ID: nht94-2.69

TYPE: INTERPRETATION-NHTSA

DATE: May 5, 1994

FROM: J. L. Steffy -- Triumph Designs Ltd.

TO: Taylor Vinson -- Office of Chief Counsel, NHTSA

TITLE: None

ATTACHMT: Attached To Letter Dated 5/31/94 From John Womack To J.L. Steffy (A42; Std. 108)

TEXT: Dear Taylor

An additional concern for another unit with respect to FMVSS 108:

This is a self contained seal unit that would allow for symetric design & lighting. It comprises a headlight with high and low beams and 2 symetrically flanking front auxillary lamps possessing low beam that augment the headlight. Can you please comment on this as it affects our immediately plans for U.S. importation.

Thank you for your assistance

ID: nht94-2.7

TYPE: Interpretation-NHTSA

DATE: March 29, 1994

FROM: Michael E. Klima -- Managing Engineer, Failure Analysis Associates, Inc.

TO: Edward Jettner -- Safety Standards Engineer, Office of Rulemaking, NHTSA

TITLE: FMVSS 208 Compliance for 1988 Pickup Trucks

ATTACHMT: Attached to letter dated 4/26/94 from John Womack to Michael E. Klima (A42; Std. 208)

TEXT:

Thank you in advance for your time and effort in responding to the following questions relating to the application of the dynamic requirements of FMVSS 208 to pickup trucks. The pickup truck in questions has a production date of April, 1988 and a GVWR o f 4,400 pounds.

Specifically, does the S6 'Injury Criteria' requirements of 49 CFR 571.208, that includes the Head Injury Criteria (HIC), apply to this 1988 model pickup truck equipped with a Type 2 lap and shoulder belt protection system for the front outboard seating positions and complies with S7.1, S7.2, and S7.3?

Secondly, is a 35 mph fixed barrier crash test required for this 1988 model pickup truck to comply with all applicable portions of 49 CFR 571.208?

Finally, do all of the requirements listed in the 49 CFR 571.208 Standard apply to this truck? If not, which portions of 49 CFR 571.208 Standard apply to this truck? Is this truck in compliance with the 49 CFR 571.208 Standard if it meets or exceeds th e portions that you have identified?

I would appreciate your timely written response with regard to this matter. For your convenience a copy of the standard is enclosed. Again, thank you for your time and effort. Please contact me at (810) 649-3775 if you have any questions.

ID: nht94-2.70

TYPE: INTERPRETATION-NHTSA

DATE: May 5, 1994

FROM: John Womack -- Acting Chief Counsel, NHTSA

TO: Luis Carricaburu -- South Steering Specialists

TITLE: None

ATTACHMT: Attached To Letter dated 1/1/94 EST From Luis Carricaburu to Mary Versailles (OCC-9613)

TEXT: Dear Mr. Carricaburu:

This responds to your letter asking whether it is legal to buy or sell a salvaged air bag which would be used to repair an automobile with a deployed air bag. Your letter explained that the salvaged air bag would be taken from an automobile sent to a re cycling yard with its air bag intact.

I am enclosing two letters that explain legal obligations to replace air bags which have been deployed. The first letter, dated January, 19, 1990, is to Ms. Linda L. Conrad. The second letter, dated March 4, 1993, is to Mr. Robert A. Ernst. As explain ed in those letters, Federal law does not require replacement of a deployed air bag in a used vehicle. In addition, there is no Federal law that prohibits selling a used vehicle with an air bag that is inoperable because of a previous deployment. Howev er, our agency strongly encourages dealers and repair businesses to replace deployed air bags whenever vehicles are repaired or resold, to ensure that the vehicles will continue to provide maximum crash protection for occupants. Moreover, a dealer or re pair business may be required by state law to replace a deployed air bag, or be liable for failure to do so.

