VIII. SMALL BUSINESS IMPACTS
A. Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 (5 U.S.C. §601 et seq.) requires agencies to evaluate the potential effects of their proposed and final rules on small businesses, small organizations and small governmental jurisdictions.
Small Vehicle Manufacturers
Currently, there are about 4 small motor vehicle manufacturers in the United States. As with other systems in the vehicle, these manufacturers will have to rely on suppliers to provide the hardware, and then they would have to integrate the system into their vehicles. The agency is providing an alternative for the small vehicle manufacturers to meet the final rule in the last year of the phase-in period, giving them as much lead time as possible.
There are a few recreational vehicles made which are under 10,000 pounds GVWR, which would have to comply with the standard. Most of these vehicles use van chassis supplied by the larger manufacturers (GM, Ford, or Daimler Chrysler) and could use the systems supplied with the chassis. To demonstrate compliance with FMVSS 138, a final stage manufacturer would primarily rely upon the chassis manufacturer’s incomplete vehicle document.
Aftermarket Wheel and Rim Manufacturers
There were several commenters to the docket stating that there would be a significant impact on a large number of aftermarket wheel and rim manufacturers. The Specialty Equipment Market Association (Docket No. 8572-114) stated that there are 550 small businesses making aftermarket tires and custom wheels and this is a $2.1 billion industry. SEMA is concerned that many of the provisions will have the effect of restricting the ability of aftermarket suppliers to provide a full range of wheel and tire combinations to consumers. They were concerned that the language requiring aftermarket wheels to be compatible with only those combinations recommended by a vehicle manufacturer could disallow aftermarket equipment that does not match manufacturer’s recommendations.
The Tire Association of North America (Docket No. 8572-129) stated that a regulation that narrows consumer choice would have a significant negative impact on small business across the United States. They argued that we should delete "recommended for use on the vehicle by the vehicle manufacturer."
Several other different types of manufacturers made related comments. Schrader Electronics (Docket No. 8572-120) stated that replacement rims do not necessarily follow the Tire and Rim Standards. Proper fitment could not be guaranteed. Thus, replacement rims should not be required to meet the standard. The Alliance (Docket No. 8572-137) stated that the agency should exempt temporary spare tires and that manufacturers can’t certify replacement tires. Ford (Docket No. 8572-141) stated that the agency should limit the scope of the final rule to those tires and rims specified for use on the vehicle by the vehicle manufacturer. Nissan (Docket No. 8572-124) stated that it was premature to include non-genuine replacement tire/rims in the standard.
The agency has decided to exempt temporary spare tires and aftermarket rims, that don’t match the original equipment rims, from the requirements on a practicability basis. This should eliminate the concerns of small businesses that make and sell custom wheels.
Low Tire Pressure Monitoring System Suppliers
There are several suppliers of direct measurement system radio frequency transmission technology (Beru, Johnson Controls, Schrader-Bridgeport, Pacific Industrial Company, TRW, SmarTire, Rayovac, and Fleet Specialties Company). Suppliers of indirect ABS integrated technology include Continental Teves, TRW, Bosch, Eaton, and Toyota. There is one company that supplies a system that monitors the tires and puts air into the tire, Cycloid Company.
The Regulatory Flexibility Act requires the agency to make a determination on whether the proposal could have a significant economic impact on a substantial number of small businesses. A small business is defined by the Small Business Administration, for purposes of receiving Small Business Administration assistance. The criteria for determining size, as stated in 13 CFR 121.201, is the number of employees in the firm. The suppliers would fall under either Subsection 336340 Motor Vehicle Brake System Manufacturers or Subsection 336322 Other Motor Vehicle Electrical and Electronic Equipment Manufacturers. A company under these subsections must have less than 750 employees to be considered a small business. Only three of these companies could have less than 750 employees (SmarTire, Fleet Specialties Company, and Cycloid Company). The agency does not have employee data on SmarTire and Fleet Specialties Company. Cycloid Company has less than 10 employees and outsources the manufacturing of their products. However, to be considered in the substantial number of small businesses, the business headquarters should be in the United States. SmarTire is located in the United Kingdom and Canada.
In conclusion, the agency believes that this proposal will not affect a substantial number of small businesses.
B. Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act of 1995 (Public Law 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditures by State, local or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually (adjusted annually for inflation with base year of 1995). Adjusting this amount by the implicit gross domestic product price deflator for the year 2000 results in $109 million (106.99/98.11 = 1.09). The assessment may be included in conjunction with other assessments, as it is here.
This proposal is not likely to result in expenditures by State, local or tribal governments of more than $109 million annually. However, it is estimated to result in the expenditure by automobile manufacturers and/or their suppliers of more than $109 million annually. The agency has estimated that compliance with this final rule would cost from $33.34 to $69.65 per vehicle. Since approximately 16 million vehicles are produced for the United States market each year, this proposal will have a greater than a $109 million effect (16 million * $33.34 = $533 million). The final cost will depend on choices made by the automobile manufacturers.
These effects have been discussed in the Final Economic Assessment; see for example the chapters on Cost, Benefits and the previous discussion in this chapter on the Regulatory Flexibility Act.