Interpretation ID: 1984-3.15

TYPE: INTERPRETATION-NHTSA

DATE: 08/27/84

FROM: AUTHOR UNAVAILABLE; Frank Berndt; NHTSA

TO: Michelle S. Benjamin -- Siegel; Mandell & Davidson; P.C.

TITLE: FMVSR INTERPRETATION

TEXT:

Michelle S. Benjamin, Esq. Siegel, Mandell & Davidson, P.C. One Whitehall Street New York, N.Y. 10004

This is in reply to your letter of July 13, 1984, seeking an interpretation that certain chassis manufactured abroad may be imported into the United States by your client providing that they will be exported upon their completion. This interpretation is sought pursuant to 15 U.S.C. 1397(b)(5) and 19 C.F.R. 12.80(b)(1)(iv).

You have informed us that your client wishes to import "various chassis" which "will not conform to Federal motor vehicle safety requirements, and they will be labelled or tagged to indicate that they are intended for export." These chassis "will be sold to various special equipment motor vehicle manufacturers in this country who will use the chassis for production of dump trucks, fire engines, and other special purpose vehicles:..(which) will not be manufactured in conformity with Federal motor vehicle safety standards, as the vehicles are to be exported by the American manufacturers or their customers, and we have been advised that at no time will they be sold for use on the roads or highways of the United States." You have enclosed a chart with your letter depicting the products your client wishes to import. They appear to be "incomplete motor vehicles" as defined in 49 CFR Part 568, Vehicles Manufactured in Two or More Stages.

The fact situation that you present has not arisen before, and is not directly covered by the importation regulations. Two provisions of those regulations, however, appear relevant to your client's problem. Subparagraph (iv) of 19 CFR 12.80 (b)(1) permits the temporary importation of noncomplying motor vehicles and equipment items pursuant to the declaration of the importer that "the vehicle or equipment item is intended solely for export, and the vehicle or equipment item, and the outside of the container of the equipment item, if any, bears a label or tag to that effect." Subparagraph (ix) would permit permanent importation pursuant to the declaration that "the vehicle is an 'incomplete vehicle ' as defined in 49 CFR Part 568."

Subparagraph (iv) is not squarely on point as the chassis are not imported "solely" for export, but for sale to final-stage manufacturers for completion of manufacturing operations before export. Subparagraph (ix) is on point, but is intended to cover incomplete vehicles that will be completed for sale in the United States. Accordingly, these vehicles must be labelled as required by 49 CFR 567.5( a) and supplied with the document required by 49 CFR 568.4. These requirements are not relevant for vehicles that will not be operated in the United States, and may be viewed as burdensome to your client. Further, the agency requires compliance of equipment items on imported incomplete vehicles that are themselves the subject of Federal motor vehicle safety standards for equipment, such as tires, glazing, lighting, and brake fluid. Under subparagraph (iv) your client could be considered in violation of the importation regulations if, by chance, a noncomplying vehicle were not exported after its completion. Under subparagraph (ix), however, your client's responsibilities would end at importation (assuming the requirements outlined above were met), and the final-stage manufacturer could affix the label for export as specified in 15 U.S.C. 1397(b)(5) upon completion. Alternatively, if circumstances changed, he could complete the vehicle in a conforming manner, certify it, and sell it in the United States.

Although not squarely on point, the agency would have no objection to importation pursuant to subparagraph (iv) if each declaration (Form HS-7) also contains the notation that the vehicle is being imported solely for completion for export purposes, and provides the name and address of the final-stage manufacturer to whom it will be sold. Alternatively, your client may import the incomplete vehicles pursuant to subparagraph (ix) if it chooses to meet the requirements outlined above.

If you have any further questions, we shall be pleased to answer them.

Sincerely,

Frank Berndt Chief Counsel

July 13, 1984

National Highway Traffic Safety Administration 400 7th Street, S.W. Room 5219 Washington, D.C. 20590

Attention: Mr. Frank Berndt, Chief Counsel

Re: Importation of Chassis Which Do Not Conform To Federal Motor Vehicle Safety Requirements

Dear Mr. Berndt:

We are writing at the suggestion of Mr. Vinson, of your office, who we spoke with approximately three weeks ago concerning our client's contemplated importation into the United States of certain chassis and proper completion of the Department of Transportation National Highway Traffic Safety Administration's HS Form 7. We believe that the facts and pertinent law discussed below require that our client affirm paragraph 4 of the HS Form 7, which provides that a motor vehicle or equipment item offered for importation under 19 CFR S12.80 "is intended solely for export and such merchandise and the outside of its container, if any, are so labeled". HS Form 7, 14, citing 19 CFR S12.80(b)(1)(iv).

By this letter, we hereby request that a binding ruling be issued as to whether paragraph 4 of the HS Form 7 is applicable under the circumstances set forth below.

F A C T S

Our client will purchase and import various chassis from a related company, beginning in August or September, 1984. In their condition as imported, the chassis will not conform to federal motor vehicle safety requirements, and they will be labeled or tagged to indicate that they are intended for export.

The imported chassis will be sold to various special equipment motor vehicle manufacturers in this country who will use the chassis for production of dump trucks, fire engines and other special purpose vehicles, some of which are more specifically outlined in the attached chart. *1 These vehicles will not be manufactured in conformity with federal motor vehicle safety standards, as the vehicles are to be exported by the American manufacturers or their customers, and we have been advised that at no time will they be sold for use on the roads or high-ways of the United States.

