Request for Public Comments on Guidance and Recommended Best Importer Practices To Enhance the Safety of Imported Motor Vehicles and Motor Vehicle Equipment, 39078-39088 [E8-15494]

Download as PDF ebenthall on PRODPC60 with NOTICES 39078 Federal Register / Vol. 73, No. 131 / Tuesday, July 8, 2008 / Notices and other documents in the FHWA administrative record file are available by contacting the FHWA or the Ohio Department of Transportation at the addresses provided above. The EA and FONSI can be viewed at the Toledo— Lucas County Public Libraries (Main, Sanger, West Toledo, Kent, and Lagrange Branches), the City of Toledo—Division of Transportation Office, ODOT District 2 Office in Bowling Green, City of Toledo—Clerk of Council Office, City of Toledo—Division of Streets, Bridges, and Harbor, and the Toledo Metropolitan Area Council of Governments (TMACOG). This notice applies to all Federal agency decisions as of the issuance date of this notice and all laws under which such actions were taken, including but not limited to: 1. General: National Environmental Policy Act (NEPA) [42 U.S.C. 4321– 4351]; Federal-Aid Highway Act [23 U.S.C. 109]. 2. Air: Clean Air Act, 42 U.S.C. 7401– 7671(q). 3. Land: Section 4(f) of the Department of Transportation Act of 1966 [49 U.S.C. 303.] 4. Wildlife: Endangered Species Act [16 U.S.C. 1531–1544 and Section 1536], Fish and Wildlife Coordination Act [16 U.S.C. 661–667(d)], Migratory Bird Treaty Act [16 U.S.C. 703–712]. 5. Historic and Cultural Resources: Section 106 of the National Historic Preservation Act of 1966, as amended [16 U.S.C. 470(f) et seq.]; Archeological Resources Protection Act of 1977 [16 U.S.C. 470(aa)–11]; Archeological and Historic Preservation Act [16 U.S.C. 469–469(c)]. 6. Social and Economic: Civil Rights Act of 1964 [42 U.S.C. 2000(d)– 2000(d)(1)]; Farmland Protection Policy Act (FPPA) [7 U.S.C. 4201–4209]. 7. Wetlands and Water Resources: Clean Water Act, 33 U.S.C. 1251–1377 (Section 404, Section 401, Section 319); Land and Water Conservation Fund (LWCF), 16 U.S.C. 4601–4604; Safe Drinking Water Act (SDWA), 42 U.S.C. 300(f)–300(j)(6); Rivers and Harbors Act of 1899, 33 U.S.C. 401–406; Wild and Scenic Rivers Act, 16 U.S.C. 1271–1287; TEA–21 Wetlands Mitigation, 23 U.S.C. 103(b)(6)(m), 133(b)(11); Flood Disaster Protection Act, 42 U.S.C. 4001–4128. 8. Executive Orders: E.O. 11990 Protection of Wetlands; E.O. 11988 Floodplain Management; E.O. 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low Income Populations; E.O. 11593 Protection and Enhancement of Cultural Resources. (Catalog of Federal Domestic Assistance Program Number 20.205, Highway Planning VerDate Aug<31>2005 15:11 Jul 07, 2008 Jkt 214001 and Construction. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities apply to this program.) Authority: 23 U.S.C. 139(l)(1). Issued on: June 30, 2008. Herman D. Rodrigo, Director of Engineering and Operations, Columbus, Ohio. [FR Doc. E8–15385 Filed 7–7–08; 8:45 am] BILLING CODE 4910–RY–P DEPARTMENT OF TRANSPORTATION National Highway Traffic Safety Administration [Docket No. NHTSA 2008–0113; Notice 1] Request for Public Comments on Guidance and Recommended Best Importer Practices To Enhance the Safety of Imported Motor Vehicles and Motor Vehicle Equipment National Highway Traffic Safety Administration (NHTSA), DOT. ACTION: Request for public comments. AGENCY: SUMMARY: This notice solicits comments from the public, from importers and manufacturers of motor vehicles and motor vehicle equipment, and from other interested parties concerning best practices to be followed by importers of motor vehicles and motor vehicle equipment to reduce the likelihood of importing products that contain defects related to motor vehicle safety or do not comply with applicable Federal motor vehicle safety standards. DATES: You should submit your comments early enough to ensure that Docket Management receives them not later than August 7, 2008. ADDRESSES: Comments should refer to the docket and notice numbers above and be submitted 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, 1200 New Jersey Avenue, SE., West Building Ground Floor, Room W12–140, Washington, DC 20590–0001. • Hand Delivery or Courier: West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue, SE., between 9 a.m. and 5 p.m. ET, Monday through Friday, except Federal holidays. • Fax: 202–493–2251. Instructions: For detailed instructions on submitting comments, see the Public Participation heading of the PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 Supplementary Information section of this document. 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 heading 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) or you may visit http:// DocketInfo.dot.gov. Docket: For access to the docket to read background documents or comments received, go to http:// www.regulations.gov and follow the online instructions for accessing the docket or visit the docket at the street address listed above. FOR FURTHER INFORMATION CONTACT: Clint Lindsay, Office of Vehicle Safety Compliance, National Highway Traffic Safety Administration, 1200 New Jersey Avenue, SE., Washington, DC 20590 (202–366–5288). SUPPLEMENTARY INFORMATION: I. Background A. National Highway Traffic Safety Administration The National Highway Traffic Safety Administration (NHTSA) administers the National Traffic and Motor Vehicle Safety Act of 1966, as amended, 49 U.S.C. chapter 301 (the Vehicle Safety Act). Under that authority, NHTSA issues and enforces Federal motor vehicle safety standards (FMVSS) that apply to motor vehicles and to certain items of motor vehicle equipment. NHTSA also monitors motor vehicles and items of motor vehicle equipment that are imported into the United States for compliance with applicable FMVSS. In recent years, an ever-increasing number of motor vehicles and motor vehicle equipment items sold in the United States have been imported. For example, in 1996 imported tires comprised just 19 percent of the 282 million tires sold that year in the United States. By 2006, imported tires rose to 46 percent of all tire sales, with 140 million tires being imported. Nearly all motorcycle helmets are now imported, as is the case for a large percentage of vehicle lighting equipment sold in this country. NHTSA’s enforcement program has two major elements, compliance testing and defects investigation. As the volume E:\FR\FM\08JYN1.SGM 08JYN1 Federal Register / Vol. 73, No. 131 / Tuesday, July 8, 2008 / Notices ebenthall on PRODPC60 with NOTICES of motor vehicle and equipment imports has increased, NHTSA’s scrutiny of those imports through both compliance testing and defect investigations has also grown. However, recent experience has demonstrated that companies importing products regulated by NHTSA, particularly motor vehicle equipment, play an especially important role in ensuring that those items comply with the FMVSS and are not likely to be defective. At the same time, both NHTSA’s recent experience and that of other agencies with regulatory authority over the safety of imported goods indicate that the entire importing community could benefit by following practices that help ensure the safety of imported products and reduce the likelihood of unsafe products entering the United States. B. The Interagency Working Group Report—Strategic Framework On July 18, 2007, the President issued Executive Order 13439 to establish the Interagency Working Group on Import Safety (the ‘‘Working Group’’). The Department of Transportation, including NHTSA, participated in the Working Group. As part of its mission, the Working Group identified strategies that could be pursued within existing resources to promote the safety of imported products. To begin identifying best practices for import safety, the Working Group held consultations with the private sector, reviewed current import safety procedures and methods, surveyed the authorities and practices of Federal agencies, and worked with the importing community. The Working Group recognized that U.S. importers are responsible for ensuring the safety of regulated products they import into the United States and should follow best practices to assure safety through methods that include: (1) Selecting foreign manufacturers to produce their products; (2) inspecting foreign manufacturing facilities; (3) inspecting goods produced on their behalf either before export or before distribution in the United States; (4) identifying the product’s country of origin; and (5) safeguarding the supply chain. In September 2007, the Working Group published a report entitled ‘‘Protecting American Consumers Every Step of the Way: A Strategic Framework for Continual Improvement in Import Safety’’ (the ‘‘Strategic Framework’’), which inaugurated the process of identifying action steps needed to enhance the safety of imported products.1 The Strategic Framework 1 Interagency Working Group on Import Safety, ‘‘Protecting American Consumers Every Step of the VerDate Aug<31>2005 15:11 Jul 07, 2008 Jkt 214001 promotes taking a cost-effective, riskbased approach that has the following key principles: (1) Prevention—Prevent harm in the first place. The Strategic Framework recognizes that the Federal government must work with the private sector and with foreign governments to adopt an approach to import safety that builds safety into the manufacturing and distribution processes; (2) Intervention—Intervene when risks are identified. The Strategic Framework encourages Federal, state, local, and foreign governments, along with foreign manufacturers and the importing community, to adopt more effective techniques for identifying potential noncompliant and/or defective products. When problems are identified, the Strategic Framework recognizes that government officials must act swiftly, and in a coordinated manner, to seize, destroy or otherwise prevent noncompliant and/or defective products from advancing beyond the point-ofentry; and (3) Response—Respond rapidly after harm has occurred. In the event that an unsafe imported product makes its way into domestic commerce, the Strategic Framework recommends swift action to limit potential exposure and harm to the American public. C. Working Group—Action Plan The Working Group promised to solicit extensive comments and recommendations from the public, and to provide an action plan by midNovember. On November 6, 2007, the Working Group submitted its report entitled ‘‘Action Plan for Import Safety: A roadmap for continual improvement’’ (the ‘‘Action Plan’’).2 As described in the Action Plan, that document represents the culmination of thousands of hours of research and analysis, as well as public comment received from hundreds of stakeholders. In the Action Plan, the Working Group set forth 14 broad recommendations and 50 specific action steps based on the key principles described above—Prevention, Intervention, and Response. For each of these key principles, the Action Plan identifies the cross-cutting building blocks that departments and agencies should use to guide their import safety programs. Building Block Number 2, Way: A strategic framework for continual improvement in import safety’’ (Washington, DC, September 2007) http://www.importsafety.gov/ report/report.pdf. 2 Interagency Working Group on Import Safety, ‘‘Action Plan for Import Safety: A roadmap for continual improvement’’ (Washington, DC, November 2007) http://www.importsafety.gov/ report/actionplan.pdf. PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 39079 with the subject heading Increase Accountability, Enforcement, and Deterrence, acknowledges that while it is important to remember that industry has a financial interest to sell safe products to consumers, all stakeholders involved in the production, distribution, and sale of imports must be held accountable to ensure that imported products meet Federal safety standards in the United States. The Action Plan recommended that Federal agencies ‘‘work with the importing community and other members of the public to develop Good Importer Practices and issue guidance with respect to particular product categories.’’ 3 Although some members of the importing community have established best practices on their own, the majority of importers do not have available best practices that are focused on ensuring product safety. The Working Group believes that by developing best importer practices, the entire importing community may benefit from taking appropriate steps to ensure the safety of imported products and to reduce the likelihood of unsafe products entering the United States. II. NHTSA’s Implementation of the Working Group’s Recommendation on Best Importer Practices The Action Plan encourages Federal agencies to work with the importing community to develop best importer practices that will provide strategies for evaluating foreign suppliers and imported products. The Food and Drug Administration (FDA) is in the process of issuing a set of Good Importer Practice recommendations on behalf of select Federal agencies and departments that are members of the Interagency Working Group on Import Safety. Those departments and agencies include the Consumer Product Safety Commission, the Environmental Protection Agency, the U.S. Department of Agriculture, the U.S. Department of Commerce, the U.S. Department of Health and Human Services, the U.S. Department of Homeland Security, and the U.S. Department of Transportation (DOT). As the DOT representative to this working group, NHTSA has participated in the development of the Good Importer Practice recommendations that are awaiting issuance by the FDA. Those recommendations are intended to be generic in nature, and not specific to the products that are regulated by any particular Federal agency. In contrast, the Best Importer Practice recommendations that are the subject of this notice are intended for importers of 3 The Action Plan, Recommendation 3.1, pp. 20– 21. E:\FR\FM\08JYN1.SGM 08JYN1 39080 Federal Register / Vol. 73, No. 131 / Tuesday, July 8, 2008 / Notices ebenthall on PRODPC60 with NOTICES motor vehicles and motor vehicle equipment, the products that are regulated by NHTSA. The FDA will be publishing a Federal Register notice in the future to solicit public comments on the generic Good Importer Practices recommendations. In this notice, NHTSA begins the process of assembling for guidance and informative purposes a set of suggested best practices for importers of motor vehicles and motor vehicle equipment. NHTSA is not establishing a binding set of rules on best practices or even suggesting that a single set of best practices would apply in all situations. The agency fully realizes that best practices may vary widely depending on the item being imported and the scale of an importer’s operations. We also recognize that such practices must remain fluid to account for changes in safety regulations and the global economic environment. Importers remain free to choose the practices that best fit their needs in ensuring compliant and defect-free products. Moreover, these recommended practices do not establish any defenses to any violations of the statutes and regulations that NHTSA administers. In the paragraphs that follow, we have presented our proposed recommendations on best importer practices under the following headings: • Fully Understand the Importer’s Obligations under Motor Vehicle Safety Statutes and Regulations; • Exercise Great Care in Selecting Foreign Manufacturers; • Inspect Foreign Manufacturing Facilities; • Inspect Goods Either Before They Are Exported to or Distributed in the United States; • Identify the Product’s Country of Origin; • Establish a Consumer Service Program; • Contact NHTSA Concerning Manufacturer/Importer Reporting Requirements, Safety Compliance, and Defect Issues; and • General Assistance with Federal Regulations. After receiving comments, we will issue a subsequent notice delineating a final set of recommended best practices for informative purposes. We will also post those best practices on the agency’s Web site for easy reference. III. Comments and Recommendations Requested Under the Vehicle Safety Act, manufacturers, including importers, are responsible for the safety of their products that are sold in or otherwise enter the United States. NHTSA has a VerDate Aug<31>2005 15:11 Jul 07, 2008 Jkt 214001 standard setting and oversight/ enforcement role and may issue guidance that provides valuable information to the affected communities. U.S. consumers provide valuable feedback to manufacturers and to NHTSA, which has a hotline for consumers to report problems with motor vehicles and motor vehicle equipment. To further this objective, the agency is asking the public, the importing community, and both foreign and domestic fabricating manufacturers of motor vehicles and motor vehicle equipment to provide comments and recommendations that address the agency’s initial thoughts on the suggested guidance regarding best importer practices set forth below. We are confident that capable and responsible manufacturers possess a body of knowledge about their respective products that, if shared, could benefit the importing community. We also welcome comments and recommendations from accreditation and certification bodies, as well as professional organizations with interests relating to best practices, particularly in the area of monitoring engineering design and manufacturing processes and facilities, recordkeeping incident to those activities, assessing safety defects and noncompliances and taking needed corrective actions, and facilitating continual process improvements. Commenters who recommend specific best practices should be careful to address the practical impacts that those practices may have on businesses of differing size and the relative costs and benefits of implementing various practices. IV. Public Participation How Do I Prepare and Submit Comments? Your comments must be written in English. To ensure that your comments are correctly filed in the Docket, please include the docket number of this document in your comments. Your comments must not be more than 15 pages long (49 CFR 553.21). We established this limit to encourage you to write your primary comments in a concise fashion. However, you may attach necessary additional documents to your comments. There is no limit on the length of the attachments. Please submit two copies of your comments, including the attachments, to Docket Management identified at the beginning of this document, under ADDRESSES. PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 How Can I Be Sure That My Comments Were Received? If you wish Docket Management to notify you upon its receipt of your comments, enclose a self-addressed, stamped postcard in the envelope containing your comments. Upon receiving your comments, Docket Management will return the postcard by mail. How Do I Submit Confidential Business Information? If you wish to submit any information under a claim of confidentiality, you must follow the procedures found in 49 CFR part 512. Requests for confidential treatment are submitted to the Chief Counsel, NHTSA, (NCC–111), Room W41–227, 1200 New Jersey Avenue, SE., Washington, DC 20590. Each request must be made in writing, explain the basis for the request and describe the materials for which confidential treatment is sought. Confidential information must be properly marked and accompanied by a certification attesting to the confidential nature of the materials. Each request for confidential treatment should include two copies of the confidential material and one copy from which the information claimed as confidential has been removed. In addition, you should submit two additional copies of the information without the claimed confidential business information to Docket Management at the address given above under ADDRESSES. Will the Agency Consider Late Comments? We will consider all comments that Docket Management receives before the close of business on the comment closing date identified at the beginning of this notice under DATES. To the extent possible, we will also consider comments that Docket Management receives after that date. How Can I Read the Comments Submitted by Other People? You may read the comments received by Docket Management at the address and times given at the beginning of this document under ADDRESSES. You may also see the comments on the Internet. To read the comments on the Internet, take the following steps: (1) Go to the Federal Docket Management System (FDMS) Web page http://www.regulations.gov. (2) On that page, click on ‘‘search for dockets.’’ (3) On the next page (http:// www.regulations.gov/fdmspublic/ component/main), select NATIONAL HIGHWAY TRAFFIC SAFETY E:\FR\FM\08JYN1.SGM 08JYN1 Federal Register / Vol. 73, No. 131 / Tuesday, July 8, 2008 / Notices ADMINISTRATION from the dropdown menu in the Agency field, enter the Docket ID number and title shown at the heading of this document, and select ‘‘NOTICES’’ from the drop-down menu in the Type field. (4) After entering that information, click on ‘‘submit.’’ (5) The next page contains docket summary information for the docket you selected. Click on the comments you wish to see. You may download the comments. Although the comments are imaged documents, instead of the word processing documents, the ‘‘pdf’’ versions of the documents are word searchable. Please note that even after the comment closing date, we will continue to file relevant information in the Docket as it becomes available. Further, some people may submit late comments. Accordingly, we recommend that you periodically search the Docket for new material. ebenthall on PRODPC60 with NOTICES V. Executive Order 12866 on ‘‘Significant Guidance’’ On January 18, 2007, the President issued Executive Order (E.O.) 13422, ‘‘Further Amendment to Executive Order 12866 on Regulatory Planning and Review.’’ On the same day, in connection with E.O. 13422, the Director of the Office of Management and Budget (OMB) issued OMB Bulletin No. 07–02 on ‘‘Agency Good Guidance Practices.’’ The primary focus of E.O. 13422 and OMB Bulletin No. 07–02 is to improve the way the Federal government does business with respect to guidance documents—by increasing their quality, transparency, accountability, and coordination. Both Executive Order 13422 and OMB Bulletin No. 07–02 define ‘‘guidance documents’’ as ‘‘an agency statement of general applicability and future effect, other than a regulatory action, that sets forth a policy on a statutory, regulatory, or technical issue or an interpretation of a statutory or regulatory issue.’’ Guidance documents that are not ‘‘significant’’ are not covered by E.O.s 13422, 12866, or Bulletin No. 07–02. A ‘‘significant’’ guidance document is one disseminated to regulated entities or the general public that may reasonably be anticipated to: (1) Lead to an annual effect of $100 million or more or adversely effect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; VerDate Aug<31>2005 15:11 Jul 07, 2008 Jkt 214001 (3) materially alter the budgetary impacts of entitlements, grants, user fees or loan programs or the rights or obligations of recipients thereof; or, (4) raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in this Executive order. Today’s proposed ‘‘Best Importer Practices’’ document does not meet any of the four stated criteria for a guidance document to be ‘‘significant.’’ In fact, one purpose of this draft document is to help manufacturers and importers of motor vehicles and motor vehicle equipment to understand the coordinated roles of NHTSA and U.S. Customs and Border Protection in the import process. Therefore, this document is not subject to E.O. 13422, E.O. 12866, or to OMB Bulletin 07–02. For this reason, no economic analysis of this document has been prepared. However, since NHTSA recognizes the public interest in this document, we solicit public comment, before issuing a final ‘‘Best Importer Practices’’ document. We hope to publish a final guidance document that will be as understandable and as user-friendly as possible for manufacturers and importers of motor vehicles and motor vehicle equipment. In writing this draft ‘‘Best Practices’’ document, we have also voluntarily sought to incorporate E.O. 12866’s principles (applicable to rules) that agencies write in ‘‘plain language.’’ Application of the principles of plain language includes consideration of the following questions: • Have we organized the material to suit the public’s needs? • Does this document contain technical language or jargon that is not clear? • Would a different format (grouping and order of sections, use of headings, paragraphing) make this document easier to understand? • Would more (but shorter) sections be better? • Could we improve clarity by adding tables, lists, or diagrams? • What else could we do to make this document easier to understand? Comments on how this draft document may be made more understandable to manufacturers and importers of motor vehicles and motor vehicle equipment and to the general public are solicited. In light of the foregoing, NHTSA proposes the following guidance and recommended best practices for importers of motor vehicles and motor vehicle equipment: PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 39081 Guidance and Recommended Best Practices for Importers of Motor Vehicles and Motor Vehicle Equipment The National Highway Traffic Safety Administration (NHTSA) is the U.S. government agency responsible for implementing and enforcing the National Traffic and Motor Vehicle Safety Act of 1966, as amended, 49 U.S.C. chapter 301 (the Vehicle Safety Act), and certain other laws relating to motor vehicle safety. Those laws impose distinct duties on manufacturers, including importers, of motor vehicles and motor vehicle equipment intended for on-road use in the United States. Companies that import these products must ensure that the products comply with Federal motor vehicle safety standards (FMVSS). If a product does not comply with an applicable FMVSS or contains a defect related to motor vehicle safety, including a defect that manifests itself after considerable operation in the field, the manufacturer must recall it. Obviously, it is best if the motor vehicle or equipment complies with applicable FMVSS and does not manifest defects. To reduce the likelihood of defects and noncompliances, manufacturers, including importers, should become familiar with the best practices suggested here and adapt them to their specific needs. NHTSA is also very willing to work closely with individual importers to explain our standards, reporting requirements, regulatory program, and enforcement process. (1) Fully Understand the Importer’s Obligations under Motor Vehicle Safety Statutes and Regulations Before importing motor vehicles or motor vehicle equipment into the United States, it is essential that the importer understand its obligations under Federal statutes and regulations governing vehicle safety. This section summarizes those obligations stemming from the Vehicle Safety Act, which the NHTSA administers.4 (a) Certification of Motor Vehicles and Equipment to the Federal Motor Vehicle Safety Standards The Safety Act authorizes NHTSA to issue the FMVSS, which set minimum performance requirements for motor vehicles and for certain items of motor vehicle equipment. See 49 CFR part 571. In general, motor vehicles are vehicles driven or drawn by mechanical power 4 It is wise for manufacturers and importers to become familiar with other laws not administered by NHTSA, such as State tort laws, which could impact the decision to sell products in the United States. E:\FR\FM\08JYN1.SGM 08JYN1 39082 Federal Register / Vol. 73, No. 131 / Tuesday, July 8, 2008 / Notices ebenthall on PRODPC60 with NOTICES and manufactured primarily for use on public roads. Motor vehicles have the following type classifications: • Buses; • low-speed vehicles; • motorcycles; • multipurpose passenger vehicles; • passenger cars; • trailers; and • trucks. The following motor vehicle equipment items are also subject to the FMVSS: • Tires; • rims; • brake hoses; • brake fluid; • seat belt assemblies; • lamps, reflective devices, and associated equipment; • glazing (automotive glass and plastics); • motorcycle helmets; • child restraint systems (child safety seats); • platform lift systems for the mobility impaired; • rear impact guards for trailers; • triangular reflective warning devices, and; • compressed natural gas containers. The Vehicle Safety Act requires manufacturers to certify that motor vehicles and regulated items of motor vehicle equipment they produce for sale in the United States comply with all applicable FMVSS. See 49 U.S.C. 30115. Motor vehicle equipment items that are not subject to the FMVSS do not require certification; however, such items may be found (by either NHTSA or the manufacturer) to have a safety-related defect, and if so, the manufacturer will have an obligation to furnish owners of the equipment with notification of, and a remedy for, the defect, usually at no charge to the consumer. Type approval 5 is not required for motor vehicles and motor vehicle 5 In many countries, before motor vehicles or motor vehicle equipment items may be sold to consumers, the fabricating manufacturer must prove that these items comply with safety regulations and receive pre-approval from a government agency. This approach is commonly referred to as ‘‘type approval.’’ Under type approval, a manufacturer submits production samples and specifications to an approved laboratory and if the product complies with the standards, the government issues a type approval certificate of compliance. Because this can take many months, the manufacturer begins the process of obtaining type approval well in advance of bringing the product to market. After type approval is granted, the manufacturer ensures that each vehicle or equipment item is produced in conformance with the specifications that were submitted for approval. If countries enter into international agreements covering vehicle safety regulations, one country’s type approval may be valid for another member country. For example, the Vehicle Certification Agency, an Executive Agency of the United Kingdom Department for Transport, VerDate Aug<31>2005 15:11 Jul 07, 2008 Jkt 214001 equipment sold in the United States. NHTSA does not issue type approval certifications and does not certify any motor vehicles or motor vehicle equipment as complying with applicable FMVSS. Instead, we have a ‘‘self-certification’’ process, which places responsibility on the fabricating manufacturer to certify the vehicle or equipment item as complying with the applicable FMVSS. Self-certification reduces the cost and time associated with lengthy, government-mandated testing that is required under type approval. Self-certification also reduces regulatory costs and facilitates international trade because it allows manufacturers to quickly bring to market vehicles and equipment items that incorporate safety and technology advancements. The Vehicle Safety Act requires the manufacturer to exercise ‘‘reasonable care’’ when issuing its certification. See 49 U.S.C. 30115. To this end, NHTSA encourages manufacturers to conduct tests in accordance with the tests specified in the FMVSS. See 49 CFR part 571. (b) Noncompliance with a FMVSS or a Safety-Related Defect Notwithstanding the certification of a product, a manufacturer may subsequently determine that a safetyrelated defect or a noncompliance with a FMVSS exists in a motor vehicle or a motor vehicle equipment item it has produced. Manufacturers have a duty to notify NHTSA if they learn the vehicle or equipment contains a defect and in good faith they decide that the defect is related to motor vehicle safety, or in good faith they decide that the vehicle or equipment does not comply with an applicable FMVSS. See 49 U.S.C. 30118(c). The manufacturer must notify NHTSA within five working days after determining the existence of a safetyrelated defect or noncompliance. See 49 CFR 573.6. Alternately, NHTSA may determine the existence of a safetyrelated defect or noncompliance in a particular motor vehicle or motor vehicle equipment item and order manufacturers to recall those items. See 49 U.S.C. 30118(b). (c) Notification and Remedy for a Safety-Related Defect or Noncompliance Regardless of whether the safetyrelated defect or noncompliance with an FMVSS is determined to exist by the manufacturer or by NHTSA, the manufacturer must provide NHTSA, as well as owners and dealers of the administers type approval in the U.K. See: http:// www.vca.gov.uk/index.asp. PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 affected products, with notification of the defect or noncompliance and must remedy the defect or noncompliance, usually without charge. The notification and remedy process is commonly referred to as a ‘‘safety recall campaign’’ or more simply as a ‘‘recall.’’ There is a limited exception under which a manufacturer that has reported a noncompliance to NHTSA may petition the agency for a determination that the noncompliance is inconsequential as it relates to motor vehicle safety.6 See 49 CFR part 556. NHTSA monitors the remedy program to ensure its successful completion. The agency is not authorized to expend its funds on recalls; the expense of notifying owners and providing a remedy must be borne by the manufacturer and/or importer of the products found to contain the defect or noncompliance. See 49 U.S.C. 30118– 30120. (d) Importers’ Recall Obligations Under the Vehicle Safety Act, importers of motor vehicles and motor vehicle equipment for resale are considered ‘‘manufacturers.’’ See 49 U.S.C. 30102(a)(5). Therefore, importers must recognize that they have obligations under the Vehicle Safety Act, which continue after motor vehicles or items of motor vehicle equipment are sold to consumers within the United States. If an importer becomes aware that a vehicle or equipment item it has imported contains a defect related to motor vehicle safety or does not comply with an applicable FMVSS, it must provide NHTSA, as well as owners and dealers of the affected vehicles or equipment, with notification of the defect or noncompliance and must remedy the defect or noncompliance, usually without charge. An importer also has notification and remedy responsibility if NHTSA determined the existence of the defect or noncompliance and ordered it to undertake a notification and remedy campaign. If a fabricating manufacturer is not located in the United States and does not conduct business operations in this country, including through a subsidiary or other controlled entity, the U.S. judicial system likely will not be able to effectively compel the foreign 6 The National Traffic and Motor Vehicle Safety Act of 1966 gives NHTSA the authority to exempt manufacturers from the requirement to provide notification and remedy for safety-related defects or noncompliances if the agency determines that the defect or noncompliance is inconsequential as it relates to motor vehicle safety. See 49 U.S.C. 30118, 30120. The procedures for implementing this statutory authority are set forth in 49 CFR part 556, Exemption for Inconsequential Defect or Noncompliance. E:\FR\FM\08JYN1.SGM 08JYN1 Federal Register / Vol. 73, No. 131 / Tuesday, July 8, 2008 / Notices manufacturer to conduct a recall. In that case, the burden of providing notification to owners and dealers and a free remedy will fall solely upon the importer, unless the fabricating manufacturer voluntarily supports the recall. ebenthall on PRODPC60 with NOTICES (e) NHTSA Defect Investigations In addition to the actions of the manufacturers and importers in recalling noncompliant and defective motor vehicles and motor vehicle equipment, NHTSA investigates suspected noncompliances and safetyrelated defects in motor vehicles and motor vehicle equipment items. Before initiating an investigation of a suspected safety-related defect, NHTSA ordinarily reviews consumer complaints that are submitted to the agency and other available information to determine whether a defect trend exists. Among the other information the agency reviews is Early Warning Reporting (EWR) information submitted by manufacturers under regulations issued pursuant to the Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act of 2000. These regulations require manufacturers, including by definition, importers, to submit information that could assist the agency in determining whether a safety-related defect exists in a vehicle or in specified items of motor vehicle equipment. See 49 CFR part 579, subpart C. Under the EWR rules, manufacturers must generally report claims they receive on incidents resulting in fatalities or injuries allegedly caused by a defect in their vehicles or motor vehicle equipment items used in the United States or deaths allegedly caused by a defect in their identical or substantially similar vehicles or equipment used in a foreign country. Moreover, depending on the level of annual production and the type of product, manufacturers may also be required to provide NHTSA with information on production, property damage claims, consumer complaints, warranty claims, field reports, as well as other information. (f) Compliance Needed to Import Motor Vehicles and Equipment As part of its safety mandate, NHTSA monitors motor vehicles and items of motor vehicle equipment that are imported into the United States for compliance with applicable FMVSS. To be imported free of restriction, a motor vehicle less than 25 years old must be originally manufactured to comply with all applicable FMVSS and bear a label certifying such compliance that is permanently affixed by the vehicle’s VerDate Aug<31>2005 15:11 Jul 07, 2008 Jkt 214001 original (i.e. ‘‘fabricating’’) manufacturer. To be lawfully imported, a new or used item of motor vehicle equipment that is subject to an FMVSS must, as originally manufactured, conform to the standard and be so certified by its original manufacturer. See 49 U.S.C. 30112 and 30115. As noted above, items of motor