Your letter asks the additional question of whether, if a deployed air bag is replaced, Federal law prohibits use of a salvaged air bag as the replacement air bag. The answer to your question is no. As explained in the enclosed letters, the Safety Act does not require a manufacturer, distributor, dealer, or repair business to return a vehicle to compliance with a standard if a device or element of design has been "rendered inoperative" by another agent, such as a crash. Thus, Federal law does not reg ulate the manner in which a deployed air bag is replaced. However, state law may regulate the manner in which a deployed air bag is replaced.

I would like to emphasize that in order for a replacement air bag to provide protection to vehicle occupants, it is essential that the replacement be properly completed. For example, the entire air bag must be replaced, including such things as the cras h

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sensors, the inflation mechanism, and other electronic parts. Moreover, since air bags are designed for specific vehicles, taking into consideration such factors as the seats, steering column crush stroke force resistance, gauge array and location on in strument panel, location and nature of knee bolsters, and compartment acceleration responses in frontal crashes, only air bags which are designed for the vehicle in question should be used. After the air bags are replaced, it is important that the air b ag readiness indicator be in good working order to alert the occupants of any future malfunction of the air bag system.

While great care must be taken in any air bag replacement, the use of a salvaged air bag raises additional safety issues. An air bag may have been rendered inoperable, for example, by damage in a low-speed crash, even if it has not been deployed. We wo uld urge you to contact the vehicle or air bag manufacturer to determine whether and how a salvaged air bag could be inspected and/or tested to ensure that it is fully operable.

Finally, you may wish to consult a private attorney concerning the state law implications of using salvaged air bags for repairing automobiles, including possible tort liability.

I hope you find this information helpful. If you have any other questions, please contact Mary Versailles of my staff at this address or by phone at (202) 366-2992.

Sincerely,

Enclosures

ID: nht94-2.71

TYPE: Interpretation-NHTSA

DATE: May 6, 1994

FROM: John Womack -- Acting Chief Counsel, NHTSA

TO: Jeffrey D. Shetler -- Manager of Government Relations, Kawasaki Motors Corp. U.S.A.

TITLE: None

ATTACHMT: Attached to letter dated 2/7/94 from Jeffrey D. Shetler to the Associate Administrator for Enforcement, NHTSA (OCC-9697)

TEXT:

This is in reply to your letter of February 7, 1994, to the Associate Administrator for Enforcement requesting an interpretation of Federal Motor Vehicle Safety Standard No. 108. So that we may serve you better in the future, please note that the Office of Chief Counsel is the one to which requests for interpretations should be addressed.

You have asked whether the "proposed application of a projector beam headlamp to a motorcycle" will meet the requirements of Standard No. 108. In this headlamp "the projector beam (lower beam) is located on the left side and the high beam is on the right side." You continue by saying that "the outer lens of the headlamp assembly is symmetrically positioned about the vertical centerline," and you ask whether the headlamp complies with the requirements of Table IV of Standard No. 108.

Table III of Standard No. 108 requires a motorcycle to have at least one headlamp. Table IV requires the headlamp to be located "on the vertical centerline, except that if two are used they shall be symmetrically disposed about the vertical centerline." The device you describe contains the upper and lower beams in one housing and hence is a single headlamp. Although your projector beam headlamp would be mounted literally on the vertical centerline, the beams provided by the headlamp are located on eit her side of the centerline and are therefore asymmetrical in relation to the centerline of the motorcycle when either beam is activated. A redesign of the lamp so that its vertical centerline becomes its horizontal centerline and Line A becomes the vert ical centerline would be a configuration that meets Table IV since both beams of the single headlamp would then be located on the vertical centerline. SAE J584 does not specify the location of one beam in relation to the other for dual beam motorcycle h eadlamps, i.e., whether one beam is to be mounted above or below the other.

Your second question concerns an interpretation of S5.1.1.23. This paragraph provides an alternative for motorcycles to the headlamps specified by Table III, and allows a motorcycle to be equipped with "one half of any headlighting system specified in S 7 which provides both a full upper beam and full lower beam, and where more than one lamp must be used, the lamps shall be mounted vertically, with the lower beam as high as practicable." You have asked whether this means that your proposed headlamp "sh all be mounted on the upper half and the high beam shall be on the lower half when using one half of any headlighting system specified in S7," or "is our proposed layout in the attachment acceptable?"

