Interpretation ID: nht79-3.41

DATE: 08/07/79

FROM: AUTHOR UNAVAILABLE; Joan Claybrook; NHTSA

TO: Chrysler Corporation

TITLE: FMVSS INTERPRETATION

TEXT: This responds to your letter about Chrysler's general need for relief from Federal regulations and the denial of its petition for a one-year exemption from the automatic restraint requirements for Chrysler 1982-model full-size cars. There are several statements by Chrysler regarding the petition denial that you wish placed in the public record. Accordingly, your letter has been placed in the public docket on occupant crash protection (74-14; General Reference).

This agency is fully appreciative of the significance of Chrysler's circumstances and needs. Where relief can be considered consistent with the spirit and provisions of the laws we administer, we will do so. This willingness was amply demonstrated by my recent action in reducing the 1981 fuel economy standard for light trucks. Chrysler's automatic restraint petition presented us with a substantially different situation. Under our statutory authority, the only way we could have exempted Chrysler's large-size 1982 model from compliance with the automatic restraint requirements would have been to classify that vehicle as a unique type of car under our exisiting authority. Clearly, such a classification would have been challenged in court, and we believe it would not have been sustained. Indeed, such an action would severely strain our credibility with the court which just recently reviewed that very issued.

Regarding your statements about the safety issues associated with the denial, the agency agrees that some safety belt reminder systems can be effective in encouraging belt use. We do not believe, however, that most simple warning systems can equal the life-saving potential of automatic restraints. Further, the NHTSA has no authority under the National Traffic and Motor Vehicle Safety Act to require ignition interlock systems, which are probably the most effective systems for encouraging use of manual belts.

In this particular matter, the law precludes us from granting the relief you seek. I regret that we are unable to assist you under these circumstances.

SINCERELY,

July 12, 1979

The Honorable Joan Claybrook Administrator National Highway Traffic Safety Administration

Dear Ms. Claybrook:

We have reviewed the NHTSA denial of our petition for a one-year exemption from MVSS 208 for Chrysler 1982 model year full-size cars. We are revising our product and capital plans accordingly; nonetheless, we are convinced that the reasons set forth by NHTSA in its denial of our petition are in error. There are three basic arguments in the statement of denial: that there will be a significant reduction in safety if these cars do not have passive restraints, that Chrysler can produce cars with passive restraints at a competitive price, and that the economic risks to Chrysler would be "slight." We cannot agree with these conclusions and believe that the public record should include the following comments:

Safety

The NHTSA estimates that an average of fifteen lives per year would be lost if 1982 Chrysler full-size cars were not equipped with passive restraints. Although the calculations were not made public, presumably they are based in part on the historical NHTSA overestimation of passive restraint benefits. In addition, Chrysler and NHTSA staff had discussed informally improved safety belt reminder systems for the cars in question. NHTSA researchers have found that improved reminders increase belt use sharply, and cars so equipped could equal or exceed the performance of passive restraint cars at a small fraction of the cost. The NHTSA did not even mention this approach in its denial.

Consumer Cost of Passive Restraints

The NHTSA contends that Chrysler can build full-size cars with passive restraints in 1982 at a cost comparable to its competitors. It cannot. A major part of the price of any car or component is amortization of capital expenses necessary to bring it to production. The basic reason for our petition was the short life and low volume of cars over which we could amortize costs. Our competitors can spread costs over more years of production, and over more cars per year. Without question our costs per vehicle would be much higher than the corresponding ones from Ford and General Motors.

A corollary NHTSA argument is that a passive restraint exemption would give Chrysler a competitive advantage. It is widely understood that Chrysler already is at a serious competitive disadvantage because the costs of compliance with federal regulations are much higher, per unit, than for Ford and General Motors, and that this disadvantage will continue into the foreseeable future. The passive restraint exemption would do no more than reduce this price disadvantage -- a little.

Capital Expenses

The costs of meeting a multiplicity of federal regulations is causing an enormous financial strain on Chrysler Corporation. This is not only our contention, but also the conclusion of every researcher who has examined the automobile industry recently. All studies found that because of federal regulation Chrysler will suffer in comparison to Ford and General Motors. All of these studies are known to NHTSA and some were done specifically for the agency. In saying that the cost to provide passive restraints for one year "can be borne by Chrysler without significant difficulty," the agency simply ignores facts. Chrysler is already at its limit and can bear not additional capital costs without extreme difficulty.

We did not expect our petition to be denied. Over the past several months federal officials have gained increased understanding of the crushing burden federal regulations have placed on Chrysler Corporation, and the competitive disadvantages they have created. These officials have recognized that some measure of relief is necessary for Chrysler and have pledged that future government action would not damage the corporation further. This NHTSA denial is the first important decision since the need for revised government policy became apparent; instead of providing the expected relief, it makes an already difficult financial picture even worse.

JOHN J. RICCARDO -- CHAIRMAN