ID: 23064.rbm

Mr. Kenneth Conaway
Adaptive Mobility Inc.
7050 Guion Road
Indianapolis, IN 46268





Dear Mr. Conaway:

This responds to your correspondence regarding the National Highway Traffic Safety Administration's (NHTSA) final rule on vehicle modifications for individuals with disabilities. You ask for clarification of the statutory prohibition against making required safety equipment inoperative. You are particularly interested in whether a modifier may alter a vehicle that has already been purchased by the individual seeking to have the vehicle modified.

By way of background, NHTSA administers a statute requiring that motor vehicles manufactured for sale in the United States or imported into the United States be manufactured so as to reduce the likelihood of motor vehicle crashes and of deaths and injuries when crashes do occur. That statute is the National Traffic and Motor Vehicle Safety Act of 1966 ("Vehicle Safety Act") (recodified at 49 U.S.C. 30101, et seq.).

One of the agency's most important functions under that Act is to issue and enforce the Federal Motor Vehicle Safety Standards (FMVSSs). These standards specify safety performance requirements for motor vehicles and/or items of motor vehicle equipment. Manufacturers of motor vehicles must certify compliance with all applicable safety standards and permanently apply a label to each vehicle stating that the vehicle complies with all applicable FMVSSs. Alterers of motor vehicles are companies that modify a completed vehicle prior to first retail sale. Alterers must determine whether those modifications could negate the vehicle manufacturer's certification of compliance and, if so, must certify the vehicle as to those safety standards that were affected by the modification.

The Vehicle Safety Act also prohibits manufacturers, distributors, dealers, or motor vehicle repair businesses from knowingly making inoperative any part of a device or element of design installed on or in a motor vehicle or motor vehicle equipment that is in compliance with any applicable FMVSS (49 U.S.C. 30122). If NHTSA determines that a business has violated the make inoperative provision, it may assess a civil penalty in the amount of $5,000 per violation (not to exceed $15,000,000 in the aggregate). NHTSA may, through regulation, exempt a person or business from the prohibition if it decides that an exemption is consistent with motor vehicle safety and the Vehicle Safety Act.

On February 27, 2001, NHTSA published a final rule setting forth a limited exemption from the make inoperative prohibition for businesses or individuals who modify vehicles for persons with disabilities (66 Federal Register 12638; Docket No. NHTSA-01-8667). This exemption is codified in 49 CFR Part 595. Only portions of some FMVSSs are covered by the exemption. Additionally, the exception only applies to modifications made after the first retail sale of the vehicle.

How and if an FMVSS applies to a particular business is dependent upon the product or services that the business provides. Producers of equipment that is used in a system designed to comply with a particular FMVSS are component suppliers and would not be directly subject to the requirements of the standard, ⁽¹⁾ although any manufacturer or alterer using the product would be. Final stage manufacturers or alterers of vehicles that modify a vehicle system that the previous-stage manufacturer had certified as compliant must certify that the vehicle, as finally manufactured or altered, complies with all applicable FMVSS. Thus, each vehicle must remain in compliance with all applicable safety standards until the time of its first retail sale. Additionally, vehicle modifiers, i.e., businesses that modify a vehicle after first retail sale, may not modify a vehicle in such a way as to negate the vehicle's compliance with any applicable FMVSSs for which there is no exemption, although the modifier is not required to certify compliance with all applicable standards.

As noted above, the prohibition against making required safety equipment inoperative applies to "manufacturers, distributors, dealers, and motor vehicle repair businesses." A motor vehicle repair business is defined in 49 U.S.C. 30122(a) as "a person holding itself out to the public to repair for compensation a motor vehicle or motor vehicle equipment." This term includes businesses that receive compensation for servicing vehicles without malfunctioning or broken parts or systems by adding or removing features or components to or from those vehicles or otherwise customizing those vehicles. (49 CFR 595.4) Thus, unless a modification is covered by the Part 595 exemption, any type of modification to a vehicle that has been sold to a retail customer that negates compliance with a FMVSS is prohibited, even if the modifications are made pursuant to the vehicle owner's instructions.

We note that an individual who modifies his or her own personal vehicle is not subject to the Federal prohibition against making required safety equipment inoperative. However, we recommend that owners not take actions that adversely affect their safety. Moreover, any individual who wishes to modify his or her vehicle should first verify that there is no prohibition against such modifications under the laws of the individual's state.

I hope the addresses your concerns. Please contact Rebecca MacPherson of my staff at this address or at (202)366-2992 should you have any additional questions about this matter.

Sincerely,

John Womack
Acting Chief Counsel
ref:595
d.3/1/02





---

¹ As a practical matter, component suppliers often assume some responsibility to the vehicle manufacturer for the compliance of their products to applicable FMVSSs. This is done through a contractual relationship between the supplier and the vehicle manufacturer that certifies compliance.

ID: nht94-4.98

TYPE: INTERPRETATION-NHTSA

DATE: December 7, 1994

FROM: Philip R. Recht -- Chief Counsel, NHTSA

TO: Roger W. Cole -- Vice President, Sales, Twin Tire U.S.A., Inc.

TITLE: None

ATTACHMT: ATTACHED TO LETTER DATED 10/18/94 FROM ROGER W. COLE TO WALTER MYERS (OCC 10419)

TEXT: This responds to your letter of October 18, 1994, received by facsimile transmission, addressed to Walter Myers of my staff. You asked whether passenger car tires that have the DOT symbol and the Uniform Tire Quality Grading Standards (UTQGS) ratings mo lded on the sidewalls may legally be sold in the United States. The short answer is yes, provided that the tires in fact comply with all applicable Federal motor vehicle safety standards (FMVSS).

