February 11, 2002 Docket No. NHTSA-2001-11107 Comments of Public Citizen, Consumers Union, Center for Auto Safety and Consumer Federation of America Regarding 49 CFR Parts 573 and 577: Reimbursement Prior to Recall, Notice of Proposed Rulemaking, 66 FR 64078 et seq., December 11, 2001 Introduction Public Citizen, Consumers Union, Center for Auto Safety and Consumer Federation of America submit these comments for the record on the National Highway Traffic Safety Administration’s proposed rule reimbursing owners for the cost of a remedy incurred in advance of a manufacturer’s recall. We have a special interest in this regulation because of our work in 2000 to secure passage of the Transportation, Recall Enhancement, Accountability and Documentation (TREAD) Act, which included the mandate for this rulemaking. The Reimbursement Period Should Conform to Existing Statutory Remedies The agency’s determination of what constitutes a "reasonable time" for the purpose of establishing a claim for reimbursement should be grounded in the intent of Congress in enacting this provision to expand the rights of consumers prior to the start of a formal recall. In addition, the rules should facilitate such determinations with ease and certainty, in order to encourage the timely replacement of defective parts and vehicles by consumers, and to discourage foot-dragging by the manufacturers in the context of recall campaigns by making it less financially advantageous to delay announcement of a recall. In view of these criteria and objectives, we are perplexed that the agency has proposed an obscure process for determining an appropriate period for reimbursement, resulting in a standard that is both unduly narrow and highly technical and one that will serve, paradoxically, to penalize consumers who take the initiative to fix their unsafe, defective vehicles when a problem first arises. The agency proposes to tie the period for reimbursement for influenced recalls to the opening of an engineering analysis (EA), while the time period for uninfluenced recalls begins one year before the date of a manufacturer’s report filed under 49 CFR part 573. Neither time frame provides consumers with either a familiar or a straightforward reference for determining their rights under the Act. On the contrary, the proposal is predicated on the consumer having a detailed understanding of the statute and of the agency’s internal investigation process, neither of which can reasonably be presumed to exist among consumers. Furthermore, tying reimbursement to the "date of the [manufacturer’s] initial test failure or the initial observation of a possible noncompliance" confers upon manufacturers virtually unrestricted leeway to define a reimbursement period, latitude that would likely be advantageous to manufacturers at the expense of consumers. A far more expansive reading of the time frame for consumer reimbursement would be consistent with Congressional intent to provide meaningful recourse under the TREAD Act to consumers affected by a recall. A uniform and easy-to-understand remedy period is essential to a consumer’s ability to obtain redress. However, the proposed guidelines for reimbursement are unnecessarily complex, difficult to administer, fail to provide a uniform statutory remedy, and limit reimbursement in a manner contrary to good public policy. Fundamentally, they penalize those who took steps to remedy a defect before an official acknowledgement of that defect and may provide a windfall to manufacturers by narrowly defining the period for reimbursement. This is clearly contrary to Congressional intent in enacting this provision. We urge, instead, that the period for reimbursement be the same as the remedy period described in 49 U.S.C. Section 30120 (g)(1), as amended under the TREAD Act, thus requiring reimbursement to be available when the recalled motor vehicle or replacement equipment is fixed or replaced by the purchaser within 10 calendar years of manufacture. This bright-line rule would be easy for the public to understand and would greatly encourage the timely remedy of safety-related defects. Congress Has Demonstrated Its Intent to Maximize Reimbursement Rights Congress amended 49 U.S.C. Section 30120 (g)(1) of the Motor Vehicle Safety Act (in passing TREAD), to extend the time, from 8 years to 10, during which manufacturers of motor vehicles or motor vehicle equipment must remedy, without charge, safety-related defects and noncompliances with federal motor vehicle safety standards. The expanded period was a direct response to manufacturers’ failure to adequately address the need for a recall in the Ford/Firestone cases. In changing the Act’s original time limits, and requiring NHTSA to issue a new rule as to the reimbursement period, Congress clearly intended to expand consumers’ rights with regard to both recalls and reimbursement. In a similar vein, section 6(b)(2) of the TREAD Act requires a manufacturer’s