Interpretation ID: nht76-5.64

DATE: 05/04/76

FROM: AUTHOR UNAVAILABLE; William T. Coleman; NHTSA

TO: Charles E. Wiggins; House of Representatives

TITLE: FMVSR INTERPRETATION

TEXT: This is in response to your letter of March 9, 1976, concerning the Tire identification and Recordkeeping Requirements administered by the National Highway Traffic Safety Administration (NHTSA).

I very much appreciate your thoughtful comments concerning this program and your obvious efforts to familiarize yourself with the way it is administered. It is clear from your letter that you share my view that these requirements should be made as effective and efficient as possible, thereby increasing consumer safety while lessening the burden on tire dealers.

As you are aware, the Congress in 1970 amended the National Traffic and Motor Vehicle Safety Act to require manufacturers and retreaders of tires to maintain the names and addresses of purchasers so that they could be notified of any defect. This step was taken only after attempts by manufacturers and the NHTSA to inform owners of defective tires proved ineffective. As you point out, Congressional action would be necessary to eliminate the program.

In your letter, you address four areas in which you believe the tire registration program is either ineffective or inefficient. I would like to discuss each one individually to ensure that your questions are answered comprehensively.

The first question you raise deals with the cost your constituent, a small tire dealer, is obligated to incur to satisfy the requirements of the program. In order to understand fully the cost involved, it would be useful to consider precisely what is required by the regulation.

1. A dealer must fill out a tire identification form supplied by the manufacturer for each purchase. This requires entering the name and address of the purchaser, the tire identification number which appears on the tire(s), and the company's name and address or number on the form. Only several minutes are required to complete the form.

2. Once a month, the dealer must send the forms to the manufacturer of the tires.

We are unable to understand how the regulation appreciably increases a small businessman's cost of doing business. It is our view that additional staff is not necessary to carry out the registration of tires, and we have no information which would suggest the contrary.

The situation would be somewhat more complex if your constituent sold tires manufactured by more than one firm, as each manufacturer supplies its own form which must, of course, be returned to the appropriate manufacturer. In this case, however, we have required that manufacturers supply to the dealers upon request a form with a standardized format to simplify completion.

The second matter you raise is the failure of some dealers to complete the registration forms. I share with you a concern that despite provision for substantial penalties, some dealers insist on breaking the law. It had been the policy of the NHTSA to delay strict enforcement of the regulation in the belief that dealer unfamiliarity with the regulation might be the cause of the poor response and that the situation would improve. In view of the continued unsatisfactory rate of compliance, the NHTSA has advised me that it will increase enforcement action to eliminate competitive advantage based on noncompliance.

Another issue raised in your letter is the cost of administering the regulation as compared to its benefit. I have queried the NHTSA as to their estimate of this cost and have been advised that the one dollar figure which you cited in your letter relates to all costs of both the manufacturer and dealer to register and maintain records for all four tires on a vehicle rather than a single tire. I am sorry for any confusion which might have arisen. Even utilizing a higher cost figure, however, it is NHTSA's view, in which I concur, that the expense of tire registration is not exorbitant in terms of helping to insure that a motorist will be advised if a tire he purchased is defective and could lead to death, a serious injury, or damage to his vehicle. As I am sure you realize, the purpose of any insurance program, be it fire insurance for the home or health insurance for the individual, is to protect all insured individuals against the catastrophic loss that only some of the insured individuals will actually experience.

It is of course difficult to associate a dollar figure with the potential damage which could be caused by a defective tire. In this regard, however, you may be interested in knowing that a Federal jury in Florida last year returned a $ 2,300,000 judgment against Sears Roebuck & Company in a tort action involving a defective tire.

You also suggest in your letter that only 25,000 tires were recalled in 1974. Our records, however, indicate that 1,098,000 tires were recalled in 1974 in 31 recall campaigns. Further, 2,526,480 tires have been recalled in the 119 recall campaigns initiated since the inception of the program. It is my view that the program should continue in light of the defect potential inherent in the sale of 200,000,000 tires annually.

In addition to planning increased enforcement, the NHTSA is evaluating the consumer response rate in tire defect notification campaigns to determine whether it can be improved and whether the low response rate is due in large part to tires no longer being in the hands of the initial purchaser. I have already requested the National Motor Vehicle Safety Advisory Council to conduct a broad study of the safety defect and recall problem, which includes a consideration of the adequacy of the tire recall effort. Based on these evaluations, the NHTSA should be able to determine if legislative action is necessary.

Let me assure you I appreciate your personal interest in this matter.

CONGRESS OF THE UNITED STATES

March 9, 1976

The Honorable William T. Coleman, Jr. Secretary of the Department of Transportation

Dear Mr. Secretary:

Recently a constituent of mine who sells motor vehicle tires at retail took time to explain to me the "Tire Identification and Recordkeeping" program which you administer and which directly affects him.

I hadn't heard of such a program, but have since learned that Section 1402(f) of Title 15 of the United States Code requires that manufacturers of tires maintain a record of names and addresses of the purchasers of their products. Regulations implementing the requirement are in Section 574 of the Code of Federal Regulations. The obvious purpose of the law is to make efficient the recall of defective tires.

My constituent informed me that the requirements of this program are widely ignored by retail tire dealers who are the conduit of the purchasers' identity to the manufacturers. He complains that the program costs him money, and being a small businessman, he must pass this cost onto his customers. His competitors who ignore the requirements don't have the cost and so gain a competitive edge. Furthermore, he believes the program is not worth the effort to begin with; due to the fact that only a miniscule percentage of those notified they have a defective tire respond to the recall notice.

On January 21, 1976, Mr. Elwood Driver, an employee of the National Highway Traffic Safety Administration came to my office with a number of his associates, to explain the program to me. Mr. Driver made it clear that DOT plays virtually no role in overseeing the registration program. He had no information to offer on how efficiently the program operated, nor how many defective tires were removed from motor vehicles because of it. Subsequent to the meeting he contacted several manufacturers, and informed me by letter that they had informed him that 90% of the manufacturer owned tire dealers and 40-50% of the independent dealers complied with the program. Those manufacturers stated that only 30% of the tire owners notified that they owned a potentially defective tire responded to the recall notice.

I was informed by Mr. Driver that more than 200 million tires are sold each year and that a conservative price for the paperwork required to properly "register" a single tire is one dollar. If 50% of the dealers are complying with the registration program, that represents a pass through to the American consumer of $ 100 million.

I have been informed from industry sources that approximately 25,000 tires were recalled in 1974 as being potentially defective. Only a certain percentage of owners of those tires were notified because only a percentage of the dealers comply with the program. However, if compliance was 100% and all the purchasers were notified, only 30% would respond. That means this $ 100 million program optimally would result in 7,500 potentially defective tires being removed from automobiles. (Parenthetically, if all the tires manufactured were properly registered this would be a $ 200 million program.)

I would hope, Mr. Secretary, that you could review this program to determine whether in your opinion it should be continued. Without question, it doesn't work efficiently or effectively. Without question, it is enormously expensive to the American consumer. On the other hand, if defective new tires pose a serious national threat, then this program should be made to operate efficiently. It is my opinion, that the appropriate Committees would seriously consider any constructive recommendations in this regard that you care to offer.

CHARLES E. WIGGINS Member of Congress

cc: HON. HARLEY O. STAGGERS;

HON. SAMUEL L. DEVINE;

HON. JOHN E. MOSS;

HON. JAMES COLLINS;

HON. FRED B. ROONEY;

HON. JOE SKUBITZ