NHTSA Interpretation File Search
Overview
NHTSA's Chief Counsel interprets the statutes that the agency administers and the standards and regulations that it issues. Members of the public may submit requests for interpretation, and the Chief Counsel will respond with a letter of interpretation. These interpretation letters look at the particular facts presented in the question and explain the agency’s opinion on how the law applies given those facts. These letters of interpretation are guidance documents. They do not have the force and effect of law and are not meant to bind the public in any way. They are intended only to provide information to the public regarding existing requirements under the law or agency policies.
Understanding NHTSA’s Online Interpretation Files
NHTSA makes its letters of interpretation available to the public on this webpage.
An interpretation letter represents the opinion of the Chief Counsel based on the facts of individual cases at the time the letter was written. While these letters may be helpful in determining how the agency might answer a question that another person has if that question is similar to a previously considered question, do not assume that a prior interpretation will necessarily apply to your situation.
- Your facts may be sufficiently different from those presented in prior interpretations, such that the agency's answer to you might be different from the answer in the prior interpretation letter;
- Your situation may be completely new to the agency and not addressed in an existing interpretation letter;
- The agency's safety standards or regulations may have changed since the prior interpretation letter was written so that the agency's prior interpretation no longer applies; or
- Some combination of the above, or other, factors.
Searching NHTSA’s Online Interpretation Files
Before beginning a search, it’s important to understand how this online search works. Below we provide some examples of searches you can run. In some cases, the search results may include words similar to what you searched because it utilizes a fuzzy search algorithm.
Single word search
Example: car
Result: Any document containing that word.
Multiple word search
Example: car seat requirements
Result: Any document containing any of these words.
Connector word search
Example: car AND seat AND requirements
Result: Any document containing all of these words.
Note: Search operators such as AND or OR must be in all capital letters.
Phrase in double quotes
Example: "headlamp function"
Result: Any document with that phrase.
Conjunctive search
Example: functionally AND minima
Result: Any document with both of those words.
Wildcard
Example: headl*
Result: Any document with a word beginning with those letters (e.g., headlamp, headlight, headlamps).
Example: no*compl*
Result: Any document beginning with the letters “no” followed by the letters “compl” (e.g., noncompliance, non-complying).
Not
Example: headlamp NOT crash
Result: Any document containing the word “headlamp” and not the word “crash.”
Complex searches
You can combine search operators to write more targeted searches.
Note: The database does not currently support phrase searches with wildcards (e.g., “make* inoperative”).
Example: Headl* AND (supplement* OR auxiliary OR impair*)
Result: Any document containing words that are variants of “headlamp” (headlamp, headlights, etc.) and also containing a variant of “supplement” (supplement, supplemental, etc.) or “impair” (impair, impairment, etc.) or the word “auxiliary.”
Search Tool
NHTSA's Interpretation Files Search
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ID: aiam0114OpenHonorable Jack Miller, United States Senate, Washington, DC 20510; Honorable Jack Miller United States Senate Washington DC 20510; Dear Senator Miller: Thank you for your letter of August 13, 1968, calling my attention t Mr. Paul Johnston's comments and suggestions on the requirements for school bus signal lamps as specified in Motor Vehicle Safety Standard No. 108.; As Mr. Johnston pointed out, Standard No. 108, effective January 1 1969, provides for optional use of either the eight-lamp or four- lamp signal system. This optional provision was adopted after careful consideration of the comments and recommendations which were received in response to the Notice of Proposed Rule Making as published in the *Federal Register* on February 3, 1967. The 'Minimum Standards for School Buses', as published by the National Conference on School Transportation, and the regulations governing minimum standards for school buses in various states were also considered during development of the optional provision for signal lamp systems. Results of our studies and investigations indicated that approximately forty states were using either the four-lamp or eight-lamp signal system. Other states were using the adopted system with only minor variations in the installation and operational requirements.; Standard No. 108, effective January 1, 1969, was published in th *Federal Register* on December 16, 1967. Under the procedural rules of the Federal Highway Administration, any person adversely affected by this order may petition the Administrator under Part 216, Subchapter B, Section 216.31 or Section 216.35, published in the *Federal Register* on November 17, 1967, a copy of which is enclosed. No petition of the adopted requirements for school bus signal lamps has been filed.; Although we do not dispute the safety benefits which Mr. Johnsto claims for a six-lamp system, I must emphasize