By way of background information, 49 U.S.C. @ 30101, et seq. (hereinafter referred to as Safety Act), directs the National Highway Traffic Safety Administration (NHTSA) to issue FMVSSs applicable to new motor vehicles and new items of motor vehicle equip ment prior to the first retail sale of such vehicles or equipment. Tires are considered motor vehicle equipment. The Safety Act provides at 49 U.S.C. @ 30112(a) that no person may manufacture, sell, offer for sale, or import into the United States any new motor vehicle or item of motor vehicle equipment unless that vehicle or equipment complies with applicable FMVSSs and is covered by a certification to that effect issued in accordance with 49 U.S.C. @ 30115. The latter section provides in pertinent part that "Certification of equipment may be shown by a label or tag on the equipment . . . ." Thus, any new tire sold by Twin Tire must comply with all applicable FMVSS's, and be certified as doing so.

FMVSS No. 109, New pneumatic tires, a copy of which is enclosed for your information, specifies the minimum standards applicable to new passenger car tires. This standard specifies labeling and performance requirements applicable to passenger car tires, which include tubeless tire resistance to bead unseating, tire strength, tire endurance, and high speed performance. If the tires in question fail to comply with Standard No. 109, the manufacturer (or importer of noncomplying tires) must notify the pur chasers of the product and remedy the noncompliance without charge to the purchaser(s). Failure to comply with any FMVSS can also result in civil penalties of up to $ 1,000 per violation, up to a maximum of $ 800,000 for a series of related violations.

With regard to the situation you present, 49 U.S.C. 30112(b) provides two exceptions to the prohibition of 30112(a) against selling noncomplying equipment, such as tires. The first exception is that the prohibition does not apply to a person who had no reason to know, despite exercising reasonable care, that an item of equipment does not comply with applicable FMVSS's. The second exception is for a person who holds a certificate issued by the equipment manufacturer stating that the equipment complies with applicable FMVSS's, provided that the person does not know about the noncompliance. However, if Twin Tire were to sell the tires in question and those tires failed to comply with applicable FMVSS's, it is unlikely that Twin Tire could successfully argue that it qualifies for these exceptions, as a defense to an enforcement action for selling the noncomplying equipment.

You state in your letter that the tire manufacturer "breached their contract to manufacture these tires under the premise of US regulations." If the breach concerned the ability of the tires to conform to the requirements of the applicable FMVSS's, Twin Tire would be on notice that there is a reasonable possibility that the tires in question, while labeled with a DOT mark certifying compliance, do not in fact comply. In a situation where a seller has reason to believe the equipment it is selling might not comply with applicable FMVSS's, the seller must ascertain if the certification is bona fide before selling the item.

The following discussion relates to the "DOT" and other markings that you describe on the tires. Paragraph S4.3.1 of FMVSS No. 109 provides that:

Each tire shall be labeled with the symbol DOT in the manner specified in Part 574 of this chapter, which shall constitute a certification that the tire conforms to applicable Federal motor vehicle safety standards (emphasis added).

Similarly, the UTQGS, also applicable only to passenger car tires, found at 49 CFR 575.104 (copy enclosed), provides at 49 CFR 575.104(d)(1)(i)(A):

Except for a tire of a new tire line . . ., each tire shall be graded with the words, letters, symbols, and figures specified in paragraph (d) (2) of this section, permanently molded into or onto the tire sidewall . . . .

Finally, 49 CFR 574.5 requires each tire sold in the United States have a tire identification number (TIN) molded into or onto the tire sidewall by the manufacturer to facilitate recall in the event of a noncompliance or defect.

To summarize, the answer to your question is the tires in question can be sold only if they comply with all applicable FMVSSs (including Standard No. 109's labeling and performance requirements) and are so labeled in the prescribed locations with the DOT symbol, the UTQGS grades, and the TIN.

I hope this information is helpful to you. Should you have any additional questions or need further information, please feel free to contact Mr. Myers at this address or at (202) 366-2992.

ID: nht90-4.35

TYPE: Interpretation-NHTSA

DATE: October 5, 1990

FROM: Gordon Bonvallet - Consulting Lighting, Engineer

TO: Paul Jackson Rice -- Chief Counsel, NHTSA

TITLE: Re FMVSS 108, Request for interpretation

ATTACHMT: Attached to letter dated 12-24-90 from Paul Jackson Rice to Gordon Bonvallet (A37; Std. 108)

TEXT:

This request for interpretation of ruling of FMVSS 108 is being made for HELLA KG, Lippstadt, Germany. Please direct any questions and the NHTSA response to the above address.

A design consideration for a future automotive vehicle headlamp system consists of four lamps, using gaseous discharge "integral beam" headlamps for the low beams and incandescent "replaceable bulb" (HB3) headlamps for the high beams. The gaseous discha rge lamp and the incandescent lamp on each side of the vehicle will be independent of each other but will share a common frame assembly. Each will be able to be replaced in part or completely without disturbing the other lamp.

The gaseous discharge lamp and ballast will be physically separated from each other but will be electrically connected with no means of disconnecting either component from the other. If either the lamp or ballast fails to operate, both components must b e replaced.

PHOTOMETRIC REQUIREMENTS: Although a combination gaseous discharge/incandescent system is not specifically addressed in FMVSS 108, it is our opinion that the Figure 15 photometric requirement would apply to both the low beam and the high beam lamps. Ple ase advise if this is correct.

AIMING REQUIREMENTS: At this time, it is anticipated that each individual lamp will have external aiming pads and therefore can be independently aimable. There is a possibility that an on-board aiming system of some type may be used. Are there any spec ial considerations that must be adhered to that are not specifically addressed in FMVSS 108?

It is our opinion that the above described system is allowable under FMVSS 108. We request that you review this concept and advise if you concur or if there are other factors that must be considered.

ID: nht94-8.29

DATE: February 7, 1994

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

TO: Associate Administrator for Enforcement -- NHTSA

TITLE: Motorcycle Projector Beam Headlamps Interpretation of FMVSS 108

ATTACHMT: Attached to letter dated 5/6/94 from John Womack to Jeffrey D. Shetler (A42; Std. 108)

TEXT:

Kawasaki Motors Corp., U.S.A. is hereby requesting a interpretation from NHTSA regarding the application of a projector beam headlamp to a motorcycle and its compliance with FMVSS 571.108.

