Interpretation ID: nht79-4.25

DATE: 05/01/79

FROM: AUTHOR UNAVAILABLE; Frank Berndt; NHTSA

TO: Oestreicher; Sternberg & Manes

TITLE: FMVSR INTERPRETATION

TEXT: This is in response to your letter of March 13, 1979, asking whether your client, a tire brand name owner, is permitted to bill its dealers and distributors directly for the costs of supplying Uniform Tire Quality Grading (UTQG) information pursuant to 49 CFR 575.104 and maintaining records of tire sales pursuant to 49 CFR 574.7.

The UTQG regulation requires that tire manufacturers and brand name owners "provide" grading information for each of their tires (49 CFR 575.104(d)(1)(i)). Similarly, the Tire Identification and Record Keeping regulation requires these parties to "provide" upon request tire registration forms to dealers and distributors (49 CFR 574.7(a)) and directs tire manufacturers and brand name owners to maintain or have maintained for them records of the information acquired on these registration forms (49 CFR 574.7(b)).

A billing arrangement of the type your client suggests would in effect make the tire manufacturer or brand name owner the agent of the dealer or distributor for purposes of grading and registering tires. Such a practice would run counter to the intention of the agency that manufacturers and brand name owners bear primary responsibility for implementation of tire grading and registration. The National Highway Traffic Safety Administration (NHTSA) will take whatever action is necessary, including possible revision of the regulations, to prevent manipulation of the tire regulations in this manner.

Apart from the legal implications of your client's proposa, NHTSA would question the soundness, from a business standpoint, of a plan for direct billing of UTQG and tire recordkeeping costs. Your client's proposed course of action appears to have the aim of generating dissatisfaction with Federal tire regulations among dealers and distributors, and could, by lessening cooperation at the retail level, interfere with your client's ability to fulfill its obligations under the regulations.

SINCERELY,

OESTREICHER, STERNBERG & MANES

March 13, 1979

Francis Armstrong, Director Office of Vehicle Safety Compliance Enforcement U.S. Department of Transportation National Highway Safety Administration

Dear Sir:

This office represents a corporation, which distributes private brand tires through its dealers on a wholesale basis. Grade labeling and registration of tires is an extremely expensive administrative procedure. My client certainly will comply with the law, however, answer to our inquiry would be appreciated.

Can the cost of grade labeling and registration be passed on directly to the wholesaler or purchaser of our dealers? The question is one of direct billing for such items rather than burying the cost of such administrative work in the cost of the tire.

Your prompt answer would be appreciated and any other information you feel might be helpful.

MARVIN G. MANES ATTORNEY AT LAW