[Federal Register Volume 80, Number 182 (Monday, September 21, 2015)]
[Proposed Rules]
[Pages 56944-56959]
[FR Doc No: 2015-23164]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 578

[Docket No. NHTSA-2015-0090]
RIN 2127-AL38

Civil Penalty Procedures and Factors

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

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: NHTSA is proposing a rule prescribing procedures for the
assessment of civil penalties and for

interpreting the factors for determining the amount of a civil penalty
or the amount of a compromise under the National Traffic and Motor
Vehicle Safety Act (Safety Act), to implement the Moving Ahead for
Progress in the 21st Century Act (MAP-21). MAP-21 states that the
Secretary of Transportation shall determine the amount of civil penalty
or compromise under the Safety Act. MAP-21 identifies mandatory factors
that the Secretary must consider and discretionary factors for the
Secretary to consider as appropriate in making such determinations.
MAP-21 further directs NHTSA to issue a rule providing an
interpretation of these penalty factors.
    NHTSA is also proposing to update our regulations to conform it to
the statutory civil penalty maximums enacted in MAP-21, the increased
penalties and damages for odometer fraud, and the statutory penalty for
knowingly and willfully submitting materially false or misleading
information to the Secretary after certifying the same information as
accurate.

DATES: Submit comments on or before November 20, 2015.

ADDRESSES: You may submit comments to the docket number identified in
the heading of this document by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting
comments.
     Mail: Docket Management Facility, U.S. Department of
Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590.
     Hand Delivery or Courier: West Building Ground Floor, Room
W12-140, 1200 New Jersey Avenue SE., between 9 a.m. and 5 p.m. Eastern
Time, Monday through Friday, except Federal holidays.
     Fax:<PHONE_NUMBER>.
    Regardless of how you submit your comments, please be sure to
mention the docket number of this document.
    You may call the Docket at<PHONE_NUMBER>.
    Note that all comments received will be posted without change to
http://www.regulations.gov, including any personal information
provided. Please see the Privacy Act discussion below.
    Privacy Act: Anyone is able to search the electronic form of all
comments received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review DOT's
complete Privacy Act Statement in the Federal Register published on
April 11, 2000 (65 FR 19477-78).

FOR FURTHER INFORMATION CONTACT: Thomas Healy, Office of the Chief
Counsel, NHTSA, 1200 New Jersey Ave. SE., West Building, W41-211,
Washington, DC 20590. Telephone:<PHONE_NUMBER> Fax:<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Executive Summary
II. Civil Penalties under the Safety Act Prior to MAP-21
III. NHTSA's Proposed Procedures for Its Assessment of Civil
Penalties under the Safety Act
    A. Initiation of the Proceeding by NHTSA
    B. Election of Process by the Respondent
    C. Administrative Appeal
    D. The Proposed Procedures Comport With Due Process
IV. NHTSA's Proposed Interpretation of the MAP-21 Civil Penalty
Factors
    A. General Penalty Factors
    B. Discretionary Penalty Factors
V. Codification of Other MAP-21 Penalty Changes in 49 CFR part 578
VI. Rulemaking Analyses and Notices

I. Executive Summary

    The Moving Ahead for Progress in the 21st Century Act (MAP-21 or
the Act) was signed into law on July 6, 2012 (Pub. L. 112-141). Section
31203(a) of MAP-21 amends the civil penalty provision of the Safety
Act, as amended and recodified, 49 U.S.C. chapter 301, by requiring the
Secretary of Transportation to consider various factors in determining
the amount of a civil penalty or compromise. This statutory language
confirms that the Secretary has the power to assess civil penalties.
The factors that the Secretary shall consider in determining the amount
of civil penalty or compromise are codified in amendments to 49 U.S.C.
30165(c). Section 31203(b) of MAP-21 requires the Secretary to issue a
final rule, in accordance with 5 U.S.C. 553, providing an
interpretation of the penalty factors set forth in MAP-21. Public Law
112-141, section 31203, 126 Stat. 758 (2012). This NPRM proposes an
interpretation of the civil penalty factors in 49 U.S.C. 30165(c) for
NHTSA to consider in determining the amount of civil penalty or
compromise and proposes procedures for NHTSA to assess civil penalties
under a delegation from the Secretary, 49 CFR 1.95 and 1.81. The
proposed procedure for assessing civil penalties and the proposed
interpretation of the civil penalty factors is intended to apply only
to matters falling under section 30165.
    This rulemaking also sets forth NHTSA's amendment of its penalty
regulation, 49 CFR 578.6, to conform it to the statutory language and
maximums enacted in MAP-21.

II. Civil Penalties Under the Safety Act Prior to MAP-21

    Prior to the enactment of MAP-21, 49 U.S.C. 30165(c) stated, ``In
determining the amount of a civil penalty or compromise, the
appropriateness of the penalty or compromise to the size of the
business of the person charged and the gravity of the violation shall
be considered.'' 49 U.S.C. 30165(c) (2011). The statute did not specify
who would assess the civil penalties. However, the statute specifically
stated that ``The Secretary of Transportation may compromise the amount
of a civil penalty imposed under this section.'' 49 U.S.C. 30165(b)(1).
Construing these provisions, NHTSA, through the authority delegated
from the Secretary of Transportation pursuant to 49 CFR 1.50 (2011),
compromised civil penalties, but did not assess them.
    NHTSA has in fact compromised, or settled, many civil penalty
actions.\1\ However, if the action was not compromised, NHTSA had
relied on the U.S. Department of Justice to initiate an action in U.S.
District Court for the assessment of civil penalties.\2\
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    \1\ See, e.g., ``Civil Penalty Settlement Amounts,'' 1999-2012,
at http://www.nhtsa.gov/Laws+&+Regulations/Civil_Penalties_1999-2012; ``Civil Penalty Settlement Amounts'' at http://www.nhtsa.gov/Laws+&+Regulations/Civil+Penalty+Settlement+Amounts.
    \2\ See, e.g., United States v. General Motors Corp., 385
F.Supp. 598 (D.D.C. 1974), vacated and remanded by United States v.
General Motors Corp., 527 F.2d 853 (D.C. Cir. 1975); United States
v. General Motors Corp., 417 F.Supp. 933 (D.D.C. 1976), judgment
remanded by United States v. GM, 565 F.2d 754 (D.C. Cir. 1977); and
United States v. Snyder Computer Sys., Inc. dba Wildfire Motors, No.
2:13-cv-311 (S.D. Ohio) (filed April 3, 2013).
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    Congress has revised the language in 49 U.S.C. 30165(c), which now
states in part that ``In determining the amount of a civil penalty or
compromise under this section, the Secretary of Transportation shall
consider the nature, circumstances, extent, and gravity of the
violation.'' The plain language of the statute indicates Congress'
intent that the Secretary of Transportation is authorized to determine
the amount of a civil penalty and to impose such penalty.
    NHTSA's reading of the statute, as amended, is supported by the
legislative history. For example, on July 29, 2011, Senator Pryor
introduced S. 1449, the Motor Vehicle and Highway Safety Improvement
Act of 2011 (Mariah's Act). This bill contained language listing the
factors that the Secretary of Transportation shall consider in
determining the amount of civil penalty

or compromise.\3\ According to a Senate report, the provisions of S.
1449 were enacted into law, with modifications, as title I of division
C of the Moving Ahead for Progress in the 21st Century Act (MAP-21, 126
Stat. 732), which was signed into law on July 6, 2012.\4\ The Report of
the Senate Committee on Commerce, Science, and Transportation made
clear that NHTSA was authorized to impose ``fines.'' For example, it
stated, ``Before issuing a fine, the Secretary would be required to
consider several relevant factors in setting the level of the fine,
including the nature of the violation; the severity of the risk of
injury; the actions taken by the person charged to identify,
investigate, or mitigate the violation; the nature of the defect or
noncompliance; and the size of the company.'' \5\ The use of the words
``issuing a fine'' indicates that the monetary amount is due and owing
to the public treasury. See, e.g., Black's Law Dictionary (10th ed.
2014) (defining ``fine'' as ``[a] pecuniary criminal punishment or
civil penalty payable to the public treasury.'').
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    \3\ Motor Vehicle and Highway Safety Improvement Act of 2011 or
``Mariah's Act''. S. 1449, 112 Cong. (2011) at p. 65-66.
    \4\ U.S. Senate, Report of the Committee on Commerce, Science,
and Transportation on S. 1449, S. Report No. 112-261 at 6-7.
    \5\ Id. at 14-15.
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    NHTSA historically has considered the gravity of the violation when
compromising civil penalties. Consideration of the gravity of the
violation has involved a variety of factors, depending on the case. The
factors that have been important or germane have included the nature of
the violation, the nature of a safety-related defect or noncompliance
with Federal Motor Vehicle Safety Standards (``FMVSS''), the safety
risk, the number of motor vehicles or items of motor vehicle equipment
involved, the delay in submitting a defect and noncompliance
information report, the information in the possession of the violator
regarding the violation, other actions by the violator, and the
relationship of the violation to the integrity and administration of
the agency's programs.\6\
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    \6\ See, e.g., April 5, 2010 Demand Letter for TQ10-002
available at ftp://ftp.nhtsa.dot.gov/TQ10-002/TQ10-002%20Resumes/TQ10-002%20Closing%20Resume/TQ10-002%20Sticky%20Pedal%20Demand%20Letter%204-5-10%20FINAL%20Signed.pdf
(In discussing the gravity of Toyota's apparent violations as severe
and potentially life-threatening, the agency stated, ``Toyota
determined that the accelerator pedals installed on a significant
number of vehicles sold and leased in the United States contained a
safety-related defect as evidenced by, among other things, its
issuance of a Technical Instruction and production improvement
information on September 29, 2009, in 31 countries across Europe.
Toyota knew or should have known that the same or substantially
similar accelerator pedals were installed on approximately 2.3
million vehicles sold or leased in the United States, and continued
to sell and lease vehicles equipped with a defective accelerator
pedal for months after this determination. Nonetheless, Toyota Motor
Corporation affirmatively-and inexplicably-instructed Toyota Motor
Engineering and Manufacturing North America, Inc. not to implement
an Engineering Change Instruction in the U.S. market. Toyota gave
this instruction despite the fact that it had issued similar or
identical instructions in Canada and Europe and knew that the very
same issues that prompted the European and Canadian actions existed
on a significant number of vehicles in the United States. The result
of these decisions by Toyota was to expose millions of American
drivers, passengers and pedestrians to the dangers of driving with a
defective accelerator pedal that could result, in Toyota's words, in
`sticky accelerator pedals, sudden rpm increase and/or sudden
vehicle acceleration.' '').
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    In the past, NHTSA also has considered the size of the violator
when compromising civil penalties. With respect to civil penalties
involving small businesses, among the factors that have been considered
are the violator's ability to pay, including its ability to pay over
time, and any effect on the violator's ability to continue to do
business.

