Interpretation ID: 23082.jeg

Granta Y. Nakayama, Esq.
Kirkland & Ellis
655 Fifteenth Street, NW
Washington, DC 20005

Dear Mr. Nakayama:

This responds to your letter of July 23, 2001, concerning whether Ferrari S.p.A. and Maserati S.p.A. qualify for the small volume manufacturer (SVM) implementation schedule in the final rule for advanced air bags. You provided information with that letter, and in a previous meeting, to supplement information provided in a letter sent by Mr. Mark A. Recchia of Fiat Auto R&D, U.S.A. You asked about this matter in light of the ownership relationships between these companies and with Fiat Auto S.p.A. and General Motors. As discussed below, it is our opinion that Ferrari S.p.A. and Maserati S.p.A. would be considered separately, both with respect to each other and with respect to Fiat Auto S.p.A. and General Motors, for purposes of qualification for the SVM implementation schedule.

The National Highway Traffic Safety Administration's new requirements for advanced air bags are included as part of Standard No. 208, Occupant Crash Protection. Paragraph S14.1(d) of that standard, as amended by the final rule we published in the Federal Register (65 FR 30680) on May 12, 2000, provides that "(v)ehicles that are manufactured by a manufacturer that produces fewer than 5,000 vehicles worldwide annually" are subject to a special implementation schedule. (Emphasis added.)

I note that the Coalition of Small Volume Automobile Manufacturers (COSVAM) submitted a petition for reconsideration asking us to expand that definition to manufacturers of no more than 10,000 vehicles per year. Alternatively, it petitioned that the 5,000 vehicle cap be limited to vehicles sold in the United States per year or that the 5,000 vehicle cap be averaged over the phase-in period. Under the averaged proposal, if a manufacturer produced more than 5,000 vehicles in a single year, it could still take advantage of the exclusion as long as the average of production during the phase-in was not more than 5,000 vehicles per year.

We will respond to the COSVAM petition as part of our general response to petitions for reconsideration of the May 2000 final rule for advanced air bags. We expect to issue a response in the near future. I observe that, however we respond to the requests of COSVAM, it will not affect the primary issue raised by your letter: whether Ferrari S.p.A. and Maserati S.p.A. would be considered separately, with respect to each other and with respect to Fiat Auto S.p.A. and General Motors, for purposes of qualification for the SVM implementation schedule

According to the information provided by Mr. Recchia, the annual worldwide production of Ferrari cars themselves is and will remain well within 5,000 units. However, the annual worldwide production of Maserati S.p.A., which is wholly owned by Ferrari S.p.A., may exceed 5,000 units in the next few years. Mr. Recchia also indicated that Ferrari S.p.A. is 87 percent owned by Fiat S.p.A., which owns 80 percent of Fiat Auto S.p.A. and 5.1 percent of General Motors. Both Fiat Auto S.p.A. and General Motors are very large auto manufacturers. Mr. Recchia also noted in a telephone conversation with Edward Glancy of this office that it is possible that Ferrari cars and Maserati cars could be imported into the United States by the same importer during the time period in question.

You provided information showing that, notwithstanding the fact that Maserati S.p.A. is wholly owned by Ferrari S.p.A., they are two operationally independent companies with different products. In an Annex to your letter, you indicated that the separate nature of the two companies is exhibited by the different and dedicated products, development location and resources, production location and resources, and headquarter location and resources.

After considering the materials provided by Mr. Recchia and by you, it is our opinion, for purposes of considering whether a company qualifies for the SVM implementation schedule under paragraph S14.1(d) of Standard No. 208, that Ferrari S.p.A. and Maserati S.p.A. are separate manufacturers, both with respect to each other and with respect to Fiat Auto S.p.A. and General Motors. This opinion reflects several considerations.

First, Ferrari S.p.A. and Maserati S.p.A. are separate corporations, are operationally independent and are separate manufacturers for most purposes.

Second, the vehicles of related manufacturers are not ordinarily grouped together for purposes of determining compliance with phase-ins of new safety standards. We note that this is in contrast to determinations of compliance with fuel economy standards, where vehicles of related manufacturers are grouped together. However, the grouping of vehicles of related manufacturers for purposes of fuel economy standards is done pursuant to an explicit statutory provision.

Third, while it is possible that Ferrari cars and Maserati cars could be imported into the United States by the same importer, we established the special provision in paragraph S14.1(d) for SVMs in light of the technical challenges faced by these manufacturers given the complexity of the new advanced air bag requirements. Ferrari S.p.A. and Maserati S.p.A. are separate European manufacturers, and the use of a common importer would not affect the challenges these companies face in meeting the requirements for advanced air bags.

Finally, the ownership relationships between these companies and with Fiat Auto S.p.A. and General Motors are longstanding and do not represent any "gamesmanship" to avoid the phase-in requirements.

We would caution that this interpretation reflects specific consideration of the factors underlying paragraph S14.1(d) of Standard No. 208 and should not be viewed as providing guidance for interpreting any other regulatory provisions.

If you have any further questions, please feel free to call Edward Glancy of my staff at (202) 366-2992.

Sincerely,

John Womack
Acting Chief Counsel

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d.8/22/01