vehicle equipment that are subject to the FMVSS include tires, rims, brake hoses, brake fluid, seat belt assemblies, lamps, reflective devices, and associated equipment, glazing (automotive glass and plastics), motorcycle helmets, child restraint systems (child safety seats), platform lift systems for the mobility impaired, rear impact guards for trailers, triangular reflective warning devices, and compressed natural gas containers. In most instances, the manufacturer’s certification of compliance with the applicable FMVSS for regulated safety equipment is evidenced by the symbol ‘‘DOT’’ either inscribed on the equipment item in a prescribed location, or placed on the outside of the container in which the equipment item is shipped. As previously noted, NHTSA has authority to investigate possible safetyrelated defects in a motor vehicle equipment item regardless of whether the item is subject to the FMVSS. When an item is subject to a FMVSS, compliance with the standard does not ensure that the item is free of a safetyrelated defect. NHTSA investigates numerous vehicles and items of equipment each year for possible defects. (g) Procedural Requirements for Fabricating Manufacturers Before offering a vehicle or motor vehicle equipment item for sale in the United States, the fabricating manufacturer must: (1) Designate a U.S. resident as its an agent for service of process if the manufacturer is not located in the United States (49 CFR part 551, Subpart D Service of Process on Foreign Manufacturers and Importers) and (2) submit to NHTSA identifying information on itself and the products it manufactures to the FMVSS, not later than 30 days after the manufacturing process begins (49 CFR part 566 Manufacturer Identification). The fabricating manufacturer of a motor vehicle must also submit to NHTSA information the agency will need to decipher the manufacturer’s vehicle identification number or ‘‘VIN’’ format not later than 60 days prior to offering the first vehicle for sale in the United States (49 CFR part 565 Vehicle Identification Number Requirements). The manufacturer of certain regulated PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 39083 equipment items such as brake hoses, glazing (automotive glass and plastics), and tires must label its products with identification numbers assigned to the manufacturer by NHTSA.7 (h) Penalties Manufacturers and importers may be subject to substantial civil penalties for failure to meet the requirements of the statutes and regulations that NHTSA administers. See 49 U.S.C. 30165. Currently, those penalties can be as high as $6,000 for each violation with a maximum of $16,375,000 for a related series of violations. See 49 CFR part 578. (2) Exercise Great Care in Selecting Foreign Manufacturers International trade presents unique risks. A company engaged in importing foreign manufactured goods or considering becoming an importer should have a complete and detailed business plan. The plan should reflect careful consideration of the following questions: • Who will determine the specifications for the product? • On what basis will the product specifications be developed? • Who will design the product? • Who will verify the product’s design? • What laboratory and field tests will be undertaken? • Who will test product prototypes? • What entity will fabricate various parts? • What manufacturing quality control will be undertaken? • How will manufacturing quality control be maintained? • How often will products be tested to ensure continued compliance with the FMVSS? • What documentation will be generated? • What documentation will be maintained? • Who will maintain the documentation? • Who will check the documentation? Compliance with FMVSS is only a part of the considerations. Motor vehicles operate in harsh conditions over many miles and some abuse must be assumed; therefore, avoidance of safety-related defects is critical. Selecting a capable and responsible overseas business partner is one of the best ways to minimize risks. Before selecting a business partner in another country, it is wise to investigate the 7 See 49 CFR 571.106, paragraph S5.2.2(b), relating to brake hoses; 49 CFR 571.205, paragraph S6.2, relating to glazing; and 49 CFR 574.5, relating to tires. E:\FR\FM\08JYN1.SGM 08JYN1 ebenthall on PRODPC60 with NOTICES 39084 Federal Register / Vol. 73, No. 131 / Tuesday, July 8, 2008 / Notices supplier’s reputation using readily available public source information (such as the Internet) or, if possible, by interviewing other customers of the supplier. It is advisable for a prospective importer to check many references and not to limit its inquiries to references that the prospective supplier identifies. If the country in which a manufacturer is located has an established government agency to oversee product safety, that agency’s public records may contain useful information on the company’s history of recalls and regulatory compliance. Importers may also wish to consider requesting the potential supplier’s catalogs and sample products for evaluation. The U.S. Department of Commerce also offers an International Company Profile Report that may assist importers in evaluating potential foreign partners. This report summarizes the financial strength of a company and provides useful information gleaned from the local press, industry contacts, and other sources. More information about this service is available on the Department of Commerce Web site. See http:// www.export.gov/salesandmarketing/ ICP.asp. At a minimum, it is prudent for importers to use existing sources of information to ensure that they will purchase, import, distribute, and sell motor vehicles and motor vehicle equipment items subject to the FMVSS that are produced by foreign manufacturers who: 1. Properly identify themselves and their products to NHTSA (49 CFR part 566); 2. designate a U.S. resident as their agent for service of process (49 CFR part 551, subpart D); 3. furnish NHTSA with VINdeciphering information (if they manufacture ‘‘motor vehicles’’) (49 CFR part 565); and 4. certify their products as complying with all applicable FMVSS and so label their products (49 U.S.C. 30115). It would be advisable for the importer to focus on the specifications for and design of the product and the requirements of all applicable FMVSS covering the product that it wishes to import before beginning negotiations with a prospective overseas business partner. The importer should be well informed about U.S. import regulations and any FMVSS requirements that cover the products the importer intends to import. Before discussions take place with a prospective manufacturer, it may be worthwhile for the importer to have translated into the language used by that manufacturer the FMVSS that are applicable to the product and the VerDate Aug<31>2005 15:11 Jul 07, 2008 Jkt 214001 agency regulations pertaining to manufacturers located outside the United States. It is reasonable to discuss with the prospective manufacturer at the outset the need for incorporating the requirements of the applicable FMVSS into the product’s design because it is far less expensive to change the product’s design in the planning stage than after the product is manufactured, when tooling must be changed or an expensive safety recall conducted. If the importer intends to have the manufacturer produce a replacement part for a motor vehicle, the part installed as original equipment may be used as a reference, keeping in mind the need to avoid infringing on any applicable patent. The importer and manufacturer may wish to consider conducting a review of the product’s design (a ‘‘design review’’) that involves examining the product’s configuration, the materials used in its fabrication, and its labeling and packaging.8 Importers without staff expertise and experience in design review may consider hiring a qualified consultant. It may be worthwhile for the design review to include a foreseeable use analysis,9 which involves integrating safety into the product’s design. An effective foreseeable use analysis may reveal substantial safety hazards that involve risks of injury or impairment of health that are related to the product’s characteristics or deficiencies. Apart from FMVSS, if any, that apply to the product, the importer may wish to measure the product’s design against a known set of objectives for the product and compare the product’s design to that of similar products produced by other manufacturers. When no FMVSS apply, it may also be sensible to measure the product’s design against accepted product standards such as a set of voluntary industry standards, should one exist.10 To find applicable standards, importers and manufacturers may wish to check the Web sites of standard-setting bodies for products of the type at issue, such as the Underwriters Laboratories Inc. (UL), American National Standards Institute (ANSI), American Welding Society (AWS), ASTM International (originally the American Society for Testing and 8 U.S. Consumer Product Safety Commission (CPSC), ‘‘Handbook For Manufacturing Safer Consumer Products’’ (Washington, DC, July 2006), p. 9. http://www.cpsc.gov/businfo/intl/ handbookenglishaug05.pdf. Note: many of our suggestions are based on CPSC’s Handbook, which provides a wealth of helpful ideas that are generally applicable to various types of manufacturing processes. 9 Ibid, p. 10. 10 Ibid, p. 26. PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 Materials or ASTM), and the Society of Automotive Engineers, International. See: http://www.sae.org. Manufacturers of certain automotive replacement parts such as lighting equipment may wish to visit the Web site of the Certified Automotive Parts Association (CAPA) for more information about that organization’s certification program. See http://www.capacertified.org/home.asp. These examples are not intended to be all-inclusive. It may be desirable for an importer to contact other standardsetting and certification organizations associated with the type of products it wishes to have manufactured, should such organizations exist. Some manufacturers use other systematic analysis tools such as a Failure Modes and Effects Analysis (FMEA) 11 to identify potential safety hazards and to improve their products over time by reducing or eliminating failures. Using FMEA, failures can be prioritized according to how serious their consequences are, how frequently they may occur, and how easily they can be detected.12 It may be advisable to have parties with expertise in standards and regulations compliance, in-use durability, quality assurance, and customer service examine the results of the importer’s product design review. Importers and manufacturers that do not have in-house expertise may consider using an accredited test laboratory to evaluate the safety of a product.13 Importers should consider creating records that identify changes in the product’s design or in the production process and to incorporate changes that affect the product’s use into the documents that accompany the product when sold. When changes are made to the product’s design or to the production process, importers should obtain additional test data to assure the product continues to comply with stated technical specifications and with all applicable FMVSS. For traceability 14 or recall reasons, changed products can be identified by being marked or stamped with ‘‘date’’ or ‘‘lot’’ codes, or in another manner that distinguishes new products from old. It makes good sense to use current versions of the supporting technical documentation such as drawings; replacement parts data; instructions for the product’s production, inspection, testing, and 11 The FMEA process was originally developed by the U.S. military in the 1940s. See: American Society for Quality, http://www.asq.org/learnabout-quality/process-analysis-tools/overview/ fmea.html. 12 CPSC, Handbook, p. 10. 13 Ibid, p. 10. 14 Ibid, p. 25. E:\FR\FM\08JYN1.SGM 08JYN1 Federal Register / Vol. 73, No. 131 / Tuesday, July 8, 2008 / Notices repair; as well as operating handbooks, and to remove from use obsolete documents and data.15 (3) Inspect Foreign Manufacturing Facilities Before entering into a written contract, we believe it is prudent for the U.S. importer to personally visit the supplier’s facility and to determine whether the manufacturer is properly licensed by the appropriate government agencies. Several trips may be necessary to conduct an objective evaluation of the company, its factory, and its management. To reduce the potential for fraud, it is preferable to deal directly with the manufacturer and to avoid dealing with representatives (such as trade groups) that claim to represent a manufacturer. When dealing with a business partner of the manufacturer, it is generally advisable to determine whether the partner is a subsidiary of a larger company 16 and whether the importer has recourse against the parent company if the subsidiary defaults on its obligations. It may also be reasonable to hire a consultant if the importer has limited knowledge of, or experience with, the culture and trade practices of a foreign country. While visiting a manufacturer’s foreign facilities, the importer may consider asking the manufacturer’s production managers to identify the quality control mechanisms that are in place (e.g., ISO 9000 series quality assurance compliance) and it may be helpful to observe whether there is evidence of good quality workmanship. During the on-site visit, the importer should look for counterfeit commodities or evidence of trademark or copyright violations such as fraudulent seals made to look like those produced by certification organizations. While NHTSA does not have authority to enforce statutes that prohibit counterfeit products from being imported and the agency is aware that in some situations counterfeit products may, in fact, comply with applicable FMVSS, importers should avoid business dealings with known or suspected counterfeiters. Importers should be aware that many Federal departments and agencies are working with industry to stop the proliferation of counterfeit products.17 Also assisting in these ebenthall on PRODPC60 with NOTICES 15 Ibid, p. 24. 16 For example, see U.S. Department of Commerce (DOC), ‘‘Essential China Advice’’ (Washington, DC, 2001–2008) http://www.buyusa.gov/china/en/ chinabiztips.html (February 22, 2008). 17 The Office of the U.S. Trade Representative and the Departments of Commerce, State, Justice, and Homeland Security lead a government-wide initiative, the Strategy Targeting Organized Piracy VerDate Aug<31>2005 15:11 Jul 07, 2008 Jkt 214001 efforts are many independent organizations such as the U.S. Chamber of Commerce, which represents more than three million businesses.18 It is advisable to reach agreement with a prospective supplier on what constitutes substandard or defective products, and on who will be responsible for conducting recalls of products that have a safety-related defect or a noncompliance with a FMVSS. Of particular importance in this context are the importer’s obligations under the Vehicle Safety Act to make determinations as to whether a product contains a safety-related defect or does not comply with a FMVSS. The importer should make clear to the foreign fabricating manufacturer that the importer makes the determination of a safety-related defect or noncompliance under U.S. law regardless of the fabricating manufacturer’s views. The importer must recognize that its liability to conduct a recall when the facts so warrant under the Vehicle Safety Act is joint and several and the willingness of the foreign fabricating manufacturer to pay for all or some of the costs of the recall is not relevant. Nonetheless, the importer may wish to include provisions in the contract with the foreign fabricating manufacturer that covers contingencies, including recalls. All aspects of the product’s design and the production process may be considered for inclusion in the written contract, such as inspection and testing procedures and any documentation the importer requires, including work orders, operation sheets, inspection logs, repair logs, and test procedure checklists.19 The contract may also specify under what circumstances the product’s design may be changed (if at all), what equipment must be used for particular manufacturing operations, product traceability measures to be employed, and the types of forms to be used for recording quantitative data such as test readings. It is useful for the contract to specify exact terms of payment, performance standards, and timelines for deliveries and payments. Other arrangements that are reached between the importer and supplier should also be made in writing, such as those covering the importer’s rights to visit the production facility in order to (STOP!), to fight billions of dollars in global trade in pirated and counterfeit goods that cheat American innovators and manufacturers, hurt the U.S. economy and endanger consumers worldwide. See: http://www.stopfakes.gov or call 1–866–999– HALT. 18 The U.S. Chamber of Commerce sponsors the Coalition Against Counterfeiting and Piracy. See http://www.thetruecosts.org/. 19 CPSC, Handbook, p. 28. PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 39085 provide guidance and conduct product inspections. The importer should obtain sound legal guidance before entering into an agreement. Following execution of the contract, it is wise to adhere to the contract provisions or risk the costs of a legal dispute in a foreign country. The importer should obey all laws and regulations of the foreign country and be wary of any offer by the partner to ignore or avoid those laws. Also, the importer may wish to become familiar with U.S. Department of Commerce, Bureau of Industry and Security (BIS) regulations relating to the transfer of dual use technology to certain foreign countries. U.S. statutes prohibit transfer of some sensitive technologies without a license. See http://www.bis.doc.gov/2. It may be imprudent to assume that the overseas operations will run by themselves and visits to the foreign manufacturer on a frequent basis may be needed to evaluate the state of affairs. During these visits, the importer should, if possible, talk to employees to learn of any substitutions of materials, modifications of the product’s design, and manufacturing problems that were encountered. The importer should verify that the manufacturer is complying with contractual requirements by inspecting the facilities, production operations, inspection and test records, supplies, and audit results. The importer should also ensure the product’s continued compliance with the standards by having performed ongoing FMVSS compliance tests. This inspection and testing will provide feedback into the nature of the operation and is part of the importer’s oversight of the operation and its quality assurance/quality control. The importer should not delay taking corrective action with the manufacturer when circumstances necessitate such action.20 (4) Inspect Goods Either Before They Are Exported to or Distributed in the United States Different products, designs, and fabrication processes will require various levels of precision and accuracy of manufacturing equipment and tooling.21 In all manufacturing processes, there is a need to monitor how well the products meet given specifications because products will deviate from specifications for reasons such as new tooling, aging machinery, and human error. Manufacturers of quality products use mathematical models for calibrating production 20 Ibid, 21 Ibid, E:\FR\FM\08JYN1.SGM p. 10. p. 28. 