Interpretation ID: Dhiman1

Ms. Savitri Dhiman

Wheel to Wheel, LLC

570 Executive Drive

Troy, MI 48083

Dear Ms. Dhiman:

This responds to your letter regarding the certification requirements for alterers under Federal Motor Vehicle Safety Standard (FMVSS) No. 138, Tire Pressure Monitoring Systems (TPMS). As you correctly pointed out in your letter, final stage manufacturers and alterers must comply with the standard beginning on September 1, 2008, a date one year after the mandatory compliance date for large manufacturers. Specifically, you asked whether, prior to the mandatory compliance date applicable to it, an alterer may disable the TPMS that is already installed on the vehicle as part of the alteration process. If so, you inquired about what effect, if any, taking the vehicle out of compliance with Standard

No. 138 would have on vehicle original equipment manufacturer (OEM) in terms of the credit it claimed under the phase-in for the standard. As discussed in further detail below, pursuant to a February 2005 final rule, alterers are permitted to make modifications to a certified vehicle that would take it out of compliance with a new safety requirement, until such time as compliance is mandatory for those entities. Such action would not impact the OEMs calculations in terms of meeting the standards phase-in requirements, unless the OEM has established an authorized conversion program, through which it would be deemed to have consented to the alterations which it knows would take the vehicle out of compliance.

By way of background, the National Highway Traffic Safety Administration (NHTSA) is authorized to issue Federal motor vehicle safety standards that set performance requirements for new motor vehicles and items of motor vehicle equipment. NHTSA does not provide approvals of motor vehicles or motor vehicle equipment, nor do we issue permits. Instead, it is the responsibility of manufacturers to certify that their products conform to all applicable safety standards before they can be offered for sale (see 49 CFR Part 567, Certification). NHTSA enforces compliance with the standards by purchasing and testing vehicles and equipment, and we also investigate safety-related defects.

Generally, alterers are entities that modify completed vehicles prior to first retail sale. Alterers must determine whether those modifications could affect the vehicle manufacturers certification of compliance, and if so, must certify that the vehicle continues to comply with those safety standards that were affected by the modification.

Turning to the matters raised in your letter, we note that FMVSS No. 138 sets forth the requirements for tire pressure monitoring systems. Under paragraph S7, Phase-in schedule, the standard provides that not less than 20 percent of covered vehicles manufactured during the period from October 5, 2005, to August 31, 2006, must be equipped with a TPMS that meets the requirements of the standard. For the period from September 1, 2006, through August 31, 2007, manufacturers must certify 70 percent of applicable vehicle production. All vehicles manufactured on or after September 1, 2007, must meet the requirements of the standard. Paragraph S7 of the standard also includes provisions for carry-forward and carry-backward credits, which provide manufacturers with additional flexibility in terms of implementation.

Furthermore, paragraph S7.7, Final-stage manufacturers and alterers, excludes those named entities from the phase-in and sets a separate, later compliance date, providing:

Vehicles that are manufactured in two or more stages or that are altered (within the meaning of 49 CFR 567.7) after having previously been certified in accordance with Part 567 of this chapter are not subject to the requirements of S7.1 through S7.4. Instead, vehicles that are manufactured in two or more stages or that are altered must comply with this standard beginning on September 1, 2008.

This extended compliance date for final-stage manufacturers and alterers is consistent with agency policy expressed in a final rule published in the Federal Register on February 14, 2005, which provides an automatic one year of additional lead time for new safety requirements for intermediate and final-stage manufacturers and alterers, unless the agency determines with respect to a particular requirement that a longer or shorter time period is appropriate (70 FR 7414). This provision was incorporated through an amendment at

49 CFR 571.8(b). In the final rule, the agency acknowledged that prior to the compliance deadline, in certain circumstances, alterers may find it necessary as part of their operations to make modifications to a vehicle that may take it out of compliance with one or more safety standards, stating:

NHTSA noted in the SNPRM [supplemental notice of proposed rulemaking] that incomplete vehicle manufacturers often do not provide final-stage manufacturers with information necessary to certify their vehicles until shortly before, and in some cases even after, the effective date of the standard in question. The same problem arises when an incomplete vehicle is substantively changed as the result of a model year changeover. The agency stated that giving alterers an additional year allows alterers to take certified vehicles out of compliance, an action typically disfavored by NHTSA. However, the problems faced by final-stage manufacturers also are applicable to alterers. If a vehicle manufacturer waits until the last possible moment to certify vehicles, alterers will not have the ability to conduct any engineering analysis to determine if the alterations affect compliance.

(70 FR 7414, 7418)

Thus, this new rule acknowledges that, in some cases, alterers may require additional time to conform their manufacturing operations in order to be able to maintain compliance with the requirements of new safety standards while continuing to produce the types of vehicles needed by their customers. With that said, we encourage final-stage manufacturers and alterers to maintain compliance with the new safety requirements, if possible, even prior to the mandatory compliance date.

We next turn to the issue of the impact that alterers actions taking vehicles out of compliance with a safety standard would have on the OEMs calculations under the standards phase-in schedule. In general, we will not presume that OEMs have control over or even knowledge of all modifications to be performed by their alterer-customers. We also do not believe that the number of altered vehicles in question will have a significant impact on the overall phase-in for TPMS. Accordingly, under normal circumstances, there would not be a reduction in an OEMs phase-in calculations to account for altered vehicles that are taken out of compliance with Standard No. 138.

However, an exception may be the case where an OEM vehicle manufacturer enters into an agreement with a particular converter, which the OEM knows will routinely be taking vehicles out of compliance with FMVSS No. 138. We believe that this situation is distinguishable from one where the OEM makes a routine, arms-length transaction for the sale of vehicles to a company performing alterations. This approach is consistent with our March 2, 1987, interpretation letter to Mr. Douglas Fairhurst (see enclosure), in which we analyzed Jaguars contractual arrangement with a company that specialized in converting hard-top vehicles into convertible models, in which case newly-required automatic safety belts were removed from the vehicle. A copy of letter enclosed.

If you have further questions, please feel free to contact Eric Stas of my staff at this address or by telephone at (202) 366-2992.

Sincerely,

Anthony M. Cooke

Chief Counsel

Enclosure

ref:138

d.12/27/06