that our long-range objective is the adoption of one nationwide system. Even with the presently adopted systems, a motorist could be faced with the problem of interpreting two sets of signals during a very short time period. This problem will become more prevalent with the anticipated increase in rapid interstate traffic. To permit the use of a third optional system, six-lamp or other, would further complicate the situation.; Standard No. 108 applies only to new school buses manufactured on o after January 1, 1969. Retrofitting of buses presently in operation is not required. Since Iowa's fleet of buses is presently equipped with a six-lamp system, it appears that considerable data on the effectiveness of this system could be accumulated from this fleet during the next several years, or until such time that a single nationwide system is proposed. We will be pleased to carefully review and consider any such data which Mr. Johnston can provide in the future.; In summary, it is the position of this Bureau that the provision o Standard No. 108 permitting optional use of either the four-lamp or eight-lamp signal system is reasonable, practicable and in the interest of highway safety. Therefore, we do not believe that a change in this provision to permit optional use of a third or six-lamp system is justified.; We have reviewed our files with respect to the written and persona contacts Mr. Arthur Roberts, Director of Pupil Transportation, has had with this Bureau.; This review indicates that the correspondence from Mr. Roberts wa submitted in response to the Notice of Proposed Rule Making on Standard No. 112 (subsequently combined with Standard No. 108) as published in the *Federal Register* on February 3, 1967. It is not the practice of the Bureau to reply individually to the numerous responses received from published rule making notices, which often run to thousands of pages. However, a summary of the comments represented by the responses and the disposition of these comments is presented in the preamble to Standard No. 108 as published in the *Federal Register* on December 16, 1967. With respect to Mr. Roberts' visit on May 7, 1968, the topics of discussion related primarily to the technical requirements of Standard No. 108 and other information relative to the merits of converging Iowa's school buses to either the four-lamp or eight- lamp system. Our understanding was that Mr. Roberts received the information he was seeking at the time of his visit and that no follow-up correspondence was necessary on our part.; Sincerely, William Haddon, Jr., M.D., Director |
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ID: aiam2129OpenMr. Tatsuo Kato, Staff, Safety, Nissan Motor Company, Ltd., P. O. Box 1606, 560 Silvan Avenue, Englewood Cliffs, NJ, 07632; Mr. Tatsuo Kato Staff Safety Nissan Motor Company Ltd. P. O. Box 1606 560 Silvan Avenue Englewood Cliffs NJ 07632; Dear Mr. Kato: This is in response to your letter of April 22, 1975, posing severa questions relating to Standard No. 302, 49 CFR 571.302. We are sorry for the delay in responding, but unfortunately your letter was filed in the docket as a response to a notice of proposed rulemaking concerning Standard No. 302.; Your first question relates to the requirement that the surface of th specimen closest to the occupant compartment air space face downward on the test frame. This requirement is now found in S5.2.2 of Standard No. 302, as published on September 16, 1975 (40 FR 42746). Through error, S5.2.2 was not amended when the standard was first amended on March 31, 1975 (40 FR 14318). This requirement applies to all test samples regardless of their thickness.; Your second question lists five components and asks whether they ar included within Standard No. 302 as amended by Docket No. 3-3, Notice 7, and whether they would be included within Standard No. 302 if the amendment proposed by Notice 8 is adopted. Our answers follow:; >>>1. The wiring harness illustrated in your letter need not currentl meet the requirements of the standard, but would have to meet the requirements if it was located within 1/2 inch of the surface of the floor covering and Notice 8 was adopted as presently proposed.; 2. The roof lamp need not currently meet the requirements of th standard, but would have to meet these requirements if Notice 8 was adopted as proposed.; 3 and 4. The door lock and door handle knobs need not meet th requirements of the standard, but would have to if Notice 8 was adopted.; 5. The floor grommets need not currently meet the requirements of th standard, but would have to meet these requirements if Notice 8 was adopted and they were within 1/2 inch of the surface of the carpet.<<<; You are correct, therefore, in your analysis of the effect of Notice as stated in your letter.; Your third question relates to whether the air space located behind th instrument panel and underneath the seat will be considered as part of the occupant compartment air space if Notice 8 is adopted. Assuming that the air behind the instrument panel is sealed off from the passenger compartment, it would not be considered part of the occupant compartment air space. The air under the seat cushion would be considered part of the occupant compartment air space unless it too is sealed off from the passenger compartment.; We trust these answers will be helpful to you. Yours truly, Richard B. Dyson, Assistant Chief Counsel |
