879 (D.C. Cir.
1989); cf., DOD v. FLRA, 510 U.S. 487, 497 (1994). Finally, there is a
weighing of the privacy interests at stake against the public interest
in disclosure. Ripkis v. Dept. Hous. and Urban Dev., 746 F.2d 1, 3
(D.C. Cir. 1984).
    Data submitted under the CARS program includes personally
identifying information for consumers. This information falls within
the classification of ``similar files'' under Exemption 6. In Center
for Auto Safety v. National Highway Traffic Safety Administration, 809
F. Supp. 148 (D.D.C. 1993), an advocacy group sought the release of
names and addresses of consumers filing complaints directly to NHTSA.
The Court found that the complainant's names and addresses invoked a
privacy interest within the scope of Exemption 6 and ruled in favor of
non-disclosure because there was no ascertainable public interest of
sufficient significance or certainty to outweigh a complainant's
privacy right justifying release of the information.

b. Approach--Class Determinations vs. Individual Assessments

    As employed in the agency's regulations governing confidentiality
determinations (49 CFR Part 512), class determinations declare that
certain categories of data submitted to NHTSA will be kept
confidential. Under this approach, submitters need not request
confidential treatment; such treatment is given automatically.
    NHTSA is promulgating class determinations on the confidentiality
of some categories of CARS data. In adopting this approach, we have
considered a number of matters. First, NHTSA may adopt categorical
rules to manage the tasks Congress assigned to it under the CARS Act.
Public Citizen v. Mineta, 427 F. Supp. 2d 7, 13 (D. D.C. 2006). Second,
we have identified and assessed the alternatives. One alternative is to
require entities to submit individual requests for confidentiality for
each transaction. A second alternative is presumptive categorical
determinations of confidentiality. A third alternative is to adopt
binding class determinations. Concerns involved in considering these
alternatives include providing clear direction to CARS participants,
predictability, consistency and efficiency.
    Requiring individual requests for confidential treatment of CARS
data would force thousands of entities, almost all of them small
businesses, to submit requests for confidentiality for each
transaction. These entities, having virtually no experience in making
such requests, would likely submit a wide variety of documents written
in different ways. Some requests would meet the applicable standards
for confidential treatment and some would not. Given our past
experience with first-time requests, many would not meet procedural
requirements, would be denied and would then be followed by
reconsideration requests. The burden imposed on entities requesting
confidential treatment and on the agency would be substantial. NHTSA
already receives about 550 requests for confidential treatment every
year. Adding the expected number of CARS submissions to the existing
confidentiality request workload would overwhelm the agency and lead to
a huge backlog. Consistent with our practice, information would be
withheld until NHTSA decides if it is confidential. Disclosure of
rightfully public information would be delayed and the public interest
would be impacted, particularly if other agency resources were diverted
to address the backlog. In view of the foregoing, requiring and
processing individual requests for confidential treatment for CARS data
is not a viable alternative.
    A second alternative is presumptive class determinations.
Presumptive determinations are a middle ground between ad hoc
determinations and binding class determinations. Unlike the latter,
that operate automatically, presumptive determinations require
submitters to provide abbreviated written requests and supporting
justifications. In our view, presumptive confidentiality determinations
are inappropriate for CARS. While presumptive determinations would
provide direction to NHTSA's clients and avoid inconsistent
confidentiality determinations, they would not eliminate individual
confidentiality requests and the significant burdens those requests
would impose.
    A third alternative is to proceed by binding rule. Binding
determinations for CARS data are appropriate mechanisms to address the
confidentiality of sensitive data. CARS reports are submitted by
filling out standardized electronic templates that are used repeatedly.
Each manufacturer, dealer and salvage yard files the same reports as
other CARS participants in the same category.
    Binding determinations provide direction to the regulated
community. They also assure consistency and avoid resource burdens,
particularly for small businesses. They conserve agency resources that
would otherwise be used to respond to thousands of individual
confidentiality requests and allow more rapid disclosure of information
that is not confidential. This is in the public interest. In view of
the foregoing, NHTSA believes that binding determinations are
appropriate.

c. Class Determinations Based on FOIA Exemption 4

    FOIA Exemption 4 covers commercial or financial information
obtained from a person that is privileged or confidential. 5 U.S.C.
552(b)(4). The terms ``commercial'' or ``financial'' information are
given their ordinary meanings. Public Citizen Health Research Group v.
FDA, 704 F.2d 1280, 1290 (D.C. Cir. 1983). Some CARS data meet this
element of Exemption 4.\22\ Second, the information must be obtained
from a ``person.'' The word ``person'' encompasses business
establishments, including corporations. See FlightSafety Servs. v.
Dep't of Labor, 326 F.3d 607, 611 (5th Cir. 2003). CARS data from
manufacturers, dealers and salvage auctions and disposal facilities is
obtained from persons within the meaning of Exemption 4. Third, the
information must be confidential. As noted above, the National Parks
Court declared that commercial or financial data is ``confidential''
for the purposes of Exemption 4 if disclosure of the information would
be likely to cause substantial competitive harm to the competitive
position of the person from whom the information was obtained. 498 F.2d
at 770. Actual competitive harm need not be demonstrated; actual
competition and a likelihood of substantial competitive injury is all
that need be shown. CNA Financial Corp. v.

Donovan, 830 F.2d 1132, 1152 (D.C. Cir. 1987).
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    \22\ See the discussion of the categories of CARS information
below. Those discussions demonstrate that the submitters have a
commercial interest in the data.
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    We now turn to certain categories of information that
manufacturers, dealers and disposal facilities must submit under the
CARS rule.

d. Data Submitted to NHTSA for the CARS Program

1. Manufacturer Data
    Vehicle manufacturers will provide NHTSA with both dealer and
vehicle information needed for administration of the CARS program. The
dealer information is used to identify dealers and determine if they
are authorized new car dealers for a particular make. Manufacturers
will provide NHTSA with information about the vehicles they
manufacture.
2. Dealer Information and Transaction Data
    New car dealers participating in the CARS program must submit