When reviewing FMVSS 108 we are not sure if our proposed application of a projector beam headlamp to a motorcycle will meet the specified requirements. Your response regarding the following questions would be greatly appreciated:

1. Table IV of FMVSS 108 specifies that if two (headlamps) are used they shall be symmetrically disposed about the vertical centerline.

Attached is a layout drawing which provides a general description of our proposed application of a projector beam headlamp. Our headlamp is not completely aligned symmetrically because the projector beam (lower beam) is located on the left side and the high beam is on the right side. However, the outer lens of the headlamp assembly is symmetrically positioned about the vertical centerline.

Question: Is our headlamp in compliance with the provision stated above?

2. Section S5.1.1.23 of FMVSS 108 indicates that instead of the headlamps specified by Table III, a motorcycle may be equipped with one half of any headlighting system specified in S7 which provides both a full upper beam and full lower beam, and where more than one lamp must be used, the lamp shall be mounted vertically, with the lower beam as high as practicable.

Question: Does this requirement mean our proposed projector beam shall 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?

Thank you in advance for your timely response to our questions. If further information is required, I can be reached at (714) 770-0400 ext. 2456.

ID: 23894.ztv

Mr. Roger Williams
3140 S. Tropical Trail
Merritt Island, FL 32952





Dear Mr. Williams:

This is in reply to your letter of December 13, 2001, to Taylor Vinson of this Office, with whom you had spoken previously.

As we understand it, you wish to buy a Land Rover, in England, that was manufactured between 1967 and 1975. You would remove the old body and place a new body on the "unrestored" chassis, retaining the original "drive line and engine." The "new" body could be from a new 2001 or 2002 Land Rover, or from a used or salvage Land Rover. We understand that you would then import the Land Rover into the United States. You stated that the vehicle would be imported for your personal use and that you are "not a vehicle business." You are interested in knowing how the laws that we administer would affect your plan.

The Federal motor vehicle safety standards (FMVSS) that we administer apply to any motor vehicle manufactured on or after January 1, 1968. However, under 49 U.S.C. 30112(b)(9), a person may import into the United States "a motor vehicle that is at least 25 years old" without the need to conform it to the applicable FMVSS, i.e., those in effect at the time of its manufacture. Thus, any Land Rover manufactured between 1967 and 1975 is "at least 25 years old," and eligible for importation under this exclusion.

The question is whether the addition of a new or newer used body on the existing 1967-75 chassis affects the exclusion afforded by Section 30112(b)(9). Under a long-standing line of interpretations of this agency, the substitution of a new body on a used chassis alone does not result in the creation of a "new" motor vehicle subject to the FMVSS, assuming that the vehicle continues to be titled and registered with its original model year. Thus, under the scheme you outline, the 1967-75 Land Rover with a different body and unmodified chassis could be imported without the need to conform it to the FMVSS.

We contrast this with the situation where refurbishment of a 1967-75 chassis occurs before importation. The substitution of new chassis parts for the original ones may reach a point where, in combination with the newer vehicle body, the overall vehicle itself could be regarded as newly manufactured, rather than one manufactured in 1967-75. In this event, the 25-year exclusion would no longer allow the vehicle to be imported free of the obligation to meet U.S. safety requirements. In a similar situation, we advised John Harland on September 29, 1999, that his extensive rebuilding of 1974 Land Rovers using both new parts and parts from other used Land Rovers would result in the creation of "new" motor vehicles subject to contemporary FMVSS and which could not be imported as vehicles "at least 25 years old."

You have also asked "may the existing engine and transmission be excluded from shipment to have it rebuilt in the U.K. and shipped at a later date?" A vehicle without an engine and transmission is considered to be an assemblage of parts. Some FMVSS apply to individual parts as well as to motor vehicles. Those individual components that are subject to the FMVSS must conform in order to be imported. For multipurpose passenger vehicles such as the Land Rover, these components are brake hoses, lighting equipment, brake hoses, tires, rims, glazing, and seat belt assemblies. There are no FMVSS that apply to engines and transmissions, and these items of equipment could be rebuilt and imported at a later date. Please note, however, that the completed vehicle would be required to comply with state and local requirements for registration.

I hope that this answers your questions.

Sincerely,

John Womack
Acting Chief Counsel

ref:591
d.2/22/01

ID: 9449

Mr. Robert Matulich
8801 Ravenna Avenue, NE
Seattle, WA 98115

Dear Mr. Matulich:

This responds to your letter requesting information about Federal requirements applicable to your product. According to promotional literature that accompanied your letter, your "Clear Vu Mirror" is an attachment to exterior mirrors that clears raindrops, dust, and mist, thus making a mirror "virtually self-cleaning." I am pleased to explain the applicability of our regulations to your product.

By way of background information, the National Highway Traffic Safety Administration (NHTSA) is authorized to issue Federal Motor Vehicle Safety Standards (FMVSSs) that set performance requirements for new motor vehicles and items of motor vehicle equipment. NHTSA does not, however, approve or certify any vehicles or items of equipment. Instead, the National Traffic and Motor Vehicle Safety Act ("Safety Act") establishes a "self-certification" process under which each manufacturer is responsible for certifying that its products meet all applicable FMVSSs.

NHTSA currently has no FMVSSs that directly apply to the product you plan to manufacture. NHTSA issued an FMVSS for vehicle rearview mirrors (FMVSS No. 111), but the standard applies to new vehicles, and not to aftermarket mirror products. If your product were manufactured and sold as part of a new vehicle, the vehicle would have to be certified as complying with all applicable standards, including Standard No. 111. The standard sets field of view requirements for new motor vehicles, and your product would have to be mounted on a new vehicle such that it does not block the field of view required by FMVSS No. 111. However, since Standard No. 111 applies only to new vehicles, it does not apply to your product.