As I have explained, your proposed layout in the attachment is not acceptable under Table IV without reorientation. The headlighting systems specified in S7 are those intended for four-wheeled motor vehicles (other than trailers). As we understand it, your proposed headlamp has been developed as a headlamp system for motorcycles and not as half of a headlamp system for vehicles other than motorcycles. Because motorcycle photometrics differ from those for vehicle other than motorcycles, your proposed headlamp could not be half of a system specified in S7 which may be used on motorcycles as an alternative to the headlamps specified by Table III.

ID: nht94-2.72

TYPE: INTERPRETATION-NHTSA

DATE: May 6, 1994

FROM: John Womack -- Acting Chief Counsel, NHTSA

TO: Ilmars Ozols

TITLE: None

ATTACHMT: Attached To Letter Dated 2/8/94 From Ilmars Ozols To John Womack (OCC-9663)

TEXT: Dear Mr. Ozols:

This responds to your February 8, 1994, letter asking about how this agency's regulations might apply to your product, the Serv-o-tray. I am pleased to have this opportunity to explain our regulations.

It appears from the enclosed technical description and photograph that the Serve-o-tray is a folding adjustable table designed to mount between the driver and passenger seats of a vehicle, and hold food, drinks, etc. As depicted, the Serv-o-tray is secu red to the center console with an adhesive pad. The table is mounted on a swiveling, articulated, lockable arm that is composed of two horizontal and two vertical tubular support members. The Serv-o-tray is made of injection molded plastic and is capab le of supporting up to 20 pounds, including a laptop computer. You explain that your product is intended to be used while the vehicle is stationary or moving.

By way of background information, the National Highway Traffic Safety Administration (NHTSA) is authorized to issue Federal motor vehicle safety standards (FMVSS's) for new motor vehicles and new items of motor vehicle equipment. Section 102(4) of the N ational Traffic and Motor Vehicle Safety Act (the "Safety Act") defines, in relevant part, the term "motor vehicle equipment" as:

any system, part, or component of a motor vehicle as originally manufactured or any similar part or component manufactured or sold for replacement or improvement of such system, part, or component or as any accessory, or addition to the motor vehicle . . . (emphasis added).

In determining whether an item of equipment is considered an accessory, NHTSA applies two criteria. The first criterion is whether a substantial portion of the expected use of the item is related to the operation or maintenance of motor vehicles. We de termine a product's expected use by considering product advertising, product labeling, and the type of store that

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retails the product, as well as available information about the actual use of the product. The second criterion is whether the product is intended to be used principally by ordinary users of motor vehicles. If the product satisfies both criteria, then the product is considered to be an "accessory" and thus is subject to the provisions of the Safety Act.

Applying these criteria to the Serv-o-tray, it appears that this product would be an accessory and thus an item of motor vehicle equipment. Based on our understanding of the product, it appears that a substantial portion of the expected use of the Serv- o-tray relates to motor vehicle operation, by allowing the occupants to eat while operating the car. Also, it appears that the product would typically be used by ordinary users of motor vehicles.

While the Serv-o-tray is an item of motor vehicle equipment, NHTSA has not issued any standards for such a device. Nevertheless, there are other Federal laws that indirectly affect the manufacture and sale of your product. You as the product's manufact urer are subject to the requirements in sections 151-159 of the Safety Act concerning the recall and remedy of products with defects related to motor vehicle safety. In the event that you or NHTSA determines that the product contains a safety related de fect, you would be responsible for notifying purchasers of the defective equipment and remedying the problem free of charge.