III. NHTSA's Proposed Procedures for Its Assessment of Civil Penalties
Under the Safety Act

    MAP-21 vests authority, responsibility, and discretion in the
Secretary to impose civil penalties for violations of the Safety Act
and regulations thereunder. Pursuant to 49 CFR 1.95, this authority has
been delegated to NHTSA. The amendments to MAP-21 providing the
Secretary with the authority to assess civil penalties do not establish
procedures for the assessment of those penalties. In order to ensure
that NHTSA's assessment of civil penalties, as delegated to NHTSA by
the Secretary, comports with the constitutional requirements of due
process, NHTSA is proposing to adopt informal procedures to assess
civil penalties pursuant to 49 U.S.C. 30165.\7\ These procedures
include three options for the respondent \8\ to elect after NHTSA makes
an initial demand for civil penalties: (1) Pay the demanded penalty;
(2) provide an informal response, or (3) request a hearing.
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    \7\ NHTSA notes that the proposed procedures for assessing civil
penalties in this NPRM do not, are not intended to, displace the
agency's existing practice of compromising civil penalties. See,
e.g., Consent Order Between NHTSA and FCA US LLC (July 24, 2015),
available at http://www.safercar.gov/rs/chrysler/pdfs/FCA_Consent_Order.pdf ; Consent Order Between NHTSA and Forest
River, Inc. (July 8, 2015), available at http://www.safercar.gov/staticfiles/safercar/pdf/Forest-River-consent-order.pdf; Consent
Order Between NHTSA and Spartan Motors, Inc., available at http://www.safercar.gov/staticfiles/safercar/pdf/Spartan-consent-order.pdf
(July 8, 2015).
    \8\ For the sake of consistence and clarity, we will refer to
the person charged with liability for a civil penalty for a
violation of the Safety Act or regulations as the ``respondent'' in
this notice and in the proposed rule.
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    In developing the procedures for conducting a hearing to impose
civil penalties, NHTSA considered its past practices with respect to
civil penalty actions related to odometer fraud under 49 U.S.C. chapter
327, proceedings under 49 CFR part 599, as well as its other procedures
relating to making determinations related to violations of the Safety
Act and the practices of other operating administrations of the
Department of Transportation.
    The procedures for a hearing to assess civil penalties need not
take all the formal trappings of a trial in a court of law. The Supreme
Court has recognized that due process is flexible and that the
procedural protections needed to ensure due process differ as the
situation demands. See Mathews v. Eldridge, 424 U.S. 319, 334 (1976).
An Agency has discretion to formulate its procedures. Vermont Yankee
Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435
U.S. 519, 524 (1978).
    NHTSA does not believe that a formal adjudication is required in
order to impose civil penalties for a violation of the Safety Act or
regulations thereunder. If Congress wanted a proceeding with a formal
adjudication on the record, it would have made that intent clear.
Indeed, in another statute administered by NHTSA, such a procedure is
required to determine certain violations. See e.g. 49 U.S.C. 32911(a)
(stating that ``The Secretary of Transportation shall conduct a
proceeding, with an opportunity for a hearing on the record, to decide
whether a person has committed a violation.''). As NHTSA does not
believe that a formal adjudication falling within the purview of
sections 5, 7, and 8 of the Administrative Procedure Act (5 U.S.C. 554,
556, 557) is required, NHTSA is adopting informal procedures that
provide respondents with administrative due process, that will allow
for the efficient enforcement of statutes administered by NHTSA, and
that will lead to the creation of a record in each individual
proceeding that can form the basis for judicial review without a new
trial of all the facts and issues in the district court. NHTSA
anticipates that judicial review of orders assessing civil penalties
issued pursuant to these procedures will consist of the ``arbitrary,
capricious, an abuse of discretion, or otherwise not in

accordance with law'' standard prescribed by 5 U.S.C. 706(2)(A).

A. Initiation of the Proceeding by NHTSA

    Under the proposed procedures, NHTSA, through the Assistant Chief
Counsel for Litigation and Enforcement, will begin a civil penalty
proceeding by serving a notice of initial demand for civil penalties on
a person (i.e. respondent) charging him or her with having violated one
or more laws administered by NHTSA. This notice of initial demand for
civil penalties will include a statement of the provision(s) which the
respondent is believed to have violated as of the date of the initial
demand for civil penalties; a statement of the factual allegations upon
which the proposed civil penalty is being sought; notice of the maximum
amount of civil penalty for which the respondent may be liable as of
that date for the violations alleged; notice of the amount of the civil
penalty proposed to be assessed; a description of the manner in which
the respondent should make payment of any money to the United States; a
statement of the respondent's right to present written explanations,
information or any materials in answer to the charges or in mitigation
of the penalty; and a statement of the respondent's right to request a
hearing and the procedures for requesting a hearing. The notice will
include a statement that failure: (i) To pay the amount of the civil
penalty; (ii) to elect to provide an informal response; or (iii) to
request a hearing within 30 days of the date of the initial demand
authorizes the NHTSA Chief Counsel, without further notice to the
respondent, to find the facts to be as alleged in the initial demand
for civil penalties and to assess an appropriate civil penalty.
    The notice will also include documentation that the Assistant Chief
Counsel for Litigation and Enforcement relied on to determine the
alleged violations of a statute or regulation administered by NHTSA
giving rise to liability for civil penalties or the amount of civil
penalties in the initial demand.\9\ This notice may be amended at any
time prior to the entry of an order assessing a civil penalty,
including amendment to the amount of civil penalties demanded. The
notice of initial demand for civil penalties may contain proposed civil
penalties for multiple unrelated violations. The maximum civil penalty
stated in the notice of initial demand for civil penalties will reflect
whether the violations in the notice are related or unrelated.
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    \9\ This documentation may be redacted if permitted or required
by Federal law.
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    NHTSA proposes that the Assistant Chief Counsel for Litigation and
Enforcement or his or her designee serve the initial demand for civil
penalties via U.S mail, overnight or express courier service,
facsimile, electronic mail, or personally. NHTSA proposes that service
of the initial demand for civil penalties or order by a person's duly
authorized representative (including, but not limited to, a person's
agent for accepting service designated pursuant to 49 CFR part 551)
constitutes service upon that person.

B. Election of Process by the Respondent

    Within 30 calendar days of the date on which the initial demand for
civil penalties is issued, the respondent must pay the amount of the
civil penalty, elect to provide an informal response, or request a
hearing. If the respondent does not pay the amount of the civil
penalty, elect to provide an informal response, or request a hearing
within the 30 day limit, NHTSA proposes to construe this as a waiver of
the respondent's right to appear and contest the allegations. This
would authorize the Chief Counsel, without further notice to the
respondent, to find the facts to be as alleged in the initial demand
for civil penalties and to assess an appropriate civil penalty.
1. Payment of the Civil Penalty Proposed
    The respondent may elect to pay the civil penalty that was proposed
in the initial demand. If the respondent elects to make the payment,
NHTSA will direct the respondent as to how to make the payment,
including any installment plan permitted.
2. Election of Informal Response
    If the respondent to the initial demand for civil penalties elects
to make an informal response, that person must submit to the Chief
Counsel and to the Assistant Chief Counsel for Litigation and
Enforcement in writing any arguments, views or supporting documentation
that dispute or mitigate that person's liability for, or the amount of,
civil penalties to be imposed. The respondent must submit these
materials within 30 days of the date on which the initial demand for
civil penalties is issued. A person who has elected to make an informal
response to an initial demand for civil penalties may also request a
conference with the Chief Counsel. Because traveling to the Department
of Transportation's headquarters in Washington, DC may be burdensome
for some smaller companies responding to an initial demand for civil
penalties, we are proposing to allow a person responding to an initial
demand for civil penalties to request that the conference with the
Chief Counsel be conducted by telephone. If the respondent elects to
request a conference with the Chief Counsel and fails to attend the
conference without good cause shown, the Chief Counsel may, without
further notice to the respondent, find the facts to be as alleged in
the initial demand for civil penalties and assess an appropriate civil
penalty. This decision will constitute final agency action and no
appeal to the Administrator will be permitted.
    The Assistant Chief Counsel for Litigation and Enforcement would be
permitted to provide rebuttal information to the Chief Counsel,
replying to the information submitted by the respondent. After
consideration of the submissions of the Assistant Chief Counsel and the
Respondent, including any relevant information presented at a
conference, the Chief Counsel may dismiss the initial demand for civil
penalties in whole or in part. If the Chief Counsel does not dismiss
the demand in its entirety, he or she may issue an order assessing a
civil penalty. For civil penalty orders exceeding $1,000,000, the
decision of the Chief Counsel becomes a final decision 20 days
(including weekends and holidays) after it is issued unless the
respondent files a timely appeal with the Administrator. If the
respondent elects not to appeal to the Administrator within the 20-day
period, then the Chief Counsel's decision is a final decision subject
to judicial review. Civil penalty orders of $1,000,000 or less are
final upon issuance by the Chief Counsel and subject to judicial review
at that time.
    Any assessment of civil penalties will be made only after
considering the nature, circumstances, extent and gravity of the
violation. As appropriate, the determination will include consideration
of the nature of the defect or noncompliance; knowledge by the
respondent of its obligations under 49 U.S.C. chapter 301; the severity
of the risk of injury posed by the defect or non-compliance; the
occurrence or absence or injury; the number of motor vehicles or items
of motor vehicle equipment distributed with the defect or
noncompliance; actions taken by the respondent to identify,
investigate, or mitigate the condition; the appropriateness of such
penalty in relation to the size of the business of the respondent,
including the potential for undue adverse economic impacts; and other
relevant and appropriate factors.

