Requirements and Procedures for Consumer Assistance To Recycle and Save Program, 37878-37920 [E9-17994]

Agencies

• National Highway Traffic Safety Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 74, Number 144 (Wednesday, July 29, 2009)]
[Rules and Regulations]
[Pages 37878-37920]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-17994]



[[Page 37877]]

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Part IV





Department of Transportation





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National Highway Traffic Safety Administration



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49 CFR Parts 512 and 599



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

Federal Register / Vol. 74, No. 144 / Wednesday, July 29, 2009 / 
Rules and Regulations

[[Page 37878]]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 512 and 599

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


Requirements and Procedures for Consumer Assistance To Recycle 
and Save Program

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

ACTION: Final rule.

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

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

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

FOR FURTHER INFORMATION CONTACT: You may obtain additional information 
about the CARS program by calling the CARS Hotline at 1-866-CAR-7891. 
It is dedicated to calls about the program. For non-legal issues, you 
may call, Mr. Frank Borris, NHTSA Office of Enforcement, telephone 
(202) 366-8089. For legal issues, you may call David Bonelli, NHTSA 
Office of Chief Counsel, telephone (202) 366-5834.

SUPPLEMENTARY INFORMATION: 

Table of Contents

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

I. Background

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

[[Page 37879]]

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

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

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

[[Page 37880]]

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

III. Public Outreach and Consultation

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

IV. The Regulation

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

[[Page 37881]]

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

a. Definitions (Sec.  599.102)

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

b. Registration of Dealers (Sec.  599.200)

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

[[Page 37882]]

c. Identification of Disposal Facilities (Sec.  599.201)

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

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

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

[[Page 37883]]

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

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

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

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

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

[[Page 37884]]

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

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

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

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

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

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

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

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

[[Page 37885]]

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

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

[[Page 37886]]

a category 3 truck. The characteristics of these vehicles were 
described earlier under Section c.1, ``Vehicle Definitions,'' and they 
are defined in section 599.102. To further assist consumers in 
determining the eligibility of new vehicles, the CARS Web site, at 
https://www.cars.gov, contains an interactive tool. Consumers may 
identify their trade-in vehicle, select a new vehicle, and determine 
whether the transaction qualifies for a credit (and the amount of the 
credit) under the program.