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ID: aiam5316OpenMr. William J. MacAdam President & CEO trans2 Corporation 37682 Enterprise Court Farmington Hills, MI 48331; Mr. William J. MacAdam President & CEO trans2 Corporation 37682 Enterprise Court Farmington Hills MI 48331; "Dear Mr. MacAdam: This responds to your request for an interpretatio that an electric vehicle that trans2 plans to manufacture is not a 'motor vehicle' within the meaning of the National Traffic and Motor Vehicle Safety Act (Safety Act). Your counsel, Mr. James Freeman, informed Ms. Dorothy Nakama of my staff that you do not object to the manner in which this letter describes the trans2 vehicle. We have determined that the trans2 electric vehicle is not a 'motor vehicle' under the Safety Act. 'Motor vehicle' is defined at Section 102(3) of the Act as: A ny vehicle driven or drawn by mechanical power manufactured primarily for use on the public streets, roads, and highways, except any vehicle operated exclusively on a rail or rails. It is unclear from your letter whether the trans2 vehicle is manufactured for on-road use. However, NHTSA has stated in past interpretations that vehicles that regularly use the public roads will not be considered 'motor vehicles' if such vehicles have a maximum attainable speed of 20 miles per hour or less and have an abnormal configuration that readily distinguishes them from other vehicles. These criteria appear to be met by trans2's vehicle. You stated that the top speed of the vehicle is 20 miles per hour. Photographs of trans2's vehicle show that it is approximately the size and height of a golf cart. From the side, the passenger compartment appears to be an oval. From the rear, the vehicle has tail lights built into the two headrests. These unusual body features make the trans2 vehicle readily distinguishable from 'motor vehicles.' Accordingly, we determine that trans2's vehicle is not a 'motor vehicle' within the meaning of the Safety Act. Since the trans2 vehicle is not a motor vehicle, none of NHTSA's regulations or standards apply to it. Please note that except for the features of the trans2's vehicle described herein, the remaining vehicle specifications described in your letter of November 3, 1993 are protected under Exemption 4 of the Freedom of Information Act. The protection will continue until trans2 discloses details of its vehicle to the public. I hope this information is helpful. If you have any further questions, please contact Dorothy Nakama of my staff at this address or at (202) 366-2992. Sincerely, John Womack Acting Chief Counsel cc: James Freeman, Esq. Hogan and Hartson Columbia Square 555 13th St., NW Washington, DC 20004-1109"; |
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ID: aiam5101OpenMr. Michael J. Motzkin Pioneer Plumbing Post Office Box 35833 Tucson, AZ 85740-5833; Mr. Michael J. Motzkin Pioneer Plumbing Post Office Box 35833 Tucson AZ 85740-5833; Dear Mr. Motzkin: This responds to your letter of October 14, 199 regarding Federal requirements pertaining to brake specifications. In particular you asked whether there are any regulations requiring automotive brake drums and rotors not to be milled beyond manufacturer specifications, and whether manufacturers are required to stamp their specifications on brake drums and rotors. I am pleased to have this opportunity to explain our law and regulations for you. The National Traffic and Motor Vehicle Safety Act of 1966 (Safety Act) authorizes the National Highway Traffic Safety Administration (NHTSA) to issue Federal motor vehicle safety standards for new motor vehicles and new motor vehicle equipment. All motor vehicles and items of motor vehicle equipment manufactured or imported for sale in the United States must comply with all applicable safety standards. This agency does not provide approvals of motor vehicles or motor vehicle equipment. Under the Safety Act, the manufacturer is responsible for certifying that its motor vehicles or equipment meet applicable standards. NHTSA has issued a number of safety standards which specify performance requirements for new motor vehicle brake systems and certain new brake equipment. The standards do not require manufacturers to stamp specifications on drums or rotors, although it is common practice for manufacturers to do so. The Federal motor vehicle safety standards do not apply to a motor vehicle after its first sale to a consumer. However, manufacturers, distributors, dealers, or motor vehicle repair businesses modifying a used vehicle are prohibited by section 108(a)(2)(A) of the Safety Act from knowingly rendering inoperative any safety device or element of design installed on or in a motor vehicle or item of motor vehicle equipment in compliance with a safety standard. The milling or turning of brake drums and rotors is typically performed during the course of repairing a used vehicle with worn brakes. We do not believe that the 'render inoperative' provision would ordinarily be relevant to such a situation. The states may regulate the repair of motor vehicles. We suggest you investigate the laws of Arizona to see whether they affect your situation. I hope this information is been helpful. If you have any further questions about NHTSA's safety standards, please feel free to contact David Elias of my staff at this address or by telephone at (202) 366-2992. Sincerely, Paul Jackson Rice Chief Counsel; |
