ID: nht90-2.63

TYPE: INTERPRETATION-NHTSA

DATE: 05/31/90

FROM: BARRY FELRICE -- ASSOCIATE ADMINISTRATOR FOR RULEMAKING NHTSA

TO: MIKE LOVE -- MANAGER, SAFETY COMPLIANCE PORSCHE CARS NORTH AMERICA, INC.

TITLE: NONE

ATTACHMT: LETTER FROM BARRY FELRICE -- NHTSA TO STEPHEN WOOD -- NHTSA ACTING CHIEF COUNSEL ENTITLED PORSCHE'S MODIFIED ANTITHEFT EXEMPTION, LETTER DATED 04/12/90; LETTER DATED 03/30/90 FROM MIKE LOVE -- PORSCHE TO JERRY CURRY -- NHTSA ADMINISTRATOR ON 49 CFR PART 543 EXEMPTION

TEXT: This responds to your request that this agency determine that the new feature added to the antitheft device proposed to be installed on the MY 1991 911 and 928 Porsche car lines, represents a de minimis change in the system that was the basis for the age ncy's previous granting of a theft exemption for those car lines beginning in MY 1990, and that therefore Porsche 911's and 928's containing the new device would be fully covered by that exemption.

As you are aware, the Porsche 911 and 928 car lines were granted an exemption, pursuant to 49 CFR Part 543, from antitheft marking because Porsche showed that the antitheft device to be used in lieu of marking on these car lines was likely to be as effec tive as parts marking. This exemption was issued on May 25, 1989, and appeared in the Federal Register on June 2, 1989 (54 FR 23727).

The agency granted the exemption from theft marking because the agency found that based on substantial evidence, the agency believed that the antitheft device is "likely to be as effective in reducing and deterring motor vehicle theft as compliance with the parts-marking requirements of the theft prevention standard (49 CFR Part 541)." In the granting of the exemption from theft marking, the agency stated that it believed that the device will provide the types of performance listed in 49 CFR Part 543.6( a)(3): Promoting activation; attracting attention to unauthorized entries; preventing defeat or circumventing of the device by unauthorized persons; preventing operation of the vehicle by unauthorized entrants; and ensuring the reliability and durability of the device.

In your letter, it was stated that beginning from MY 1991, Porsche plans to modify the antitheft device that is standard equipment on the Porsche 911 and 928, as follows: integrate the alarm control unit with the central locking and interior light contro l units; incorporate a feature that will also monitor the glove box for unauthorized opening; improve

P2

diagnostic capability in order to enhance serviceability; and install a capability to accept other features (such as motion sensors) if they are desired in the future.

In addition, it was stated that the changes in the system will be virtually unnoticeable to the operator, and that the system will still be armed passively by locking either door with the key. Further, with the addition of the glovebox, all the same poi nts of entry, such as the doors, hood, and hatch, will be monitored by the system and the engine disabling and alarm features will be the same. Porsche further stated that the system "will be as protected and tamper resistant as the current system."

After reviewing the proposed changes to the componentry and performance of the antitheft device on which the exemption was based, the agency concludes that the changes are de minimis. While the new device has enhanced componentry and provides some aspec ts of performance not provided by the original device, it also continues to provide the same aspects of performance provided by the original device and relies on essentially the same componentry to provide that performance. Therefore, it is not necessar y for Porsche to submit a petition to modify the exemption pursuant to 49 CFR Part 543.9(c)(2).

If Porsche does not implement the new antitheft device as described in your letter, or delays implementation until after MY 1991, we request that Porsche notify the agency of such decisions.

It is my understanding that, in an April 13, 1990 telephone conversation with Dorothy Nakama of NHTSA's Office of Chief Counsel, you stated that Porsche was not requesting confidential treatment of any information provided in your letter. Therefore, a c opy of your letter, and this response, will be placed together in NHTSA's public docket.

REF: PART 543

ID: nht90-2.64

TYPE: INTERPRETATION-NHTSA

DATE: 05/31/90

FROM: STEPHEN P. WOOD -- ACTING CHIEF COUNSEL NHTSA

TO: THEO BOSE -- WEBASTO HEATER, INC.