    NHTSA intends for this informal response process to be less rigid
than the procedures for conducting a hearing discussed below. For
example, a respondent that elects an informal response would be
permitted to bring in employees or other representatives (within
reason) to explain facts and circumstances relating to the events
described in the initial demand for civil penalties or any other
factors that the respondent believes are relevant. A respondent may
find it beneficial to be able to present the views of employees or
representatives to the Chief Counsel in person, considering that if the
respondent elects a hearing the presentation of witness testimony will
be committed to the discretion of the Hearing Officer. Further, NHTSA
envisions that any written materials that the respondent provides as
part of an informal response would not have the formality of legal
briefs submitted pursuant to the hearing procedures in this proposal
and would allow for flexibility in the respondent's response. It is
also NHTSA's intent that the conference between the Chief Counsel and
the respondent consist of informal discussion and would not take on the
structure of an adversarial proceeding.
3. Election of a Hearing
    If, in response to an initial demand for civil penalties, a person
requests a hearing, the Chief Counsel will designate a Hearing Officer
to preside over the hearing. The Hearing Officer appointed by the Chief
Counsel may have no other responsibility, either direct or supervisory,
for the investigation or enforcement of the violation for which the
initial demand for civil penalties relates and will not have any prior
connection to the case.
    The Hearing Officer will have the authority to conduct the
proceeding and arrange for NHTSA and the person served with the initial
demand for civil penalties to submit additional documents for the
administrative record, regulate the course of the hearing, and take
notice of matters that are not subject to a bona fide dispute and are
commonly known in the community or are ascertainable from readily
available sources of known accuracy.
    With respect to the type of hearing proposed, NHTSA believes that
most civil penalty determinations can be made based solely on written
submissions because in the vast majority of instances, the evidence to
establish, or refute, a respondent's liability for civil penalties and
facts for the application of the penalty factors will consist of
documents. Therefore, we are proposing that the Hearing Officer will
have the discretion to conduct an in-person hearing and allow witness
testimony only if an in-person hearing is needed, in the opinion of the
Hearing Officer, to resolve any factual and/or legal issues that cannot
be easily resolved by written submissions.
    If the respondent elects to request a hearing, the respondent must
submit to the Assistant Chief Counsel for Litigation and Enforcement
two complete copies via hand delivery, use of an overnight or express
courier service, facsimile, or electronic mail containing: (1) A
detailed statement of factual and legal issues in dispute; and (2) all
statements and documents supporting the respondent's case within 30
days of the date on which the initial demand for civil penalties is
issued. If the respondent wishes for the hearing to be conducted in-
person, the respondent must also submit the basis for its request for
the in-person hearing (i.e. why an in-person hearing and witness
testimony are necessary to resolve any factual or legal issues present
in the case), a list of witnesses that the respondent wishes to call at
the hearing, a description of each witness's expected testimony, a
description of the factual basis for each witness's expected testimony,
and whether the respondent will arrange to have a verbatim transcript
prepared at its own expense.\10\ These materials must be provided
within 30 days of the date on which the initial demand for civil
penalties is issued. If an in-person hearing is requested, the Hearing
Officer will notify the respondent and NHTSA in writing of his or her
decision to grant or deny a request for an in-person hearing.
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    \10\ NHTSA has determined that in order to minimize the expense
of conducting a hearing, a verbatim transcript of any in-person
hearing will not normally be prepared. Any person requesting an in-
person hearing in response to an initial demand for civil penalties
may arrange for a transcript to be created at its own expense if an
in-person hearing is granted.
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    If an in-person hearing is granted and the respondent fails to
attend the in-person hearing without good cause shown, the Hearing
Officer is authorized, without further notice to the respondent, to
find the facts as alleged in the initial demand for civil penalties and
to assess an appropriate civil penalty. This decision will constitute
final agency action and no appeal to the Administrator will be
permitted.
    NHTSA may supplement the record with additional information,
including disclosure of proposed witnesses and their expected
testimony, prior to the hearing. A copy of such information will be
provided to the respondent no later than 3 days before the hearing.
These procedures allow the Hearing Officer to focus the inquiry at the
hearing and eliminate the need for discovery because both the agency
and respondent will be in possession of the documents on which the
other party intends to rely and appraised of all expected witness
testimony. Therefore, we propose that discovery not be permitted in any
hearing conducted pursuant to these procedures.
    The administrative record of an in-person hearing shall contain the
notice of initial demand for civil penalties and any supporting
documentation that accompanied the initial demand; any documentation
submitted by the respondent, any further documentation submitted by the
Agency as a reply to the request for a hearing or presented at an in-
person hearing; any additional materials presented at an in-person
hearing; the transcript of the hearing (if any); and any other
materials that the Hearing Officer determines are relevant. In
considering the admission of evidence into the administrative record,
the Hearing Officer will not be bound by the Federal Rules of Evidence.
    In the event that the Hearing Officer determines that witness
testimony is not necessary, the Assistant Chief Counsel for Litigation
and Enforcement will submit a written reply with the agency's responses
to the arguments and documents included in the respondent's request for
a hearing. With respect to the administrative record where there is no
in-person hearing, NHTSA proposes that all documents contained in and
with its initial demand, any response thereto, or any reply
automatically would be part of the administrative record. In
considering the admission of evidence into the administrative record,
the Hearing Officer will not be bound by the Federal Rules of Evidence.
    At the hearing, NHTSA will have the evidentiary burden of
establishing the violation giving rise to civil penalties under 49
U.S.C. 30165. In the event that the hearing is conducted by written
submission, the Hearing Officer will make his or her decision based on
NHTSA's initial demand for civil penalties and any included documents,
the respondent's request for a hearing and any included documents,
NHTSA's reply (including any documents) to the arguments and documents
provided in the respondent's request for a hearing, and any other
evidence in the record.
    In the event that the Hearing Officer grants an in-person hearing,
NHTSA will first present any evidence the agency believes is relevant
for the administrative record. If permitted by the Hearing Officer,
NHTSA may call

witnesses. No later than three days prior to the hearing NHTSA will
provide a list of witnesses that it expects to call at the hearing, a
description of the witnesses' expected testimony and the factual basis
for the expected testimony to the respondent. At the close of NHTSA's
presentation of evidence, the respondent will have the right to respond
to and rebut evidence and arguments presented by NHTSA. The respondent
or his or her counsel may offer relevant information including
testimony (if permitted) regarding the respondent's liability for civil
penalties and the application of the penalty factors. At the close of
the respondent's presentation of evidence, the Hearing Officer may
allow the presentation of rebuttal evidence by NHTSA. The Hearing
Officer, in his or her discretion, may allow the respondent to reply to
any such rebuttal evidence submitted.
    In the event that the Hearing Officer grants an in-person hearing,
the Assistant Chief Counsel for Litigation and Enforcement and the
respondent may present arguments on the issues involved in the case
after all the evidence has been presented.
    A respondent challenging the amount of a civil penalty proposed to
be assessed will have the burden of proving the mitigating
circumstances. For example, a respondent challenging the amount of a
civil penalty on the grounds that the penalty would have an undue
adverse economic impact would have the burden of proving that undue
impact. It is appropriate that the burden is placed on the respondent
as the respondent is more likely to have relevant financial evidence
than NHTSA.
    After the hearing is completed, the Hearing Officer will issue a
written decision based solely on the administrative record, including
any testimony offered at an in-person hearing. Any assessment of civil
penalties will be made only after considering the nature,
circumstances, extent and gravity of the violation. As appropriate, the
determination will include consideration of the nature of the defect or
noncompliance, knowledge by the respondent of its obligations under 49
U.S.C. chapter 301, the severity of the risk of injury, the occurrence
or absence or injury, the number of motor vehicles or items of motor
vehicle equipment distributed with the defect or noncompliance, actions
taken by the respondent to identify, investigate, or mitigate the
condition, the appropriateness of such penalty in relation to the size
of the business of the respondent, including the potential for undue
adverse economic impacts, and other relevant and appropriate factors,
including those discussed below.
    For civil penalties exceeding $1,000,000, the decision of the
Hearing Officer will become a final decision 20 calendar days
(including weekends and holidays) after it is issued, unless the
respondent files a timely appeal with the Administrator before the
expiration of 20 days. If the respondent elects not to appeal to the
Administrator within the 20-day period, then the Hearing Officer's
decision is a final decision subject to judicial review. Civil penalty
orders of $1,000,000 or less are final upon issuance by the Hearing
Officer and subject to judicial review at that time.

C. Administrative Appeal

    In matters where the civil penalties assessed by either the Chief
Counsel or the Hearing Officer exceed $1,000,000, the proposed
regulations provide an opportunity for the respondent aggrieved by the
order assessing a civil penalty to file an appeal with the
Administrator.
    The Administrator will affirm the order unless the Administrator
finds that the order was unsupported by the record as a whole; based on
a mistake of law; or that new evidence, not available at the hearing,
is available. Appeals that fail to allege and provide supporting basis
for one of these grounds of appeal will be summarily dismissed. If the
Administrator finds that the order was unsupported, based on a mistake
of law, or that new evidence is available, then the Administrator may
assess or modify a civil penalty; rescind the initial demand for civil
penalty; or remand the case for new or additional proceedings. In the
absence of a remand, the decision of the Administrator in an appeal is
a final agency action.
    If the Administrator affirms the order assessing civil penalties
and the respondent does not pay the civil penalty in the manner
specified by the order within thirty (30) days after the
Administrator's decision on appeal is issued, the matter may be
referred to the Attorney General with a request that an action to
collect the penalty be brought in the appropriate United States
District Court pursuant to 49 U.S.C. 30163(c). See also 28 U.S.C. 1331.
A party aggrieved by a final order from the Administrator or a final
order from the Hearing Officer or Chief Counsel, may file a civil
action in United States District Court seeking review of the final
order pursuant to the Administrative Procedure Act. See 5 U.S.C. 706.

D. The Proposed Procedures Comport With Due Process

The proposed procedures for adjudicating civil penalties are consistent
with the requirements for due process established by the U.S. Supreme
Court in Mathews v. Eldridge. In that case the Court stated that three
factors should be considered when determining what procedures must be
provided before the government deprives a person of a property
interest. The factors that the Court considers are:

the private interest that will be affected by the official action; .
. . the risk of an erroneous deprivation of such interest through
the procedures used, and the probable value, if any, of additional
or substitute procedural safeguards; and . . . the Government's
interest, including the function involved and the fiscal and
administrative burdens that the additional or substitute procedural
requirement would entail. See Eldridge, 424 U.S. at 335.

    In examining whether the private interest at stake requires
additional procedural safeguards, the Supreme Court looks to the
``degree of potential deprivation,'' and the gravity of the hardship
borne by an entity wrongfully deprived of a property interest. See id.
at 341, 343. In determining whether additional procedures would add to
the fairness and reliability of the proceeding, the courts consider the
nature of the issue at controversy. See id. Factors that the court
considers include the nature of the evidence to be presented, such as
whether the evidence consists mainly of documents or whether the
resolution of the controversy hinges on the credibility of witness
testimony. See id. at 343-44. When considering the government interest
at stake, the courts examine the administrative burdens created by
additional procedures and other societal costs that additional
procedures would impose. See id. at 347.
    NHTSA believes that the private interest at stake in a proceeding
to assess civil penalties, while substantial for some of the entities
NHTSA regulates, does not rise to the level of hardship for which the
Supreme Court has required heightened procedural protections.\11\ In
many cases in which NHTSA has settled civil penalty liability with
motor vehicle manufacturers, the total civil penalty amount was a small
percentage of the

company's annual revenue.\12\ NHTSA will also apply its Civil Penalty
Policy Under the Small Business Regulatory Enforcement Fairness Act
when assessing a civil penalty against a small entity.\13\ As NHTSA
considers a business' size in determining the penalty amount under this
policy, the relative magnitude of the potential deprivation of the
interest of smaller entities subject to civil penalties is
minimized.\14\
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    \11\ See Goldberg v. Kelly, 397 U.S. 254 (1970) (holding that
because the wrongful deprivation of a person's interest in welfare
would deny the person of their means for subsistence, due process
required a pre-termination evidentiary hearing).
    \12\ Compare Consent Order between NHTSA and General Motors Co.
p. 4 (May 16, 2014) (agreeing to a civil penalty of $35 million and
a penalty of $7,000 per day for failure to fully respond to a
Special Order), available at http://www.nhtsa.gov/staticfiles/communications/pdf/May-16-2014-TQ14-001-Consent-Order.pdf, with
General Motors Co., 2013 Annual Report p. 12 (2014) (showing $155
billion in revenue for the 2013 Fiscal Year). Compare Consent Order
between NHTSA and American Honda Motor Co. p. 5 (Dec. 29, 2014)
(agreeing to a civil penalty of $70 million), available at http://www.nhtsa.gov/staticfiles/communications/pdf/Honda-consent-order-12292014.pdf, with Honda Motor Co., 2013 Annual Report p. 4 (2014)
(showing $83 billion in revenue for the 2013 Fiscal Year). Cf.
Consent Order between NHTSA and Ferrari S.p.A. and Ferrari North
America p. 4 (agreeing to pay a civil penalty of $3.5 million),
available at http://www.nhtsa.gov/staticfiles/communications/pdf/2014-10-31-Ferrari-Consent-Order.pdf.
    \13\ See NHTSA, Civil Penalty Policy Under the Small Business
Regulatory Enforcement Fairness Act, 62 FR 37115 (July 10, 1997).
    \14\ See e.g. Settlement Agreement between NHTSA and Chapman
Chevrolet LLC p. 2 (Oct. 1, 2014) (Chapman Chevrolet LLC agreed to
pay a civil penalty of $50,000), available at http://www-odi.nhtsa.dot.gov/acms/cs/jaxrs/download/doc/UCM465636/INOT-AQ12002-60546.pdf; Settlement Agreement between NHTSA and Gwinnett Place
Nissan p. 2 (Nov. 24, 2014) (Gwinnett Place Nissan agreed to pay a
civil penalty of $110,000), available at http://www-odi.nhtsa.dot.gov/acms/cs/jaxrs/download/doc/UCM469202/INOT-AQ12003-61067.pdf; Consent Order between NHTSA and Ricon Corporation (Feb.
6, 2015) (agreeing to pay a civil penalty of $1.75 million)
available at http://www.nhtsa.gov/staticfiles/communications/pdf/Ricon-NHTSA-Consent-Order-02-2015.pdf.
---------------------------------------------------------------------------