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ID: aiam0303OpenMr. Paul Peterson, Willett Company, 700 S. Desplaines Street, Chicago, IL 60607; Mr. Paul Peterson Willett Company 700 S. Desplaines Street Chicago IL 60607; Dear Mr. Peterson: This is in reply to a letter dated February 10, 1971, that was receive from Mr. William V. Reynolds of the National Association of School Bus Contract Operators asking that we send our reply to you. The letter asks two questions concerning Motor Vehicle Safety Standard No. 213, which are restated below with our response.; >>>1. Is the standard applicable to a school bus operator who install seat belts (not presently required) at the behest of a school board for use when transporting children attending Special Education Classes?<<<; The answer to this question is no. Standard No. 213 applies only t child seating systems, and not to seat belts or persons who install seat belts. In addition, there are no other Federal requirements applicable to one who installs seat belts for passengers in either a new or used bus. There is, however, a Federal standard (No. 209) that requires all seat belt assemblies manufactured after March 1, 1967, to meet certain performance requirements. We strongly recommend that you examine the seat belts you wish to install to determine whether they were manufactured to comply with this standard. This can be done by examining the belt assembly, particularly its label or buckle assembly, for the date of manufacture, which may appear in an abbreviated fashion. Also, many seat belt assemblies manufactured after March 1, 1967, will be labeled with a specific statement that they comply with all applicable Federal motor vehicle safety standards. This statement may alternatively appear on the box in which the belt assembly is delivered.; For your information, I have enclosed a copy of a Bureau of Moto Carrier Safety regulation concerning requirements for seat belt assemblies at the driver's position, in buses under that agency's jurisdiction, which became effective August 1, 1970. These requirements would be applicable to you if the buses in question are subject to the Bureau of Motor Carrier Safety Regulations.; >>>2. Is the standard applicable to devices designed by the schoo physiotherapy department and built in the school carpentry shop for use in transporting handicapped children with a handicap that is peculiar to that one child? (This includes both regular and van-type buses.)<<<; The answer to this question is yes. Standard No. 213 applies to al child seating systems for use in motor vehicles, including buses, regardless of whether the child seating system is manufactured by a company for sale or whether it is manufactured for persons for their own use, as in your case. If the standard poses a particular hardship in the situation you describe, however, we will be glad to discuss the matter further with the persons involved.; Sincerely, Lawrence R. Schneider, Acting Chief Counsel |
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ID: aiam5551OpenMr. Donnell W. Morrison 1005 Drinnon Drive Morristown, TN 37814; Mr. Donnell W. Morrison 1005 Drinnon Drive Morristown TN 37814; Dear Mr. Morrison: This is in reply to your letter of April 25, 1995 asking for a clarification of the letter of April 10 to you from the former Chief Counsel, Philip Recht. He explained Standard No. 108's requirements for the location of rear lighting on wide vehicles. As the letter stated, identification lamps are to be mounted 'as close to the top of the vehicle as practicable.' You speak of having seen 'semitrailers on the highway with all the rear lights at bed level' including clearance and identification lamps. As the letter also stated, the determination of practicability is initially that of the manufacturer, to be made in its certification that the vehicle meets all applicable Federal motor vehicle safety standards. NHTSA will not question that determination unless it appears clearly erroneous. Without further information on the semitrailers you saw, we cannot judge whether mounting the clearance and identification lamps at bed level was a clearly erroneous determination by the trailer's manufacturer. There are some configurations where there is no header on which to mount lamps and the top of the doors approaches the top of the vehicle. In those configurations, we would not contest the manufacturer's determination that mounting the lamps at bed level was 'as close to the top of the vehicle as practicable.' On the other hand, the semitrailers you saw might have failed to conform to Standard No. 108. I hope that this clarifies the matter for you. If you have any further questions you may call Taylor Vinson of this Office (202-366-5263). Sincerely, John Womack Acting Chief Counsel; |
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ID: aiam2294OpenMr. Cornelius C. Setter, Independent Textile Testing Service, Inc., P. O. Box 1948, 1499 Murray Avenue, Dalton, GA, 30720; Mr. Cornelius C. Setter Independent Textile Testing Service Inc. P. O. Box 1948 1499 Murray Avenue Dalton GA 30720; Dear Mr. Setter: This is in response to your letter of February 18, 1976, concernin testing procedures pursuant to Federal Motor Vehicle Safety Standard No. 302, *Flammability of Interior Materials*.; As you point out, S5.1.3 of the standard provides that thin, hea resistant wires are used to support a 'specimen that softens and bends at the flaming end so as to cause erratic burning.' One of your customers asserted that support wires should be used in testing his materials, and you have asked when the use of support wires is appropriate.; Your interpretation of the standard in this case is commendable, an your test practices are calculated to demonstrate clearly the exercise of due care that a particular product complies with Federal motor vehicle safety standards. However, an NHTSA July 19, 1971, interpretation of Standard No. 302 (copy enclosed) permits use of support wires when any bending of the tested material occurs. At the time of that interpretation, it was believed that the support wires would not influence the test results.; More recent testing by the agency demonstrates that the support wire do significantly affect burn rates, and the agency intends to issue an interpretative amendment of the standard that will limit use of support wires.; Thank you for your responsible approach to testing products that ar required to conform to Federal motor vehicle safety standards.; Sincerely, Frank Berndt, Acting Chief Counsel |