I note, however, that there are other Federal requirements that indirectly affect you and your product. Under the Safety Act, your product is considered to be an item of motor vehicle equipment. As a manufacturer of motor vehicle equipment, you are subject to the requirements in 151-159 of the Safety Act concerning the recall and remedy of products with safety related defects. I have enclosed an information sheet that briefly describes those responsibilities. In the event that you or NHTSA determines that your product contains a safety- related defect, you would be responsible for notifying purchasers of the defective equipment and remedying the problem free of charge.

In addition, manufacturers, distributors, dealers, and motor vehicle repair businesses are subject to 108(a)(2)(A) of the Safety Act, which states: "No manufacturer, distributor, dealer, or motor vehicle repair business shall knowingly render inoperative ... any device or element of design installed on or in a motor vehicle or item of motor vehicle equipment in compliance with an applicable Federal motor vehicle safety standard ...." It is conceivable that your product, when placed on a vehicle's exterior mirror, could "render inoperative" the vehicle's ability to comply with FMVSS No. 111. Persons in the aforementioned categories cannot install your product if it blocks the field-of-view required by FMVSS No. 111, or otherwise caused the vehicle to no longer comply with Standard No. 111.

The "render inoperative" prohibition of 108(a)(2)(A) does not apply to the actions of vehicle owners in adding to or otherwise modifying their vehicles or items of motor vehicle equipment. Thus, if your product were placed on an exterior mirror by the vehicle owner, the render inoperative provision would not apply. Nevertheless, NHTSA urges vehicle owners not to degrade the safety of any system or device on their vehicles, including the safety of their rearview mirrors.

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

Sincerely,

John Womack Acting Chief Counsel

Enclosure ref 111 d:4/7/94

ID: 10419

Mr. Roger W. Cole
Vice President, Sales
Twin Tire U.S.A., Inc.
335 Phoenixville Pike
Malvern, PA 19355

Dear Mr. Cole:

This responds to your letter of October 18, 1994, received by facsimile transmission, addressed to Walter Myers of my staff. You asked whether passenger car tires that have the DOT symbol and the Uniform Tire Quality Grading Standards (UTQGS) ratings molded on the sidewalls may legally be sold in the United States. The short answer is yes, provided that the tires in fact comply with all applicable Federal motor vehicle safety standards (FMVSS).

By way of background information, 49 U.S.C. '30101, et seq. (hereinafter referred to as Safety Act), directs the National Highway Traffic Safety Administration (NHTSA) to issue FMVSSs applicable to new motor vehicles and new items of motor vehicle equipment prior to the first retail sale of such vehicles or equipment. Tires are considered motor vehicle equipment. The Safety Act provides at 49 U.S.C. '30112(a) that no person may manufacture, sell, offer for sale, or import into the United States any new motor vehicle or item of motor vehicle equipment unless that vehicle or equipment complies with applicable FMVSSs and is covered by a certification to that effect issued in accordance with 49 U.S.C. '30115. The latter section provides in pertinent part that "Certification of equipment may be shown by a label or tag on the equipment . . . ." Thus, any new tire sold by Twin Tire must comply with all applicable FMVSS's, and be certified as doing so.

FMVSS No. 109, New pneumatic tires, a copy of which is enclosed for your information, specifies the minimum standards applicable to new passenger car tires. This standard specifies labeling and performance requirements applicable to passenger car tires, which include tubeless tire resistance to bead unseating, tire strength, tire endurance, and high speed performance. If the tires in question fail to comply with

Standard No. 109, the manufacturer (or importer of noncomplying tires) must notify the purchasers of the product and remedy the noncompliance without charge to the purchaser(s). Failure to comply with any FMVSS can also result in civil penalties of up to $1,000 per violation, up to a maximum of $800,000 for a series of related violations.

With regard to the situation you present, 49 U.S.C. 30112(b) provides two exceptions to the prohibition of 30112(a) against selling noncomplying equipment, such as tires. The first exception is that the prohibition does not apply to a person who had no reason to know, despite exercising reasonable care, that an item of equipment does not comply with applicable FMVSS's. The second exception is for a person who holds a certificate issued by the equipment manufacturer stating that the equipment complies with applicable FMVSS's, provided that the person does not know about the noncompliance. However, if Twin Tire were to sell the tires in question and those tires failed to comply with applicable FMVSS's, it is unlikely that Twin Tire could successfully argue that it qualifies for these exceptions, as a defense to an enforcement action for selling the noncomplying equipment.

You state in your letter that the tire manufacturer "breached their contract to manufacture these tires under the premise of US regulations." If the breach concerned the ability of the tires to conform to the requirements of the applicable FMVSS's, Twin Tire would be on notice that there is a reasonable possibility that the tires in question, while labeled with a DOT mark certifying compliance, do not in fact comply. In a situation where a seller has reason to believe the equipment it is selling might not comply with applicable FMVSS's, the seller must ascertain if the certification is bona fide before selling the item.

The following discussion relates to the "DOT" and other markings that you describe on the tires. Paragraph S4.3.1 of FMVSS No. 109 provides that:

Each tire shall be labeled with the symbol DOT in the manner specified in Part 574 of this chapter, which shall constitute a certification that the tire conforms to applicable Federal motor vehicle safety standards (emphasis added).

Similarly, the UTQGS, also applicable only to passenger car tires, found at 49 CFR 575.104 (copy enclosed), provides at 49 CFR 575.104(d)(1)(i)(A):

Except for a tire of a new tire line . . . , each tire shall be graded with the words, letters, symbols, and figures specified in paragraph (d)(2) of this section, permanently molded into or onto the tire sidewall . . . .

Finally, 49 CFR 574.5 requires each tire sold in the United States have a tire identification number (TIN) molded into or onto the tire sidewall by the manufacturer to facilitate recall in the event of a noncompliance or defect.

To summarize, the answer to your question is the tires in question can be sold only if they comply with all applicable FMVSSs (including Standard No. 109's labeling and performance requirements) and are so labeled in the prescribed locations with the DOT symbol, the UTQGS grades, and the TIN.

I hope this information is helpful to you. Should you have any additional questions or need further information, please feel free to contact Mr. Myers at this address or at (202) 366-2992.