This agency is very concerned about the safety implications of the Serv-o-tray, especially if it is swiveled in front of the occupants in an air bag-equipped vehicle. Under the provisions of FMVSS No. 208, "Occupant Crash Protection," all new cars-and t rucks must be equipped with a driver side and passenger side air bag by September 1, 1998. Manufacturers are already producing ever increasing numbers of air bag-equipped cars and trucks. The enclosed document entitled "Sudden Impact" describes the spe ed with which an air bag deploys. Should the Serv-o-tray be installed in an air bag-equipped vehicle, the occupants could be at risk of injury or death from the interaction of the deploying air bag and the Serv-o-tray or its contents. To protect the occ upant, this agency will require that every new vehicle with an air bag be provided with a caution label that states, among other things, "TO AVOID SERIOUS INJURY . . . Do not place any objects over the air bag or between the air bag and yourself." As you can see, the installation of a Serv-o-tray could be contrary to this warning.

There are other potential safety problems associated with the Serv-o-tray. Even without being propelled by an air bag, the Serv-o-tray or its contents could impact the occupant's head,

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abdomen or lower extremities during a collision. It also seems possible that the Serv-o-tray could interfere with the driver's use of the vehicle's transmission shift lever in an emergency situation. We ask that you consider these and all possible safe ty impacts of the Serv-o-tray.

If the Serv-o-tray were installed by a vehicle manufacturer as original equipment, the vehicle manufacturer would have to certify that the vehicle, with the Serv-o-tray installed, complies with all FMVSS's. Among the FMVSS's that might be affected by th e Serv-o-tray installation are Standard No. 201, "Occupant Protection in Interior Impact" (copy enclosed), and Standard No. 208.

A commercial business that installs the Serv-o-tray would also be subject to provisions of the Safety Act that affect modifications of new or used vehicles. Section 108(a)(2)(A) of the Safety Act (15 U.S.C. 1397 (a)(2)(A)) provides that:

No manufacturer, distributor, dealer, or motor vehicle repair business shall knowingly render inoperative, in whole or in part, any device or element of design installed on or in a motor vehicle . . . in compliance with an applicable Federal motor vehicl e safety standard.

This means that a manufacturer, distributor, dealer, or motor vehicle repair business must not install your product if the Serv-o-tray renders inoperative the vehicle's compliance with the FMVSS's. For instance, installing the Serv-o-tray in front of th e driver or passenger could degrade the performance of an air bag or the seat belts in the vehicle. Any violation of this "render inoperative" prohibition would subject the violator to a potential civil penalty of up to $ 1,000 for each violation.

Please note also that the render inoperative prohibition does not apply to modifications that vehicle owners make to their own vehicles. Thus, Federal law would not apply in situations where individual vehicle owners install the Serv-o-tray in their own vehicles, even if the installation were to result in the vehicle no longer complying with the safety standards. However, NHTSA encourages vehicle owners not to degrade any safety device or system installed in their vehicles. In addition, individual St ates have the authority to regulate modifications that individual vehicle owners may make to their vehicles, so you might wish to consult State regulations to see whether your product would be permitted.

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I hope this information is helpful. I have enclosed a fact sheet entitled "Information for New Manufacturers of Motor Vehicles and Motor Vehicle Equipment." If you have any further questions about NHTSA's safety standards, please feel free to contact us at this address or by telephone at (202) 366-2992.

Sincerely

Enclosure

ID: nht94-2.73

TYPE: INTERPRETATION-NHTSA

DATE: May 6, 1994

FROM: David L. Ori -- Manager Vehicle Control Division, Bureau of Motor Vehicles, Pennsylvania Dept. of Transportation

TO: Jim Gilkey -- NHTSA

TITLE: NONE

ATTACHMT: Attached to letter dated 09/07/94 from John Womack to David Ori (A42; STD. 205; Part 567

TEXT: I would like to thank you for the assistance you gave to one of my staff members, Kris Singer, when she recently telephoned you regarding Federal glazing standards relating to limousines. Since the Pennsylvania Department of Transportation is addressing this issue at the present time, I would appreciate your assistance in confirming the information which Mrs. Singer received.