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ID: aiam0753OpenMr. Satoshi Nishibori, Nissan Motor Co., Ltd., 560 Sylvan Avenue, Englewood Cliffs, NJ 07632; Mr. Satoshi Nishibori Nissan Motor Co. Ltd. 560 Sylvan Avenue Englewood Cliffs NJ 07632; Dear Mr. Nishibori: This is in reply to your letter of June 21, 1972, in which yo requested our interpretation of the phrase in S4.3.1.3 of Motor Vehicle Safety Standard No. 210 which states that the angle of the belt is to be measured from the seating reference point to the 'nearest contact point of the belt with the hardware attaching it to the anchorage'.; The language in question was adopted in response to petitions fo reconsideration of the amended rule as published in 1970 (35 F.R. 15293, 35 F.R. 18116). Several petitioners had stated that measuring the angle from the seating reference point to the anchorage, as the standard then specified, would not accurately reflect the true angle of the belt because of the intervention of rigid attachment hardware between the anchorage and the webbing. The section was therefore amended to refer to the point at which the belt touched such attachment hardware.; In the diagram which you provide of a seat belt system in which th buckle is attached to the seat by means of a rigid bracket, we would consider the buckle itself to be a part of the attaching hardware. The contact point would therefore lie on the interface between the tongue and the buckle at the point nearest the seating reference point.; It does not appear from Figures 2 and 3 of your letter that any of th designated angles correspond exactly to the angle that should be measured under S4.3.1.3. In both figures the angle would be determined by the line between the reference point and the nearest point to it on the forward end of the buckle.; Please advise us if you have further questions on this point. Sincerely, Richard B. Dyson, Assistant Chief Counsel |
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ID: aiam1841OpenHonorable Lawton Chiles, United States Senator, Federal Building, Lakeland, FL 33801; Honorable Lawton Chiles United States Senator Federal Building Lakeland FL 33801; Dear Senator Chiles: This is in response to your letter of March 5, 1975, forwarding a inquiry from one of your constituents, Mr. Vincent Tetuan, concerning a proposed amendment to the Federal bumper standard.; On January 2, 1975, the National Highway Traffic Safety Administratio (NHTSA) issued a Federal Register notice (copy enclosed) proposing to reduce the current 5 mph bumper impact requirements to 2.5 mph until the 1979 model year. The impact requirements would then have been increased to 4 mph for 1979 and later model year cars.; The proposal was based primarily on the results of two agency-sponsore studies which indicated that the cost and weight of many current production bumpers, in light of inflation and fuel shortages, made the bumpers no longer cost beneficial. Information presented at public hearings on the bumper notice and comments submitted to the docket in response to the proposal have brought to light additional data. The NHTSA has carefully examined all of this evidence and reviewed its studies in light of the new information. As a result, the agency has concluded that the 5 mph protection level should not be reduced. This decision is contained in a Federal Register notice that was published March 12, 1975 which is enclosed (Docket No. 74-11, Notice 7, Docket No. 73-19, Notice 6).; Mr. Tetuan appears to be directing his comments to what he believes t be a proposed requirement that vehicles manufactured in the future be equipped with plastic bumper systems. Such an understanding of the proposal is incorrect. The January 2, 1975 proposal was aimed at enabling a reduction in vehicle weight. In the preamble to that notice, the NHTSA cited soft face bumpers as one type of system that could produce a significant weight reduction. However, no proposal was made to require the use of soft face systems. The March 12, 1975 notice reiterates the agency's position that bumpers which are lighter in weight than those currently in mass production could and probably would be developed. The requirements proposed in the March notice, however, ensure that a wide variety of materials could continue to be used in bumper systems.; Sincerely, James C. Schultz, Chief Counsel |