Sincerely,

Philip R. Recht Chief Counsel

ref:109#575.105 d: 12/7/94

ID: 8439

Mr. Jeffery A. Kester
Product Development
Green Wheels Electric Car Company
181 Elliott St., Unit 605
Beverly, MA 01915

Dear Mr. Kester:

We have received your letter of March 18, 1993, with respect to electric vehicle conversions and the Federal Motor Vehicle Safety Standards (FMVSS).

As we understand it, Green Wheels intends to convert 1975-84 Volkswagen Rabbits to electric power. Because the FMVSS directly apply only to the manufacture of new vehicles you understand that you are "not bound to comply with the FMVSS and have no reason to petition from exemption from any standards in the FMVSS."

You have concluded that section 108(a)(2)(A) of the National Traffic and Motor Vehicle Safety Act (l5 U.S.C. 1397(a)(2)(A)) applies in this instance, but are worried by the fact that the conversion operations will render inoperative "'devices or elements of design' on a permanent basis," as "[t]he vehicle will obviously be used during the time such devices or elements of design no longer exist." You believe that any devices or elements of design rendered inoperative by conversion operations should be disregarded if it will not compromise safety when the vehicle is in operation. For example, because a flammable fuel system no longer exists after conversion to electric power, you should not be regarded as having rendered the system inoperable.

On this basis, you have asked for a confirmation of the "viability" of your interpretation, which you may provide to prospective customers. You have also asked for recommendations for any further action with reference to compliance with section 108(a)(2)(A), information on petitioning for exemption under section 108(a)(2)(B), and information concerning the establishment of standards for used motor vehicles under section 108(b)(1).

We are pleased to provide you with our views on this matter. We do not interpret section 108(a)(2)(A) as prohibiting the removal of fuel system components installed in accordance with Standard No. 301 during the conversion to electric propulsion, as long as the converter ensures that its modifications do not "knowingly render inoperative, in whole or in part, any device or element of design" required for compliance with any other Federal motor vehicle safety standard.

By way of background, it is important to understand the scheme established by the Vehicle Safety Act (15 U.S.C. 1381 et seq.) with respect to new and used vehicles. With respect to the issues you have raised, certain statutory provisions are relevant. These are discussed below and quoted in pertinent part:

Section 108(a)(1)(A) (l5 U.S.C. 1397(a)(1)(A)): "No person shall manufacture for sale, sell, offer for sale, or introduce in interstate commerce, or import into the United States, any motor vehicle . . . on or after the date any applicable Federal motor vehicle safety standard takes effect . . . unless it is in conformity with such standard and is covered by a certification . . . ."

Section 108(b)(1): "Paragraph (1)(A) of subsection (a) shall not apply to the sale, offer for sale, or the introduction or delivery for introduction in interstate commerce of any motor vehicle . . . after the first purchase of it in good faith for purposes other than resale."

Under section 108(b)(1), a "new" vehicle becomes a "used" one after its first purchase for purposes other than resale, and certain actions may occur without violation of the Vehicle Safety Act. Please compare section 108(b)(1) with section 108(a)(1)(A). When a vehicle is used, Section 108(b)(1) clearly allows, without penalty, its sale, offer for sale, introduction and delivery for introduction into interstate commerce even if it does not conform to the FMVSS. However, section 108(b)(1) does not include "manufacture for sale" and "import" in its used vehicle exclusions. With respect to the latter, the agency does require used imported vehicles to be brought into conformance with the FMVSS.

We assume that Congress deemed it impossible to "manufacture for sale" a vehicle "after its first purchase for purposes other than resale", and that is the reason why "manufacture for sale" is not included in the used vehicle exclusions of section 108(b)(1).

Section 108(b)(1) (con'd): "It is the policy of Congress to encourage and strengthen the enforcement of State inspection of used motor vehicles. Therefore to that end the Secretary shall conduct a thorough study and investigation to determine the adequacy of motor vehicle safety standards and motor vehicle inspection requirements and procedures applicable to used motor vehicles . . . . * * * . . . the Secretary . . . shall establish uniform Federal motor vehicle safety standards applicable to used motor vehicles."

You have asked whether the Secretary has exercised his authority to establish standards for used motor vehicles. The answer is yes, but the standards do not apply to the remanufacture, repair, or conversion of used vehicles; they only establish criteria to be followed by States in their motor vehicle inspection programs. See 49 CFR Part 570 Vehicle in Use Inspection Standards. No standards have been established governing repair or conversion of used vehicles, or "vehicles in use", the term the agency prefers.

Although Congress has not granted the agency authority to establish manufacturing standards for a motor vehicle after its first purchase for purposes other than resale, it did take a limited step intended to ensure that a vehicle remained in compliance with its original FMVSS throughout its life. This step is reflected in section 108(a)(2)(A):

Section 108(a)(2)(A): "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 vehicle safety standard, unless such manufacturer . . . or motor vehicle repair business reasonably believes that such vehicle . . . will not be used (other than for testing or similar purposes in the course of maintenance or repair) during the time such device or element of design is rendered inoperative."

The principal purpose of this prohibition is to inhibit the removal of safety equipment such as seat belts and head rests that might be initially unpopular with vehicle operators. However, this agency has interpreted the prohibition to apply to any modification of a used motor vehicle that is performed by manufacturers, distributors, dealers, and motor vehicle repair businesses that has the possible effect of creating a noncompliance.

However, we have not interpreted Section l08(a)(2)(A) as forbidding modifications that result in the inapplicability of one or more of the FMVSS with which a vehicle originally complied. For instance, under section 108(a)(2)(A) we have allowed the conversions of closed sedans to convertibles, as long as FMVSS requirements applicable to convertibles are met at the end of the conversion process. Similarly, to use your hypothetical, we would not interpret section 108(a)(2)(A) as prohibiting the removal of fuel system equipment installed in accordance with Standard No. 301 in the process of conversion to electric propulsion because this standard would not apply to the propulsion source of a new electric vehicle. However, the converter does remain under the obligation to ensure that its modifications do not create a noncompliance. For example, the additional weight of batteries could render inoperative the ability of the converted vehicle to meet the standards with crash test demonstration procedures.