remedy program to include a plan to reimburse an owner who has already incurred the cost of a remedy within a "reasonable time" prior to the manufacturer’s notification of a defect or noncompliance with a FMVSS. In view of the 10-year time frame for repair, replacement, or refund provided by Section 30120(g)(1), we believe that it would be unreasonable, punitive, and contrary to the intent of the Act to refuse compensation during this same period to owners who repair defects prior to a recall. To reimburse owners differently based on the timing of a repair, rather than on the nature of a repair, inequitably distinguishes between similarly-situated individuals whose vehicles have identical safety defects. Owners should be encouraged to make safety-related repairs. The proposed rule instead short-changes owners who take the initiative to correct motor vehicle safety defects and who otherwise would have been eligible for repair or replacement under a recall. Reimbursement End Date Should be Based on Vehicle Manufacture Date The agency proposes the same end dates for reimbursement regardless of whether the notice is predicated on a safety-related defect or on noncompliance with a Federal motor vehicle safety standard. The reimbursement period for motor vehicles would end ten days after the manufacturer mailed the last of its initial Part 577 notices, and, in the case of replacement equipment, 30 days after the conclusion of the manufacturer’s initial efforts to publicize the existence of the defect or noncompliance. For the same reasons, we oppose the agency’s proposal that reimbursement rights for repair previous to the official recall should terminate prior to the end of ten years, upon the announcement of a recall. A consumer who has fixed a vehicle before an official recall should remain eligible for reimbursement for the full ten-year period. While a consumer who has not fixed the vehicle prior to the recall may indeed be subject to the terms and limitations of the recall, this is a separate question from monetary reimbursement of expenses once a defect has been fixed. In this context, we believe the time period for reimbursement is unreasonable. The mailing date of a manufacturer’s notice and the concluding date of a manufacturer’s efforts to publicize a defect or noncompliance are irrelevant to an owner’s right to be reimbursed for repairs made prior to a safety recall. Neither the consumer’s receipt of a recall notice nor his or her knowledge of a recall effort can be assured. A consumer who repairs a vehicle prior to a recall should be entitled to the same rights under the Act that are provided to a consumer who obtains a repair in response to a recall notice. We urge the agency to set the period for reimbursement at 10 years from the date of manufacture, the same period for reimbursement during which manufacturers of motor vehicles or motor vehicle equipment are obligated to remedy, without charge, safety-related defects and noncompliances with motor vehicle safety standards. A vehicle’s manufacture date is obvious and clear to consumers. Consequently, we believe the 10-year limit should be the only applicable time limit. Replacement Child Seats The agency has proposed various limitations on the right of pre-notification reimbursement for the replacement of defective child seats. The principle goal of a recall or of reimbursement is to give a refund for, or repair or replace a defective product. The impact of the agency’s proposed conditions on reimbursement prior to notification must be considered in light of these critical objectives. To facilitate the removal of recalled child seats from the marketplace, and to encourage the repair or replacement of defective seats, we urge the agency to insure that reimbursement need only be predicated on proof of ownership and of replacement, if no repair is feasible, with an essentially similar product that is free of the defect. The agency’s proposal to refuse reimbursement to an owner of a child seat covered by a defect recall because the owner replaced the seat when his or her child outgrew the seat, rather than when the defect became apparent or public, does not facilitate removal of defective seats from the market place and from potential use, nor does it encourage the replacement of defective seats. The owner’s intent in replacing a recalled child seat should not be the determining factor; the goal should be the replacement or repair of the defective seat. Any consumer who has replaced a recalled child seat, prior to recall, should be reimbursed upon proof of ownership of the recalled seat and upon proof of purchase for a replacement seat that at least duplicates the function of the recalled seat. A consumer who purchases a child seat with features that expand upon those offered or available in the original seat should not be denied reimbursement under a manufacturer’s plan. Sincerely, Joan Claybrook Jack Gillis Clarence Ditlow Sally