Mr. Ernest Cuff
General Manager
Sputhe Engineering, Inc.
11185 Lime Kiln Road
Grass Valley, CA 95949-9715

Dear Mr. Cuff:

This responds to your letter asking several questions concerning your planned manufacture of motorcycles. You explain that your company presently manufactures Aaftermarket [motorcycle] engine and transmission components@ and is negotiating with an Australian company to manufacture and sell motorcycles in the United States.

By way of background, the National Highway Traffic Safety Administration (NHTSA) is authorized by Congress (49 U.S.C. Chapter 301) to issue Federal motor vehicle safety standards that set performance requirements for new motor vehicles and new items of equipment. NHTSA does not approve or certify any motor vehicles or motor vehicle equipment. Instead, our statute establishes a "self certification" process under which each manufacturer has the responsibility to certify that its product meets all applicable standards.

Your questions are as follows:

1. What if any, standards must be met for U.S. production?

ANSWER: The following Federal Motor Vehicle Safety Standards (49 C.F.R. Part 571) apply to motorcycles: Standard No. 106, Brake hoses; Standard No. 108 Lamps, reflective devices, and associated equipment; Standard No. 111 Rearview mirrors; Standard No. 115 Vehicle identification number - basic requirements; Standard No. 116 Motor vehicle brake fluids; Standard No. 119 New pneumatic tires for vehicles other than passenger cars; Standard No. 120 Tire selection and rims for motor vehicles other than passenger cars; Standard No. 122 Motorcycle brake systems; and Standard No. 123 Motorcycle controls and displays.

Each motorcycle must be certified by its manufacturer as meeting all applicable safety standards. The certification must be made in accordance with 49 CFR Part 567, Certification. In addition, if a vehicle contains a safety-related defect, the vehicle manufacturer must notify all owners, purchasers, and dealers of the defect and provide a remedy without charge.

A new manufacturer of motor vehicles or motor vehicle equipment must submit information identifying itself and its products to NHTSA not later than 30 days after it begins manufacture (49 CFR Part 566, Manufacturer Identification). I am, for your information, enclosing an information sheet, "Information for New Manufacturers of Motor Vehicles and Motor Vehicle Equipment" and another sheet that describes how you may obtain copies of NHTSA=s standards.

The U.S. Environmental Protection Agency (EPA) has established motor vehicle noise and emission standards. For information on EPA's requirements, please contact:

Office of Mobile Sources, ANR-455 Environmental Protection Agency 401 M Street, S.W. Washington, D.C. 20460 Telephone (202) 260-7645

2. Is there an annual level of production at which certain rules would apply, or would all rules apply for a production of as low as 2 to 3 units per year?

ANSWER: Each motorcycle must be certified as meeting the safety standards, regardless of production levels. Thus, even if only one motorcycle is manufactured, all the requirements mentioned in our response to question one would apply.

3. Would the Australian certification be accepted here, or would it be necessary to initiate a whole new round of testing to achieve U.S. certification?

ANSWER: As noted above, it is the manufacturer, not NHTSA, who self-certifies its motor vehicles or items of equipment. Manufacturers certifying compliance with the safety standards are not required to initiate any kind of testing for their certifications.

Each of NHTSA's safety standards specifies the test conditions and procedures that this agency will use to evaluate the performance of the vehicle or equipment being tested for compliance with the particular safety standard. However, NHTSA does not require a manufacturer to test its products only in the manner specified in the safety standards. A manufacturer may choose any means of evaluating its products to determine whether the vehicle or item of equipment complies with the requirements, provided, however, that the manufacturer assures that the vehicle will comply with the standard when tested by NHTSA.

If NHTSA's compliance test were to show an apparent noncompliance of a vehicle with the standard, the vehicle manufacturer would be asked to show the basis for its certification that its vehicle complies with the standard. If in fact there is a noncompliance, the manufacturer would

be subject to civil penalties unless it can establish that it exercised "reasonable care" in the manufacture of the product and in the checks (through actual testing, computer simulation, engineering analyses, or other means) to ensure compliance.

It may be simplest for a manufacturer to establish that it exercised "reasonable care" if the manufacturer conducted testing that strictly followed a specific standard's compliance test

procedures. However, "reasonable care" might be shown even if modified test procedures were used.

I hope this information is helpful. If you have any further questions, please feel free to contact Dorothy Nakama of my staff at this address or at (202) 366-2992.

Sincerely,

Samuel J. Dubbin Chief Counsel

Enclosures

ref:571.3 d:4/24/96

While the exercise of "reasonable care" may relieve a manufacturer of liability for civil penalties for the manufacture and sale of noncomplying vehicles or equipment, it does not relieve a manufacturer of the responsibility to notify purchasers of the noncompliance and remedy the noncompliance free of charge.