You explained that limousines which seat less than ten persons are categorized as passenger cars for the purpose of Federal Motor Vehicle Safety Standard 205 (FMVSS 205). As such, these vehicles may not be equipped with any sun screening or window tintin g product which does not meet FMVSS 205. This prohibition also applies to vehicle modifications completed during the second stage or alteration phase of the manufacturing process. Further, the company which alters the original vehicle is required to ce rtify that the finished product is still in compliance with FMVSS 205.

Limousines which seat ten or more persons are categorized as buses and, therefore, would not be restricted regarding the use of sun screening products on windows located behind the driver's area of the vehicle. These vehicles would also require certific ation from the second stage manufacturer of continued compliance with FMVSS 205.

I would appreciate receiving your confirmation of the above information, at your earliest convenience, at the Bureau of Motor Vehicles, Vehicle Control Division, Room 104, T & S Building, Harrisburg, PA 17120. If there is any additional information whic h you feel may be pertinent to Pennsylvania's efforts to address this issue, please include it with your response, or contact me at (717) 787-3184.

ID: nht94-2.74

TYPE: Interpretation-NHTSA

DATE: May 8, 1994

FROM: John Womack -- Acting Chief Counsel, NHTSA

TO: James Schaub -- Midas Muffler Shop

TITLE: None

ATTACHMT: Attached to letter dated 10/21/93 from James "Bubba" Schaub to John Womack (OCC-9252)

TEXT:

This responds to your letter asking us about Federal Motor Vehicle Safety Standard No. 105 with regard to replacing brake rotors and/or drums. I apologize for the delay in our response. You stated that local automobile dealership service departments do n ot follow manufacturers' recommendations in this area, causing your customers to believe that your shop is fraudulently selling and installing parts on vehicles when they are not needed. You requested an interpretation of Standard No. 105 in this regard, and asked whether there is any basis for fraud in replacing rotors and drums when they are outside manufacturer safety tolerances. You stated that if you can present an established standard to your customers, you can prevent them from believing they hav e been taken advantage of.

By way of background information, the National Traffic and Motor Safety Act (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 eq uipment. Standard No. 105, HYDRAULIC BRAKE SYSTEMS, specifies requirements for hydraulic brake systems and associated parking brake systems. The standard applies to new motor vehicles.

While you asked for an interpretation of Standard No. 105, that standard is of little relevance to your situation. This is because the Federal motor vehicle safety standards do not apply to a motor vehicle after its first sale to a consumer. The Safety A ct does include some provisions which are relevant to used vehicles. In particular, the Safety Act prohibits manufacturers, distributors, dealers, and motor vehicle repair businesses from knowingly rendering inoperative any safety device or element of de sign installed on or in a motor vehicle or item of motor vehicle equipment in compliance with a safety standard. However, this provision would ordinarily not be relevant to a decision whether to replace, or mill or turn, worn brake drums and rotors.

With respect to your desire to show your customers an established standard in this area, I can call your attention to NHTSA's vehicle in use inspection standards. These standards set forth criteria for, among other things, inspecting service brake system s. You should be aware that these standards were developed for use by the States in establishing their inspection requirements. Thus, the standards only apply to the extent that they are adopted by individual States. I have enclosed a copy of the standar ds for your information and particularly call your attention to section 570.5(f). That section, which applies to vehicles with a GVWR of 10,000 pounds or less, reads as follows:

(f) Disc and drum condition. If the drum is embossed with a maximum safe diameter dimension or the rotor is embossed with a minimum safety thickness dimension, the drum or disc shall be within the appropriate specifications. . . .

This section reflects the importance NHTSA places on following manufacturer recommendations in this area.

The states may regulate the repair of motor vehicles. We suggest that you investigate the laws of Louisiana to see whether they affect your situation. We cannot advise you about Federal or state requirements concerning fraud. You may wish to contact the Federal Trade Commission, your state government, and/or a private attorney about this matter.