A R G U M E N T

THE NON-CONFORMING CHASSIS MAY BE IMPORTED BY VIRTUE OF 15 USC S1397(b)(5), AND THE IMPORTER MAY PROPERLY AFFIRM PARAGRAPH 4 OF THE HS FORM 7 IN SEEKING TO OBTAIN ENTRY OF THE CHASSIS INTO THE UNITED STATES.

As the chassis will be labeled accordingly, are intended to be exported from the United States and, after being sold and manufactured into complete, non-conforming vehicles, the finished vehicles will in fact be exported, it is our opinion that paragraph 4 of the HS Form 7 is the appropriate paragraph to be completed when making the declaration upon entry of the chassis into this country. As demonstrated below, this interpretation is supported by 15 USC S1397, the statute under which the HS

* We have been advised that the attached chart is a representative sampling of the types of vehicles which will be manufactured. Our client has further advised that manufacture of the buses depicted on the chart is not contemplated.

Form 7 is required to be filed to obtain entry of imported nonconforming vehicles or equipment items into the United States.

The National Traffic and Motor Vehicle Safety Act of 1966, P.L. 89-563, 80 Stat. 718 (Sept. 9, 1966), codified at 15 USC S1397 (1982), provides in pertinent part:

(a)(1) No person shall

(A) manufacture for sale, offer for sale, or introduce or deliver for introduction in interstate commerce, or import into the United States, any motor Vehicle or item of motor vehicle equipment manufactured on or after the date any applicable federal motor vehicle safety standard takes effect under this subchapter unless it is in conformity with such standard except as provided in subsection (b) of this section;....

(b)(5) Paragraph (1)(A) of subsection (a) of this section shall not apply in the case of a motor vehicle or item of motor vehicle equipment intended solely for export, and so labeled or tagged on the vehicle or item itself and on the outside of the container, if any, which is exported. Id.

Construed together, these provisions establish that by virtue of S1397(b)(5), importation of non-conforming motor vehicles and motor vehicle equipment which are intended for export and appropriately labeled or tagged to that effect fall squarely outside the general prohibition against manufacture, sale, importation, etc., of non-conforming motor vehicles or motor vehicle equipment set forth in S1397(a)(1)(A). This is because the statute, designed to "provide for a coordinated national safety program and establishment of safety standards for motor vehicles in interstate commerce", (1966 U.S. Code Cong. & Admin. News 2709 (emphasis supplied)) was not intended to have any regulatory effect over the manufacture, sale, importation, etc., of motor vehicles or motor vehicle equipment intended to be exported for use on the roads or highways of other nations.

The domestic orientation of the statute makes clear that the statute was not intended to have extraterritorial effects, but to provide a legislative response to the soaring casualty and injury levels caused by accidents occurring on our nation's highways. See id. at 2709-10. In this connection, it is important to note that prohibition of the manufacture, sale, importation, etc., of non-conforming motor vehicles and motor vehicle equipment which are intended to be exported for use on the roads of other countries would adversely affect the United States auto industry's ability to design and manufacture vehicles to the specifications of companies doing business in such countries having their own laws and vehicle standards. This, in turn, would hamper commercial relations with other nations, and simultaneously deprive a segment of our already declining motor vehicle manufacturing industry of the opportunity to remain productive and competitive in the marketplace. Clearly, the statute does not reasonably admit of such an interpretation which would give rise to results injurious to both our domestic and international interests.

Moreover, the legislative history plainly reveals that the statute was not meant to provide the administrating authorities with the power to usurp the design and manufacturing functions of private industry, which is made clear in the following statement:

The Committee ... recognizes that the broad powers conferred upon the Secretary, while essential to achieve improved traffic safety, could be abused in such a manner as to have serious adverse effects on the automotive manufacturing industry. The Committee is not empowering the Secretary to take over the design and manufacturing functions of private industry. Id. at 2712.

Certainly, were S1397 construed to prohibit the importation of non-conforming vehicles or equipment intended for export as completed non-conforming vehicles, then the government will have achieved the very take-over it sought to avoid, by requiring that all vehicles and equipment imported into the United States and subjected to manufacturing operations in this country must conform to federal motor vehicle safety standards even if the vehicles are never intended to be sold for use in the United States.

In view of the foregoing, it is clear that S1397(b)(5) was intended to lift the prohibition against manufacture, importation, sale, etc., of non-conforming vehicles or motor vehicle equipment intended for export, which are appropriately tagged to that effect, and in fact, exported. Any other interpretation would harm a United States industry already beset with the problems of grave unemployment and declining productivity, and run afoul of the statute's underlying scope and purposes.

C O N C L U S I O N

For these reasons, it is claimed that importation of non-conforming chassis which are: 1) intended to be exported after being manufactured into complete non-conforming vehicles; 2) labeled or tagged to that effect; and 3) in fact, exported, is permitted by virtue of S1397(b)(5). Accordingly, we request that a binding ruling be issued confirming that the importer seeking entry of non-conforming chassis into the United States under the circumstances described in this application may properly affirm paragraph 4 on the Department of Transportation's HS Form 7, indicating that the imported non-conforming merchandise is intended solely for export and such merchandise and the outside of its container, if any, are so labeled.

We would appreciate your acting on the enclosed request for a binding ruling at your earliest opportunity. Naturally, should you require any additional information prior to reaching a decision, kindly contact the undersigned.

Very truly yours, SIEGEL, MANDELL & DAVIDSON, P.C.

Michelle S. Benjamin MSB:ek