08JYN1 ebenthall on PRODPC60 with NOTICES 39086 Federal Register / Vol. 73, No. 131 / Tuesday, July 8, 2008 / Notices equipment, controlling the output of the manufacturing process, and auditing production processes to attain improvements. Therefore, importers may wish to carefully consider instituting a quality control program at the outset. It would be wise for an importer to bear in mind that even though a product appears to be well manufactured, this does not necessarily mean that it also complies with applicable FMVSS and will not prove to be defective in actual use. While it is important to produce quality products, it is crucial that manufacturers test, on a continuing basis, their products to verify compliance with the FMVSS. To better shoulder the costs of any testing needed to assure compliance, smaller importers may wish to consider consortium purchasing, which would allow them to pool their resources. To ensure that product requirements are within tolerances, it is sensible to collect product samples at predetermined intervals and inspect them for compliance with any specifications that are identified in advance. The purpose of the inspection is to ensure that the products safely perform their intended functions. Inspection procedures may include a visual examination, testing with appropriate instruments, measuring, or other forms of evaluation.22 Manufacturers collect production samples for inspection based on mathematical models, which are beyond the scope of this notice, but that are critical to ensuring the quality of the end products. Test programs that are based on statistically sound sampling techniques will increase the probability that problems will be quickly identified and remedied before the products are shipped. Obviously, it is preferable from a cost perspective for nonconforming or substandard products to be discovered by the manufacturer before shipping costs are incurred. It is generally expected that quality control issues will be greater within the first batch of products made by the new manufacturer. After the initial production run, the importer and manufacturer may want to conduct an inspection to determine whether the initial products function as intended, whether their dimensions are within tolerances, and whether their appearance is satisfactory. The importer and manufacturer may consider conducting comprehensive tests of representative products to ensure compliance with design specifications. It is desirable to have an inspection plan to specify exactly what is to be inspected, how an inspection will be conducted and how often, and the types of gauges, tools, or instruments that will be used. If inspections are particularly critical to product safety, the inspection plan may require that they be performed by designated specialized or certified personnel.23 It would be advisable to include inspection procedures in the contract and any changes should be mutually agreed upon so that a record of changes is maintained. We also suggest that the contract clearly state how the costs of quality control inspection and any need to redesign a product or process based on such inspections will be apportioned. From the moment products leave the manufacturer until they are acquired by consumers, they are exposed to numerous contingencies that can affect their safety or usability. For these reasons, it is best not to terminate quality control measures at the port and the prudent importer might consider instituting quality control measures at storage locations and throughout the domestic distribution process. Distribution practices directly influence the safety of consumer products so it is wise to exercise control over packaging and shipping operations. This control includes the selection of adequate packaging materials, design of methods of packaging that preclude damage in shipment, and selection of shipping methods consistent with the physical properties of the product. Packaging and shipping techniques may need to be revised as experience dictates. In those instances where distributors are involved in assembly or test operations before delivery to the consumer it is wise to provide them with current and adequate assembly and test instructions and the importer may wish to ensure that these instructions are followed.24 When quality control problems are encountered, it may be useful to determine what has caused the problem and to collaborate with the manufacturer and participants in the distribution process to remediate the cause and prevent similar future problems. We believe it is wise to keep in mind that reputable manufacturers want to be apprised of problems and will work for compliance with the importer’s requirements. Developing and nurturing personal relationships with the business partner may be helpful and may pay dividends if problems are encountered.25 To (5) Identify the Product’s Country of Origin It is generally required that an imported product be properly marked with its country of origin. The pertinent statute requires that, unless excepted, every article of foreign origin (or its container) imported into the United States must be marked with the article’s country of origin. See section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304). The purpose of the marking requirement is to inform the ultimate purchaser in the United States of the country in which the imported article was produced. Articles that are not marked at the time of importation with the English name of their country of origin may be subject to additional duties unless they are properly marked after importation, or are exported or destroyed under CBP supervision. CBP allows importers, where administratively practicable, to mark goods that are not marked at the time of importation, prior to their release from CBP’s control or custody. This rule does not apply to an importer that has repeatedly violated the country of origin marking requirements after p. 35. VerDate Aug<31>2005 15:11 Jul 07, 2008 Jkt 214001 PO 00000 23 Ibid, 26 CPSC, 24 Ibid, 22 Ibid, p. 36. p. 40. 25 U.S. DOC, Essential Advice. prevent potentially dangerous products from being delivered to consumers, it may be desirable for importers and manufacturers to discuss the need for prompt corrective actions and to agree on those in advance. These actions may include determining what caused the problem, how to prevent future problems, and the removal of problem products from the production and distribution channels before they reach consumers.26 Locating products within the production and distribution system is crucial to preventing hazardous products from being delivered to consumers after safety-defects become apparent. The importer might consider being prepared to provide the overseas partner with training and technical assistance to assure product quality.27 This commitment to quality control may minimize defect costs and maintain profits by ensuring the end user’s satisfaction, thereby enhancing the prospect for repeat business. On the other hand, neglecting oversight may result in compromised product quality and could possibly lead to legal consequences at home and abroad. It is worth noting that the foreign country’s court system may not be relied on to offer a legal settlement consistent with U.S. practice.28 27 U.S. Frm 00119 Fmt 4703 Sfmt 4703 Handbook, p. 45. DOC, Essential Advice. 28 Ibid. E:\FR\FM\08JYN1.SGM 08JYN1 39087 Federal Register / Vol. 73, No. 131 / Tuesday, July 8, 2008 / Notices receiving written notification from CBP that the goods are required to be marked prior to importation. It is also important to keep in mind that any person who removes, destroys, alters, covers, or obliterates, with the intent of concealing, the country of origin marking on an imported article could be subject to criminal prosecution.29 (6) Establish a Consumer Service Program It is wise for importers to establish and maintain an effective consumer service program because good service leads to satisfied customers and repeat business. An effective consumer service program may also assist the importer in quickly identifying quality control and safety-related problems and allow the importer to remedy those problems before they become widespread. Importers should consider establishing a consumer service program that includes the following elements: (a) Consumer Education An effective consumer service program will inform consumers using product manuals or instructions on how products are to be assembled, installed, and operated to prevent safety hazards. For example, NHTSA recommends that consumers read the instruction manual provided with a newly purchased child safety seat as well as the seat belt and child seat installation section of their vehicle owner’s manual before attempting to install and use a child safety seat. (b) Product Service An effective consumer service program will make it easy for consumers to obtain replacement parts and will inform consumers how and where to take the product for servicing, particularly for deficiencies or malfunctions that are potential causes of safety hazards. Importers may consider providing a U.S. telephone number with the product for consumers to call if they have questions regarding the product. (c) Recordkeeping An effective consumer service program will include a records system that identifies a product by serial number, model, and date of manufacture and that identifies its location in the distribution system and after sale to a consumer. Importers should be aware that recordkeeping becomes very important for notifying consumers, retailers, and distributors of products when a safety recall is announced. (d) Safety Recall Plan An effective consumer service program will include a plan for the rapid recall of imported products from consumers, distributors, and dealers. The plan should include procedures to inform consumers how the importer will respond to safety defects or noncompliances with the FMVSS that are determined to exist in a product.30 The recall plan should also establish procedures for notifying NHTSA about safety-related defects or noncompliances with the FMVSS, as required by agency regulations. The recall plan should be periodically evaluated and amended as necessary. (e) Intervention If a noncompliance or safety-related defect becomes apparent, an effective consumer service program will assist an importer in locating products within the production and distribution system and help to prevent problem products from being delivered to consumers. (f) Notification In the event of a recall, the most important factor is the ability to inform as many owners, dealers, retailers, and distributors of the product as possible. Notifying owners will be the importer’s responsibility. While it may be impractical to maintain records identifying all retail purchasers of a particular consumer product, the importer may wish to make a reasonable effort in that direction by requesting distributors, dealers or retailers to maintain such records or by including with products self-addressed mailing cards for consumers to use, if they so choose, to register their ownership of the product.31 Where it is a requirement to maintain records identifying retail purchasers of a product, such as is the case for tires and for motor vehicles, the importer must ensure that distributors, dealers, and retailers understand their obligations under existing regulations. For example, see 49 CFR part 574 Tire Identification and Recordkeeping. (g) Business Process Monitoring Other than complaints received directly from the importer’s consumer service program, information that could assist in identifying safety-related defects or noncompliances with the FMVSS includes insurance claims, lawsuits, product return data from business partners, the results of ongoing quality assurance testing, and information about products that share common parts or platforms. The importer should also pay close attention to the EWR data it submits to NHTSA because that information may be very useful in identifying safety-related problems early in the product’s history. (7) Contact NHTSA Concerning Manufacturer/Importer Reporting Requirements, Safety Compliance, and Defect Issues Enhanced product safety for imported motor vehicles and equipment will result from a collaborative effort between the importer community, manufacturers, and NHTSA. To this end, we offer the following agency contact numbers and Internet resources to help answer questions about these recommended best importer practices. Office of Vehicle Safety Compliance Topic NHTSA Office/Internet General questions about importing vehicles and equipment items ......................... Import and Certification Division ............ ebenthall on PRODPC60 with NOTICES General Importation Information ............................................................................... Questions about how a manufacturer informs NHTSA about its company and the products it manufactures. Questions about how to provide NHTSA with the manufacturer’s vehicle identification number deciphering information. 29 U.S. Customs and Border Protection (CBP), ‘‘Marking of Country of Origin’’ (Washington, DC, December 2004) Publication # 0000–0539 http:// VerDate Aug<31>2005 15:11 Jul 07, 2008 Jkt 214001 Frm 00120 Fmt 4703 Sfmt 4703 (202) 366–5291 http://www.nhtsa.dot.gov/cars/rules/import/ Import and Certification Division ............ (202) 366–5291 Import and Certification Division ............ (202) 366–5291 www.cbp.gov/xp/cgov/toolbox/publications/trade/ (February 22, 2008). PO 00000 Telephone No. 30 CPSC, 31 Ibid, E:\FR\FM\08JYN1.SGM Handbook, p. 42. p. 45. 08JYN1 39088 Federal Register / Vol. 73, No. 131 / Tuesday, July 8, 2008 / Notices Office of Vehicle Safety Compliance Topic NHTSA Office/Internet Questions about NHTSA ID numbers that are assigned to equipment manufacturers of brake hoses, glazing (glass), and tires. Equipment Division ................................. Information to Assist New Manufacturers ................................................................ Telephone No. (202) 366–5322 http://www.nhtsa.dot.gov/cars/rules/maninfo/ Questions about FMVSS as they relate to equipment items (i.e., tires, rims, brake hoses, brake fluid, seat belt assemblies, lighting equipment, glazing (automotive glass and plastics), motorcycle helmets, child restraint systems (child safety seats), platform lift systems for the mobility impaired, rear impact guards for trailers, triangular reflective warning devices, and compressed natural gas containers). Equipment Division ................................. (202) 366–5322 Federal motor vehicle safety standards (FMVSS) ................................................... http://www.nhtsa.dot.gov/cars/rules/ NHTSA’s Manufacturer Databases .......................................................................... www.nhtsa.dot.gov/cars/rules/manufacture Government Vehicle Safety Information .................................................................. http://www.safercar.gov/ Office of Defects Investigation Topic NHTSA Office/Internet Questions about Early Warning Reporting (EWR) ................................................... Early Warning Division ........................... Early Warning Reporting .......................................................................................... Telephone No. (202) 366–4238 http://www-odi.nhtsa.dot.gov/ewr/ewr.cfm Questions about Defects and Recalls ...................................................................... Office of Defects Investigation ............... Defects Investigations .............................................................................................. (202) 366–5210 http://www-odi.nhtsa.dot.gov/ Office of Chief Counsel Topic NHTSA Office/Internet Telephone No. Questions about how the statutes and regulations administered by NHTSA are interpreted. Office of Chief Counsel ................. Requests for interpretations should be made in writing. NHTSA Chief Counsel interpretive letters .............................................. http://isearch.nhtsa.gov/ NHTSA Statutory Authorities ................................................................... http://www.nhtsa.dot.gov/nhtsa/Cfc_title49/index.html NHTSA Regulations ................................................................................ http://www.nhtsa.dot.gov/cars/rules/ Questions about how to designate a U.S. resident as an agent for service of process. Suggested Designation of Agent for Service of Process 49 CFR Part 551, Subpart D. ebenthall on PRODPC60 with NOTICES (8) General Assistance with Federal Regulations The Office of Management and Budget, in conjunction with the U.S. Small Business Administration, publishes a one-stop Internet resource to make it easier for importers to understand Federal regulations, including those administered by NHTSA. The Web site provides a point of contact at each agency to answer specific questions.32 See: http:// Small Business Paperwork Relief Act of 2002 (SBPRA) requires each Federal agency to establish a point of contact to act as a liaison between the agency and small businesses. In addition, SBPRA requires the Office of Management and Budget (OMB), in conjunction with the Small Business Administration, to publish on the Internet Office of Chief Counsel ................. http://www.nhtsa.dot.gov/cars/rules/manufacture/agent/customer.html www.business.gov/contacts/federal/. U.S. Customs and Border Protection (CBP), an agency of the U.S. Department of Homeland Security, has also published ‘‘Importing into the United States: A Guide for Commercial Importers,’’ which provides wideranging information about the importing process and import requirements. See: http://www.cbp.gov/xp/cgov/toolbox/ publications/trade/. Authority: E.O. 13439, 72 FR 40051. 32 The VerDate Aug<31>2005 15:11 Jul 07, 2008 Jkt 214001 a list of compliance assistance resources available at Federal agencies for small businesses. PO 00000 Frm 00121 Fmt 4703 (202) 366–1834. Sfmt 4703 Issued on: July 1, 2008. Daniel C. Smith, Associate Administrator for Enforcement. [FR Doc. E8–15494 Filed 7–7–08; 8:45 am] BILLING CODE 4910–59–P DEPARTMENT OF THE TREASURY Open Meeting of the Advisory Committee on the Auditing Profession Office of the Undersecretary for Domestic Finance, Treasury. ACTION: Notice of meeting. AGENCY: SUMMARY: The Department of the Treasury’s Advisory Committee on the Auditing Profession will convene a E:\FR\FM\08JYN1.SGM 08JYN1