Section 108(a)(2)(B): "The Secretary may by regulation exempt any person from this paragraph if he determines that such exemption is consistent with motor vehicle safety and the purposes of this Act. The Secretary may prescribe regulations defining the term 'render inoperative.'"

Although under section 108(a)(2)(B) the agency may "by regulation" provide exemptions from section 108(a)(2)(A), we have never developed a procedure by which exemptions may be granted, nor have we adopted a regulation defining "render inoperative." No such regulations are under consideration.

I hope that this letter is responsive to your request.

Sincerely,

John Womack Acting Chief Counsel

ref:VSA d:4/21/93

ID: nht93-3.10

DATE: April 21, 1993

FROM: John Womack -- Acting Chief Counsel, U.S. Department of Transportation, NHTSA

TO: Jeffery A. Kester -- Product Development, Green Wheels Electric Car Company

TITLE: None

ATTACHMT: Attached to letter dated 3-18-93 from Jeffery A. Kester to John Womack (OCC 8439)

TEXT: We have received your letter of March 18, 1993, with respect to electric vehicle conversions and the Federal Motor Vehicle Safety Standards (FMVSS).

As we understand it, Green Wheels intends to convert 1975-84 Volkswagen Rabbits to electric power. Because the FMVSS directly apply only to the manufacture of new vehicles you understand that you are "not bound to comply with the FMVSS and have no reason to petition from exemption from any standards in the FMVSS."

You have concluded that section 108(a)(2)(A) of the National Traffic and Motor Vehicle Safety Act (15 U.S.C. 1397(a)(2)(A)) applies in this instance, but are worried by the fact that the conversion operations will render inoperative "'devices or elements of design' on a permanent basis," as "(t)he vehicle will obviously be used during the time such devices or elements of design no longer exist." You believe that any devices or elements of design rendered inoperative by conversion operations should be disregarded if it will not compromise safety when the vehicle is in operation. For example, because a flammable fuel system no longer exists after conversion to electric power, you should not be regarded as having rendered the system inoperable.

On this basis, you have asked for a confirmation of the "viability" of your interpretation, which you may provide to prospective customers. You have also asked for recommendations for any further action with reference to compliance with section 108(a)(2)(A), information on petitioning for exemption under section 108(a)(2)(B), and information concerning the establishment of standards for used motor vehicles under section 108(b)(1).

We are pleased to provide you with our views on this matter. We do not interpret section 108(a)(2)(A) as prohibiting the removal of fuel system components installed in accordance with Standard No. 301 during the conversion to electric propulsion, as long as the converter ensures that its modifications do not "knowingly render inoperative, in whole or in part, any device or element of design" required for compliance with any other Federal motor vehicle safety standard.

By way of background, it is important to understand the scheme established by the Vehicle Safety Act (15 U.S.C. 1381 et seq.) with respect to new and used vehicles. With respect to the issues you have raised, certain statutory provisions are relevant. These are discussed below and quoted in pertinent part:

SECTION 108(a)(1)(A) (15 U.S.C. 1397(a)(1)(A)): "No person shall manufacture for sale, sell, offer for sale, or introduce in interstate commerce, or

import into the United States, any motor vehicle ... on or after the date any applicable Federal motor vehicle safety standard takes effect ... unless it is in conformity with such standard and is covered by a certification ...."

SECTION 108(b)(1): "Paragraph (1) (A) of subsection (a) shall not apply to the sale, offer for sale, or the introduction or delivery for introduction in interstate commerce of any motor vehicle ... after the first purchase of it in good faith for purposes other than resale."

Under section 108(b)(1), a "new" vehicle becomes a "used" one after its first purchase for purposes other than resale, and certain actions may occur without violation of the Vehicle Safety Act. Please compare section 108(b)(1) with section 108(a)(1)(A). When a vehicle is used, Section 108(b)(1) clearly allows, without penalty, its sale, offer for sale, introduction a delivery for introduction into interstate commerce even if it does not conform to the FMVSS. However, section 108(b)(1) does not include "manufacture for sale" and "import" in its used vehicle exclusions. With respect to the latter, the agency does require used imported vehicles to be brought into conformance with the FMVSS.

We assume that Congress deemed it impossible to "manufacture for sale" a vehicle "after its first purchase for purposes other than resale", and that is the reason why "manufacture for sale" is not included in the used vehicle exclusions of section 108(b)(1).

SECTION 108(b)(1) (CON'D): "It is the policy of Congress to encourage and strengthen the enforcement of State inspection of used motor vehicles. Therefore to that end the Secretary shall conduct a thorough study and investigation to determine the adequacy of motor vehicle safety standards and motor vehicle inspection requirements and procedures applicable to used motor vehicles ... the Secretary ... shall establish uniform Federal motor vehicle safety standards applicable to used motor vehicles."

You have asked whether the Secretary has exercised his authority to establish standards for used motor vehicles. The answer is yes, but the standards do not apply to the remanufacture, repair, or conversion of used vehicles; they only establish criteria to be followed by States, in their motor vehicle inspection programs. See 49 CFR Part 570 VEHICLE IN USE INSPECTION STANDARDS. No standards have been established governing repair or conversion of used vehicles, or "vehicles in use", the term the agency prefers.

Although Congress has not granted the agency authority to establish manufacturing standards for a motor vehicle after its first purchase for purposes other than resale, it did take a limited step intended to ensure that a vehicle remained in compliance with its original FMVSS throughout its life. This step is reflected in section 108(a)(2)(A):

SECTION 108(a)(2)(A): "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 vehicle safety standard, unless such manufacturer or motor vehicle repair business reasonably believes that such vehicle ... will not be used (other than for testing or similar purposes in the course of maintenance or repair) during the time such device or element

of design is rendered inoperative."

