VIII.  SMALL BUSINESS IMPACTS

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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.

Currently, there are about 4 small motor vehicle manufacturers in the United States ^[43]. 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 does not believe this will create a significant economic burden for these manufacturers. The agency is providing an alternative for the small vehicle manufacturers to meet the proposal 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 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 and aftermarket rims.

Low Tire Pressure Monitoring System Suppliers

There are several suppliers of direct measurement system radio frequency transmission technology (Beru, IQ Mobil, 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 $775 million to over $1.1 billion. The final cost will depend on choices made by the automobile manufacturers.

These effects have been discussed in the Preliminary Economic Assessment; see for example the chapters on Cost, Benefits and the previous discussion in this chapter on the Regulatory Flexibility Act.




IX.  CUMULATIVE IMPACTS

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Section 1(b) II of Executive Order 12866 Regulatory Planning and Review requires the agencies to take into account to the extent practicable "the costs of cumulative regulations". To adhere to this requirement, the agency has decided to examine both the costs and benefits by vehicle type of all substantial final rules with a cost or benefit impact effective from MY 1990 or later. In addition, proposed rules are also identified and preliminary cost and benefit estimates provided.

Costs include primary cost, secondary weight costs and the lifetime discounted fuel costs for both primary and secondary weight. Costs will be presented in two ways, the cost per affected vehicle and the average cost over all vehicles. The cost per affected vehicle includes the range of costs that any vehicle might incur. For example, if two different vehicles need different countermeasures to meet the standard, a range will show the cost for both vehicles. The average cost over all vehicles takes into account voluntary compliance before the rule was promulgated or planned voluntary compliance before the rule was effective and the percent of the fleet for which the rule is applicable. Costs are provided in 2000 dollars, using the implicit GNP deflator to inflate previous estimates to 2000 dollars.

Benefits are provided on an annual basis for the fleet once all vehicles in the fleet meet the rule. Benefit and cost per average vehicle estimates take into account voluntary compliance.

* Total benefits for passenger cars and light trucks

** Total benefits for passenger cars and light trucks, does not count potential loss in benefits if air bags are significantly depowered.

* Total benefits for passenger cars and light trucks

** Total benefits for passenger cars and light trucks, does not count potential loss in benefits if air bags are significantly depowered.

* Total benefits for passenger cars and light trucks

** Total benefits for passenger cars and light trucks, does not count potential loss in benefits if air bags are significantly depowered.

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^[43]  Avanti, Callaway, Panoz, and Saleen. 

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