TITLE: NONE

ATTACHMT: LETTER FROM THEO BOSE -- WEBASTO HEATER INC DATED 07/19/89 TO FEDERAL HIGHWAY ADMINISTRATION ON CLARIFICATION OF TITLE 49 393.77[12]

TEXT: You wrote to the Federal Highway Administration (FHWA) asking about requirements for "diesel fuel burning coolant heaters and air heaters" that you import for installation in trucks, buses and school buses. According to the installation instructions for the heaters, they are connected either to the fuel tank of the vehicle or to a separate fuel tank. The FHWA forwarded us your letter with regard to Federal Motor Vehicle Safety Standard (FMVSS) No. 301, Fuel System Integrity, since the National Highway Traffic Safety Administration (NHTSA) is responsible for this standard. I regret the delay in responding.

By way of background, NHTSA is authorized to issue FMVSS's applying to the manufacture of new motor vehicles and items of motor vehicle equipment. NHTSA is not authorized to certify or approve motor vehicles or motor vehicle equipment for compliance wit h our FMVSS's. Instead, under the National Traffic and Motor Vehicle Safety Act (copy enclosed), each manufacturer of a motor vehicle or item of motor vehicle equipment is responsible for certifying that its products meet all applicable safety standards . This process requires each manufacturer to determine in the exercise of due care that its products meet all applicable requirements. (A general information sheet describing manufacturers' responsibilities under the Safety Act is enclosed.)

The Safety Act defines the term "manufacturer" as "any person engaged in the manufacturing or assembling of motor vehicles or motor vehicle equipment, including any person importing motor vehicles or motor vehicle equipment for resale." (@ 102(5); emphas is added.) As a manufacturer of motor vehicle equipment, you are responsible for compliance with the Safety Act and applicable regulations.

There is currently no FMVSS that directly applies to the heating unit you describe. Standard No. 301 (copy enclosed) applies only to completed new motor vehicles, and not to components of fuel systems. (The standard applies to trucks and buses with a g ross vehicle weight rating of 10,000

pounds or less, and to school buses.) However, Federal law may affect the installation of your product, depending on who installs the heating unit and when the work is performed.

If the heating unit were installed as original equipment on a new vehicle, the vehicle manufacturer is required by our certification regulations to certify that the entire vehicle (with your product installed) satisfies the requirements of all applicable FMVSS's. If the heater were added to a new, previously-certified vehicle (e.g., a new completed school bus), the person who adds the system would be required to certify that, as altered, the vehicle continues to comply with all of the safety standards affected by the alteration. These certification requirements apply to the vehicle manufacturer and alterer regardless of whether the heater is connected to the vehicle's fuel system. Of course, if the heater is connected to the vehicle's fuel system, th e vehicle's compliance with Standard No. 301 should be carefully scrutinized. (I have enclosed a copy of our certification regulation (49 CFR Part 567) for your information.)

If the heater were installed on a used vehicle by a vehicle manufacturer, distributor, dealer or repair business, the installer would not be subject to the certification requirements outlined above. Instead, the installer would have to ensure that it di d not knowingly render inoperative the compliance of the vehicle with any applicable safety standards, including Standard No. 301. This is required by @ 108 (a) (2)(A) of the Safety Act. If the modification of the vehicle entailed connecting the heater to the vehicle's fuel system, compliance with Standard No. 301 would of course be especially germane to whether the modification had rendered inoperative the vehicle's compliance.

The prohibition of @ 108(a)(2)(A) does not apply to individual vehicle owners who alter their own vehicles. Thus, under our requirements, individual owners may install any item of motor vehicle equipment regardless of its effect on compliance with Feder al motor vehicle safety standards. However, NHTSA encourages vehicle owners not to tamper with vehicle safety equipment if the modification would degrade the safety of the vehicle.

In addition to the foregoing, you should be aware that manufacturers of motor vehicle equipment are subject to the requirements in sections 151-159 of the Safety Act concerning the recall and remedy of products with defects relating to motor vehicle safe ty. If you or NHTSA determines that a safety-related defect exists, you must notify purchasers of your product and remedy the problem free of charge. (Note that this responsibility is borne by the vehicle manufacturer in cases in which the heater is in stalled on a new vehicle by or with the express authorization of that vehicle manufacturer.) Any manufacturer which fails to provide notification of or remedy for a defect may be subject to a civil penalty of up to $ 1,000 per violation.

I hope this information is helpful. Please contact my office if you have further questions.