The principal purpose of this prohibition is to inhibit the removal of safety equipment such as seat belts and head rests that might be initially unpopular with vehicle operators. However, this agency has interpreted the prohibition to apply to any modification of a used motor vehicle that is performed by manufacturers, distributors, dealers, and motor vehicle repair businesses that has the possible effect of creating a noncompliance.

However, we have not interpreted Section 108(a)(2)(A) as forbidding modifications that result in the inapplicability of one or more of the FMVSS with which a vehicle originally complied. For instance, under section 108(a)(2)(A) we have allowed the conversions of closed sedans to convertibles, as long as FMVSS requirements applicable to convertibles are met at the end of the conversion process. Similarly, to use your hypothetical, we would not interpret section 108(a)(2)(A) as prohibiting the removal of fuel system equipment installed in accordance with Standard No. 301 in the process of conversion to electric propulsion because this standard would not apply to the propulsion source of a new electric vehicle. However, the converter does remain under the obligation to ensure that its modifications do not create a noncompliance. For example, the additional weight of batteries could render inoperative the ability of the converted vehicle to meet the standards with crash test demonstration procedures.

SECTION 108(a)(2)(B): "The Secretary may by regulation exempt any person from this paragraph if he determines that such exemption is consistent with motor vehicle safety and the purposes of this Act. The Secretary may prescribe regulations defining the term 'render inoperative.'"

Although under section 108(a)(2)(B) the agency may "by ... regulation" provide exemptions from section 108(a)(2)(A), we have never developed a procedure by which exemptions may be granted, nor have we adopted a regulation defining "render inoperative." No such regulations are under consideration.

I hope that this letter is responsive to your request.

ID: sponorship_rbm

Erika Z. Jones, Esq.
Mayer, Brown, Rowe & Maw
1909 K Street, N.W.
Washington, DC 20006-1101

Dear Ms. Jones:

This letter responds to a recent request you made regarding the National Highway Traffic Safety Administration's (NHTSA) interpretation of the term "motor vehicle manufacturer" as it relates to compliance with the phase-in requirements of various Federal motor vehicle safety standards (FMVSS). Your immediate concern is whether a vehicle may be deemed to be manufactured by more than one manufacturer if there is an agreement between two separate companies under which both companies provide financial and engineering resources for the development of a vehicle model that will be assembled by one company for the exclusive marketing by the other. If the answer to that question is yes, you ask whether either company could take credit for those vehicles for the purpose of complying with the phase-in requirements of a safety standard, as long as they filed a contract with NHTSA specifying who was taking such credit. I am pleased to provide an explanation of NHTSA's position on these issues, which we refer to as "sponsorship."

NHTSA first articulated its position on sponsorship in 1985 when it proposed to phase-in the new passive restraint requirements of FMVSS No. 208, Occupant crash protection. See 50 Fed. Reg. 14589, 14596 (April 12, 1985). In that rulemaking, NHTSA allowed consensual attribution of a vehicle when there was more than one manufacturer of the vehicle. Specifically, NHTSA developed a regimen under which a passenger car produced by more than one manufacturer would be attributed for phase-in purposes to a single manufacturer, as specified by an express written contract provided to NHTSA. In the absence of a written contract, the attribution would go to the importer, in the case of an imported vehicle, or to the manufacturer that marketed the vehicle, in the case of a vehicle manufactured in the United States. See 49 CFR 571.208, S4.1.3.5. The same regimen has been adopted for subsequent phase-ins of other requirements of FMVSS No. 208 (S4.1.5.2, S4.2.5.6, S4.2.6.1.2, S14.3.1, and S14.3.3.1), as well as those of other safety standards (FMVSS No. 201, Occupant protection in interior impact, at S6.1.6; FMVSS No. 214, Side impact protection, at S8.4; and FMVSS No. 225, Child restraint anchorage systems, at S14.2).

The term "manufacturer" is defined by statute as "a person manufacturing or assembling motor vehicles or motor vehicle equipment; or importing motor vehicles or motor vehicle equipment for resale." 49 U.S.C. 30102. The NHTSA regulations governing vehicle certification of a completed vehicle require the assembler of the vehicle to certify the vehicle as the manufacturer. Three exceptions apply to the general requirement: first, a non-assembling manufacturer may certify compliance when it controls the corporation assembling the vehicle and agrees to assume all legal responsibilities associated with certification; second, a manufacturer that fabricates and sends a vehicle in an unassembled form such that it can be assembled without any special machinery or tools may name itself as the vehicle manufacturer; and third, a trailer manufacturer may certify compliance for a trailer that it did not manufacture, but for which it accepts legal responsibility associated with certification. See 49 CFR 567.4(g). The manufacturer identified on the certification label generally bears full legal responsibility for any notifications and remedies resulting from a determination of a noncompliance with a FMVSS or a safety-related defect. See 49 CFR 573.3.

In the 1985 FMVSS No. 208 NPRM, the agency acknowledged that there were instances in which a vehicle could arguably have more than one manufacturer. One example of this situation could be when there was an existing parent/subsidiary relationship. However, there could also be instances where the relationship between the two possible manufacturers was not based on control of the company, but rather on control of the production of a specific vehicle model. We determined that, under certain circumstances, the definition of manufacturer in 49 U.S.C. 30102 was sufficiently broad to include this scenario. The example we gave in explaining our position was a company, which we refer to as a "sponsor," that contracts with another manufacturer to produce a design exclusively for the sponsor. However, the agency went on to state, "the mere purchase of vehicles for resale by a company which is also a manufacturer of motor vehicles does not make the purchaser the manufacturer of those vehicles." See 50 Fed. Reg. 14589, 14596.

To date, NHTSA has examined the sponsorship question, based on particular sets of circumstances, only four times. In the first instance, the agency evaluated the relationship between General Motors and Lotus Cars Ltd. See August 15, 1987, letter from NHTSA to General Motors. We determined that since GM sponsored the importation, distribution, and marketing of the Lotus vehicles in the United States, it could be considered the manufacturer of the vehicles for the FMVSS No. 208 phase-in requirements. In making its decision, NHTSA noted that Lotus was a wholly-owned subsidiary of GM and the vehicles were marketed in the United States by another wholly-owned subsidiary of GM, providing sufficient indicia of GM's active role in bringing the vehicles to market.

