Interpretation ID: nht93-9.2

DATE: December 2, 1993

FROM: James E. Shlesinger -- Shlesinger, Arkwright & Garvey

TO: Walter K. Myers -- Office of the General Counsel, NHTSA

TITLE: None $125(Y) OCC-9388

ATTACHMT: Attached to letter dated 3/21/94 from John Womack to James E. Schlesinger (A42; Redbook; Part 575.104), letter dated 12/23/92 from James E. Shlesinger to Walter Myers, and letter dated 2/23/93 from John Womack to James E. Schlesinger

TEXT:

This is to follow-up on prior correspondence and discussions pertaining to regulatory standards for tires and manufacturer and tire brand name owner requirements in the areas of treadwear, traction and temperature resistance. Previously, we requested an opinion concerning the Uniform Tire Quality Grading Standards (UTQGS) as it applied to a certain fact situation. Copies of our letter dated December 23, 1992, and Chief Counsel's letter of February 23, 1993 in response are enclosed for your reference.

Our present request is directed to an interpretation of the language of 49 C.F.R. S575.104(c)(2) and the qualifications as a limited production tire exception to the requirement that the UTQGS information be molded onto or into the tire sidewall and be provided by means of a paper label affixed to the tread surface of the tire. We also seek confirmation of violations of 49 C.F.R. S575.6(b) and 575.6(d)(2) in the case below wherein a brand name owner of tires both fails to provide the consumer and the Administrator consumer information applicable to tires offered for sale. Finally, we request a brief comment concerning the penalties for violation of the UTQGS as set forth in the National Traffic and Motor Vehicle Safety Act of 1966 (15 U.S.C. S1381 et seq., as amended (hereinafter "Act").

For the purpose of convenience and clarification, we present the following background information which we believe forms the basis for a violation of the Act subjecting the violator to civil penalties for each violation.

Companies A and B are wholly owned Canadian subsidiaries of U.S. companies. A and B manufacture tires for Company C for sale and distribution in Canada. The tires produced by A and B for C carry C's brand name on both the tire sidewall and the paper tread label affixed to the tread surface of the tire. C retails and sells tires through stores which C own and operate throughout Canada. All of the tires in question carry the "DOT" certification and the Canadian National Tire Safety mark which is evidenced by a maple leaf. However, the tires manufactured by A and B for C do not contain UTQGS information on either the tire sidewall or the paper tread label affixed to the tires. We believe the reason for this is because Canada does not require UTQGS information be molded into the sidewall of the tire or be placed on the paper tread label for the tire, and that the tires manufactured by A and B were produced for C for sale within its stores in Canada.

For various reasons, C rejected a large number of tires manufactured for it by A and B during the period 1990-1991 and these tires ultimately found their way into the U.S. market. Specifically, C rejected tires manufactured

for it by A or B in three instances. In the case of an overrun of tires to the extent that C was unable to absorb the volume, C permitted A or B to market and sell the tires in the United States or countries other than Canada. Second, C did not accept blem tires for sale through its stores in Canada. Blem tires would initially be offered for sale to an associate of C in Canada, but if the associate rejected the offer, then A and B were free to dispose of the blem tires provided said tires were not disposed of in Canada. Third, in the case of an end of the line run of a certain brand of tires, when C decided to discontinue the line, A and B were allowed to sell the excess of the discontinued line to countries other than Canada.

All of the tires shipped to the U.S. by A or B which carried C's brand name on them during this period were passenger car tires. None of the tires were deep tread, winter type snow, space-saver, or temporary use spare tires. Also, none of the tires were with nominal rim diameters of 10-12 inches. (See 49 C.F.R. S575.104(c)).

As noted previously, none of the tires in question contained information pertaining to treadwear, traction and temperature resistance, either by means of a label affixed to the tread surface of the tire or molded onto or into the tire sidewall as set forth in the requirements governing UTQGS at 49 C.F.R. S575.104. Further, C, the brand name owner of the tires did not file any documents or any submissions to the Administrator at any time prior to or concurrent with the shipment of tires into the U.S. as noted in the requirements set forth at 49 C.F.R. S575.6(d)(2) which specify that a brand name owner of tires must submit to the Administrator ten (10) copies of information specified in subpart B that is applicable to tires offered for sale at least thirty (30) days before it is first provided for examination by prospective purchasers. Nor was any of this information provided to purchasers.

With this information, our specific inquiry is directed to the "limited production tires" exception to the requirement to meet UTQGS set forth at 49 C.F.R. S575.104(c)(2)./1 The specific language is as follows:

(2) "Limited production tire" means a tire meeting all the following criteria, as applicable:

(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;...

COMPANY A

Approximately 6,975 tires were shipped to the U.S. in April 1990 and 2,947 tires were shipped to the U.S. in November 1991, all with the tire size P225/75R15. This size refers to a tire size listed as a vehicle manufacturer's recommended tire size designation for the calendar year preceding the year of the tire's manufacture. For example, P225/75R15 is a

1/ For the purpose of this inquiry, it can be assumed that the criteria set forth at S575.104(c)(2)(i), (ii) and (iv) are met by Companies A and B.

vehicle manufacturer's recommended tire Size for the 1988 Buick LeSabre, Buick Electra Estate Wagon, Cadillac Brougham (4-door) Sedan, and Oldsmobile Custom Cruiser Wagon; the 1989 Buick Electra Estate Wagon, LeSabre Estate Wagon, Cadillac Brougham (4-door), Chevrolet Caprice Wagon, and Oldsmobile Custom Cruiser Wagon; and the 1990 Chevrolet Caprice, Cadillac Brougham and Buick Estate Wagon. These motor vehicles were produced in or imported into the U.S. in quantities greater than 10,000 during the respective years. We therefore believe that the limited production tire exception of 575.104(c)(2) does not apply because criteria (iii) of the exception was not met.

COMPANY B

Approximately 6,164 tires were shipped to the U.S. in June 1990 with various tire sizes. The tire sizes for these tires were acceptable substitute sizes for a given tire size listed as a vehicle manufacturer's recommended tire size designation for new motor vehicles 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. For example, some of the tires shipped to the U.S. in June 1990 were of the tire size P255/6OR15. P255/6OR15 is an acceptable substitute tire size for the P225/75R15 referred to above.

Assuming that all of the tires aforementioned shipped to the United States by Companies A and B were sold in the United States, please advise on the following:

1. Is Company A in violation of the UTQGS set forth at 49 C.F.R. S575.104?

2. Is Company B in violation of the UTQGS set forth at 49 C.F.R. S575.104?

3. Is Company C in violation of 49 C.F.R. S575.6(b) and 575.6(d)(2) for the failure to provide consumer information and the failure to submit to the Administrator 10 copies of the information specified in Subpart B of the regulations applicable to the tires offered for sale?

4. In addition to the penalties for the violation of the UTQGS set forth in the Act under Section 109 (15 U.S.C. S1398(a)), are there additional sanctions (i.e., requiring the manufacturer or brand name owner to recall unlawful product or notification procedures intended to identify unlawful product in the marketplace?

Thank you for your consideration of this matter and we appreciate your kind assistance.