Interpretation ID: avi.ztv

Mr. John M. Dowd
Mr. James C. Osborne, Jr.
Ms. Elizabeth C. Peterson
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1333 New Hampshire Avenue, N.W.
Suite 400
Washington, DC 20036

Re: American Vehicle Importers, Inc.

Dear Messrs. Dowd and Osborne, and Ms. Peterson:

We are replying to your letter of December 23, 1999, addressed to myself, and to Messrs. Guerci, Vinson, and Entwistle of this agency submitting a proposal to resolve the matters discussed at your meeting with us on December 21. This meeting concerned the practices of your client, American Vehicle Importers, Inc. ("AVI") with respect to statutes and regulations enforced by the Office of Vehicle Safety Compliance ("OVSC").

I will address the items in your letter in the order you have raised them. Your initial remark ascribes to us the acknowledgment that "the current regulations do not prohibit a Registered Importer ('RI') from moving an imported vehicle to an auction lot prior to receipt of a Bond Release for a vehicle." This is coupled with your realization that we may need to know the location of the vehicle during the period before the bond is released in order to be able to inspect it for conformance, and you state that AVI will inform OVSC of the location where the vehicles may be inspected. We agree that the current regulations do not specifically prohibit a RI from placing bonded vehicles on an auction lot, and that AVI's informing us of the location of bonded vehicles should facilitate our ability to inspect them. However, AVI must also ensure that we have unfettered access to these vehicles on an auction lot in the same manner as we would were they retained on AVI's property, at all times until receipt of the bond release. That is to say, we must be admitted to inspect bonded vehicles stored on an auction lot during all business hours. We will require the same information location from all RIs that do not store bonded vehicles on the lots identified in their registration application.

You contend "that the regulation, which prohibits an RI from licensing or registering the vehicle or 'releas[ing] custody of the vehicle to any person for license or registration for use on public streets . . .' prior to receipt of a Bond Release, do not preclude the vehicle's sale at a wholesale auction prior to receipt of the Bond Release." We disagree with you on this point. One of the conditions of the bond is that the vehicle it covers be exported or abandoned to the United States in the event that an insufficient showing of conformity is made and the bond and the vehicle are not released (49 U.S.C. 30141(d)(1) as implemented by 49 CFR 591.8(e) and Appendices A and B, and 49 CFR 592.6(a)). If a bonded vehicle has been sold at auction, wholesale or otherwise, before the bond has been released, we could not be certain that the RI could fulfill its duty to export or abandon the nonconforming vehicle because it would no longer own the vehicle. In that instance, NHTSA's sole remedy would be to foreclose on the bond. This is insufficient to fulfill the safety purpose of the statute and the bond, which is to ensure that imported noncomplying vehicles be brought into compliance before being licensed for use, and used, on the public roads. We note, however, your statement that "AVI will agree to await receipt of a Bond Release before selling its imported vehicles at a wholesale auction," and your opinion that all RI s should be preluded from selling their vehicles before receiving a bond release. To address your concern, we do intend to enforce the law equally, and we have informed RIs that they must not sell bonded vehicles while the bond is in effect, whether at auctions, to dealers, or to individuals.

Your final concern regards titling of bonded vehicles. You assert that we acknowledged that "the current regulations do not prohibit the titling of an imported vehicle prior to release of the bond on the vehicle." You refer to the letter of November 11, 1999, by Philip Trupiano, the president of Auto Enterprises, Inc. (and a principal of AVI), requesting an interpretation whether a RI may obtain a title for re-sale purposes before this agency has released the applicable performance bond. I enclose a copy of the Chief Counsel's recent response to Mr. Trupiano. As he advised Mr. Trupiano, we do not interpret 49 U.S.C. 30146(a)(1) as precluding a RI from obtaining a title to a bonded vehicle in its own name before the bond is released. However, for the reasons explained in that letter, we have concluded that a RI may not have a vehicle retitled to another entity pending bond release.

With respect to other issues, you ask that OVSC commit to release the bond on a vehicle no more than seven days after receipt of conformance certification. While OVSC will not make such a "commitment," which, in any event, would not be enforceable, our policy has been, and will be, to process conformance certification packages expeditiously and in the order in which they are received. During the past three months, the average period between receipt of a RI's conformance package and bond release has been reduced to five days.

You also ask that OVSC engage in further discussions regarding implementation of a software program presented to OVSC by AVI and Avalon Risk Management. OVSC is willing to consider any software program, provided that the developer of the program agrees to waive all proprietary rights if the program is implemented. With regard to AVI's proposal to work with OVSC "to develop a procedure by which Vehicle Identification Numbers are inspected and verified prior to entry into the U.S," we believe that the U.S. Customs Service would be a more appropriate Federal agency to work with, particularly regarding procedures intended to identify stolen vehicles before their entry into the U.S.

Finally, we agree with you that fundamental fairness requires us to interpret and enforce the law equally against all RIs. To assure that RIs understand their duties and responsibilities, we will discuss these matters in Newsletter No. 16, currently being prepared to be sent to the RI community.

Sincerely,
Kenneth N. Weinstein
Associate Administrator
for Safety Assurance
Enclosure
ref:592
d.4/19/2000