ID: nht94-2.75

TYPE: INTERPRETATION-NHTSA

DATE: May 9, 1994

FROM: Womack, John -- Acting Chief Counsel, NHTSA

TO: Bloomfield, John -- Manager, Engine Management, Legislation and Certification, Lotus Cars, Ltd. (ENGLAND)

TITLE: NONE

ATTACHMT: Attached To a Letter Dated 10/28/93 From Rachel Jelly To John Womack

TEXT: This responds to the letter from Ms. Rachel Jelly, formerly of your company, concerning low volume CAFE exemptions. I apologize for the delay in our response. Ms. Jelly asked whether Bugatti Automobili S.p.A. (Bugatti) and Lotus Cars, Ltd. (Lotus), bot h of which are controlled by the same holding company, may submit separate low volume CAFE exemption petitions requesting two alternative standards. The answer to this question is no. Since any alternative CAFE standard would apply to Bugatti and Lotus together, a single combined petition must be submitted for a single alternative standard.

The reasons for the above response are discussed in the attached letter from NHTSA to Mr. Lance Tunick, of Bugatti. Mr. Tunick's letter to NHTSA raised issues that are of concern to both Bugatti and Lotus. Thus, NHTSA's response to Mr. Tunick should ad dress Lotus' concerns about filing for alternative CAFE standards.

I hope this information is helpful. If there are any questions, please contact Dorothy Nakama of my staff at this address or at (202) 366-2992.

ID: nht94-2.76

TYPE: INTERPRETATION-NHTSA

DATE: May 09, 1994

FROM: Womack, John -- Acting Chief Counsel, NHTSA

TO: Tunick, Lance -- Bugatti

TITLE: NONE

ATTACHMT: Attached To A Letter Dated 11/8/93 From Federico Trombi To John Womack (OCC 9318)

TEXT: This responds to your letter n1 concerning low volume CAFE exemptions. I apologize for the delay in our response. You asked whether Bugatti Automobili S.p.A. (Bugatti) and Lotus Cars, Ltd. (Lotus), both of which are controlled by the same holding compa ny, may submit separate low volume CAFE exemption petitions requesting two separate alternative standards. As discussed below, the answer to this question is no. Since any alternative CAFE standard would apply to Bugatti and Lotus together, a single co mbined petition must be submitted for a single alternative standard.

n1 The letter was signed by Federico Trombi of Bugatti Automobili S.p.A. but requested that the response be directed to you.

According to your letter and a separate one received from Lotus, General Motors sold Lotus to Bugatti International Holding, SA, in August 1993. That holding company also controls Bugatti, which is planning to enter the U.S. market in the near future. Lotus and Bugatti intend to submit petitions for low volume CAFE exemptions. Moreover, the joint annual production of Bugatti and Lotus is far below the 10,000 vehicles per year eligibility threshold for low volume CAFE exemptions.

In a telephone conversation with Edward Glancy of my staff, you indicated that Lotus cars are imported by Lotus USA. You also indicated that Bugatti cars could be imported by Lotus USA, or could be imported by a new company that would be established by Bugatti, e.g., "Bugatti USA." Finally, you indicated that Lotus USA is not in a control relationship with any other auto manufacturers.

In addressing whether Bugatti and Lotus would be eligible for two separate standards, I will begin by identifying the statutory provisions which are relevant to determining who manufactures the vehicles at issue. Under section 501(8) of the Motor Vehicl e Information and Cost Savings Act, "(t)he term 'manufacturer' means any person engaged in the business of manufacturing automobiles." Under section 501(9), "(t)he term 'manufacture' (except for purposes of section 502(c)) means to produce in the customs territory of the United States, or to import." Under section 501(10), "(t)he term 'import' means to import into the customs territory of the United States."

Under these sections, the company which imports foreign-built cars into the United States is the manufacturer of those automobiles. Thus, if Lotus USA imported Lotus cars and Bugatti cars, Lotus USA, rather than Bugatti Automobili S.p.A. and Lotus Cars, Ltd., would be considered the manufacturer of those vehicles for CAFE purposes.