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ID: aiam4710OpenLewis H. Goldfarb, Esq. Assistant General Counsel Chrysler Motors Corporation l2000 Chrysler Drive Highland Park, MI 48288-l9l9; Lewis H. Goldfarb Esq. Assistant General Counsel Chrysler Motors Corporation l2000 Chrysler Drive Highland Park MI 48288-l9l9; "Dear Mr. Goldfarb: This responds to your letter concerning the fue economy implications of Chrysler's acquisition of American Motors Corporation (AMC). You stated that you were writing to obtain confirmation of Chrysler's 'understanding' that fuel economy credits earned by AMC, for exceeding light truck standards in model years l984-86, are now available to Chrysler. You enclosed a memorandum of law explaining your position. As discussed below, it is our opinion that even if Chrysler is considered the 'successor' to AMC under the Motor Vehicle Information and Cost Savings Act, that fact would not result in the conclusion that credits earned, prior to the acquisition, by AMC for exceeding a fuel economy standard could be applied to shortfalls incurred by Chrysler's pre-acquisition fleet, under the three-year carryforward and carryback provisions of the Act and regulations. However, credits earned by AMC could be applied to the pre-acquisition AMC fleet and to the post-acquisition Chrysler/AMC fleet. Also, credits earned by post-acquisition Chrysler/AMC could be applied to the pre-acquisition Chrysler fleet and/or AMC fleet, provided that double counting does not take place. Other issues raised by your letter and legal memorandum are also addressed below. Section 50l(8) of the Cost Savings Act defines 'manufacturer' as follows: The term 'manufacturer' means any person engaged in the business of manufacturing automobiles. The Secretary shall prescribe rules for determining, in cases where more than one person is the manufacturer of an automobile, which person is to be treated as the manufacturer of such automobile for purposes of this part. Such term also includes any predecessor or successor of such a manufacturer to the extent provided under rules which the Secretary shall prescribe. One issue raised by Chrysler's memorandum is whether Chrysler is the successor of AMC. The term 'successor,' as used in the definition of 'manufacturer' quoted above, is not defined in the statute or in agency regulations. Under general principles of corporate law, the term 'successor' ordinarily refers to a corporation which, through amalgamation, consolidation, or other legal succession, becomes invested with the rights and assumes the burdens of another corporation. Based on our general understanding of Chrysler's acquisition of AMC, we have no reason to doubt your conclusion that Chrysler is the successor of AMC. However, your letter does not provide specific facts concerning the structure of Chrysler's acquisition of AMC or whether Chrysler is invested with the rights and has assumed the burdens of AMC. In the absence of such facts, we are unable to provide an opinion that Chrysler is the successor of AMC. However, for purposes of this letter, it will be assumed that a factual showing can be made that Chrysler is the successor to AMC. It should be noted that the mere fact that one corporation acquires another corporation does not necessarily mean that the acquiring corporation is a 'successor.' In the context of the Cost Savings Act, manufacturer A may be wholly owned by manufacturer B, yet still be a manufacturer itself. Under sections 503(a) and (c), however, the automobiles of such related manufacturers would be combined for purposes of calculating average fuel economy. Another issue raised by Chrysler's memorandum is whether Chrysler and AMC became the same manufacturer for fuel economy purposes for model year l987. According to the memorandum, Chrysler agreed to acquire AMC in the spring of l987, and the transaction closed on August 6, l987. The memorandum concludes that Chrysler and AMC became the same manufacturer for fuel economy purposes in model year l987. Based on the above facts, it is our opinion that all of Chrysler's and AMC's vehicles should be treated as manufactured by the same manufacturer for model year l987. Fuel economy standards apply to passenger automobiles manufactured by a manufacturer, for a particular model year. See section 502(a)(l). Moreover, average fuel economy is calculated based on the total number of passenger automobiles manufactured in a given model year by a manufacturer. See section 503(a)(l). Under section 503(c), the term 'passenger automobiles manufactured by a manufacturer' includes all automobiles manufactured by persons who control, are controlled by, or are under common control with, such manufacturer.' Since Chrysler controlled AMC prior to the end of the l987 model year, and since fuel economy standards apply to particular model years as a whole and not to separate parts of a model year, it is our opinion that all of the vehicles produced by both Chrysler and AMC for model year l987 shall be treated as if manufactured by the same manufacturer, i.e., placed into one fleet. Otherwise, one or both of the manufacturers would have two separate CAFE values, pre-acquisition (or pre-control) and post-acquisition (or post-control), for the same model year. We will now address generally the issue of how credits may be used where one manufacturer is the successor of another. In discussing the issue, we will refer to the following hypothetical example: A and B are both car manufacturers. After consolidation, A is the only surviving corporation and is invested with the rights and assumes the burdens of B. Thus, A is the 'successor' of B. While this example and subsequent discussion is for passenger automobiles, the relevant requirements concerning the earning and availability of credits are essentially identical for passenger automobile standards and light truck standards. Compare section 502(l)(1)(B) and 49 