ENCLOSURES

ID: nht90-2.65

TYPE: INTERPRETATION-NHTSA

DATE: 05/31/90

FROM: STEPHEN P. WOOD -- NHTSA ACTING CHIEF COUNSEL

TO: SUICHI WATANABE -- GENERAL MANAGER AUTOMOTIVE LIGHTING ENGINEERING CONTROL DEPARTMENT STANLEY ELECTRIC CO., LTD.

TITLE: NONE

ATTACHMT: LETTER DATED 03/19/90 FROM SHUICHI WATANABE TO ERIKA Z. JONES -- NHTSA; OCC 4549

TEXT: This is in reply to your letter of March 19, 1990, asking whether a new combination rear lamp is permitted under Motor Vehicle Safety Standard No. 108.

The lamp consists of three compartments. In its normal operating mode, when the taillamp and/or stop lamp are activated, all three compartments show a red light. Your question arises with respect to three different operating modes. The first occurs whe n the turn signal is activated; the red light in one of the compartments is replaced by an amber flashing one. The second occurs when the backup lamp is activated; the red light in another of the compartments is replaced by a white steady-burning one. The third occurs when both the backup lamp and turn signal are activated; in this event, the combination lamp would present an amber flashing light, a red steady-burning one, and a white steady-burning one. You have informed us that "the requirement of photometric and lighted area for each lamp function comply to FMVSS No. 108 and related comply with requirements for one and three compartment lamps when operating with one or three compartments (we assume that they would also meet the requirements for t wo compartment lamps).

The lamp appears to be intended to fulfill the requirements of Standard No. 108 for turn signal, stop, tail, and backup lamps. Thus, your question appears to be whether Standard No. 108 requires separate lamps or compartments dedicated to a specific pur pose, or whether your multiple purpose lamp is acceptable.

Standard No. 108 does not prohibit a combination of the functions that any chamber of your lamp provides. When a specific function is activated, the lamp will perform that particular function in a manner that appears to meet the minimum standard establi shed by Standard No. 108. Assuming that the CIE color definitions for white, amber, and red are met by the backup, turn, and stop/tail functions, the lamp appears to be permissible under Standard No. 108.

Sincerely,

ID: nht90-2.66

TYPE: INTERPRETATION-NHTSA

DATE: 05/31/90

FROM: STEPHEN P. WOOD -- NHTSA ACTING CHIEF COUNSEL

TO: SATOSHI NISHIBORI -- VICE PRESIDENT INDUSTRY/GOVERNMENT AFFAIRS NISSAN RESEARCH & DEVELOPMENT, INC.

TITLE: NONE

ATTACHMT: LETTER DATED 02/15/90 FROM SATOSHI NISHIBORI -- NISSAN RESEARCH TO STEPHEN P. WOOD -- NHTSA; OCC 4485

TEXT: This responds to your letter requesting an interpretation of 49 CFR Part 575, Consumer Information Regulations. Specifically, you asked about the requirement in @ 575.6(a)(2)(i), which requires the "name of the manufacturer" to be inserted in two places in a statement required to appear in the owner's manual. You asked whether you could use the name "Infiniti" as the required "name of the manufacturer" for vehicles manufactured by that division of Nissan Motors, or whether Nissan would have to be ident ified as the manufacturer of those vehicles. The answer is that identifying Infiniti as the manufacturer of the vehicles produced by that division of your corporation would not violate @ 575.6(a)(2), as explained below.

The term "manufacturer" is not specifically defined for Part 575 in @ 575.2. However, @ 575.2(a) provides that all terms used in Part 575 that are defined in section 102 of the National Traffic and Motor Vehicle Safety Act (the Safety Act; 15 U.S.C. 1391 ) are used as defined in the Safety Act. Section 102(5) of the Safety Act (15 U.S.C. 1391(5)) defines a manufacturer as "any person engaged in the manufacturing or assembling of motor vehicles or motor vehicle equipment, including any person importing m otor vehicles or motor vehicle equipment for resale." According to your letter, Infiniti is a division within Nissan Motor Corporation (USA), the importer of Nissan and Infiniti vehicles. The Infiniti vehicles are assembled by Nissan Motor Company, Ltd. , the parent corporation, in Japan. Hence, both the parent corporation, as the assembler of the Infiniti cars, and the U.S. subsidiary, as the importer of those cars, would be "manufacturers" of the Infiniti cars, within the meaning of the Safety Act.