Since Lotus USA would be the manufacturer of all the vehicles under this scenario, and CAFE standards apply to all passenger automobiles manufactured by a manufacturer, there would be no basis for Bugatti and Lotus to request two separate standards. Ins tead, a single alternative standard would need to be requested for Lotus USA, which would cover all automobiles imported by that company.

This result would not change if Bugatti established a new company, Bugatti USA, for importing cars into the U.S. This is because of the operation of the operation of section 503(c), which provides that any reference to "automobiles manufactured by a man ufacturer" is deemed to include all automobiles manufactured by persons who control, are controlled by, or are under common control with, such manufacturer. Since Lotus USA and Bugatti USA would presumably be under common control (traced back to Bugatti International Holding, SA), their fleets would be combined for CAFE purposes. Since many of the arguments you raise in your letter are relevant to this type of scenario, i.e., one in which Lotus and Bugatti cars would be considered to be manufactured b y manufacturers within a control relationship, I will assume it for the rest of this letter.

As you noted in your letter, NHTSA addressed the issue of how alternative CAFE standards apply to manufacturers within a control relationship in a July 1991 decision concerning low volume exemption petitions submitted by Ferrari. Ferrari and Alfa Romeo w ere under the common control of Fiat. We stated the following:

Because of the operation of section 503(c), Ferrari and Alfa Romeo are in essence the same manufacturer for purposes of CAFE standards. As discussed below, under section 502, the same CAFE standard should apply to both manufacturers together. This i s true for both generally applicable standards and alternative standards.

Section 502(a), in setting forth the generally applicable standard, specifies a standard for "passenger automobiles manufactured by any manufacturer." Section 502(c)(1), in setting forth requirements relating to low volume exemptions, specifies that s uch exemptions may not be granted unless the Secretary establishes, by rule, alternative average fuel economy standards for "passenger automobiles manufactured by manufacturers" which receive exemptions under this subsection. Under 503(c)(1), any refere nce to "automobiles manufactured by a manufacturer" is deemed to include all automobiles manufactured by persons who control, are controlled by, or are under common control with, such manufacturer. Thus, any CAFE standard which applies to Ferrari should apply to Ferrari and Alfa Romeo together. Therefore, granting Ferrari a low volume exemption in MY 1988 would create a paradox, since Alfa Romeo is indisputably not eligible (given its own worldwide production) for an exemption.

A similar paradox would arise in the context of determining compliance with the statute. Under section 503(a), neither manufacturer may have an independent CAFE value. Instead, by operation of section 503(c), they share a CAFE value that is based on the total volume of cars imported by both companies.

Thus, a decision to grant an exemption to Ferrari while applying the generally applicable standard to Alfa Romeo would cause compliance enforcement difficulties by compelling the agency to try to compare a combined CAFE value to separate CAFE standard s. 56 FR 31461, July 10, 1991.

You argued in your letter that, because of factual differences, the Ferrari/Alfa analysis should not be applied to the Bugatti/Lotus situation, and Bugatti and Lotus should be permitted to submit separate low volume CAFE exemption petitions requesting tw o separate alternative standards.

While we agree that there are factual differences, e.g., Ferrari and Alfa Romeo together produced too many vehicles to meet the eligibility threshold while Bugatti and Lotus do not, the situations are identical with respect to the issue of how CAFE stand ards apply to manufacturers within a control relationship. In particular, since Lotus USA and Bugatti USA would be under common control and because of the operation of section 503(c), the two companies would in essence be the same manufacturer for purpo ses of CAFE standards. Any alternative standard issued under section 502 would apply to the two companies together. Moreover, neither manufacturer would have an independent CAFE value under section 503(a). Instead, by operation of section 503(c), they would share a CAFE value that is based on the total volume of cars imported by both companies. Therefore, the same CAFE standard would necessarily apply to the two companies together.

