Interpretation ID: nht93-1.47

DATE: 02/23/93

FROM: JOHN WOMACK -- ACTING CHIEF COUNSEL, NHTSA

TO: JAMES E. SCHLESINGER -- SCHLESINGER, ARKWRIGHT & GARVEY

TITLE: NONE

ATTACHMT: ATTACHED TO LETTER DATED 12-23-92 FROM JAMES E. SHLESINGER TO WALTER MYERS (OCC 8159)

TEXT: This responds to your letter addressed to Walter Myers of this office, requesting an opinion concerning the Uniform Tire Quality Grading Standards (UTQGS).

You stated in your letter that two tire manufacturers, A and B, both with production facilities in both Canada and the United States, produced tires for a brand name owner, Company C, in Canada. A, B, and C agreed that in the event of overproduction or if some of the tires were "blems" (Company C refuses to accept blems, which are tires with minor cosmetic blemishes but structurally sound), A and B were free to market their tires elsewhere, including the United States. The tires manufactured for Company C contain the DOT number and the Canadian National Tire Safety Mark, but not the UTQGS information, which is not required in Canada. You stated that over a period of 1 1/2 years, A imported 10,622 tires into the United States while B imported 12,856 tires, including 4,644 blems, into the country. All were passenger tires and all sales occurred in 1990 and 1991. You then posed three questions based on those facts, which I will answer below in the order presented.

First, by way of background information, under the National Traffic and Motor Vehicle Safety Act of 1966 (15 U.S.C. @@ 1381) et seq., as amended (hereinafter Act), the National Highway Traffic Safety Administration (NHTSA) is authorized to issue Federal motor vehicle safety standards applicable to all new motor vehicles and items of new motor vehicle equipment, which includes tires. Section 203 of the Act (15 U.S.C. @ 1423) directs the Secretary to prescribe, through standards established under Title I of the Act, a uniform quality grading system for motor vehicle tires. NHTSA issued the UTQGS under the authority of @ 203 and @ 112(d) (15 U.S.C. @ 1401(d)), which authorizes the Secretary to require manufacturers to provide performance and technical data to the first purchasers of motor vehicle equipment for purposes other than resale. The UTQGS may be found at 49 CFR @ 575.104.

The penalties for violation of the UTQGS are set forth in the Act. Section 108(a) (1) (E) of the Act (15 U.S.C. @ 1397(a) (1) (E)) prohibits any failure to comply with any rule, regulation, or order issued under @ 112. Sanctions for violation of @ 108 are set forth in @ 109 of the Act (15 U.S.C. @ 1398(a)), which provides civil penalties of up to $1,000 for each violation of @ 108, up to a total maximum civil penalty of $ 800,000 for "any related series of violations." In addition, @ 110(a) of the Act (15 U.S.C. @ 1399(a)) gives U.S. district courts the jurisdiction to restrain any violation of Title I of the Act, or any rule, regulation, or order issued thereunder, which include the UTQGS.

With that background in mind, I turn now to your specific questions: 1. Is it unlawful to import, sell or distribute in the United States tires which do not have the UTQG information on the sidewall of the tire and/or on the paper tread label for the tire?

ANSWER: Subject to the exceptions discussed in the answer to your question No. 3 below, 49 CFR 575.6(b) provides that:

At the time a motor vehicle tire is delivered to the first purchaser for a purpose other than resale, the manufacturer of that tire or, . . . the brand name owner, shall provide to that purchaser the information specified in Subpart B of this part that is applicable to that tire.

Subpart B includes @575.104 which, at (d) (1) (i) (A), requires that the UTQG information be molded onto or into the tire sidewall. Where a new tire line is introduced into the United States for the first time, however, the tire manufacturer or brand name owner may, for the first six months after the tire's introduction, provide the UTQG information by means of a paper label affixed to the tread surface of the tire. After that six-month grace period, the required information must be molded onto or into the tire sidewall.

Although both the Act and the UTQGS are silent as to whether tires can be imported or distributed without the UTQGS information, there would be no point in doing so since the tires cannot legally be sold without that information.

2. If it is unlawful to import, distribute and sell tires in the United States without said UTQG information, what penalties are imposed on the manufacturer and/or brand name owner?

ANSWER: As discussed above, civil penalties of up to $ 1,000 for each violation of @ 575.6(b) may be imposed, up to a maximum of $ 800,000. In addition, U.S. district courts have jurisdiction to restrain any such violations.

3. Would any of the exceptions of 49 CFR @ 575.104(c) apply in this case, and, if so, in what way? Is there any legislative history or interpretation of the meaning of "limited production tires" as noted in this section, and what effects, if any, this limitation might have on the above fact situation?

ANSWER: 49 CFR @ 575.104(c) provides that the UTQGS apply to new pneumatic passenger car tires. The standards do not apply, however, to deep tread, winter type snow tires, space-saver or temporary use spare tires, tires with nominal rim diameters of 10 to 12 inches, or "limited production" tires. In order to qualify as a limited production tire, @ 575.104(c) (2) establishes four criteria, all of which the tires must meet:

(i) The manufacturer's annual domestic production or importation into the U.S. of tires of the same size and design as the tire does not exceed 15,000 tires;

(ii) The annual domestic purchase or importation by a brand name owner into the U.S. of tires of the same size and design as the tire does not exceed 15,000 tires;

(iii) The tire's size was not listed as a vehicle manufacturer's recommended tire size designation for a new motor vehicle produced in or imported into the U.S. in quantities greater than 10,000 during the calendar year preceding the year of the tire's manufacture; and

(iv) The total annual production or importation into the U.S. by the manufacturer or, if the tire is marketed under a brand name, the total annual domestic purchase or purchase for importation into the U.S. by the tire's brand name owner, of tires meeting the criteria of (i), (ii), and (iii) above, does not exceed 35,000 tires.

Section 575.104(c) also states that "tire design" is "the combination of general structural characteristics, materials, and tread pattern, but does include cosmetic, identifying or other minor variations among tires."

The factual scenario you described in your letter would suggest that the tires in question might meet the numbers criteria of (c) (2) (i) and (ii), but there is not sufficient information on which to base an opinion as to whether they meet the other two criteria. There is likewise insufficient information to determine whether the exceptions relating to deep tread, winter-type snow tires, space-saver or temporary use spare tires, or tires with nominal rim diameters of 10 to 12 inches may apply to any or all the tires in question. The manufacturer(s) seeking to import those tires into the U.S. must make those determinations.

For your additional information, I am enclosing a copy of 45 FR 23442, dated April 7, 1980, the final rule which initially exempted limited production tires from the UTQGS. That notice explains the rationale for exempting limited production tires and other background information you may find helpful.

I hope the above information will be of assistance to you. Should you have any further questions or need additional information regarding this matter, please feel free to contact Walter Myers at this address or at (202) 366-2992.