Interpretation ID: nht90-2.22

TYPE: Interpretation-NHTSA

DATE: April 24, 1990

FROM: Satoshi Nishibori -- Vice President, Industry-Government Affairs, Nissan Research & Development, Inc.

TO: Stephen P. Wood -- Acting Chief Counsel, NHTSA

TITLE: Ref: W-007-F

ATTACHMT: Attached to letter dated 12-21-90 from Paul Jackson Rice to Satoshi Nishibori (A37; CSA 501(9))

TEXT:

Enclosed for your consideration is a copy of a letter that we have sent to EPA regarding the regarding the procedure specified in its regulations for calculating light truck CAFEs. As you will note, in that letter we request clarification of how EPA's c alculation regulations should be interpreted in light of NHTSA's vehicle classification regulations, with regard to calculating light truck CAFEs. We would appreciate receiving any comments that you may have regarding this matter and, in particular, on our understanding of NHTSA's policy regarding the treatment of imported light trucks.

We also would like to confirm our understanding of the scope of the "captive import" definition in 49 CFR 533.4 (b)(2). As we interpret that definition it applies only to light trucks that are imported by a manufacturer whose "principal place of busines s is in the United States." Our question relates to how this definition would apply to Nissan, given its corporate organization.

Nissan Motor Co., Ltd. (NML), the parent corporation, is based in Japan. Nissan Motor Corporation in U.S.A. (NMC) is a wholly-owned, U.S. corporate subsidiary of NML that imports and distributes vehicles that are produced by NML. Nissan Motor Manufactur ing Corp. U.S.A. (NMM) is another corporate subsidiary and is owned jointly by NML and NMC. NMM is responsible for operating Nissan's facility in Smyrna, Tennessee, where certain passenger automobile and light truck models are produced. It is our under standing that this type of corporate structure is typical for most (if not all) foreign manufacturers that produce vehicles in the U.S.

In our opinion, neither light trucks that are imported by NMC nor those that are produced at the NMM facility shoud be considered to be "captive imports," even though their domestic content levels are currently below 75 percent. It is our understanding that, at the time that NHTSA developed the "captive import" definition, it was aware of concerns that fuel economy domestic content requirements for passenger automobiles operated in a perverse manner for foreign manufacturers, by discouraging them from increasing domestic content levels. These concerns led NHTSA in 1979 to seek legislation to exclude foreign manufacturers from the "separate fleet" requirement. If the "captive import" definition were interpreted to treat Nissan as having its principal place of business in the United States, then the perverse impact of the separate fleet requirement would remain for Nissan and any foreign manufacturer that set up U.S. subsidiaries to import or produce light trucks.

Moreover, vehicles that are imported through NMC would not be considered to be "captive imports" as that phrase is normally used. The phrase is usually applied to vehicles that are imported by domestic manufacturers but which are produced by foreign man ufacturers in which the domestic company has an ownership interest. In contrast to this, NMC has no ownership interest in NML. Vehicles that are produced at the NMM facility are not imported, even though their domestic content is currently less than 75 percent, and they therefore cannot be considered to be captive imports.

NML's name appears on the certification labels for all Nissan trucks, as the manufacturer of the vehicles. NML's principal place of business is in Japan.

NHTSA should consider the Nissan organization in its entirety to have its principal place of business outside the U.S., consistent with the above- mentioned considerations. This approach would also be consistent with section 503 (c) of the Motor Vehicle Information and Cost Savings Act, under which the activities of closely related corporations are combined for fuel economy calculation purposes.

Please confirm whether our interpretation regarding this matter is correct. If you have any questions on this letter, please contact Mr. Noboru Fujii of my staff, at (202) 466-5284.