Interpretation ID: nht87-2.95

TYPE: INTERPRETATION-NHTSA

DATE: 09/18/87

FROM: AUTHOR UNAVAILABLE; Erika Z. Jones; NHTSA

TO: J. Douglas Hand -- General Motors Legal Staff

TITLE: FMVSS INTERPRETATION

ATTACHMT: 10/15/87 letter from Erika Z. Jones to G.T. Doe (Std. 208; Std. 216); 2/5/87 letter from G.T. Doe to Erika Z. Jones (occ 176)

TEXT:

J. Douglas Hand, Esq. Legal Staff General Motors Corporation P.O. Box 33122 Detroit, MI 48232

This responds to your letter seeking an interpretation of Standard No. 208, Occupant Crash Protection (49 CFR S571.208). Specifically, you asked whether General Motors Corporation (GM can be deemed the manufacturer of passenger cars produced by Lotus Car s Limited (LCL) for the purposes of S4.1.3.5, the manufacturer attribution provisions of Standard No. 208. After we received your letter, you made us aware of certain changed circumstances. In your letter, you stated that GM did not own the entity that w as the exclusive importer of Lotus Vehicles, and that GM owned 96 percent of LCL. Subsequently, you have told us that GM wholly owns the companies that import and market Lotus vehicles in the United States and that GM wholly owns LCL. This letter of inte rpretation is based on the GM -Lotus corporate relationship described in this letter. To the extent that the description in this letter differs from the description set forth in your August, 1986 letter, if reflects our understanding of the change circum stances. Our conclusion is that, since GM sponsors the importation, distribution, and marketing of these cars, GM may be considered the manufacturer of cars produced by LCL for the purposes of standard No. 208.

You explained that LCL is a part of Group Lotus, a United Kingdom company that provides engineering services to various motor vehicle manufactures and produces fewer than a thousand passenger cars a year. Group Lotus is a wholly-owned subsidiary of GM, a lthough LCL designs, builds, and certifies its cars without GM's advice. Approximately 200 Lotus Performance Cars, Limited Partnership (LPC), a wholly-owned subsidiary of GM. Lotus cars are marketed and distributed in the United States by Lotus Cars USA, Inc., another wholly-owned subsidiary of GM. Hence, GM owns the company that designs and assembles these cars, and GM owns the companies that import and market the vehicles.

Section 102(5) of the National Traffic and Motor Vehicle Safety Act (15 U.S.C. 1391(5)) defines "manufacturer" as many person engaged in the manufacturing or assembling of motor vehicles or motor vehicle equipment, including any person importing motor ve hicles or motor vehicle equipment for resale." Under this definition, both LCL and LPC are statutory manufacturers of Lotus passenger cars. LCL designs and assembles the cars, and has filed a designation of agent for service of process with this agency, pursuant to 15 U.S.C. 1399(e). By filing a designation of agent, LCL has acknowledged that it is offering its cars for importation into the United State. LPC imports those cars into the United States.

Section S4.1.3.5 of Standard No. 208 sets forth provisions for instances in which passenger cars have more than one statutory "manufacturer." That section provides that the manufacturers may execute an express written contract to specify the manufacturer s to which the cars shall up attributed. In the absence of such a contract, S4.1.3.5.1(a) provides that imported passenger cars will be attributed to the importer. Since there is no such contract in this instance, application of this provision means that the Lotus passenger cars, which are produced in the United Kingdom, would be attributed to LPC, the GM subsidiary which imports the cars into the United States.

In the April 11, 1985, proposal to establish attribution requirements in the case of vehicles that have more than one statutory "manufacturer" (50, FR 14589), NHTSA stated that it considers the statutory definition of "manufacturer" to be sufficiently br oad to include sponsors, depending on the circumstances. See 50 FR 14596. The agency stated that if a sponsor contracts for another manufacturer to produce a design exclusively for the sponsor, the sponsor may be considered the manufacturer of those vehi cles, applying basic principles of agency law. On the other hand, the agency stated that the mere purchase of vehicles for resale by a company which also is a manufacturer of motor vehicles does not make the purchaser the manufacturer of those vehicles.

Applying these principles to your case, we conclude that GM sponsors the importation of the Lotus vehicles. Both LCL, the actual assembler, and LPC, the actual importer, are wholly-owned subsidiaries of GM. By itself, GM's ownership of both the producer and importer of these care might not be sufficient to establish that GM was the sponsor of these vehicles for the purposes of Standard No. 208. In addition, however, another GM wholly-owned subsidiary distributes and markets the vehicles in the United St ates. GM coordinates the activities of all these subsidiaries. Since GM wholly owns the actual producer of these vehicles and is actively involved in the importation, distribution, and marketing of these vehicles, we believe that GM should be considered to sponsor the importation of the Lotus vehicles. Accordingly, GM rather than LPC, may be considered the importer and manufacturer of these vehicles.

If you have any further questions, please let me know.

Sincerely.