Two years later, NHTSA concluded that a contractual relationship whereby one manufacturer contracts with another to assemble vehicles, without more, was insufficient to establish a sponsorship relationship. The agency noted that a contract to assemble may be nothing more than the purchase of vehicles for resale. Without more information as to the details of the contract, NHTSA was unable to determine whether the non-assembly manufacturer exercised sufficient control over the production of the vehicle to be considered a sponsor for phase-in purposes. See September 7, 1989, letter from NHTSA to LAFORZA Automobiles, Inc.

In 1991, NHTSA determined that a joint venture agreement, under which one party provides design and development support, as well as major components, and the other party assembles the vehicle, was sufficient to allow the non-assembler to be considered as the manufacturer of the vehicle and to attribute the vehicle to its fleet for phase-in purposes. See October 28, 1991, letter from NHTSA to Nissan Research & Development, Inc.

Finally, we recently clarified our position that vehicles of related manufacturers may be grouped together for the purposes of meeting safety standard phase-in requirements, and expanded it beyond the findings of control described in the GM/Lotus letter. In a letter to the Alliance of Automobile Manufacturers, we noted that the manufacturer attribution provisions needed to be clear and easily applied. We stated that we believed there was sufficient interaction among related manufacturers, and direct involvement by parent corporations in the actions of their subsidiaries, that their fleets could be grouped together or treated as the vehicles of separate manufacturers, at the manufacturers' option. We also stated that if the fleets of motor vehicle manufacturers are considered to be within the same "control" relationship for the purposes of the Corporate Average Fuel Economy (CAFE) statute, 49 U.S.C. Chapter 329, their vehicles could be grouped together or treated as the vehicles of separate manufacturers for phase-in purposes, again at the manufacturers' option. See October 24, 2002, letter from NHTSA to the Alliance of Automobile Manufacturers.

Thus, under existing interpretations, sponsorship could be found with respect to a vehicle model in three instances: first, if the vehicle were designed from the beginning exclusively for another manufacturer; second, if the fleets of the two companies are combined under the CAFE statute during the model year at issue; and third, if the vehicle were designed and produced pursuant to a joint venture agreement that reflected joint participation. Sponsorship would not be found, however, if a contract merely directed one company to assemble an existing model for another manufacturer without other evidence of the non-assembling company's control over the design and production process.

I now turn to the fact scenario presently before the agency. In your letter, you state that Company A has agreed to supply Company B with a vehicle model developed, in part, pursuant to an engineering agreement between the two companies. The new model is based in large part on an existing model that was designed and engineered by Company A. Company A has also marketed the existing model in the United States. However, a subsidiary or affiliate of Company B will have sole distribution and marketing rights for the new model.

Under the engineering agreement, Company B has provided exterior and interior specifications and requirements, prepared and provided detailed designs of modified interior and exterior parts, and assigned employees to participate actively in the design and development process. Additionally, Company B has committed to pay Company A a net total of $30 million to cover engineering and tooling costs for the vehicle.

I have determined that this arrangement is sufficient to establish a sponsorship relationship between Company A and Company B with respect to the vehicle, regardless of whether such a relationship could be found generally, as was the case with GM and Lotus or with fleets of vehicles that are grouped together under the CAFE statute. I have also determined that it is not necessary for Company B to have been actively involved in the initial development of the vehicle, as was the case in the Nissan joint venture. Rather, my decision is based on the presence of three separate factors: the would-be sponsor's commitment of substantial design and engineering resources, the significant financial contribution by Company B to the development of the vehicle, and Company B's exclusive marketing rights to the vehicle. I note that the absence of any one of these factors, particularly the commitment of design and engineering resources, could create a situation more akin to the situation with LAFORZA, where NHTSA expressed concern that the contractual relationship may not have amounted to more than a mere purchase for resale.

Please note that in order for Company B to take credit for the vehicles in question during the phase-in, the companies must submit a written contract to that effect with NHTSA. Moreover, we note that the entire production for a given production year (i.e., from September 1 of one year through August 31 of the next year) must be attributed to one manufacturer. We would not allow a company to "sponsor" only a portion of a given year's production.

This approach to sponsorship for phase-in purposes is somewhat different from NHTSA's recently articulated position on the respective responsibilities of manufacturers under the early warning reporting rule. 67 Fed. Reg. 45833 (July 10, 2002). In that rule, we specifically addressed the obligations placed on manufacturers involved in joint ventures and production agreements. We noted that all manufacturers that are party to such ventures or agreements could assume responsibility for reporting consumer complaint and other relevant information to NHTSA. Under the early warning reporting rule, we described a production agreement as one in which one manufacturer agrees to produce vehicles for another under the second manufacturer's brand name. We did not premise our statement about the assumption of responsibility on whether the owner of the vehicle brand name had any control over the design or production of the vehicle, or whether the vehicle was designed exclusively for marketing by the brand name owner. We took this approach in the early warning reporting context because we believe the critical element is which company a consumer is more likely to notify in the event of a complaint or problem. We believe consumers would be most likely to notify the manufacturer whose name appears on the vehicle rather than the manufacturer whose name appears on the certification label. To that end, we also added a definition of "brand name owner" to mean "a person that markets a motor vehicle or motor vehicle equipment under its own trade name whether or not it is the fabricator or importer of the vehicle." This definition alone would be insufficient to establish sponsorship under the phase-in requirements of the various safety standards, because the mere branding of a vehicle does not demonstrate sufficient control or investment in the design and production of the vehicle.

I hope that this information is helpful. Should you have any further questions on this matter, please feel free to contact me or Rebecca MacPherson of my staff at the address given above or at (202) 366-2992.

Sincerely,

Jacqueline Glassman
Chief Counsel

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