Agencies

[Federal Register Volume 73, Number 131 (Tuesday, July 8, 2008)]
[Notices]
[Pages 39078-39088]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-15494]


-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA 2008-0113; Notice 1]


Request for Public Comments on Guidance and Recommended Best 
Importer Practices To Enhance the Safety of Imported Motor Vehicles and 
Motor Vehicle Equipment

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

ACTION: Request for public comments.

-----------------------------------------------------------------------

SUMMARY: This notice solicits comments from the public, from importers 
and manufacturers of motor vehicles and motor vehicle equipment, and 
from other interested parties concerning best practices to be followed 
by importers of motor vehicles and motor vehicle equipment to reduce 
the likelihood of importing products that contain defects related to 
motor vehicle safety or do not comply with applicable Federal motor 
vehicle safety standards.

DATES: You should submit your comments early enough to ensure that 
Docket Management receives them not later than August 7, 2008.

ADDRESSES: Comments should refer to the docket and notice numbers above 
and be submitted 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, 1200 New Jersey Avenue, SE., West Building Ground 
Floor, Room W12-140, Washington, DC 20590-0001.
     Hand Delivery or Courier: West Building Ground Floor, Room 
W12-140, 1200 New Jersey Avenue, SE., between 9 a.m. and 5 p.m. ET, 
Monday through Friday, except Federal holidays.
     Fax: 202-493-2251.
    Instructions: For detailed instructions on submitting comments, see 
the Public Participation heading of the Supplementary Information 
section of this document. 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 heading 
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) or you may visit http://
DocketInfo.dot.gov.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov and follow the 
online instructions for accessing the docket or visit the docket at the 
street address listed above.

FOR FURTHER INFORMATION CONTACT: Clint Lindsay, Office of Vehicle 
Safety Compliance, National Highway Traffic Safety Administration, 1200 
New Jersey Avenue, SE., Washington, DC 20590 (202-366-5288).

SUPPLEMENTARY INFORMATION:

I. Background

A. National Highway Traffic Safety Administration

    The National Highway Traffic Safety Administration (NHTSA) 
administers the National Traffic and Motor Vehicle Safety Act of 1966, 
as amended, 49 U.S.C. chapter 301 (the Vehicle Safety Act). Under that 
authority, NHTSA issues and enforces Federal motor vehicle safety 
standards (FMVSS) that apply to motor vehicles and to certain items of 
motor vehicle equipment. NHTSA also monitors motor vehicles and items 
of motor vehicle equipment that are imported into the United States for 
compliance with applicable FMVSS. In recent years, an ever-increasing 
number of motor vehicles and motor vehicle equipment items sold in the 
United States have been imported. For example, in 1996 imported tires 
comprised just 19 percent of the 282 million tires sold that year in 
the United States. By 2006, imported tires rose to 46 percent of all 
tire sales, with 140 million tires being imported. Nearly all 
motorcycle helmets are now imported, as is the case for a large 
percentage of vehicle lighting equipment sold in this country.
    NHTSA's enforcement program has two major elements, compliance 
testing and defects investigation. As the volume

[[Page 39079]]

of motor vehicle and equipment imports has increased, NHTSA's scrutiny 
of those imports through both compliance testing and defect 
investigations has also grown. However, recent experience has 
demonstrated that companies importing products regulated by NHTSA, 
particularly motor vehicle equipment, play an especially important role 
in ensuring that those items comply with the FMVSS and are not likely 
to be defective. At the same time, both NHTSA's recent experience and 
that of other agencies with regulatory authority over the safety of 
imported goods indicate that the entire importing community could 
benefit by following practices that help ensure the safety of imported 
products and reduce the likelihood of unsafe products entering the 
United States.

B. The Interagency Working Group Report--Strategic Framework

    On July 18, 2007, the President issued Executive Order 13439 to 
establish the Interagency Working Group on Import Safety (the ``Working 
Group''). The Department of Transportation, including NHTSA, 
participated in the Working Group. As part of its mission, the Working 
Group identified strategies that could be pursued within existing 
resources to promote the safety of imported products. To begin 
identifying best practices for import safety, the Working Group held 
consultations with the private sector, reviewed current import safety 
procedures and methods, surveyed the authorities and practices of 
Federal agencies, and worked with the importing community. The Working 
Group recognized that U.S. importers are responsible for ensuring the 
safety of regulated products they import into the United States and 
should follow best practices to assure safety through methods that 
include: (1) Selecting foreign manufacturers to produce their products; 
(2) inspecting foreign manufacturing facilities; (3) inspecting goods 
produced on their behalf either before export or before distribution in 
the United States; (4) identifying the product's country of origin; and 
(5) safeguarding the supply chain.
    In September 2007, the Working Group published a report entitled 
``Protecting American Consumers Every Step of the Way: A Strategic 
Framework for Continual Improvement in Import Safety'' (the ``Strategic 
Framework''), which inaugurated the process of identifying action steps 
needed to enhance the safety of imported products.\1\ The Strategic 
Framework promotes taking a cost-effective, risk-based approach that 
has the following key principles:
---------------------------------------------------------------------------

    \1\ Interagency Working Group on Import Safety, ``Protecting 
American Consumers Every Step of the Way: A strategic framework for 
continual improvement in import safety'' (Washington, DC, September 
2007) http://www.importsafety.gov/report/report.pdf.
---------------------------------------------------------------------------

    (1) Prevention--Prevent harm in the first place. The Strategic 
Framework recognizes that the Federal government must work with the 
private sector and with foreign governments to adopt an approach to 
import safety that builds safety into the manufacturing and 
distribution processes;
    (2) Intervention--Intervene when risks are identified. The 
Strategic Framework encourages Federal, state, local, and foreign 
governments, along with foreign manufacturers and the importing 
community, to adopt more effective techniques for identifying potential 
noncompliant and/or defective products. When problems are identified, 
the Strategic Framework recognizes that government officials must act 
swiftly, and in a coordinated manner, to seize, destroy or otherwise 
prevent noncompliant and/or defective products from advancing beyond 
the point-of-entry; and
    (3) Response--Respond rapidly after harm has occurred. In the event 
that an unsafe imported product makes its way into domestic commerce, 
the Strategic Framework recommends swift action to limit potential 
exposure and harm to the American public.