    NHTSA does not believe that additional procedural safeguards beyond
what are proposed in today's NPRM would add to the fairness and
reliability of civil penalty determinations under the proposed
procedures. NHTSA believes that most of the evidence regarding a
person's liability for civil penalties will consist of documents such
as test reports, documents submitted in compliance with 49 CFR part 579
subpart C, Reporting of Early Warning Information; technical service
bulletins and other notices submitted in compliance with 49 CFR 579.5,
Notices, Bulletins, Customer Satisfaction Campaigns, Consumer
Advisories and Other Communications; vehicle owner questionnaires
submitted by consumers; and documents and responses submitted in
response to Information Requests, General Orders, and Special Orders.
This is the type of evidence for which witness demeanor and credibility
is not at issue and a hearing conducted by written submission is
appropriate. See Pinnacle Armor, Inc. v. United States, 648 F.3d 708,
717 (9th Cir. 2011) (stating that, in the context of an administrative
adjudication, documentary ``evidence lends itself to the kind of paper
review a district court might engage in on a motion for summary
judgment and does not require a full trial.''). In the rare instance in
which liability for civil penalties hinges on issues that involve
witness credibility, the Hearing Officer will have the discretion to
permit witness testimony and cross examination.
    NHTSA also does not believe that additional procedures for
conducting administrative discovery before the hearing would increase
the reliability or fairness of a hearing to determine liability for
civil penalties. See Eldridge, 424 U.S. at 343. Under the proposed
hearing procedures, the Assistant Chief Counsel for Litigation and
Enforcement must attach to the notice of initial demand for civil
penalties any documentation that he or she relied on in determining an
alleged violation of a statute or regulation that NHTSA contends gives
rise to liability for civil penalties or the amount of civil penalties
in the initial demand. If NHTSA later wishes to present materials not
provided with the initial demand, NHTSA must provide these materials to
the respondent. These procedures will ensure that the respondent
receives all of the materials that the agency will rely on to establish
a violation giving rise to civil penalties and to support its demanded
amount.\15\ Furthermore, most of the materials relevant to the
respondent's liability for civil penalties will have been obtained by
NHTSA from the respondent in the first instance (either through the
reporting requirements in 49 CFR part 579 or during the course of an
investigation by the Agency), or will otherwise be publicly available.
Therefore, we propose that discovery not be permitted in any hearing
conducted pursuant to these procedures.
---------------------------------------------------------------------------

    \15\ NHTSA may rely on documents not provided to the respondent
with the initial demand for civil penalties to rebut statements made
on behalf of the respondent.
---------------------------------------------------------------------------

    Finally, the procedures for determining civil penalties proposed in
today's NPRM will advance the government's interest in increasing the
administrative efficiency of the resolution of civil penalty cases. The
proposed procedures will also serve society's interests by allowing
NHTSA to more efficiently and effectively enforce the Safety Act and
regulations prescribed thereunder by allowing the Agency to assess
civil penalties without protracted proceedings. Fair, timely, and
efficient imposition of civil penalties on persons who violate the
statutes administered by NHTSA and regulations prescribed thereunder
should lead to greater compliance with those statutes and regulations.
    Moreover, a final order on civil penalties would be a final agency
action subject to judicial review under the Administrative Procedure
Act, 5 U.S.C. 701 et seq. A challenge to a NHTSA civil penalty final
order could be brought in the appropriate United States district court
and subject to all of the procedural rights and protections afforded by
federal courts in reviewing final agency orders. See e.g. 49 U.S.C.
30163(c), 28 U.S.C. 1331. We anticipate that the standard of review in
the U.S. district court would be the ``arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law'' standard
prescribed by 5 U.S.C. 706(2)(A).\16\
---------------------------------------------------------------------------

    \16\ The statute providing the Secretary the authority to assess
civil penalties does not expressly state the standard of review for
actions challenging an order assessing civil penalties. NHTSA
believes that the ``arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law'' standard prescribed by 5
U.S.C. 706(2)(A) would apply. See Snyder Computer Systems, Inc. v.
U.S. Dep't of Transp., 13 F.Supp.3d 848, 859-60 (S.D. Ohio 2014)
(stating that because the Safety Act did specify a standard of
review for recall remedy orders, the arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law standard of
reviewed applied).
---------------------------------------------------------------------------

    For these reasons NHTSA believes that the procedures in today's
NPRM would provide due process to persons alleged to have violated the
statutes or regulations administered by NHTSA and regulations
prescribed thereunder.

IV. NHTSA's Proposed Interpretation of the MAP-21 Civil Penalty Factors

    The MAP-21 legislation sets forth civil penalty factors to be
considered by NHTSA in determining the amount of a civil penalty or
compromise. The general provision in the amended section 30165(c) calls
for consideration of the nature, circumstances, extent and gravity of
the violation. The term ``violation'' refers to any violation addressed
by 49 U.S.C. 30165(a)(1), (2), (3), or (4). The Secretary has the
discretion to consider the totality of the circumstances surrounding a
violation. The Secretary also has the discretion to consider the
factors in 30165(c)(1) through (9) as appropriate.
    Our proposed approach to interpreting the MAP-21 factors is

based on the language of the statute, informed NHTSA's years of day-to-
day enforcement experience, and the manner in which NHTSA has
compromised penalties in the past. In this section, we begin with our
proposed interpretation of the general penalty factors: the nature,
circumstances, extent, and gravity of the violation. Then we provide
our proposed interpretation for each of the nine discretionary penalty
factors. For each of the nine discretionary penalty factors, we provide
an explanation of NHTSA's proposed interpretation, which may include
specific examples of how the interpretation may be applied in practice,
and/or illustrative scenarios and issues.

A. General Penalty Factors

    First, we propose to interpret the nature of the violation to mean
the essential, fundamental character or constitution of the
violation.\17\ This includes, but is not limited to, the nature of the
defect (in a case involving a safety-related defect) or noncompliance.
It also includes what the violation involves, for example, a violation
of the Early Warning Reporting (``EWR'') requirements, the failure to
provide timely notification of a safety-related defect or
noncompliance, the failure to remedy, the lack of a reasonable basis
for certification to the FMVSS, the sale of unremedied vehicles, or the
failure to respond fully and timely to a request issued under 49 U.S.C.
30166.
---------------------------------------------------------------------------

    \17\ See e.g. Webster's Third New International Dictionary
Unabridged, 1507 (defining nature as ``the essential character or
constitution of something''); Black's Law Dictionary (10th ed. 2014)
(defining nature as ``[a] fundamental quality that distinguishes one
thing from another; the essence of something.'').
---------------------------------------------------------------------------

    Second, we propose to interpret the circumstances of the violation
to mean the context, facts, and conditions having bearing on the
violation.\18\ This would include whether the manufacturer has been
recalcitrant or shown disregard for its obligations under the Safety
Act.
---------------------------------------------------------------------------

    \18\ See e.g. Ehlert v. United States, 422 F.2d 332, 335 (9th
Cir. 1970) (Duniway, J. concurring) (stating that Webster's New
International Dictionary, 2d ed. defines ``circumstances'' as
``conditions under which an act or event takes place or with respect
to which a fact is determined.'').
---------------------------------------------------------------------------

    Third, we propose to interpret the extent of the violation to mean
the range of inclusiveness over which the violation extends including
the scope, time frame, and/or the degree of the violation.\19\ This
includes the number of violations and whether the violations are
related or unrelated.
---------------------------------------------------------------------------

    \19\ See e.g. Webster's Third New International Dictionary
Unabridged, 805 (defining extent as the ``range (as of inclusiveness
or application) over which something extends.'').
---------------------------------------------------------------------------

    Finally, we propose to interpret the gravity of the violation to
mean the importance, significance, and/or seriousness of the
violation.\20\
---------------------------------------------------------------------------

    \20\ See e.g. Black's Law Dictionary (10th ed. 2014) (defining
``gravity'' as ``[s]eriousness of harm, an offense, etc., as judged
from an objective, legal standpoint.''); Webster's Third New
International Dictionary Unabridged, 993 (defining gravity as the
importance, significance, or seriousness).
---------------------------------------------------------------------------

B. Discretionary Penalty Factors

    The penalty factors listed in 49 U.S.C. 30165(c)(1) through (9) are
discretionary factors that NHTSA may apply in making civil penalty
amount determinations and determining the amount of compromise.
1. The nature of the Defect or Noncompliance
    We propose to interpret ``the nature of the defect or
noncompliance,'' 49 U.S.C. 30165(c)(1), to mean the essential,
fundamental characteristic or constitution of the safety-related defect
or noncompliance. This is consistent with the dictionary definition of
``nature.'' \21\ ``Defect'' is defined at 49 U.S.C. 30102(a)(2) as
including ``any defect in performance, construction, a component, or
material or a motor vehicle or motor vehicle equipment.''
``Noncompliance'' under this statutory factor includes a noncompliance
with an FMVSS, as well as other violations subject to penalties under
49 U.S.C. 30165. Noncompliance may include, but is not limited to,
noncompliance(s) with the FMVSS; the manufacture, sale, or importation
of noncomplying motor vehicles and equipment or defective vehicles or
equipment covered by a notice or order regarding the defect; failure to
certify or have a reasonable basis to certify that a motor vehicle or
item of motor vehicle equipment complies with applicable motor vehicle
safety standards; failure to maintain records as required; failure to
provide timely notification of defects and noncompliances with the
FMVSS; failure to follow the notification procedures set forth in 49
U.S.C. 30119 and regulations prescribed thereunder; failure to remedy
defects and noncompliances pursuant to 49 U.S.C. 30120 and regulations
prescribed thereunder; making safety devices and elements inoperative;
failure to comply with regulations relating to school buses and school
bus equipment; failure to comply with Early Warning Reporting
requirements; and/or the failure to respond to an information request,
Special Order, General Order, subpoena or other required reports.\22\
---------------------------------------------------------------------------

    \21\ See e.g. Webster's Third New International Dictionary
Unabridged, 1507 (defining nature as ``the essential character or
constitution of something''); Black's Law Dictionary (9th ed. 2009)
(defining nature as ``[a] fundamental quality that distinguishes one
thing from another; the essence of something.'').
    \22\ The foregoing list is intended to be illustrative only, and
is not exhaustive.
---------------------------------------------------------------------------