Generally speaking, when this agency's regulations require disclosure of the name of the manufacturer, it is permissible to identify the

manufacturer as the division that sells and markets the vehicle, instead of naming the corporation of which the division is a part. The only exception to this general rule would arise if naming the division, instead of the whole corporation, as the manu facturer would be likely to confuse the public or otherwise frustrate the purposes of the regulation.

With respect to @ 575.6(a)(2), the preamble to the final rule that added these requirements identified their purpose as "to increase consumer awareness of the [Auto Safety] Hotline and the agency's efforts to strengthen its defect investigation activitie s." 54 FR 48745, at 48746; November 27, 1989. It does not appear that identifying Infiniti, instead of Nissan, as the manufacturer of the Infiniti cars would in any way hamper or frustrate this purpose. Additionally, that preamble also included the foll owing discussion:

NHTSA nevertheless agrees with the commenters that the public should be instructed to also contact the manufacturer. Therefore, the agency has revised the message to state that a consumer should also contact the manufacturer or its designate (e.g., i ts authorized dealer) to resolve safety-related or other problems with the vehicle. 54 FR 48747. (Emphasis added)

This language shows that NHTSA intended these requirements to provide the consumer with necessary information to resolve safety-related or other problems with the vehicle, not to provide the consumer with information about the corporate structure of the manufacturer. In fact, identifying Infiniti instead of Nissan as the manufacturer of Infiniti cars may be more useful information for the purchasers of those cars. Hence, we conclude that nothing in @ 575.6(a)(2) prohibits Nissan from identifying its I nfiniti division as the manufacturer of Infiniti cars.

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

Sincerely,

ID: nht90-2.67

TYPE: INTERPRETATION-NHTSA

DATE: 05/31/90

FROM: STEPHEN P. WOOD -- NHTSA ACTING CHIEF COUNSEL

TO: WILLIAM D. FALCON -- COMMISSION ON ACCREDITATION FOR LAW ENFORCEMENT AGENCIES, INC.

TITLE: NONE

ATTACHMT: LETTER DATED 01/30/89 FROM WILLIAM D. FALCON TO RALPH HITCHCOCK -- NHTSA; OCC 3107; LETTER FROM STEVE CROWELL; DATED 11/02/88 EST; LETTER FROM STEVEN CROWELL DATED 06/02/88 TO ELIZABETH DENNISTON -- EGOH BITTNER COMMISIONER WALTHAM MASSACHUSETT S

TEXT: This responds to your letter to our agency concerning your law enforcement standard (71.4.1) for an interior partition you call a "safety barrier." I regret the delay in responding.

The copy of 71.4.1 you provided states: "Vehicles used primarily for transporting prisoners (80 percent of their use) should have the driver separated from the prisoner by a safety barrier." The "commentary" to 71.4.1 states that, "The safety barrier may be of wire mesh or heavy gauge plastic to prevent the prisoner from having access to the driver's compartment . . ." Mr. Steven Crowell wrote you last year suggesting that this commentary should be revised to state: "The safety barrier must be one which has had a label or tag affixed to it which certifies compliance with all applicable" Federal motor vehicle safety standards (FMVSS's). Mr. Crowell believes such certification is required by Federal law, and apparently bases this on our September 13, 19 85 letter to him. You ask whether his understanding is correct.

Mr. Crowell is not entirely correct in his understanding of our certification requirements. Our regulations do not generally require materials in safety barriers to be certified, except for glazing materials in barriers. Standard No. 205, Glazing Mater ials, applies to all glazing installed in a motor vehicle, including the glazing used for an interior partition. The standard does not require labels or tags to certify the compliance of the glazing material with it. However, the standard does require that glazing material in a barrier must bear a mark to certify compliance with the standard. Standard No. 205 is the only FMVSS that applies directly to interior partitions (and only if the partition contains glazing material). There is no other FMVSS to which the partition itself would be certified.

Since glazing material in safety barriers need not be certified by labels or tags, and because safety barriers made from materials other than glazing materials are not certified under Federal law, we believe 71.4.1's seeking to require affixing a certifi cation label or tag on the barriers may engender confusion about NHTSA's requirements. We note also

that there is no Federal requirement for persons to certify modifications made to used vehicles. Therefore, we recommend against 71.4.1's seeking to require certifications in the form of labels or tags affixed to safety barriers installed in new or used vehicles.

