Auto Safety and Emissions:

No Assurance That Imported Gray Market Vehicles Meet Federal Standards

RCED-87-29: Published: Dec 11, 1986. Publicly Released: Jan 27, 1987.

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In response to a congressional request, GAO reviewed how the National Highway Traffic Safety Administration (NHTSA), Environmental Protection Agency (EPA), and U.S. Customs Service carry out their respective responsibilities regarding the Gray Market Vehicle Enforcement Program, specifically: (1) the problems they encounter in administering safety and emission standards; (2) the costs of implementing the program; (3) the extent to which each of the three involved agencies uses contractors for the program and their contract award methods; (4) the extent of coordination between NHTSA, EPA, and Customs; (5) the extent to which the importation of nonconforming vehicles has become a commercial operation; and (6) the extent to which importers can modify nonconforming motor vehicles to conform to emission and safety standards.

GAO found that: (1) NHTSA does not inspect firms that modify vehicles to ensure that they have the capability to conform the vehicles to the safety standards; (2) NHTSA does not test the vehicles after modifications; (3) EPA has a certification program that recognizes certain firms and laboratories that have the capability to modify the vehicles to meet the emission standards or perform the federal emission test procedures, but does not provide for periodic inspection of the modifying firms or vehicle testing; (4) NHTSA and EPA had not timely submitted documentation for 21 of 50 vehicles GAO reviewed; (5) the adequacy and accuracy of the documents substantiating that 29 vehicles conformed with the safety standards was questionable; (6) EPA could not locate emission compliance documentation for 26 vehicles; (7) EPA granted 24 exemptions on the basis of the vehicles' ages and on test results EPA-recognized testing laboratories submitted; and (8) in a 1984 study, only 1 of 27 gray market vehicles that EPA initially approved after laboratory tests passed all parts of the emission test. GAO also found that Congress proposed legislation that would: (1) require NHTSA to provide greater assurance of proper modification of gray market vehicles to meet safety standards; (2) restrict the importation of vehicles that did not conform to safety standards; and (3) establish eligibility controls over consumer importation of nonconforming vehicles.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: NHTSA disagreed with this recommendation and is unlikely to change its position.

    Recommendation: The Secretary of Transportation should direct the Administrator, NHTSA, to improve controls over its program by establishing a process similar to the EPA program, whereby firms are recognized by NHTSA, through certification, as being capable of modifying gray market vehicles. In addition, NHTSA should periodically reinspect these firms and consider testing a sample of modified vehicles as a check on each firm's performance in ensuring vehicle compliance with the safety standards. In considering the appropriate scope, frequency, and amount of testing, NHTSA should take into account factors such as staffing constraints, as well as the safety standards for which compliance testing is technically practical and cost-effective.

    Agency Affected: Department of Transportation

  2. Status: Closed - Implemented

    Comments: EPA issued new regulations, effective July 10, 1989, establishing independent commercial importers who must certify that imported vehicles meet federal emission standards. EPA audited each of nine importer operations before issuing a license.

    Recommendation: The Administrator, EPA, should improve the controls over its program by periodically inspecting both the modifying firms and test laboratories that have been previously recognized and consider testing the vehicles, on a sample basis, to ensure compliance with federal emission standards. In considering the scope and amount of testing, various factors should be taken into account, including staffing constraints and the costs of such testing.

    Agency Affected: Environmental Protection Agency


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