    When considering the nature of a safety-related defect or
noncompliance with an FMVSS, NHTSA may examine the conditions or
circumstances under which the defect or noncompliance arises, the
performance problem, and actual and probable consequences of the defect
or noncompliance. When considering the nature of the noncompliance with
the Safety Act or a regulation promulgated thereunder, NHTSA may
examine the circumstances surrounding the violation.
    For example, NHTSA has a process by which a manufacturer can
petition for an exemption from the notification and remedy requirements
of 49 U.S.C. 30118 and 30120 on the basis that a noncompliance is
inconsequential to motor vehicle safety. 49 U.S.C. 30118(d) and
30120(h), 49 CFR part 556. If a petition for inconsequential
noncompliance is granted, then it could serve as mitigation under this
factor.
    When considering the nature of the noncompliance with the Safety
Act or a regulation promulgated thereunder, NHTSA also may examine the
circumstances surrounding the violation.
2. Knowledge by the Respondent of Its Obligations Under This Chapter
    We propose to interpret the ``knowledge by the . . . [respondent]
of its obligations under this chapter,'' 49 U.S.C. 30165(c)(2), as all
knowledge, legal and factual, actual, presumed and constructive, of the
respondent of its obligations under 49 U.S.C. chapter 301. We propose
that if a respondent is other than an individual, including but not
limited to a corporation or a partnership, then the knowledge of an
employee or employees of that non-natural person be imputed to that
non-natural person. We propose to interpret the knowledge of an agent
as being imputed to a principal. We propose that a non-natural person,
such as a corporation, with multiple employees will be charged with the
knowledge of each employee, regardless of whether the employees have
communicated that knowledge among each other or to a decision maker for
the non-natural person.
    Under this proposed interpretation of ``knowledge,'' delays
resulting from or caused by a manufacturer's internal

reporting processes would not excuse a manufacturer's failure to report
a defect or noncompliance to NHTSA. Further, NHTSA may examine the
actions of a respondent in assessing or imputing knowledge. For
instance, NHTSA may examine such factors as whether the respondent is a
new manufacturer or whether the respondent began producing parts to
remedy a particular defect or noncompliance with an FMVSS prior to
reporting the defect or noncompliance with an FMVSS to NHTSA. NHTSA may
also consider communication between the respondent (e.g. a
manufacturer) and other entities such as dealers and owners in
determining its knowledge of a violation. NHTSA may consider the
information NHTSA provided to the respondent, including notification of
apparent noncompliance, information on the recall process, information
on governing regulations, and information on consequences of failure to
comply with regulatory requirements. NHTSA may also consider whether
the respondent has been proactive in discerning other potential safety
issues, and whether it has attempted to mislead the agency or conceal
its full information, including its knowledge of a defect or
noncompliance.
3. The Severity of the Risk of Injury
    We propose to interpret the ``severity of the risk of injury,'' 49
U.S.C. 30165(c)(3), as the gravity of exposure to potential injury,
including the potential for injury or death of drivers, passengers,
other motorists, pedestrians and others. The severity of the risk
includes the likelihood of an injury occurring and the population group
exposed.
    The severity of the risk of injury may depend on the component of a
motor vehicle that is defective or noncompliant with an FMVSS. For
example, a defective steering component or airbag system may pose a
more severe risk of injury than a defective door handle. A grant of a
petition for inconsequential noncompliance could serve as a mitigation
under this penalty factor.
4. The Occurrence or Absence of Injury
    We propose to interpret ``the occurrence or absence of injury,'' 49
U.S.C. 30165(c)(4), as whether injuries or deaths have occurred as a
result of a defect, noncompliance, or other violation of the Safety Act
or implementing regulations. NHTSA may also take into consideration
allegations of death or injury.
    In evaluating this factor, it is important to emphasize that the
absence of deaths or injuries is not dispositive of the existence of a
defect or noncompliance or a person's liability for civil penalties.
5. The Number of Motor Vehicles or Items of Motor Vehicle Equipment
Distributed With the Defect or Noncompliance
    We propose to interpret ``the number of motor vehicles or items of
motor vehicle equipment distributed with the defect or noncompliance,''
49 U.S.C. 30165(c)(5), as referring to the total number of vehicles or
items of motor vehicle equipment distributed with the defect or
noncompliance with an FMVSS, or the percentage of the vehicles or items
of motor vehicle equipment of the subject population with the defect or
noncompliance with an FMVSS. That is, NHTSA may look not only at
absolute numbers of motor vehicles or items of motor vehicle equipment;
rather it may also take into account the portion of a vehicle or
equipment population with the defect, noncompliance, or other
violation. NHTSA may also consider the percentage of motor vehicles
that contain the defect or noncompliance with an FMVSS as a percentage
of the manufacturer's total annual production of vehicles if multiple
make, model and model years of motor vehicles are affected by the
defect or noncompliance with an FMVSS.
    Further, NHTSA may choose to make a distinction between those
defective or noncompliant products distributed in commerce that
consumers received, and those defective or noncompliant products
distributed in commerce that consumers have not received.
6. Actions Taken by the Respondent To Identify, Investigate, or
Mitigate the Condition
    We propose to interpret ``actions taken by the . . . [respondent]
to identify, investigate, or mitigate the condition,'' 49 U.S.C.
30165(c)(6), as actions actually taken, the time frame when those
actions were taken, what those actions involved and how they
ameliorated or otherwise related to the condition, what remained after
those actions were taken, and the speed with which the actions were
taken. We propose that in assessing actions, a failure to act may also
be considered.
    For example, under this factor, NHTSA may consider whether the
respondent has been diligent in endeavoring to meet the requirements of
the Safety Act and regulations thereunder, including whether it has set
up processes to facilitate timely and accurate reporting, and whether
it has audited such systems. NHTSA may also consider the measures taken
by the respondent to proactively bring potential issues to NHTSA's
attention, including whether the respondent timely informed NHTSA of
potential violations of Safety Act requirements. NHTSA may also take
into account the investigative activities the respondent has undertaken
relating to the scope of the issues identified by NHTSA. NHTSA may also
consider whether the respondent delayed in reporting a safety-related
defect or a noncompliance with an FMVSS (a person is required to file a
49 CFR part 573 report not more than five working days after a person
knew or should have known of the safety-related defect or noncompliance
with an FMVSS). NHTSA may also consider whether the respondent remedied
the safety-related defect or noncompliance with an FMVSS in a timely
manner. For instance, NHTSA may consider whether a recall remedy is
adequate, whether a new safety-related defect or noncompliance with an
FMVSS arose from an inadequate recall remedy, and whether the scope of
a recall was adequate. NHTSA may also consider the timeliness and
adequacy of the respondent's communications with owners and dealers.
7. The Appropriateness of Such Penalty in Relation to the Size of the
Business of the Respondent, Including the Potential for Undue Adverse
Economic Impacts
    NHTSA takes the Small Business Regulatory Enforcement Fairness Act
of 1996 (SBREFA) into account prior to setting any final penalty
amount.\23\ This policy will continue in light of the MAP-21 amendments
to 49 U.S.C. 30165(c).
---------------------------------------------------------------------------

    \23\ See NHTSA, Civil Penalty Policy Under the Small Business
Regulatory Enforcement Fairness Act, 62 FR 37115 (July 10, 1997).
---------------------------------------------------------------------------

    Upon a showing by a violator that it is a small entity, NHTSA will
make appropriate adjustments to the proposed penalty or settlement
amount (although certain exceptions may apply).\24\ If the respondent
wants to assert it is a ``small business,'' NHTSA expects the
respondent to provide the supporting documentation. Under the Small
Business Administration's standards, an entity is considered ``small''
if it is independently owned and operated and is not dominant in its
field of operation,\25\ or if its number of employees or the dollar
volume of its business does not exceed specific thresholds.\26\ For
example, 13 CFR

Section 121.201 specifically identifies as ``small entities''
manufacturers of motor vehicles, passenger car bodies, and motor homes
that employ 1,000 people or less, manufacturers of motor vehicle parts
and accessories that employ 750 people or less, automobile and tire
wholesalers that employ 100 people or less, new car dealers that employ
200 people or less and automotive parts and accessory stores with
annual receipts less than $15 million.
---------------------------------------------------------------------------

    \24\ Id. at 37117.
    \25\ Id. at 37115.
    \26\ Id.
---------------------------------------------------------------------------

    NHTSA interprets ``potential for undue adverse economic impacts,''
49 U.S.C. 30165(c)(7), as the possibility that payment of a civil
penalty amount would affect the ability of the respondent to continue
to operate. NHTSA may consider a respondent's ability to pay, including
in installments over time, and any effect of a penalty on that person's
ability to continue to do business. The ability of a business to pay a
penalty is not dictated by its size. In some cases for small
businesses, however, these two considerations may relate to one
another. NHTSA may consider relevant financial factors such as
capitalization, liquidity, solvency, and profitability to determine a
small business' ability to pay a penalty. NHTSA may also consider
whether the business has been deliberately undercapitalized. The burden
to present sufficient evidence relating to a charged business' size and
ability to pay rests on that business. More generally, in cases where
the respondent claims that it is financially unable to pay the civil
penalty or that the penalty would have undue adverse economic impacts,
the burden of proof is on the respondent. In the case of closely-held
or privately-held companies, NHTSA may provide the respondent the
opportunity to submit personal financial documentation for
consideration.
8. Whether the Respondent has Been Assessed Civil Penalties Under This
Section During the Most Recent 5 Years
    We propose to interpret ``whether the [respondent] has been
assessed civil penalties under this section during the most recent 5
years,'' 49 U.S.C. 30165(c)(8), as including an assessment of civil
penalties, a settlement agreement containing a penalty, or a consent
order or a lawsuit involving a penalty or payment of a civil penalty in
the most recent 5 years from the date of the alleged violation,
regardless of whether there was any admission of a violation or of
liability under 49 U.S.C. 30165.
9. Other Appropriate Factors
    We propose to interpret other appropriate factors as factors not
specifically identified in Section 31203(a) of MAP-21 which are
appropriately considered, including both aggravating and mitigating
factors.
    Such factors may include, but are not limited to:
    a. A history of violations. NHTSA may increase penalties for
repeated violations of the Safety Act or implementing regulations, or
for a pattern or practice of violations.
    b. An economic gain from the violation. NHTSA may consider whether
the respondent benefitted economically from a violation, including a
delay in complying with the Safety Act, a failure to comply with the
Safety Act, or a delay or failure to comply with the regulations
thereunder.
    c. Effect of the respondent's conduct on the integrity of programs
administered by NHTSA. The Agency's programs depend in large part on
timely and accurate reporting and certification by manufacturers.
Therefore, NHTSA may consider whether a person has been forthright with
the Agency. NHTSA may also consider whether a person has attempted to
mislead the Agency or conceal relevant information. For instance, NHTSA
may consider whether a manufacturer has provided accurate and timely
statements consistent with its Early Warning Reporting obligations.
NHTSA may also consider whether a registered importer has provided
accurate conformity packages and/or other information consistent with
49 U.S.C. 30141-30147 and the implementing regulations.
    d. Responding to requests for information or remedial action. NHTSA
may consider a person's failure to respond in a timely and complete
fashion to requests from NHTSA for information or for remedial action.
NHTSA may also consider whether the agency needed to make multiple
requests to receive requested information.

V. Codification of Other MAP-21 Penalty Changes in 49 CFR Part 578

    MAP-21 increased the maximum penalties under the Safety Act, 49
U.S.C. 30165(a)(1), (3) to $35,000,000. MAP-21 31203(a), 126 Stat. 758.
It also increased the penalties and damages for odometer fraud. MAP-21
31206, 126 Stat. 761. MAP-21 also established civil penalties for
violations of corporate responsibility provisions in 49 U.S.C. 30166 of
$5,000 per day and a maximum penalty of $1,000,000. MAP-21 31304(b),
126 Stat. 764. These new penalties and increased penalties and damages
are all currently in effect. NHTSA intends to amend its penalty
regulation, 49 CFR 578.6, to conform it to MAP-21 amendments.
    Where changes to provisions, penalties and damages are made by
statute, NHTSA may amend its penalty regulation, 49 CFR 578.6, without
notice and comment, effective the date of the statutory amendment. See
e.g., 65 FR 68108-68110 (Nov. 14, 2000). While notice is not required,
this provides notice of NHTSA's intention to amend its penalty
regulations to conform to the statutory changes made by MAP-21.