Greenberg February 11, 2002 The Honorable Bill Luther United States House of Representatives Washington, DC 20515 Dear Representative Luther, We are writing in appreciation of your efforts a year and half ago on the Transportation, Recall Enhancement, Accountability and Documentation (TREAD) Act, and to alert you that an amendment you sponsored, concerning the reimbursement of consumers who have acted to fix a defect before a recall is officially announced, is in danger of being rendered ineffective by the National Highway Traffic Safety Administration (NHTSA) in its rulemaking. Your amendment to the TREAD Act provided authority for the agency to require that consumers who act within a "reasonable time" prior to a recall to fix a defect must be reimbursed for costs by the manufacturer. As you may remember, your amendment arose out of a concern that consumers who acted to replace Firestone tires long before the Ford/Firestone recall were treated unfairly despite their diligence, as they may not have been eligible for reimbursement once they had replaced tires out of their own pocket. The highly commendable purpose of the amendment was to encourage consumers to act on safety defects as soon as they are evident, rather than having to wait for NHTSA or the manufacturer to announce a formal recall. Under current law (49 U.S.C. 30120(a)), when there is an official notification of a defect or noncompliance, either by NHTSA or the manufacturer, consumers are entitled to a remedy for the defect or noncompliance without charge. Before TREAD, manufacturers were required to provide this free-of-charge repair or replacement for eight calendar years from the time the defect or noncompliance was found to exist. In the TREAD Act, that time was extended to ten calendar years. We believe that consumers who fix safety defects before the official announcement of a recall or noncompliance should be afforded a similar period of time to seek a remedy for a defect or noncompliance. We further believe that this interpretation is entirely consistent with your amendment, which calls for any remedy program to include reimbursing an owner who incurred the cost of the remedy within a "reasonable time" in advance of the manufacturer’s notification. Unfortunately, the agency has, in its proposed rulemaking, produced what we believe is a tortured definition of a "reasonable time" for reimbursement, and it is one that significantly reduces the scope of your amendment by limiting the reimbursement period in a manner that is unfair to consumers.
Under the agency’s proposal, in order to be reimbursed, a consumer must apply for reimbursement after fixing the vehicle, but before the recall, and after the agency opens its "engineering analysis," a preliminary step in a defect investigation or within one year prior to the manufacturers’ report of a recall that it has decided to conduct without agency sponsorship Predicating reimbursement on these obscure events could lead to gaming by the companies; further, consumers lack sufficient information on the timing NHTSA has proposed and could totally miss the arcane deadlines in this proposal. This system makes little sense, in our view. In our comments to NHTSA, we suggest that the agency instead apply a bright-line rule to define "reasonable time." The TREAD Act provides a useful guideline for that standard in extending from eight to ten years the time allowed for repair without charge for vehicle defects subject to recall. We argue that reimbursement should also be available to consumers who have acted early to fix a defect at any time during the first ten years after the vehicle was manufactured. This simple standard gives equal treatment to all consumers faced with safety-related repairs, whether before or after a recall, and would permit those who act before the official announcement of a recall to replace defective and faulty parts, assured that they will be compensated if it later turns out that their particular problem was the subject of a recall. For the same reasons, we oppose the agency’s proposal that reimbursement rights for repair previous to the official recall should terminate prior to the end of ten years, upon the announcement of a recall. A consumer who has fixed a vehicle before an official recall should remain eligible for reimbursement for the full ten-year period. In sum, we believe the agency’s proposed rulemaking fails to safeguard the rights of consumers to reimbursement in the way that we believe Congress intended. Further discussion may be found in our comments to the agency’s docket, which are attached. We urge your active interest in this rulemaking, and hope that you will consider writing to the agency or scheduling a meeting with agency officials in order to assure that the agency’s approach to the rule captures the spirit of your amendment and advances the rights of consumers. Sincerely, Joan Claybrook Jack Gillis Clarence Ditlow Sally Greenberg |