C. Working Group--Action Plan

    The Working Group promised to solicit extensive comments and 
recommendations from the public, and to provide an action plan by mid-
November. On November 6, 2007, the Working Group submitted its report 
entitled ``Action Plan for Import Safety: A roadmap for continual 
improvement'' (the ``Action Plan'').\2\ As described in the Action 
Plan, that document represents the culmination of thousands of hours of 
research and analysis, as well as public comment received from hundreds 
of stakeholders. In the Action Plan, the Working Group set forth 14 
broad recommendations and 50 specific action steps based on the key 
principles described above--Prevention, Intervention, and Response. For 
each of these key principles, the Action Plan identifies the cross-
cutting building blocks that departments and agencies should use to 
guide their import safety programs. Building Block Number 2, with the 
subject heading Increase Accountability, Enforcement, and Deterrence, 
acknowledges that while it is important to remember that industry has a 
financial interest to sell safe products to consumers, all stakeholders 
involved in the production, distribution, and sale of imports must be 
held accountable to ensure that imported products meet Federal safety 
standards in the United States. The Action Plan recommended that 
Federal agencies ``work with the importing community and other members 
of the public to develop Good Importer Practices and issue guidance 
with respect to particular product categories.'' \3\ Although some 
members of the importing community have established best practices on 
their own, the majority of importers do not have available best 
practices that are focused on ensuring product safety. The Working 
Group believes that by developing best importer practices, the entire 
importing community may benefit from taking appropriate steps to ensure 
the safety of imported products and to reduce the likelihood of unsafe 
products entering the United States.
---------------------------------------------------------------------------

    \2\ Interagency Working Group on Import Safety, ``Action Plan 
for Import Safety: A roadmap for continual improvement'' 
(Washington, DC, November 2007) http://www.importsafety.gov/report/
actionplan.pdf.
    \3\ The Action Plan, Recommendation 3.1, pp. 20-21.
---------------------------------------------------------------------------

II. NHTSA's Implementation of the Working Group's Recommendation on 
Best Importer Practices

    The Action Plan encourages Federal agencies to work with the 
importing community to develop best importer practices that will 
provide strategies for evaluating foreign suppliers and imported 
products. The Food and Drug Administration (FDA) is in the process of 
issuing a set of Good Importer Practice recommendations on behalf of 
select Federal agencies and departments that are members of the 
Interagency Working Group on Import Safety. Those departments and 
agencies include the Consumer Product Safety Commission, the 
Environmental Protection Agency, the U.S. Department of Agriculture, 
the U.S. Department of Commerce, the U.S. Department of Health and 
Human Services, the U.S. Department of Homeland Security, and the U.S. 
Department of Transportation (DOT). As the DOT representative to this 
working group, NHTSA has participated in the development of the Good 
Importer Practice recommendations that are awaiting issuance by the 
FDA. Those recommendations are intended to be generic in nature, and 
not specific to the products that are regulated by any particular 
Federal agency. In contrast, the Best Importer Practice recommendations 
that are the subject of this notice are intended for importers of

[[Page 39080]]

motor vehicles and motor vehicle equipment, the products that are 
regulated by NHTSA. The FDA will be publishing a Federal Register 
notice in the future to solicit public comments on the generic Good 
Importer Practices recommendations.
    In this notice, NHTSA begins the process of assembling for guidance 
and informative purposes a set of suggested best practices for 
importers of motor vehicles and motor vehicle equipment. NHTSA is not 
establishing a binding set of rules on best practices or even 
suggesting that a single set of best practices would apply in all 
situations. The agency fully realizes that best practices may vary 
widely depending on the item being imported and the scale of an 
importer's operations. We also recognize that such practices must 
remain fluid to account for changes in safety regulations and the 
global economic environment. Importers remain free to choose the 
practices that best fit their needs in ensuring compliant and defect-
free products. Moreover, these recommended practices do not establish 
any defenses to any violations of the statutes and regulations that 
NHTSA administers.
    In the paragraphs that follow, we have presented our proposed 
recommendations on best importer practices under the following 
headings:
     Fully Understand the Importer's Obligations under Motor 
Vehicle Safety Statutes and Regulations;
     Exercise Great Care in Selecting Foreign Manufacturers;
     Inspect Foreign Manufacturing Facilities;
     Inspect Goods Either Before They Are Exported to or 
Distributed in the United States;
     Identify the Product's Country of Origin;
     Establish a Consumer Service Program;
     Contact NHTSA Concerning Manufacturer/Importer Reporting 
Requirements, Safety Compliance, and Defect Issues; and
     General Assistance with Federal Regulations.
    After receiving comments, we will issue a subsequent notice 
delineating a final set of recommended best practices for informative 
purposes. We will also post those best practices on the agency's Web 
site for easy reference.

III. Comments and Recommendations Requested

    Under the Vehicle Safety Act, manufacturers, including importers, 
are responsible for the safety of their products that are sold in or 
otherwise enter the United States. NHTSA has a standard setting and 
oversight/enforcement role and may issue guidance that provides 
valuable information to the affected communities. U.S. consumers 
provide valuable feedback to manufacturers and to NHTSA, which has a 
hotline for consumers to report problems with motor vehicles and motor 
vehicle equipment. To further this objective, the agency is asking the 
public, the importing community, and both foreign and domestic 
fabricating manufacturers of motor vehicles and motor vehicle equipment 
to provide comments and recommendations that address the agency's 
initial thoughts on the suggested guidance regarding best importer 
practices set forth below.
    We are confident that capable and responsible manufacturers possess 
a body of knowledge about their respective products that, if shared, 
could benefit the importing community. We also welcome comments and 
recommendations from accreditation and certification bodies, as well as 
professional organizations with interests relating to best practices, 
particularly in the area of monitoring engineering design and 
manufacturing processes and facilities, recordkeeping incident to those 
activities, assessing safety defects and noncompliances and taking 
needed corrective actions, and facilitating continual process 
improvements. Commenters who recommend specific best practices should 
be careful to address the practical impacts that those practices may 
have on businesses of differing size and the relative costs and 
benefits of implementing various practices.

IV. Public Participation

How Do I Prepare and Submit Comments?

    Your comments must be written in English. To ensure that your 
comments are correctly filed in the Docket, please include the docket 
number of this document in your comments.
    Your comments must not be more than 15 pages long (49 CFR 553.21). 
We established this limit to encourage you to write your primary 
comments in a concise fashion. However, you may attach necessary 
additional documents to your comments. There is no limit on the length 
of the attachments.
    Please submit two copies of your comments, including the 
attachments, to Docket Management identified at the beginning of this 
document, under ADDRESSES.

How Can I Be Sure That My Comments Were Received?

    If you wish Docket Management to notify you upon its receipt of 
your comments, enclose a self-addressed, stamped postcard in the 
envelope containing your comments. Upon receiving your comments, Docket 
Management will return the postcard by mail.

How Do I Submit Confidential Business Information?

    If you wish to submit any information under a claim of 
confidentiality, you must follow the procedures found in 49 CFR part 
512. Requests for confidential treatment are submitted to the Chief 
Counsel, NHTSA, (NCC-111), Room W41-227, 1200 New Jersey Avenue, SE., 
Washington, DC 20590. Each request must be made in writing, explain the 
basis for the request and describe the materials for which confidential 
treatment is sought. Confidential information must be properly marked 
and accompanied by a certification attesting to the confidential nature 
of the materials. Each request for confidential treatment should 
include two copies of the confidential material and one copy from which 
the information claimed as confidential has been removed. In addition, 
you should submit two additional copies of the information without the 
claimed confidential business information to Docket Management at the 
address given above under ADDRESSES.

Will the Agency Consider Late Comments?

    We will consider all comments that Docket Management receives 
before the close of business on the comment closing date identified at 
the beginning of this notice under DATES. To the extent possible, we 
will also consider comments that Docket Management receives after that 
date.

How Can I Read the Comments Submitted by Other People?

    You may read the comments received by Docket Management at the 
address and times given at the beginning of this document under 
ADDRESSES.
    You may also see the comments on the Internet. To read the comments 
on the Internet, take the following steps:
    (1) Go to the Federal Docket Management System (FDMS) Web page 
http://www.regulations.gov.
    (2) On that page, click on ``search for dockets.''
    (3) On the next page (http://www.regulations.gov/fdmspublic/
component/main), select NATIONAL HIGHWAY TRAFFIC SAFETY

[[Page 39081]]

ADMINISTRATION from the drop-down menu in the Agency field, enter the 
Docket ID number and title shown at the heading of this document, and 
select ``NOTICES'' from the drop-down menu in the Type field.
    (4) After entering that information, click on ``submit.''
    (5) The next page contains docket summary information for the 
docket you selected. Click on the comments you wish to see. You may 
download the comments. Although the comments are imaged documents, 
instead of the word processing documents, the ``pdf'' versions of the 
documents are word searchable. Please note that even after the comment 
closing date, we will continue to file relevant information in the 
Docket as it becomes available. Further, some people may submit late 
comments. Accordingly, we recommend that you periodically search the 
Docket for new material.

V. Executive Order 12866 on ``Significant Guidance''

    On January 18, 2007, the President issued Executive Order (E.O.) 
13422, ``Further Amendment to Executive Order 12866 on Regulatory 
Planning and Review.'' On the same day, in connection with E.O. 13422, 
the Director of the Office of Management and Budget (OMB) issued OMB 
Bulletin No. 07-02 on ``Agency Good Guidance Practices.'' The primary 
focus of E.O. 13422 and OMB Bulletin No. 07-02 is to improve the way 
the Federal government does business with respect to guidance 
documents--by increasing their quality, transparency, accountability, 
and coordination.
    Both Executive Order 13422 and OMB Bulletin No. 07-02 define 
``guidance documents'' as ``an agency statement of general 
applicability and future effect, other than a regulatory action, that 
sets forth a policy on a statutory, regulatory, or technical issue or 
an interpretation of a statutory or regulatory issue.'' Guidance 
documents that are not ``significant'' are not covered by E.O.s 13422, 
12866, or Bulletin No. 07-02.
    A ``significant'' guidance document is one disseminated to 
regulated entities or the general public that may reasonably be 
anticipated to:
    (1) Lead to an annual effect of $100 million or more or adversely 
effect in a material way the economy, a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities;
    (2) create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) materially alter the budgetary impacts of entitlements, grants, 
user fees or loan programs or the rights or obligations of recipients 
thereof; or,
    (4) raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
this Executive order.
    Today's proposed ``Best Importer Practices'' document does not meet 
any of the four stated criteria for a guidance document to be 
``significant.'' In fact, one purpose of this draft document is to help 
manufacturers and importers of motor vehicles and motor vehicle 
equipment to understand the coordinated roles of NHTSA and U.S. Customs 
and Border Protection in the import process. Therefore, this document 
is not subject to E.O. 13422, E.O. 12866, or to OMB Bulletin 07-02. For 
this reason, no economic analysis of this document has been prepared.
    However, since NHTSA recognizes the public interest in this 
document, we solicit public comment, before issuing a final ``Best 
Importer Practices'' document. We hope to publish a final guidance 
document that will be as understandable and as user-friendly as 
possible for manufacturers and importers of motor vehicles and motor 
vehicle equipment.
    In writing this draft ``Best Practices'' document, we have also 
voluntarily sought to incorporate E.O. 12866's principles (applicable 
to rules) that agencies write in ``plain language.'' Application of the 
principles of plain language includes consideration of the following 
questions:
     Have we organized the material to suit the public's needs?
     Does this document contain technical language or jargon 
that is not clear?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make this document easier to understand?
     Would more (but shorter) sections be better?
     Could we improve clarity by adding tables, lists, or 
diagrams?
     What else could we do to make this document easier to 
understand?
    Comments on how this draft document may be made more understandable 
to manufacturers and importers of motor vehicles and motor vehicle 
equipment and to the general public are solicited.
    In light of the foregoing, NHTSA proposes the following guidance 
and recommended best practices for importers of motor vehicles and 
motor vehicle equipment:

Guidance and Recommended Best Practices for Importers of Motor Vehicles 
and Motor Vehicle Equipment

    The National Highway Traffic Safety Administration (NHTSA) is the 
U.S. government agency responsible for implementing and enforcing the 
National Traffic and Motor Vehicle Safety Act of 1966, as amended, 49 
U.S.C. chapter 301 (the Vehicle Safety Act), and certain other laws 
relating to motor vehicle safety. Those laws impose distinct duties on 
manufacturers, including importers, of motor vehicles and motor vehicle 
equipment intended for on-road use in the United States. Companies that 
import these products must ensure that the products comply with Federal 
motor vehicle safety standards (FMVSS). If a product does not comply 
with an applicable FMVSS or contains a defect related to motor vehicle 
safety, including a defect that manifests itself after considerable 
operation in the field, the manufacturer must recall it. Obviously, it 
is best if the motor vehicle or equipment complies with applicable 
FMVSS and does not manifest defects. To reduce the likelihood of 
defects and noncompliances, manufacturers, including importers, should 
become familiar with the best practices suggested here and adapt them 
to their specific needs. NHTSA is also very willing to work closely 
with individual importers to explain our standards, reporting 
requirements, regulatory program, and enforcement process.
(1) Fully Understand the Importer's Obligations under Motor Vehicle 
Safety Statutes and Regulations
    Before importing motor vehicles or motor vehicle equipment into the 
United States, it is essential that the importer understand its 
obligations under Federal statutes and regulations governing vehicle 
safety. This section summarizes those obligations stemming from the 
Vehicle Safety Act, which the NHTSA administers.\4\
---------------------------------------------------------------------------

    \4\ It is wise for manufacturers and importers to become 
familiar with other laws not administered by NHTSA, such as State 
tort laws, which could impact the decision to sell products in the 
United States.
---------------------------------------------------------------------------

(a) Certification of Motor Vehicles and Equipment to the Federal Motor 
Vehicle Safety Standards
    The Safety Act authorizes NHTSA to issue the FMVSS, which set 
minimum performance requirements for motor vehicles and for certain 
items of motor vehicle equipment. See 49 CFR part 571. In general, 
motor vehicles are vehicles driven or drawn by mechanical power

[[Page 39082]]

and manufactured primarily for use on public roads. Motor vehicles have 
the following type classifications:
     Buses;
     low-speed vehicles;
     motorcycles;
     multipurpose passenger vehicles;
     passenger cars;
     trailers; and
     trucks.
    The following motor vehicle equipment items are also subject to the 
FMVSS:
     Tires;
     rims;
     brake hoses;
     brake fluid;
     seat belt assemblies;
     lamps, reflective devices, and associated equipment;
     glazing (automotive glass and plastics);
     motorcycle helmets;
     child restraint systems (child safety seats);
     platform lift systems for the mobility impaired;
     rear impact guards for trailers;
     triangular reflective warning devices, and;
     compressed natural gas containers.
    The Vehicle Safety Act requires manufacturers to certify that motor 
vehicles and regulated items of motor vehicle equipment they produce 
for sale in the United States comply with all applicable FMVSS. See 49 
U.S.C. 30115. Motor vehicle equipment items that are not subject to the 
FMVSS do not require certification; however, such items may be found 
(by either NHTSA or the manufacturer) to have a safety-related defect, 
and if so, the manufacturer will have an obligation to furnish owners 
of the equipment with notification of, and a remedy for, the defect, 
usually at no charge to the consumer.
    Type approval \5\ is not required for motor vehicles and motor 
vehicle equipment sold in the United States. NHTSA does not issue type 
approval certifications and does not certify any motor vehicles or 
motor vehicle equipment as complying with applicable FMVSS. Instead, we 
have a ``self-certification'' process, which places responsibility on 
the fabricating manufacturer to certify the vehicle or equipment item 
as complying with the applicable FMVSS. Self-certification reduces the 
cost and time associated with lengthy, government-mandated testing that 
is required under type approval. Self-certification also reduces 
regulatory costs and facilitates international trade because it allows 
manufacturers to quickly bring to market vehicles and equipment items 
that incorporate safety and technology advancements.
---------------------------------------------------------------------------