VI. Rulemaking Analyses and Notices

Executive Order 12866, Executive Order 13563, and DOT Regulatory
Policies and Procedures

    NHTSA has considered the impact of this rulemaking action under
Executive Order 12866, Executive Order 13563, and the Department of
Transportation's regulatory policies and procedures. This rulemaking
document was not reviewed under Executive Order 12866 or Executive
Order 13563. This action would establish procedures for NHTSA to follow
when assessing civil penalties and state how NHTSA would apply the
civil penalty factors in 49 U.S.C. 30165. Because this rulemaking only
seeks to explain and streamline the process by which the agency
determines and resolves civil penalties and does not change the number
of entities subject to civil penalties or the amount of civil
penalties,\27\ the impacts of the rule are limited. Therefore, this
rulemaking has been determined to be not ``significant'' under the
Department of Transportation's regulatory policies and procedures and
the policies of the Office of Management and Budget.
---------------------------------------------------------------------------

    \27\ MAP-21 increased the amount of civil penalties for a
related series of violations of the Vehicle Safety Act to
$35,000,000. The proposed revisions to the to the civil penalty
amounts in this rulemaking merely update 49 CFR 578.6 to reflect the
maximum civil penalty already in effect and therefore do not
increase the maximum penalty that NHTSA may seek for violations of
the Safety Act or implementing regulations.
---------------------------------------------------------------------------

Regulatory Flexibility Act

    We have also considered the impacts of this notice under the
Regulatory Flexibility Act. I certify that this rule is not expected to
have a significant economic impact on a substantial number of small
entities. The following provides the factual basis for this
certification under 5 U.S.C. 605(b). The amendments almost entirely
affect manufacturers of motor vehicles and motor vehicle equipment.

    SBA uses size standards based on the North American Industry
Classification System (``NAICS''), Subsector 336--Transportation
Equipment Manufacturing, which provides a small business size standard
of 1,000 employees or fewer for automobile manufacturing businesses.
Other motor vehicle-related industries have lower size requirements
that range between 100 and 750 employees.
    For example, according to the SBA coding system, businesses that
manufacture truck trailers, travel trailers/campers, and vehicular
lighting equipment, qualify as small businesses if they employ 500 or
fewer employees. Many small businesses are subject to the penalty
provisions of 49 U.S.C. 30165 and therefore may be affected by the
procedures for assessing civil penalties and the civil penalty factors
in this NPRM. The impacts of this rulemaking on small businesses are
minimal, as NHTSA will continue to consider the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA).\28\
---------------------------------------------------------------------------

    \28\ See NHTSA, Civil Penalty Policy under the Small Business
Regulatory Enforcement Fairness Act, 62 FR 37115 (July 10, 1997).
---------------------------------------------------------------------------

Small Business Regulatory Enforcement Fairness Act (SBREFA)

    This NPRM would not materially affect our civil penalty policy
toward small businesses. Because NHTSA will continue to consider SBREFA
and consider the business' size including the potential that a civil
penalty would have undue adverse economic impacts on a small business
before assessing a civil penalty, the impacts of this rulemaking on
small businesses are minimal.

Executive Order 13132 (Federalism)

    Executive Order 13132 requires NHTSA to develop an accountable
process to ensure ``meaningful and timely input by State and local
officials in the development of regulatory policies that have
federalism implications.'' ``Policies that have federalism
implications'' is defined in the Executive Order to include regulations
that have ``substantial direct effects on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.'' Under Executive Order 13132, the agency may not issue a
regulation with Federalism implications, that imposes substantial
direct compliance costs, and that is not required by statute, unless
the Federal government provides the funds necessary to pay the direct
compliance costs incurred by State and local governments, the agency
consults with State and local governments, or the agency consults with
State and local officials early in the process of developing the
proposed regulation.
    This NPRM would not have substantial direct effects on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government, as specified in Executive Order 13132.
    This proposed rule generally would apply to private motor vehicle
and motor vehicle equipment manufacturers (including importers),
entities that sell motor vehicles and equipment and motor vehicle
repair businesses. Thus, Executive Order 13132 is not implicated and
consultation with State and local officials is not required.

Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995, Public Law 104-4,
requires agencies to prepare a written assessment of the cost, benefits
and other effects of proposed or final rules that include a Federal
mandate likely to result in the expenditure by State, local, or tribal
governments, in the aggregate, or by the private sector, of more than
$100 million annually. Because this rulemaking would not have a $100
million effect, no Unfunded Mandates assessment will be prepared.

Executive Order 12988 (Civil Justice Reform)

    With respect to the review of the promulgation of a new regulation,
section 3(b) of Executive Order 12988, ``Civil Justice Reform'' (61 FR
4729; Feb. 7, 1996), requires that Executive agencies make every
reasonable effort to ensure that the regulation: (1) Clearly specifies
the preemptive effect; (2) clearly specifies the effect on existing
Federal law or regulation; (3) provides a clear legal standard for
affected conduct, while promoting simplification and burden reduction;
(4) clearly specifies the retroactive effect, if any; (5) specifies
whether administrative proceedings are to be required before parties
file suit in court; (6) adequately defines key terms; and (7) addresses
other important issues affecting clarity and general draftsmanship
under any guidelines issued by the Attorney General. This document is
consistent with that requirement.
    Pursuant to this Order, NHTSA notes as follows: This proposed rule
would establish procedures for NHTSA to follow in assessing civil
penalties pursuant to 49 U.S.C. 30165 under delegation from the
Secretary of Transportation. The proposed rule clearly identifies the
section of the Safety Act or regulation thereunder that, if violated,
would subject a person to a demand for civil penalties pursuant to the
procedures in this NPRM. This proposed rule also lists the mandatory
and discretionary factors for NHTSA to consider when assessing civil
penalties. The rule would not have retroactive effect.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1980, we state
that there are no requirements for information collection associated
with this rulemaking action.

Regulatory Identifier Number (RIN)

    The Department of Transportation assigns a regulation identifier
number (RIN) to each regulatory action listed in the Unified Agenda of
Federal Regulations. The Regulatory Information Service Center
publishes the Unified Agenda in April and October of each year. You may
use the RIN contained in the heading at the beginning of this document
to find this action in the Unified Agenda.

Privacy Act

    Anyone is able to search the electronic form of all comments
received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review DOT's
complete Privacy Act Statement in the Federal Register published on
April 11, 2000 (65 FR 19477-78).

List of Subjects in 49 CFR Part 578

    Administrative practice and procedure, Civil and criminal
penalties, Civil penalty factors, Imports, Motor vehicle safety, Motor
vehicles, Rubber and rubber products, Tires.

Proposed Regulatory Text

    For the reasons set forth in the preamble, NHTSA proposes to amend
49 CFR part 578 as follows:

PART 578--CIVIL AND CRIMINAL PENALTIES

0
1. The authority citation for part 578 is revised to read as follows:

    Authority: Pub. L. 101-410, Pub. L. 104-134, Pub. L. 112-141, 49
U.S.C. 322, 30165, 30170, 30505, 32308, 32309, 32507, 32709, 32710,
32902, 32912, and 33115 as amended; delegation of authority at 49
CFR 1.81 and 1.95.
0
2. Revise Sec.  578.1 to read as follows:

Sec.  578.1  Scope.

    This part specifies the civil penalties for violations of statutes
and regulations administered by the National Highway Traffic Safety
Administration (NHTSA), as adjusted for inflation. It also sets forth
the procedures NHTSA must follow in assessing civil penalties under 49
U.S.C. chapter 301. This part also sets forth NHTSA's interpretation of
the civil penalty factors listed in 49 U.S.C. 30165(c). In addition,
this part sets forth the requirements regarding the reasonable time and
the manner of correction for a person seeking safe harbor protection
from criminal liability under 49 U.S.C. 30170(a).
0
3. Revise Sec.  578.2 to read as follows:

Sec.  578.2  Purpose.

    One purpose of this part is to effectuate the remedial impact of
civil penalties and to foster compliance with the law by specifying the
civil penalties for statutory and regulatory violations, as adjusted
for inflation. Another purpose of this part is to set forth the
procedures for assessing civil penalties under 49 U.S.C. chapter 301. A
third purpose of this part is to set forth NHTSA's interpretation of
the civil penalty factors listed in 49 U.S.C. 30165(c). A fourth
purpose of this part is to set forth the requirements regarding the
reasonable time and the manner of correction for a person seeking safe
harbor protection from criminal liability under 49 U.S.C. 30170(a).
0
4. Revise Sec.  578.3 to read as follows:

Sec.  578.3  Applicability.

    This part applies to civil penalties for violations of chapters
301, 305, 323, 325, 327, 329, and 331 of title 49 of the United States
Code or a regulation prescribed thereunder. This part applies to civil
penalty factors under section 30165(c) of title 49 of the United States
Code. This part also applies to the criminal penalty safe harbor
provision of section 30170 of title 49 of the United States Code.
0
5. Amend Sec.  578.4 by adding in alphabetical order definitions of
``Person'' and ``Respondent'' to read as follows:

Sec.  578.4  Definitions.

* * * * *
    Person means any individual, corporation, company, limited
liability company, trust, association, firm, partnership, society,
joint stock company, or any other entity.
    Respondent means any person charged with liability for a civil
penalty for a violation of sections 30112, 30115, 30117 through 30122,
30123(a), 30125(c), 30127, 30141 through 30147, or 30166 of title 49 of
the United States Code or a regulation prescribed under any of those
sections or any person to whom an initial demand for civil penalties is
sent.
0
6. Amend Sec.  578.6 by revising paragraphs (a)(1) and (3), adding
paragraph (a)(4), and revising paragraph (f) to read as follows:

Sec.  578.6  Civil penalties for violations of specified provisions of
title 49 of the United States Code.

    (a) Motor vehicle safety--(1) In general. A person who violates any
of sections 30112, 30115, 30117 through 30122, 30123(a), 30125(c),
30127, or 30141 through 30147 of title 49 of the United States Code or
a regulation prescribed under any of those sections is liable to the
United States Government for a civil penalty of not more than $7,000
for each violation. A separate violation occurs for each motor vehicle
or item of motor vehicle equipment and for each failure or refusal to
allow or perform an act required by any of those sections. The maximum
civil penalty under this paragraph for a related series of violations
is $35,000,000.
* * * * *
    (3) Section 30166. Except as provided in paragraph (a)(4) of this
section, a person who violates section 30166 of title 49 of the United
States Code or a regulation prescribed under that section is liable to
the United States Government for a civil penalty for failing or
refusing to allow or perform an act required under that section or
regulation. The maximum penalty under this paragraph is $7,000 per
violation per day. The maximum penalty under this paragraph for a
related series of daily violations is $35,000,000.
    (4) Section 30166(o). A person who knowingly and willfully submits
materially false or misleading information to the Secretary, after
certifying the same as accurate under the process established pursuant
to section 30166(o), shall be subject to a civil penalty of not more
than $5,000 per day. The maximum penalty under this paragraph for a
related series of daily violations is $1,000,000.
* * * * *
    (f) Odometer tampering and disclosure. (1) A person that violates
49 U.S.C. chapter 327 or a regulation prescribed or order issued
thereunder is liable to the United States Government for a civil
penalty of not more than $10,000 for each violation. A separate
violation occurs for each motor vehicle or device involved in the
violation. The maximum civil penalty under this paragraph for a related
series of violations is $1,000,000.
    (2) A person that violates 49 U.S.C. chapter 327 or a regulation
prescribed or order issued thereunder, with intent to defraud, is
liable for three times the actual damages or $10,000, whichever is
greater.
* * * * *

Sec.  578.7  [Redesignated as Sec.  578.15]

0
7. Redesignate Sec.  578.7 as Sec.  578.15.
0
8. Add new Sec.  578.7 to read as follows:

Sec.  578.7  Notice of initial demand for civil penalties.