Erika Z. Jones

Chief Counsel

August 29, 1986 Erika Z. Jones, Esq. Chief Counsel National Highway Traffic Safety Administration 400 Seventh Street, S.W. Washington, DC 20590

Dear Ms. Jones:

Re: Interpretation of Multiple Manufacturer

Provision of FMVSS 208 Phase-In

This letter is written to request an interpretation of S4.1.3.5 of FMVSS 208. As you will recall, this portion of the standard provides that where more than one manufacturer is involved in the production of a passenger car, the manufacturers are permitte d to determine between or among themselves, by express written contract, which of them shall be deemed the manufacturer of the vehicle for purposes of meeting the phase-in requirements of FMVSS 208. In the absence of such an agreement, domestic passenger cars produced by more than one manufacturer are attributed to the manufacturer marketing the vehicles, and imported ones are attributed to the manufacturer importing them.

The specific subject matter of the interpretation we are requesting in this letter was discussed at a meeting held at the NHTSA on August 27, 1986. Messrs. Wood, Oesch, and Vinson of your staff represented the agency; Mr. R. F. Humphrey of General Motors Washington Office and I represented GM; and Mr. G. E. Atkin represented Lotus Cars Limited. After a discussion of the issues involved, the members of your staff suggested that a written request for interpretation would be appropriate. This letter is a r esult of that suggestion. The facts comprising the issue we are concerned with, and our specific request for an interpretation of the phase-in provisions of FMVSS 208, are as follows.

Lotus Cars Limited (Lotus) is part of Group Lotus, a United Kingdom firm that provides engineering services to various motor vehicle manufacturers and itself produces several hundred passenger cars each year. Lotus passenger cars are imported into the Un ited States under a contract between Lotus and Lotus Performance Cars (LPC), an American limited partnership. The contract gives LPC the exclusive right to distribute Lotus passenger cars in the United States, and LPC is the importer of record of Lotus p assenger cars. GM has recently purchased substantially all of the shares (approximately 96 percent) of Group Lotus. Neither GM nor Lotus owns any interest in LPC.

Of the somewhat less than 1,000 passenger cars produced by Lotus each year, approximately 200 are imported into the United States. In light of this fact, the phase-in requirements of FMVSS 208, which would obligate Lotus to install passive restraints on approximately 20 vehicles in model year 1987, 50 vehicles in 1988, and 80 vehicles in 1989, can be seen to impose an inordinate financial burden on Lotus.

The multiple manufacturer provision of FMVSS 208 was promulgated to give manufacturers the flexibility to deal with the uncertainties and anomalies created by the phase-in scheme for passive restraint requirements. In furthering this purpose, we believe that the agency should use reasonable flexibility in its interpretation of statutory and regulatory terms and definitions, viewing the business arrangements between manufacturers so as to fulfill the intent of the multiple manufacturer provision.

It is clear that Lotus, the designer and producer of Lotus passenger cars, is a manufacturer of those cars under the Safety Act and safety standards. It is also clear that LPC, the importer of Lotus passenger cars, is a statutory manufacturer. The interp retation we request from the agency is that General Motors, by virtue of its nearly total ownership of Lotus, may also be deemed a manufacturer of Lotus passenger cars for purposes of the multiple manufacturer provision of FMVSS 208.

Because it owns 96 percent of the shares of Group Lotus (an ownership level which will reach 100 percent within the foreseeable future), GM has a substantial and abiding concern in the long-term viability of Lotus, a concern that extends to the extraordi nary difficulties imposed upon Lotus by the phase-in provisions of the passive restraint rule. By permitting GM to substitute its vehicles for those of Lotus in determining compliance with the phase-in requirements, the NHTSA would do no violence to the language or spirit of the Safety Act, which is expansive enough to encompass the changing business relation-ships among manufacturers. The agency would also be fulfilling the intent of the multiple manufacturer provision of FMVSS 208, and would be rectif ying a particularly egregious example of the kind of inequity implicitly recognized by the adoption of the multiple manufacturer provision. Finally, this interpretation would not result in any reduction in the number of vehicles required to be equipped w ith passive restraints during the phase-in period. For all these reasons, we ask that the NHTSA issue the interpretation of the multiple manufacturer provision of FMVSS 208 that we have requested.

The other issue discussed during the August 27 meeting was the situation of Lotus in the event that the agency finds itself unable to concur with the interpretation of FMVSS 208 that I have outlined above. Lotus has concluded that if the agency is unable to issue our requested interpretation, Lotus finds it necessary to file a petition for exemption from the first year of the phase-in requirements of FMVSS 208 (that is, the requirement that 10 percent of the vehicles produced by each manufacturer during the period September 1, 1986 through September 1, 1987 be equipped with passive restraints). We are therefore enclosing with this letter a petition by Lotus for exemption from those requirements, as prescribed in 49 CFR Part 555. If the NHTSA is able to render the interpretation of FMVSS 208 that we have requested, the enclosed petition will be moot, and in that case, GM and Lotus request that the agency disregard the petition. If, however, the agency does not issue the interpretation we have requested above, Lotus requests that the agency act upon the enclosed petition and determine Lotus' entitlement to an exemption as expeditiously as possible.

If you have any questions about our request for an interpretation of FMVSS 208, please direct them to me. If the enclosed petition is not rendered moot by your interpretation of FMVSS 208, and you have any questions about the petition, please direct them to Mr. Graham Atkin of Lotus. Thank you for your attention to this matter.

Sincerely, J. Douglas Hand JDH: kt Attorney

Enclosure