    \5\ In many countries, before motor vehicles or motor vehicle 
equipment items may be sold to consumers, the fabricating 
manufacturer must prove that these items comply with safety 
regulations and receive pre-approval from a government agency. This 
approach is commonly referred to as ``type approval.'' Under type 
approval, a manufacturer submits production samples and 
specifications to an approved laboratory and if the product complies 
with the standards, the government issues a type approval 
certificate of compliance. Because this can take many months, the 
manufacturer begins the process of obtaining type approval well in 
advance of bringing the product to market. After type approval is 
granted, the manufacturer ensures that each vehicle or equipment 
item is produced in conformance with the specifications that were 
submitted for approval. If countries enter into international 
agreements covering vehicle safety regulations, one country's type 
approval may be valid for another member country. For example, the 
Vehicle Certification Agency, an Executive Agency of the United 
Kingdom Department for Transport, administers type approval in the 
U.K. See: http://www.vca.gov.uk/index.asp.
---------------------------------------------------------------------------

    The Vehicle Safety Act requires the manufacturer to exercise 
``reasonable care'' when issuing its certification. See 49 U.S.C. 
30115. To this end, NHTSA encourages manufacturers to conduct tests in 
accordance with the tests specified in the FMVSS. See 49 CFR part 571.
(b) Noncompliance with a FMVSS or a Safety-Related Defect
    Notwithstanding the certification of a product, a manufacturer may 
subsequently determine that a safety-related defect or a noncompliance 
with a FMVSS exists in a motor vehicle or a motor vehicle equipment 
item it has produced. Manufacturers have a duty to notify NHTSA if they 
learn the vehicle or equipment contains a defect and in good faith they 
decide that the defect is related to motor vehicle safety, or in good 
faith they decide that the vehicle or equipment does not comply with an 
applicable FMVSS. See 49 U.S.C. 30118(c). The manufacturer must notify 
NHTSA within five working days after determining the existence of a 
safety-related defect or noncompliance. See 49 CFR 573.6. Alternately, 
NHTSA may determine the existence of a safety-related defect or 
noncompliance in a particular motor vehicle or motor vehicle equipment 
item and order manufacturers to recall those items. See 49 U.S.C. 
30118(b).
(c) Notification and Remedy for a Safety-Related Defect or 
Noncompliance
    Regardless of whether the safety-related defect or noncompliance 
with an FMVSS is determined to exist by the manufacturer or by NHTSA, 
the manufacturer must provide NHTSA, as well as owners and dealers of 
the affected products, with notification of the defect or noncompliance 
and must remedy the defect or noncompliance, usually without charge. 
The notification and remedy process is commonly referred to as a 
``safety recall campaign'' or more simply as a ``recall.'' There is a 
limited exception under which a manufacturer that has reported a 
noncompliance to NHTSA may petition the agency for a determination that 
the noncompliance is inconsequential as it relates to motor vehicle 
safety.\6\ See 49 CFR part 556. NHTSA monitors the remedy program to 
ensure its successful completion. The agency is not authorized to 
expend its funds on recalls; the expense of notifying owners and 
providing a remedy must be borne by the manufacturer and/or importer of 
the products found to contain the defect or noncompliance. See 49 
U.S.C. 30118-30120.
---------------------------------------------------------------------------

    \6\ The National Traffic and Motor Vehicle Safety Act of 1966 
gives NHTSA the authority to exempt manufacturers from the 
requirement to provide notification and remedy for safety-related 
defects or noncompliances if the agency determines that the defect 
or noncompliance is inconsequential as it relates to motor vehicle 
safety. See 49 U.S.C. 30118, 30120. The procedures for implementing 
this statutory authority are set forth in 49 CFR part 556, Exemption 
for Inconsequential Defect or Noncompliance.
---------------------------------------------------------------------------

(d) Importers' Recall Obligations
    Under the Vehicle Safety Act, importers of motor vehicles and motor 
vehicle equipment for resale are considered ``manufacturers.'' See 49 
U.S.C. 30102(a)(5). Therefore, importers must recognize that they have 
obligations under the Vehicle Safety Act, which continue after motor 
vehicles or items of motor vehicle equipment are sold to consumers 
within the United States. If an importer becomes aware that a vehicle 
or equipment item it has imported contains a defect related to motor 
vehicle safety or does not comply with an applicable FMVSS, it must 
provide NHTSA, as well as owners and dealers of the affected vehicles 
or equipment, with notification of the defect or noncompliance and must 
remedy the defect or noncompliance, usually without charge. An importer 
also has notification and remedy responsibility if NHTSA determined the 
existence of the defect or noncompliance and ordered it to undertake a 
notification and remedy campaign.
    If a fabricating manufacturer is not located in the United States 
and does not conduct business operations in this country, including 
through a subsidiary or other controlled entity, the U.S. judicial 
system likely will not be able to effectively compel the foreign

[[Page 39083]]

manufacturer to conduct a recall. In that case, the burden of providing 
notification to owners and dealers and a free remedy will fall solely 
upon the importer, unless the fabricating manufacturer voluntarily 
supports the recall.
(e) NHTSA Defect Investigations
    In addition to the actions of the manufacturers and importers in 
recalling noncompliant and defective motor vehicles and motor vehicle 
equipment, NHTSA investigates suspected noncompliances and safety-
related defects in motor vehicles and motor vehicle equipment items. 
Before initiating an investigation of a suspected safety-related 
defect, NHTSA ordinarily reviews consumer complaints that are submitted 
to the agency and other available information to determine whether a 
defect trend exists. Among the other information the agency reviews is 
Early Warning Reporting (EWR) information submitted by manufacturers 
under regulations issued pursuant to the Transportation Recall 
Enhancement, Accountability, and Documentation (TREAD) Act of 2000. 
These regulations require manufacturers, including by definition, 
importers, to submit information that could assist the agency in 
determining whether a safety-related defect exists in a vehicle or in 
specified items of motor vehicle equipment. See 49 CFR part 579, 
subpart C. Under the EWR rules, manufacturers must generally report 
claims they receive on incidents resulting in fatalities or injuries 
allegedly caused by a defect in their vehicles or motor vehicle 
equipment items used in the United States or deaths allegedly caused by 
a defect in their identical or substantially similar vehicles or 
equipment used in a foreign country. Moreover, depending on the level 
of annual production and the type of product, manufacturers may also be 
required to provide NHTSA with information on production, property 
damage claims, consumer complaints, warranty claims, field reports, as 
well as other information.
(f) Compliance Needed to Import Motor Vehicles and Equipment
    As part of its safety mandate, NHTSA monitors motor vehicles and 
items of motor vehicle equipment that are imported into the United 
States for compliance with applicable FMVSS. To be imported free of 
restriction, a motor vehicle less than 25 years old must be originally 
manufactured to comply with all applicable FMVSS and bear a label 
certifying such compliance that is permanently affixed by the vehicle's 
original (i.e. ``fabricating'') manufacturer. To be lawfully imported, 
a new or used item of motor vehicle equipment that is subject to an 
FMVSS must, as originally manufactured, conform to the standard and be 
so certified by its original manufacturer. See 49 U.S.C. 30112 and 
30115. As noted above, items of motor vehicle equipment that are 
subject to the FMVSS include tires, rims, brake hoses, brake fluid, 
seat belt assemblies, lamps, reflective devices, and associated 
equipment, glazing (automotive glass and plastics), motorcycle helmets, 
child restraint systems (child safety seats), platform lift systems for 
the mobility impaired, rear impact guards for trailers, triangular 
reflective warning devices, and compressed natural gas containers. In 
most instances, the manufacturer's certification of compliance with the 
applicable FMVSS for regulated safety equipment is evidenced by the 
symbol ``DOT'' either inscribed on the equipment item in a prescribed 
location, or placed on the outside of the container in which the 
equipment item is shipped.
    As previously noted, NHTSA has authority to investigate possible 
safety-related defects in a motor vehicle equipment item regardless of 
whether the item is subject to the FMVSS. When an item is subject to a 
FMVSS, compliance with the standard does not ensure that the item is 
free of a safety-related defect. NHTSA investigates numerous vehicles 
and items of equipment each year for possible defects.
(g) Procedural Requirements for Fabricating Manufacturers
    Before offering a vehicle or motor vehicle equipment item for sale 
in the United States, the fabricating manufacturer must: (1) Designate 
a U.S. resident as its an agent for service of process if the 
manufacturer is not located in the United States (49 CFR part 551, 
Subpart D Service of Process on Foreign Manufacturers and Importers) 
and (2) submit to NHTSA identifying information on itself and the 
products it manufactures to the FMVSS, not later than 30 days after the 
manufacturing process begins (49 CFR part 566 Manufacturer 
Identification). The fabricating manufacturer of a motor vehicle must 
also submit to NHTSA information the agency will need to decipher the 
manufacturer's vehicle identification number or ``VIN'' format not 
later than 60 days prior to offering the first vehicle for sale in the 
United States (49 CFR part 565 Vehicle Identification Number 
Requirements). The manufacturer of certain regulated equipment items 
such as brake hoses, glazing (automotive glass and plastics), and tires 
must label its products with identification numbers assigned to the 
manufacturer by NHTSA.\7\
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    \7\ See 49 CFR 571.106, paragraph S5.2.2(b), relating to brake 
hoses; 49 CFR 571.205, paragraph S6.2, relating to glazing; and 49 
CFR 574.5, relating to tires.
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(h) Penalties
    Manufacturers and importers may be subject to substantial civil 
penalties for failure to meet the requirements of the statutes and 
regulations that NHTSA administers. See 49 U.S.C. 30165. Currently, 
those penalties can be as high as $6,000 for each violation with a 
maximum of $16,375,000 for a related series of violations. See 49 CFR 
part 578.
(2) Exercise Great Care in Selecting Foreign Manufacturers
    International trade presents unique risks. A company engaged in 
importing foreign manufactured goods or considering becoming an 
importer should have a complete and detailed business plan. The plan 
should reflect careful consideration of the following questions:
     Who will determine the specifications for the product?
     On what basis will the product specifications be 
developed?
     Who will design the product?
     Who will verify the product's design?
     What laboratory and field tests will be undertaken?
     Who will test product prototypes?
     What entity will fabricate various parts?
     What manufacturing quality control will be undertaken?
     How will manufacturing quality control be maintained?
     How often will products be tested to ensure continued 
compliance with the FMVSS?
     What documentation will be generated?
     What documentation will be maintained?
     Who will maintain the documentation?
     Who will check the documentation?
    Compliance with FMVSS is only a part of the considerations. Motor 
vehicles operate in harsh conditions over many miles and some abuse 
must be assumed; therefore, avoidance of safety-related defects is 
critical.
    Selecting a capable and responsible overseas business partner is 
one of the best ways to minimize risks. Before selecting a business 
partner in another country, it is wise to investigate the

[[Page 39084]]

supplier's reputation using readily available public source information 
(such as the Internet) or, if possible, by interviewing other customers 
of the supplier. It is advisable for a prospective importer to check 
many references and not to limit its inquiries to references that the 
prospective supplier identifies. If the country in which a manufacturer 
is located has an established government agency to oversee product 
safety, that agency's public records may contain useful information on 
the company's history of recalls and regulatory compliance. Importers 
may also wish to consider requesting the potential supplier's catalogs 
and sample products for evaluation. The U.S. Department of Commerce 
also offers an International Company Profile Report that may assist 
importers in evaluating potential foreign partners. This report 
summarizes the financial strength of a company and provides useful 
information gleaned from the local press, industry contacts, and other 
sources. More information about this service is available on the 
Department of Commerce Web site. See http://www.export.gov/
salesandmarketing/ICP.asp.
    At a minimum, it is prudent for importers to use existing sources 
of information to ensure that they will purchase, import, distribute, 
and sell motor vehicles and motor vehicle equipment items subject to 
the FMVSS that are produced by foreign manufacturers who:
    1. Properly identify themselves and their products to NHTSA (49 CFR 
part 566);
    2. designate a U.S. resident as their agent for service of process 
(49 CFR part 551, subpart D);
    3. furnish NHTSA with VIN-deciphering information (if they 
manufacture ``motor vehicles'') (49 CFR part 565); and
    4. certify their products as complying with all applicable FMVSS 
and so label their products (49 U.S.C. 30115).
    It would be advisable for the importer to focus on the 
specifications for and design of the product and the requirements of 
all applicable FMVSS covering the product that it wishes to import 
before beginning negotiations with a prospective overseas business 
partner. The importer should be well informed about U.S. import 
regulations and any FMVSS requirements that cover the products the 
importer intends to import. Before discussions take place with a 
prospective manufacturer, it may be worthwhile for the importer to have 
translated into the language used by that manufacturer the FMVSS that 
are applicable to the product and the agency regulations pertaining to 
manufacturers located outside the United States. It is reasonable to 
discuss with the prospective manufacturer at the outset the need for 
incorporating the requirements of the applicable FMVSS into the 
product's design because it is far less expensive to change the 
product's design in the planning stage than after the product is 
manufactured, when tooling must be changed or an expensive safety 
recall conducted. If the importer intends to have the manufacturer 
produce a replacement part for a motor vehicle, the part installed as 
original equipment may be used as a reference, keeping in mind the need 
to avoid infringing on any applicable patent.
    The importer and manufacturer may wish to consider conducting a 
review of the product's design (a ``design review'') that involves 
examining the product's configuration, the materials used in its 
fabrication, and its labeling and packaging.\8\ Importers without staff 
expertise and experience in design review may consider hiring a 
qualified consultant. It may be worthwhile for the design review to 
include a foreseeable use analysis,\9\ which involves integrating 
safety into the product's design. An effective foreseeable use analysis 
may reveal substantial safety hazards that involve risks of injury or 
impairment of health that are related to the product's characteristics 
or deficiencies.
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    \8\ U.S. Consumer Product Safety Commission (CPSC), ``Handbook 
For Manufacturing Safer Consumer Products'' (Washington, DC, July 
2006), p. 9. http://www.cpsc.gov/businfo/intl/
handbookenglishaug05.pdf. Note: many of our suggestions are based on 
CPSC's Handbook, which provides a wealth of helpful ideas that are 
generally applicable to various types of manufacturing processes.
    \9\ Ibid, p. 10.
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    Apart from FMVSS, if any, that apply to the product, the importer 
may wish to measure the product's design against a known set of 
objectives for the product and compare the product's design to that of 
similar products produced by other manufacturers. When no FMVSS apply, 
it may also be sensible to measure the product's design against 
accepted product standards such as a set of voluntary industry 
standards, should one exist.\10\ To find applicable standards, 
importers and manufacturers may wish to check the Web sites of 
standard-setting bodies for products of the type at issue, such as the 
Underwriters Laboratories Inc. (UL), American National Standards 
Institute (ANSI), American Welding Society (AWS), ASTM International 
(originally the American Society for Testing and Materials or ASTM), 
and the Society of Automotive Engineers, International. See: http://
www.sae.org. Manufacturers of certain automotive replacement parts such 
as lighting equipment may wish to visit the Web site of the Certified 
Automotive Parts Association (CAPA) for more information about that 
organization's certification program. See http://www.capacertified.org/
home.asp. These examples are not intended to be all-inclusive. It may 
be desirable for an importer to contact other standard-setting and 
certification organizations associated with the type of products it 
wishes to have manufactured, should such organizations exist.
---------------------------------------------------------------------------