    (a) NHTSA, through the Assistant Chief Counsel for Litigation and
Enforcement, begins a civil penalty proceeding by serving a notice of
initial demand for civil penalties on a person (i.e. respondent)
charging the person with having violated one or more provisions of 49
U.S.C. 30112, 30115, 30117-30122, 30123(a), 30125(c), 30127, 30141-
30147, or 30166, or the regulations prescribed thereunder.
    (b) A notice of initial demand for civil penalties issued under
this section includes:
    (1) A statement of the provision(s) which the respondent is alleged
to have violated as of the date of the initial demand for civil
penalties;
    (2) A statement of the factual allegations upon which the proposed
civil penalty is being sought;
    (3) Notice of the maximum amount of civil penalty for which the
respondent may be liable at the time of the notice for the violations
alleged;
    (4) Notice of the amount of the civil penalty proposed to be
assessed;
    (5) A description of the manner in which the respondent should make
payment of any money to the United States;
    (6) A statement of the respondent's right to present written
explanations, information or any materials in answer to the charges or
in mitigation of the penalty;
    (7) A statement of the respondent's right to request a hearing and
the procedures for requesting a hearing;
    (8) A statement that failure to pay the amount of the civil
penalty, to elect to provide an informal response, or to request a
hearing within 30 days of the date of the initial demand authorizes the
NHTSA Chief Counsel, without further notice to the respondent, to find
the facts to be as alleged in the initial demand for civil penalties
and to assess an appropriate civil penalty; and
    (9) Documents relied on by the Assistant Chief Counsel for
Litigation and Enforcement to establish that the person is liable for
civil penalties or to

determining the amount of the initial demand. The documents may be
provided in redacted form.
    (c) NHTSA may amend the initial demand for civil penalties at any
time prior to the entry of an order assessing a civil penalty including
by amending the amount of civil penalties demanded. If the amendment
contains any new material allegation of fact, the respondent is given
an opportunity to respond. In an amended notice, NHTSA may change the
proposed amount of civil penalty up to and including the maximum
penalty amount for each violation, to and including the maximum penalty
amount for a related series of violations.
    (d) An initial demand for civil penalty, reply, or order issued by
NHTSA under this section or Sec. Sec.  578.8, 578.9, 578.10, and 578.11
may be delivered to the party by:
    (1) Mailing to the party (certified mail is not required);
    (2) Hand delivery;
    (3) Use of an overnight or express courier service; or
    (4) Facsimile transmission or electronic mail to the party or an
agent or employee of the party.
    (e) Service of an initial demand for civil penalty or order by a
person's duly authorized representative (including, but not limited to,
a person's agent for accepting service designated pursuant to 49 CFR
part 551) constitutes service upon that person.
    (f) Within thirty (30) calendar days of the date on which the
initial demand for civil penalties is issued under this section, the
respondent must:
    (1) Pay the amount of civil penalty proposed and thereby close the
case;
    (2) Make an informal response as provided in Sec.  578.9; or
    (3) Request a hearing as provided in Sec.  578.10.
0
9. Add Sec.  578.8 to read as follows:

Sec.  578.8  Default judgments.

    (a) Failure of the respondent to reply by taking one of the three
actions described in Sec.  578.7(f) within the period provided
constitutes a waiver of his or her right to appear and contest the
allegations and authorizes the Agency's Chief Counsel, without further
notice to the respondent, to find the facts to be as alleged in the
initial demand for civil penalties and to assess an appropriate civil
penalty. This decision by the Chief Counsel will constitute final
agency action. No appeal to the Administrator is permitted.
    (b) If respondent elects to request a conference with the Chief
Counsel and fails to attend the conference without good cause shown,
the Chief Counsel may, without further notice to the respondent, find
the facts to be as alleged in the initial demand for civil penalties
and assess an appropriate civil penalty. This decision by the Chief
Counsel will constitute final agency action. No appeal to the
Administrator is permitted.
    (c) If the respondent elects to request a hearing and is granted an
in-person hearing, failure of the respondent to attend the hearing
without good cause shown authorizes the Hearing Officer, without
further notice to the respondent, to find the facts to be as alleged in
the initial demand for civil penalties and assess an appropriate civil
penalty. This decision by the Hearing Officer will constitute final
agency action. No appeal to the Administrator is permitted.
0
10. Add Sec.  578.9 to read as follows:

Sec.  578.9  Procedures when an informal response is elected.

    (a) If a respondent elects to make an informal response to an
initial demand for civil penalties, the respondent shall submit to the
Chief Counsel and to the Assistant Chief Counsel for Litigation and
Enforcement in writing any arguments, views or supporting documentation
that dispute or mitigate that person's liability for, or the amount of,
civil penalties to be imposed within 30 calendar days of the date on
which the initial demand for civil penalties is issued. The informal
response shall be submitted via hand delivery, use of an overnight or
express courier service, facsimile or electronic mail. The respondent
may include in his or her informal written response a request for a
conference. Upon receipt of such a request, the Chief Counsel will
arrange for a conference as soon as practicable at a time of mutual
convenience. Unless otherwise specified by the Chief Counsel, the
conference will take place at the Department's headquarters. Respondent
may also request to conduct the conference by telephone if traveling to
the Department's headquarters would be unduly burdensome.
    (b) Written explanations, information or materials submitted by the
respondent and relevant information presented during any conference
held under this section are considered by the Chief Counsel in
reviewing the notice of initial demand for civil penalties and
determining the fact of violation and the amount of any penalty to be
assessed.
    (c) The Assistant Chief Counsel for Litigation and Enforcement is
permitted to provide rebuttal information to the Chief Counsel replying
to the information submitted by the respondent.
    (d) After consideration of the submissions in paragraphs (a) and
(c) of this section, and any relevant information presented at a
conference, the Chief Counsel may dismiss the initial demand for civil
penalties in whole or in part. If the Chief Counsel does not dismiss
the initial demand in its entirety, the Chief Counsel may issue an
order assessing a civil penalty.
    (e) The NHTSA Chief Counsel will assess civil penalties under this
section only after considering the nature, circumstances, extent and
gravity of the violation. The determination may consider the nature of
the defect or noncompliance; knowledge by the respondent of its
obligations under this chapter; the severity of the risk of injury
posed by the defect or noncompliance; the occurrence or absence or
injury; the number of motor vehicles or items of motor vehicle
equipment distributed with the defect or noncompliance; actions taken
by the respondent to identify, investigate, or mitigate the condition;
the appropriateness of such penalty in relation to the size of the
business of the respondent, including the potential for undue adverse
economic impacts; and other relevant and appropriate factors and
information.
    (f) An order by the Chief Counsel assessing civil penalties
exceeding $1,000,000 becomes a final decision 20 calendar days after it
is issued unless the respondent files an appeal under Sec.  578.11
within the 20 day period. An order by the Chief Counsel assessing civil
penalties of $1,000,000 or less is a final decision upon issuance.
0
11. Add Sec.  578.10 to read as follows:

Sec.  578.10  Procedures when a hearing is elected.

    (a) A respondent or counsel for a respondent, responding to an
initial demand for civil penalties by requesting a hearing must provide
with the request for hearing two complete copies (via hand delivery,
use of an overnight or express courier service, facsimile or electronic
mail) containing a detailed statement of factual and legal issues in
dispute and all statements and documents supporting the respondent's
case within 30 calendar days of the date on which the initial demand
for civil penalties is issued. If the respondent wishes to request an
in-person hearing and the opportunity to present witness testimony, the
respondent must also provide with the request for a hearing a statement
of the factual and/or legal issues that an in-person hearing is
necessary to resolve, a statement containing the names of individuals
whom the respondent wishes to call as witnesses at the hearing, a
description

of the witnesses' expected testimony and the factual basis for such
testimony, and whether the respondent will arrange to have a verbatim
transcript prepared at its own expense. One copy of the respondent's
submission set shall be labeled ``For Hearing Officer.'' Failure to
specify any issue in the respondent's written submission will preclude
its consideration.
    (b) When a hearing is requested and scheduled under this section, a
Hearing Officer designated by the Chief Counsel convenes and presides
over the hearing. The Hearing Officer is solely responsible for the
case referred to him or her. The Hearing Officer shall have no other
responsibility, direct or supervisory, for the investigation of the
case referred for the assessment of civil penalties and must have no
prior connection with the case. The Agency will be represented in the
hearing by an attorney designated by the Chief Counsel.
    (c) The hearing will be conducted by written submission unless an
in-person hearing is requested and the Hearing Officer determines that
an in-person hearing is necessary to resolve factual or legal issues
presented in the case. In a hearing conducted by written submission,
the Assistant Chief Counsel for Litigation and Enforcement will submit
a reply responding to the statement of factual and legal issues in
dispute and the statements and documents provided with the respondent's
request for a hearing submitted under paragraph (a) of this section. In
a hearing by written submission, the Hearing Officer's decision will be
based on the initial demand for civil penalties and all attached
documents, the respondent's request for a hearing submitted under
paragraph (a) of this section and all attached documents and
statements, and the reply to the respondent's request for a hearing
(including any documents) submitted under this paragraph. All of the
materials described in this subsection are automatically part of the
administrative record.
    (d) If the Hearing Officer determines that an in-person hearing is
necessary to resolve factual and/or legal issues present in the case,
the Hearing Officer will notify the respondent and NHTSA of his or her
decision in writing and schedule an in-person hearing.
    (e) In order to regulate the course of a hearing, the Hearing
Officer may:
    (1) Direct or arrange for the submission of additional materials
for the administrative record in written form;
    (2) Receive testimony from witnesses during an in-person hearing;
    (3) Convene, recess, reconvene, and adjourn and otherwise regulate
the course of the in-person hearing; and
    (4) Take administrative notice of matters that are not subject to a
bona fide dispute and are commonly known in the community or are
ascertainable from readily available sources of known accuracy. Prior
to taking notice of a matter, the Hearing Officer shall give NHTSA and
the respondent an opportunity to show why notice should not be taken.
In any case in which notice is taken, the Hearing Officer shall place a
written statement of the matters as to which notice was taken in the
record, with the basis for such notice, including a statement that the
parties consented to the notice being taken or a summary of each
party's objections.
    (f) In considering the admission of evidence, the Hearing Officer
is not bound by the Federal Rules of Evidence. In evaluating the
evidence presented, the Hearing Officer must give due consideration to
the reliability and relevance of each item of evidence.
    (g) If, in response to a request for an in-person hearing, the
Hearing Officer determines that an in-person hearing is necessary, the
respondent may appear and be heard on his or her own behalf or through
counsel of his or her choice. The respondent or his or her counsel may
offer relevant information which he or she believes should be
considered in defense of the allegations or which may bear on the
penalty proposed to be assessed. The respondent may also call witnesses
at the in-person hearing, if permitted by the Hearing Officer. A
respondent represented by counsel bears all of its own attorneys' fees
and costs. If a respondent wishes to present testimony through a
personal appearance, the respondent is responsible for any costs
associated with such appearance. The Hearing Officer may, at his or her
discretion, accept a stipulation, declaration, or affidavit in lieu of
testimony.
    (h) If, in response to a request for an in-person hearing, the
Hearing Officer determines that an in-person hearing is necessary,
NHTSA may supplement the record with information prior to the in-person
hearing. A copy of such information will be provided to the respondent
no later than 3 days before the hearing. NHTSA may also call witnesses
at the in-person hearing, if permitted by the Hearing Officer. NHTSA
will provide to the respondent a list of witnesses that it expects to
call at the in-person hearing, a description of the witnesses' expected
testimony, and the factual basis for the expected testimony no later
than three days prior to the in-person hearing. The Hearing Officer
may, at his or her discretion, accept a stipulation, declaration, or
affidavit in lieu of testimony.
    (i) If, in response to a request for an in-person hearing, the
Hearing Officer determines that an in-person hearing is necessary, the
Hearing Officer may allow for cross examination of witnesses.
    (j) A verbatim transcript of any in-person hearing will not
normally be prepared. A respondent may, solely at its own expense,
cause a verbatim transcript to be made. If a verbatim transcript is
made, the respondent shall submit two copies to the Hearing Officer not
later than 15 days after the in-person hearing. The Hearing Officer
shall include such transcript in the record. A respondent who wishes a
verbatim transcript of the in-person hearing to be made must notify the
Hearing Officer and the Assistant Chief Counsel for Litigation and
Enforcement in advance of the hearing.
    (k) The administrative record of an in-person hearing shall contain
the notice of initial demand for civil penalties and any supporting
documentation described in Sec.  578.7; any timely documentation
submitted by the respondent; any further documentation submitted by the
Agency or presented at an in-person hearing; any additional materials
presented at an in-person hearing; the transcript of the hearing (if
any); and any other materials that the Hearing Officer determines are
relevant.
    (l) During an in-person hearing, NHTSA makes the first presentation
of evidence. At the close of NHTSA's presentation of evidence, the
respondent will have the right to respond to and rebut evidence and
argument presented by NHTSA. The respondent or his or her counsel may
offer relevant information including testimony (if permitted by the
Hearing Officer) regarding the respondent's liability for civil
penalties and the application of the penalty factors. At the close of
the respondent's presentation of evidence, the Hearing Officer may
allow the presentation of rebuttal evidence by NHTSA. The Hearing
Officer, in his or her discretion, may allow the respondent to reply to
any such rebuttal evidence submitted. NHTSA has the burden at the
hearing of establishing a violation charged in Sec.  578.7 giving rise
to liability for a civil penalty. A respondent challenging the amount
of a proposed civil penalty will have the burden to establish
mitigating circumstances. After the evidence in the case has been
presented, NHTSA and the respondent may present arguments on the issues
in the case. The decision of the Hearing Officer shall be made