CFR Part 535, and see 45 FR 83233-36, December l8, l980. Thus, our analysis for passenger automobile standards is also relevant to light truck standards. Section 502(l)(1)(B) states: Whenever the average fuel economy of the passenger automobiles manufactured by a manufacturer in a particular model year exceeds an applicable average fuel economy standard . . ., such manufacturer shall be entitled to a credit calculated under subparagraph (C), which-- (i) shall be available to be taken into account with respect to the average fuel economy of that manufacturer for any of the three consecutive model years immediately prior to the model year in which such manufacturer exceeds such applicable average fuel economy standard, and (ii) to the extent that such credit is not so taken into account pursuant to clause (i), shall be available to be taken into account with respect to the average fuel economy of that manufacturer for any of the three consecutive model years immediately following the model year in which such manufacturer exceeds such applicable average fuel economy standard. We note first that credits earned by a particular manufacturer are only 'available to be taken into account with respect to the average fuel economy of that manufacturer,' for any of the three model years before, or after, the model year in which the credits are earned. (Emphasis added.) In the example set forth above, B is no longer a manufacturer under the Cost Savings Act. (Indeed, it is no longer a 'person' under section 50l(8).) Thus, in the absence of some provision concerning 'successors,' any unused credits that B had earned prior to the consolidation would expire unused, since the only manufacturer to which they are available no longer exists. However, for some purposes B continues to exist as part of A, its 'successor.' Section 50l(8)'s definition of 'manufacturer' does not provide that the term 'manufacturer' necessarily includes any precedessor or successor but instead provides that the term does so 'to the extent provided under rules which the Secretary shall prescribe.' This provision was added by the Automobile Fuel Efficiency Act of l980 as a conforming amendment to the section concerning modification of local content requirements to encourage domestic production of fuel efficient automobiles and not to the section concerning credits. The legislative history does not provide any indication as to why the provision was added, and, to date, NHTSA's administration of the statutory provisions concerning modification of the local content requirements has not turned up a situation for which such rules would be relevant. Should rules be issued under section 50l(8), NHTSA would do so by notice-and-comment rulemaking, taking account of the purposes of that section and the statutory scheme as a whole. Notwithstanding the absence of rules, we do not believe that Congress intended to require the forfeit of a manufacturer's unused credits in a situation where that manufacturer's substance continues to exist as part of a 'successor.' Thus, taking account of section 50l(8) and the statutory scheme as a whole, we conclude that, in the example set forth above, B can be deemed as continuing to exist as part of A, from the time of succession. This conclusion does not, however, permit the general integration of A's and B's credits and shortfalls. Under section 502(l)(1)(B), credits earned by a particular manufacturer are only 'available to be taken into account with respect to the average fuel economy of that manufacturer.' Since B's existence as part of A only dates from the time of succession, B is not the same manufacturer as A prior to the time of succession. Thus, any credits earned by B would only be available to offset A's shortfalls for the model years during which B exists as part of A, since it is only at that time that the credits earned by B and applied to A can be considered to be taken into account with respect to the average fuel economy of 'that manufacturer.' Similarly, the only credits earned by A which would be available to B would be those credits earned during the time when B exists as part of A. The general integration of A's and B's credits would be inconsistent with the basic structure of section 502(l)(l). Assume, for example, that A and B are separate manufacturers for model years 1 through 6, and A is the successor of B for model year 7. If general integration of credits were permitted, credits earned by B in model year 4 could be applied to A's CAFE for model years l-6, as well as model year 7. However, the structure of section 502(l)(l) does not permit this result. Under paragraph (B)(i), any credits earned by B in model year 4 are available to be carried back with respect to B's CAFE for any of model years l, 2 and 3. To the extent that such credits are not so used, paragraph (B)(ii) makes those credits available to be carried forward with respect to B's CAFE for any of model years 5, 6 and 7. In order for credits earned by B in model year 4 to be applied to A's CAFE for model years l-6, B's credits would first have to be carried forward to model year 7 (the model year where A is B's successor) and then be carried back to model years l-6 (for application to A's CAFE), a process which has no statutory basis. We will now apply the general analysis discussed above to the particular facts cited in Chrysler's letter. Prior to MY l987, Chrysler and AMC were two separate manufacturers. Chrysler acquired AMC during MY l987, and became the 'successor' to AMC at that time. Under