    \10\ Ibid, p. 26.
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    Some manufacturers use other systematic analysis tools such as a 
Failure Modes and Effects Analysis (FMEA) \11\ to identify potential 
safety hazards and to improve their products over time by reducing or 
eliminating failures. Using FMEA, failures can be prioritized according 
to how serious their consequences are, how frequently they may occur, 
and how easily they can be detected.\12\
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    \11\ The FMEA process was originally developed by the U.S. 
military in the 1940s. See: American Society for Quality, http://
www.asq.org/learn-about-quality/process-analysis-tools/overview/
fmea.html.
    \12\ CPSC, Handbook, p. 10.
---------------------------------------------------------------------------

    It may be advisable to have parties with expertise in standards and 
regulations compliance, in-use durability, quality assurance, and 
customer service examine the results of the importer's product design 
review. Importers and manufacturers that do not have in-house expertise 
may consider using an accredited test laboratory to evaluate the safety 
of a product.\13\
---------------------------------------------------------------------------

    \13\ Ibid, p. 10.
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    Importers should consider creating records that identify changes in 
the product's design or in the production process and to incorporate 
changes that affect the product's use into the documents that accompany 
the product when sold. When changes are made to the product's design or 
to the production process, importers should obtain additional test data 
to assure the product continues to comply with stated technical 
specifications and with all applicable FMVSS. For traceability \14\ or 
recall reasons, changed products can be identified by being marked or 
stamped with ``date'' or ``lot'' codes, or in another manner that 
distinguishes new products from old. It makes good sense to use current 
versions of the supporting technical documentation such as drawings; 
replacement parts data; instructions for the product's production, 
inspection, testing, and

[[Page 39085]]

repair; as well as operating handbooks, and to remove from use obsolete 
documents and data.\15\
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    \14\ Ibid, p. 25.
    \15\ Ibid, p. 24.
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(3) Inspect Foreign Manufacturing Facilities
    Before entering into a written contract, we believe it is prudent 
for the U.S. importer to personally visit the supplier's facility and 
to determine whether the manufacturer is properly licensed by the 
appropriate government agencies. Several trips may be necessary to 
conduct an objective evaluation of the company, its factory, and its 
management. To reduce the potential for fraud, it is preferable to deal 
directly with the manufacturer and to avoid dealing with 
representatives (such as trade groups) that claim to represent a 
manufacturer. When dealing with a business partner of the manufacturer, 
it is generally advisable to determine whether the partner is a 
subsidiary of a larger company \16\ and whether the importer has 
recourse against the parent company if the subsidiary defaults on its 
obligations. It may also be reasonable to hire a consultant if the 
importer has limited knowledge of, or experience with, the culture and 
trade practices of a foreign country.
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    \16\ For example, see U.S. Department of Commerce (DOC), 
``Essential China Advice'' (Washington, DC, 2001-2008) http://
www.buyusa.gov/china/en/chinabiztips.html (February 22, 2008).
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    While visiting a manufacturer's foreign facilities, the importer 
may consider asking the manufacturer's production managers to identify 
the quality control mechanisms that are in place (e.g., ISO 9000 series 
quality assurance compliance) and it may be helpful to observe whether 
there is evidence of good quality workmanship.
    During the on-site visit, the importer should look for counterfeit 
commodities or evidence of trademark or copyright violations such as 
fraudulent seals made to look like those produced by certification 
organizations. While NHTSA does not have authority to enforce statutes 
that prohibit counterfeit products from being imported and the agency 
is aware that in some situations counterfeit products may, in fact, 
comply with applicable FMVSS, importers should avoid business dealings 
with known or suspected counterfeiters. Importers should be aware that 
many Federal departments and agencies are working with industry to stop 
the proliferation of counterfeit products.\17\ Also assisting in these 
efforts are many independent organizations such as the U.S. Chamber of 
Commerce, which represents more than three million businesses.\18\
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    \17\ The Office of the U.S. Trade Representative and the 
Departments of Commerce, State, Justice, and Homeland Security lead 
a government-wide initiative, the Strategy Targeting Organized 
Piracy (STOP!), to fight billions of dollars in global trade in 
pirated and counterfeit goods that cheat American innovators and 
manufacturers, hurt the U.S. economy and endanger consumers 
worldwide. See: http://www.stopfakes.gov or call 1-866-999-HALT.
    \18\ The U.S. Chamber of Commerce sponsors the Coalition Against 
Counterfeiting and Piracy. See http://www.thetruecosts.org/.
---------------------------------------------------------------------------

    It is advisable to reach agreement with a prospective supplier on 
what constitutes substandard or defective products, and on who will be 
responsible for conducting recalls of products that have a safety-
related defect or a noncompliance with a FMVSS. Of particular 
importance in this context are the importer's obligations under the 
Vehicle Safety Act to make determinations as to whether a product 
contains a safety-related defect or does not comply with a FMVSS. The 
importer should make clear to the foreign fabricating manufacturer that 
the importer makes the determination of a safety-related defect or 
noncompliance under U.S. law regardless of the fabricating 
manufacturer's views. The importer must recognize that its liability to 
conduct a recall when the facts so warrant under the Vehicle Safety Act 
is joint and several and the willingness of the foreign fabricating 
manufacturer to pay for all or some of the costs of the recall is not 
relevant. Nonetheless, the importer may wish to include provisions in 
the contract with the foreign fabricating manufacturer that covers 
contingencies, including recalls.
    All aspects of the product's design and the production process may 
be considered for inclusion in the written contract, such as inspection 
and testing procedures and any documentation the importer requires, 
including work orders, operation sheets, inspection logs, repair logs, 
and test procedure checklists.\19\ The contract may also specify under 
what circumstances the product's design may be changed (if at all), 
what equipment must be used for particular manufacturing operations, 
product traceability measures to be employed, and the types of forms to 
be used for recording quantitative data such as test readings. It is 
useful for the contract to specify exact terms of payment, performance 
standards, and timelines for deliveries and payments. Other 
arrangements that are reached between the importer and supplier should 
also be made in writing, such as those covering the importer's rights 
to visit the production facility in order to provide guidance and 
conduct product inspections.
---------------------------------------------------------------------------

    \19\ CPSC, Handbook, p. 28.
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    The importer should obtain sound legal guidance before entering 
into an agreement. Following execution of the contract, it is wise to 
adhere to the contract provisions or risk the costs of a legal dispute 
in a foreign country. The importer should obey all laws and regulations 
of the foreign country and be wary of any offer by the partner to 
ignore or avoid those laws. Also, the importer may wish to become 
familiar with U.S. Department of Commerce, Bureau of Industry and 
Security (BIS) regulations relating to the transfer of dual use 
technology to certain foreign countries. U.S. statutes prohibit 
transfer of some sensitive technologies without a license. See http://
www.bis.doc.gov/2.
    It may be imprudent to assume that the overseas operations will run 
by themselves and visits to the foreign manufacturer on a frequent 
basis may be needed to evaluate the state of affairs. During these 
visits, the importer should, if possible, talk to employees to learn of 
any substitutions of materials, modifications of the product's design, 
and manufacturing problems that were encountered. The importer should 
verify that the manufacturer is complying with contractual requirements 
by inspecting the facilities, production operations, inspection and 
test records, supplies, and audit results. The importer should also 
ensure the product's continued compliance with the standards by having 
performed ongoing FMVSS compliance tests. This inspection and testing 
will provide feedback into the nature of the operation and is part of 
the importer's oversight of the operation and its quality assurance/
quality control. The importer should not delay taking corrective action 
with the manufacturer when circumstances necessitate such action.\20\
---------------------------------------------------------------------------

    \20\ Ibid, p. 10.
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(4) Inspect Goods Either Before They Are Exported to or Distributed in 
the United States
    Different products, designs, and fabrication processes will require 
various levels of precision and accuracy of manufacturing equipment and 
tooling.\21\ In all manufacturing processes, there is a need to monitor 
how well the products meet given specifications because products will 
deviate from specifications for reasons such as new tooling, aging 
machinery, and human error. Manufacturers of quality products use 
mathematical models for calibrating production

[[Page 39086]]

equipment, controlling the output of the manufacturing process, and 
auditing production processes to attain improvements. Therefore, 
importers may wish to carefully consider instituting a quality control 
program at the outset.
---------------------------------------------------------------------------

    \21\ Ibid, p. 28.
---------------------------------------------------------------------------

    It would be wise for an importer to bear in mind that even though a 
product appears to be well manufactured, this does not necessarily mean 
that it also complies with applicable FMVSS and will not prove to be 
defective in actual use. While it is important to produce quality 
products, it is crucial that manufacturers test, on a continuing basis, 
their products to verify compliance with the FMVSS. To better shoulder 
the costs of any testing needed to assure compliance, smaller importers 
may wish to consider consortium purchasing, which would allow them to 
pool their resources.
    To ensure that product requirements are within tolerances, it is 
sensible to collect product samples at predetermined intervals and 
inspect them for compliance with any specifications that are identified 
in advance. The purpose of the inspection is to ensure that the 
products safely perform their intended functions. Inspection procedures 
may include a visual examination, testing with appropriate instruments, 
measuring, or other forms of evaluation.\22\ Manufacturers collect 
production samples for inspection based on mathematical models, which 
are beyond the scope of this notice, but that are critical to ensuring 
the quality of the end products. Test programs that are based on 
statistically sound sampling techniques will increase the probability 
that problems will be quickly identified and remedied before the 
products are shipped. Obviously, it is preferable from a cost 
perspective for nonconforming or substandard products to be discovered 
by the manufacturer before shipping costs are incurred.
---------------------------------------------------------------------------

    \22\ Ibid, p. 35.
---------------------------------------------------------------------------

    It is generally expected that quality control issues will be 
greater within the first batch of products made by the new 
manufacturer. After the initial production run, the importer and 
manufacturer may want to conduct an inspection to determine whether the 
initial products function as intended, whether their dimensions are 
within tolerances, and whether their appearance is satisfactory. The 
importer and manufacturer may consider conducting comprehensive tests 
of representative products to ensure compliance with design 
specifications.
    It is desirable to have an inspection plan to specify exactly what 
is to be inspected, how an inspection will be conducted and how often, 
and the types of gauges, tools, or instruments that will be used. If 
inspections are particularly critical to product safety, the inspection 
plan may require that they be performed by designated specialized or 
certified personnel.\23\ It would be advisable to include inspection 
procedures in the contract and any changes should be mutually agreed 
upon so that a record of changes is maintained. We also suggest that 
the contract clearly state how the costs of quality control inspection 
and any need to redesign a product or process based on such inspections 
will be apportioned.
---------------------------------------------------------------------------

    \23\ Ibid, p. 36.
---------------------------------------------------------------------------

    From the moment products leave the manufacturer until they are 
acquired by consumers, they are exposed to numerous contingencies that 
can affect their safety or usability. For these reasons, it is best not 
to terminate quality control measures at the port and the prudent 
importer might consider instituting quality control measures at storage 
locations and throughout the domestic distribution process. 
Distribution practices directly influence the safety of consumer 
products so it is wise to exercise control over packaging and shipping 
operations. This control includes the selection of adequate packaging 
materials, design of methods of packaging that preclude damage in 
shipment, and selection of shipping methods consistent with the 
physical properties of the product. Packaging and shipping techniques 
may need to be revised as experience dictates. In those instances where 
distributors are involved in assembly or test operations before 
delivery to the consumer it is wise to provide them with current and 
adequate assembly and test instructions and the importer may wish to 
ensure that these instructions are followed.\24\
---------------------------------------------------------------------------

    \24\ Ibid, p. 40.
---------------------------------------------------------------------------

    When quality control problems are encountered, it may be useful to 
determine what has caused the problem and to collaborate with the 
manufacturer and participants in the distribution process to remediate 
the cause and prevent similar future problems. We believe it is wise to 
keep in mind that reputable manufacturers want to be apprised of 
problems and will work for compliance with the importer's requirements.
    Developing and nurturing personal relationships with the business 
partner may be helpful and may pay dividends if problems are 
encountered.\25\ To prevent potentially dangerous products from being 
delivered to co