You raised several other objections in your letter. First, you stated that the CAFE statute provides that "a manufacturer" may submit a petition for a CAFE exemption, and a joint petition would not fall within this provision. In fact, any one of the re lated companies (Lotus, Lotus USA, Bugatti, the Bugatti U.S. subsidiary, or the holding company) could submit a petition on behalf of the combined companies. However, any such petition would apply to the combined fleet of both Bugatti USA and Lotus USA.

You also stated that combining two small companies together would muddy the question of the best fuel economy that each company is capable of achieving. However, NHTSA would simply assess the "maximum feasible average fuel economy level" that could be ac hieved by the combined Bugatti/Lotus fleet. We recognize that this level would be dependent on assumptions about the relative volumes of Bugatti USA and Lotus USA. However, the agency needs to take this factor into account in assessing the capability o f any manufacturer which produces vehicles with varying fuel economy values.

Finally, you stated that if a joint alternative standard was established, NHTSA would face a difficult enforcement situation in the event of a failure to comply with the standard. You asked how the agency would divide the civil penalties. It is our opin ion that Lotus USA and Bugatti USA would be jointly and severally liable for the full amount of the civil penalty, although we would permit the two companies to divide the penalty between themselves.

I would like to address two other issues that are raised by the factual situation described in your letter: (1) the immediate eligibility of Bugatti/Lotus given that Lotus was owned by General Motors until August 1993, and (2) the timing of petitions for low volume exemptions.

As you know, section 502(c)(1) specifies that low volume exemptions are only available for manufacturers "who manufactured . . . fewer than 10,000 passenger automobiles in the second model year preceding the model year for which the application is made. . . ." (Emphasis added.) During the time that Lotus was owned by General Motors, the combined companies manufactured far more than 10,000 vehicles. It is our opinion that Lotus does not have to wait two years from the date it ceased being in a control r elationship with General Motors to be eligible, given the circumstances described above. In particular, we believe that the requirement that a manufacturer have manufactured fewer than 10,000 passenger automobiles in the second model year preceding the model year for which the application is made was intended to address varying production levels (above and below 10,000) and not a situation where a small manufacturer such as Lotus is sold by a large manufacturer.

With respect to the timing of petitions, NHTSA's regulations at 49 CFR @ 525.6, Requirements for petition, state that petitions from low volume manufacturers for alternative fuel economy standards must be "submitted not later than 24 months before the be ginning of the affected model year, unless good cause for later submission is shown." Clearly, the deadline for a timely submission for model years 1994-96 has passed. On the issue of "good cause" for a later submission, we note that Lotus was not sold by General Motors until August 1993, and both Lotus and Bugatti requested our opinion concerning submitting a petition within three months of that sale.

Under the circumstances, we conclude that, Lotus/Bugatti have, to date, taken reasonable measures to submit a petition in as timely a manner as possible. Therefore, if a petition that meets the requirements of 49 CFR Part 525 is submitted promptly after receipt of this letter, we will consider there to be good cause shown for submitting a late petition for model years 1994-96. I also note that a petition for model year 1997 would be due later this year.

I hope this information is helpful. If there are any questions, please contact Dorothy Nakama of my staff at (202) 366-2992.

ID: nht94-2.77

TYPE: INTERPRETATION-NHTSA

DATE: May 10, 1994

FROM: Christopher A. Hart -- Acting Administrator, NHTSA; Signature by Stephen P. Wood

TO: The Honorable Doug Bereuter -- U.S. House of Representatives

TITLE: None

ATTACHMT: Attached To Letter Dated 4/20/94 From Doug Bereuter To Christopher Hart (OCC-9916) And 1/1/94 (EST) Letter From Christopher A. Hart To Doug Bereuter

TEXT: Dear Mr. Bereuter:

Thank you for your recent letter concerning our rulemaking on compressed natural gas (CNG) vehicle fuel systems and fuel containers. Please be assured that I will keep you fully apprised of the rulemaking's status. I share your concern that the rulemak ing be completed expeditiously as possible and appreciate your interest in this matter.

Thank you for your patience.

Sincerely,