section 502(l)(1)(B), credits earned by a particular manufacturer are only 'available to be taken into account with respect to the average fuel economy of that manufacturer.' Since AMC's existence as part of Chrysler only dates from MY l987, AMC was not the same manufacturer as Chrysler prior to MY l987. Thus, any credits earned by AMC would only be available to Chrysler to offset CAFE shortfalls incurred in the model years during which AMC exists as part of Chrysler, i.e., MY l987 and thereafter, since it is only at that time that the credits earned by AMC and applied to Chrysler can be considered to be taken into account with respect to the average fuel economy of 'that manufacturer.' Similarly, the only credits earned by Chrysler which would be available to AMC would be those credits earned during the time when AMC exists as part of Chrysler, i.e., credits earned in MY l987 and thereafter. Chrysler's memorandum argues that section 502(l) must mean more than that the predecessor's credits can be carried forward and used for the successor firm for l987 and subsequent years. The memorandum states: 'Manufacturer' is a defined term, and it must be read in light of its definition. The only satisfactory reading of this provision is that the reference to 'that manufacturer' includes its predecessors and successors--that is, the successor firm may use the credits available to it for calculating its own fuel economy for l987 and subsequent model years or that of its predecessors, including pre-acquisition Chrysler, for the years before l987. On any other reading, the definition of 'manufacturer' would be meaningless, and the term would mean different things in different places in the Act. Chrysler also asserts that its approach would represent a 'literal' reading of the Act, and that the agency should not seek to import into the carryover scheme a qualification on the use of credits that Congress did not impose. We believe that Chrysler's analysis is incorrect since it does not take into account fundamental differences in the timing of the earning of the credits and of Chrysler's becoming a successor. Chrysler was not the successor to AMC during the model years prior to Chrysler's acquisition of AMC in which AMC earned credits. In MY l984, for example, Chrysler and AMC were two separate manufacturers. In particular, Chrysler is incorrect in concluding that AMC's l984-l986 credits can be applied to Chrysler for model years before l987. Chrysler cannot succeed to rights greater than AMC possessed at the time of the acquisition. As of its acquisition in MY l987, AMC's 'rights' as to its MY 1984 credits were to apply them to its own fleet in MY l981-l983 and l985-l986 (since it had no successor in that time period) and to apply them to itself/successor in MY l987. In construing the Act, we believe that it is appropriate and necessary to read its provisions in the correct temporal context. Thus, we do not believe that the term 'manufacturer' means different things in different places in the Act, but instead recognize that corporate relationships, and thus manufacturer identities, may differ for different model years. Moreover, we believe that Chrysler's memorandum itself construes the term 'manufacturer' differently in different parts of the Act. As indicated above, section 502(l)(l)(B) states that 'whenever the average fuel economy of the passenger automobiles manufactured by a manufacturer in a particular model year exceeds an applicable average fuel economy standard . . ., such manufacturer shall be entitled to a credit . . . .' Emphasis added. In concluding that Chrysler is entitled to AMC's l984 credits, Chrysler's memorandum apparently reads 'manufacturer' to mean 'AMC only' the first time it is used in this section, and 'AMC and its future successors' the second time it is used. We also note that Chrysler's current position would lead to absurd results. For example, if the term 'manufacturer' were consistently read to include future successors, Chrysler's acquisition of AMC would presumably require calculation of new CAFE values, for the combined Chrysler/AMC fleet, for each model year all the way back to the beginning of the CAFE program. See section 503(a)(l). Moreover, if a company which paid penalties in a particular model year were later acquired by another company which had earned credits in that same model year, but never used the credits, under Chrysler's retroactive successorship interpretation NHTSA could be required to refund those penalties, even if the acquisition took place ten or twenty years later. The Cost Savings Act was designed to encourage manufacturers to improve their CAFE performance, not to allow them to avoid penalties for non-compliance by acquiring companies that had, independently, earned credits in prior years. Finally, we reject the argument that we are importing into the carryover scheme a qualification on the use of credits that Congress did not impose. Congress expressly chose to limit the ability to use credits to the manufacturer that exceeded an applicable average fuel economy standard and thereby earned the credits. Credits earned by AMC are only available to Chrysler for the model years during which AMC exists as part of Chrysler, since it is only at that time that the credits earned by AMC can be considered as being 'taken into account with respect to the average fuel economy' of the manufacturer that earned them. Sincerely, Stephen P. Wood Acting Chief Counsel"; |
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