solely on the administrative record developed during the course of the
hearing.
    (m) A Hearing Officer's decision and order assessing civil
penalties exceeding $1,000,000 becomes a final order 20 calendar days
after it is issued unless the respondent files an appeal within the 20
day period to the Administrator under Sec.  578.11. A Hearing Officer's
decision and order assessing civil penalties of $1,000,000 or less is a
final order upon issuance.
    (n) The Hearing Officer will assess civil penalties under this
section only after considering the nature, circumstances, extent and
gravity of the violation. The determination may consider the nature of
the defect or noncompliance; knowledge by the respondent of its
obligations under this chapter; the severity of the risk of injury; the
occurrence or absence or injury; the number of motor vehicles or items
of motor vehicle equipment distributed with the defect or
noncompliance; actions taken by the respondent to identify,
investigate, or mitigate the condition; the appropriateness of such
penalty in relation to the size of the business of the respondent,
including the potential for undue adverse economic impacts; and other
relevant and appropriate factors and information.
0
12. Add Sec.  578.11 to read as follows:

Sec.  578.11  Appeals to the Administrator.

    (a) A respondent aggrieved by an order issued by the Chief Counsel
or Hearing Officer assessing a civil penalty of more than $1,000,000
may file an appeal with the Administrator. The appeal must be filed
within twenty (20) calendar days of date on which the order was issued
and state the grounds for appeal and the factual or legal basis
supporting the appeal. If no appeal is filed within 20 days of the date
on which the order was issued, the order by the Chief Counsel or the
Hearing Officer shall become a final agency order.
    (b) The Administrator will affirm the decision unless the
Administrator finds that the decision was unsupported by the record as
a whole; based on a mistake of law; or that new evidence, not available
at the hearing, is available. Absent any of these bases, the appeal
will be summarily dismissed.
    (c) If the Administrator finds that the decision was unsupported,
in whole or in part; based on a mistake of law; or that new evidence is
available, then the Administrator may: Assess or modify a civil
penalty; rescind the initial demand for civil penalties; or remand the
case back for new or additional proceedings.
    (d) In the absence of a remand, the decision of the Administrator
in an appeal is a final agency action.
0
13. Add Sec.  578.12 to read as follows:

Sec.  578.12  Collection of assessed penalties.

    (a) Payment of a civil penalty shall be made by check, postal money
order, or electronic transfer of funds, as provided in instructions by
the Agency.
    (b) Failure by the respondent to submit in writing his/her
acceptance of the terms of an order directing payment of a civil
penalty and to remit the civil penalty to NHTSA within 30 days after an
agency decision becomes final, may result in the institution of an
action in an appropriate United States District Court to collect the
civil penalty.
0
14. Add Sec.  578.13 to read as follows:

Sec.  578.13  Judicial review.

    (a) Any party to the underlying proceeding who is adversely
affected by a final order issued under this part may petition for
review of the order in the appropriate United States district court.
    (b) Judicial review will be based on whether the final order was
arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law. No objection that has not been raised before the
Agency will be considered by the court, unless reasonable grounds
existed for failure to do so.
    (c) The commencement of proceedings under this section will not,
unless ordered by the court, operate as a stay of the final order the
Agency.
0
15. Add Sec.  578.14 to read as follows:

Sec.  578.14  Civil penalty factors under 49 U.S.C. chapter 301.

    (a) General civil penalty factors. This subsection interprets the
terms nature, circumstances, extent, and gravity of the violation
consistent with the factors in 49 U.S.C. 30165(c).
    (1) Nature of the violation means the essential, fundamental
character or constitution of the violation. It includes but is not
limited to the nature of a safety-related defect or noncompliance. It
also includes what the violation involves.
    (2) Circumstances of the violation means the context, facts, and
conditions having bearing on the violation.
    (3) Extent of the violation means the range of inclusiveness over
which the violation extends including the scope, time frame and/or the
degree of the violation. This includes the number of violations and
whether the violations are related or unrelated.
    (4) Gravity of the violation means the importance, significance,
and/or seriousness of the violation.
    (b) Discretionary civil penalty factors. This paragraph interprets
the nine discretionary factors in 49 U.S.C. 30165(c)(1) through (9)
that NHTSA may apply in making civil penalty amount determinations.
    (1) The nature of the defect or noncompliance means the essential,
fundamental characteristic or constitution of the defect or
noncompliance.
    (i) ``Defect'' is as defined in 49 U.S.C. 30102(a)(2).
``Noncompliance'' under this factor includes a noncompliance with a
Federal Motor Vehicle Safety Standard (``FMVSS''), as well as other
violations subject to penalties under 49 U.S.C. 30165.
    (ii) When considering the nature of a safety-related defect or
noncompliance with an FMVSS, NHTSA may examine the conditions or
circumstances under which the defect or noncompliance arises, the
performance problem, and actual and probable consequences of the defect
or noncompliance. When considering the nature of the noncompliance with
the Safety Act or a regulation promulgated thereunder, NHTSA may also
examine the circumstances surrounding the violation.
    (2) Knowledge by the respondent of its obligations under this
chapter means all knowledge, legal and factual, actual, presumed and
constructive, of the respondent of its obligations under 49 U.S.C.
chapter 301. If a respondent is other than a natural person, including
but not limited to a corporation or a partnership, then the knowledge
of an employee or employees of that non-natural person shall be imputed
to that non-natural person. The knowledge of an agent is imputed to a
principal. A person, such as a corporation, with multiple employees is
charged with the knowledge of each employee, regardless of whether the
employees have communicated that knowledge among each other, or to a
decision maker for the non-natural person.
    (3) The severity of the risk of injury means the gravity of
exposure to potential injury and includes the potential for injury or
death of drivers, passengers, other motorists, pedestrians, and others.
The severity of the risk includes the likelihood of an injury occurring
and the population group exposed.
    (4) The occurrence or absence of injury means whether injuries or
deaths have occurred as a result of a defect, noncompliance, or other
violation of 49 U.S.C. chapter 301 or chapter 5 of title 49 of the Code
of Federal Regulations. NHTSA may also take into consideration
allegations of death or injury. The absence of deaths or injuries shall
not be dispositive of

manufacturer's liability for civil penalties.
    (5) The number of motor vehicles or items of motor vehicle
equipment distributed with the defect or noncompliance means the total
number of vehicles or items of motor vehicle equipment distributed with
the defect or noncompliance with an FMVSS or the percentage of vehicles
or items of motor vehicle equipment of the subject population with the
defect or noncompliance with an FMVSS. If multiple make, model and
model years of motor vehicles are affected by the defect or
noncompliance with an FMVSS, NHTSA may also consider the percentage of
motor vehicles that contain the defect or noncompliance with an FMVSS
as a percentage of the manufacturer's total annual production of
vehicles. NHTSA may choose to make distinction between those defective
or noncompliant products distributed in commerce that consumers
received, and those defective or noncompliant products distributed in
commerce that consumers have not received.
    (6) Actions taken by the respondent to identify, investigate, or
mitigate the condition means actions actually taken, the time frame
when those actions were taken, what those actions involved and how they
ameliorated or otherwise related to the condition, what remained after
those actions were taken, and the speed with which the actions were
taken. A failure to act may also be considered.
    (7) The appropriateness of such penalty in relation to the size of
the business of the respondent, including the potential for undue
adverse economic impacts. NHTSA takes the Small Business Regulatory
Enforcement Fairness Act of 1996 into account. Upon a showing that a
violator is a small entity, NHTSA may include, but is not limited to,
requiring the small entity to correct the violation within a reasonable
correction period, considering whether the violation was discovered
through the participation by the small entity in a compliance
assistance program sponsored by the agency, considering whether the
small entity has been subject to multiple enforcement actions by the
agency, considering whether the violations involve willful or criminal
conduct, considering whether the violations pose serious health, safety
or environmental threats, and requiring a good faith effort to comply
with the law. NHTSA may also consider the effect of the penalty on
ability of the person to continue to operate. NHTSA may consider a
person's ability to pay, including in installments over time, any
effect of a penalty on the respondent's ability to continue to do
business, and relevant financial factors such as liquidity, solvency,
and profitability. NHTSA may also consider whether the business has
been deliberately undercapitalized.
    (8) Whether the respondent has been assessed civil penalties under
this section during the most recent 5 years means whether the
respondent has been assessed civil penalties, including a settlement
agreement containing a penalty, a consent order or a lawsuit involving
a penalty or payment of a civil penalty in the most recent 5 years from
the date of the alleged violation, regardless of whether there was any
admission of a violation or of liability, under 49 U.S.C. 30165.
    (9) Other appropriate factors means other factors not identified
above, including but not limited to aggravating and mitigating factors
relating to the violation, such as whether there is a history of
violations, whether a person benefitted economically from a violation,
the effect of the respondent's conduct on the integrity of programs
administered by NHTSA, and whether there was a failure to respond in a
complete and timely manner to requests for information or remedial
action.

    Issued in Washington, DC on September 8, 2015, under authority
delegated pursuant to 49 CFR 1.95.
Paul A. Hemmersbaugh,
Acting Chief Counsel.
[FR Doc. 2015-23164 Filed 9-18-15; 8:45 am]
 BILLING CODE 4910-59-P