However, we agree with Mr. Crowell that safety barriers should be installed in a safe manner, and believe that our regulations promote this to the extent possible under the Vehicle Safety Act. If a new vehicle is altered by the installation of a partiti on as original equipment (prior to the vehicle's first sale to a consumer), the person making the installation would be required by 49 CFR Part 567, Certification, to certify (by attaching a label to the vehicle) that the vehicle complies with all applic able FMVSS's. These FMVSS's include the standards for head restraints (Standard 202), interior impact protection (201), rearview mirrors (111), and crash protection (208).

We know of no reason why a suitable partition can't be developed which could be placed in a vehicle equipped with head restraints and shoulder belts. Further, it does not seem to be a difficult matter for the barrier to be installed so that the vehicle would meet Standard 111's requirements for rearview mirrors.

On the other hand, installation of the barrier could interfere with the compliance of the back of the front seat with Standard 201 (copy enclosed). Paragraph S3.2 of that standard sets energy-absorption requirements for the back of the front seat to prot ect the heads of rear seat occupants thrown forward in a crash. The partition design should be capable of meeting Standard 201's requirements for energy absorption and should not be hazardous to head impact.

If the safety barrier were installed on a used vehicle by a vehicle manufacturer, distributor, dealer or repair business, the installer would be subject to a civil penalty of $ 1,000 per violation if he knowingly rendered inoperative the compliance of th e vehicle with any safety standard. This prohibition is contained in @ 108(a)(2)(A) of the Vehicle Safety Act.

The prohibition of @ 108(a)(2)(A) does not apply to individual vehicle owners who alter their own vehicles. Thus, under Federal law, they may install or remove any items of motor vehicle equipment regardless of its effect on compliance with Federal moto r vehicle safety standards.

Manufacturers of motor vehicle equipment, such as the safety barrier you described, also have responsibilities under the Vehicle Safety Act regarding safety defects and noncompliances in their products. Under @ 151 et seq., they must notify purchasers a bout safety-related defects and noncompliances and remedy the product free of charge. The Safety Act imposes a civil penalty of $ 1,000 per violation upon any manufacturer who fails to provide notification of or remedy for a defect or noncompliance in i ts motor vehicles or motor vehicle equipment.

In view of the fact that a police department may alter its own vehicles without regard to @ 108(a)(2)(A), we believe Mr. Crowell might be suggesting that 71.4.1 recommend that the safety barrier should be installed in a manner that does not negatively af fect the compliance of the vehicle with applicable FMVSS's. NHTSA generally encourages vehicle owners not to remove safety equipment or otherwise alter their vehicles if the modification would degrade the safety of the vehicle. Therefore, while we do n ot agree with Mr. Crowell that you should seek to require affixed certification labels or tags for barriers, we agree that installation of the barrier should be done in a manner that avoids degrading the overall safety of the vehicle.

I hope this information is helpful. Please let me know if you have any further questions.

Sincerely,

ENCLOSURE

ID: nht90-2.68

TYPE: INTERPRETATION-NHTSA

DATE: 06/01/90

FROM: STEPHEN P. WOOD -- NHTSA ACTING CHIEF COUNSEL

TO: PETER KOPANON -- DIRECTOR, REGISTRY OF MOTOR VEHICLE INSPECTION MASSACHUSETTS

TITLE: NONE

TEXT: This follows up on the recent telephone call from Ms. Fujita of my staff concerning our October 1985 cover letter to you. That letter enclosed a copy of a May 10, 1982 letter from NHTSA to Mr. Martin Chauvin on the applicability of our school bus safety standards to vehicles used by day care centers. As Ms. Fujita informed you, our cover letter mistakingly summarized the Chauvin letter as stating that day care centers are considered to be "schools" within the meaning of the Vehicle Safety Act. The co rrect iteration of the Chauvin letter is that NHTSA has said day care centers are not considered to be schools.

I regret any inconvenience caused by our error. Please contact us if you have any questions.

ID: nht90-2.69

TYPE: Interpretation-NHTSA

DATE: June 1, 1990

FROM: A. Roger Hirstein -- Industry Development Manager, 3M Commercial Graphics Div.

TO: Taylor Vincent -- Legal Counsel, NHTSA

TITLE: None

ATTACHMT: Attached to letter dated 9-14-90 from P.J. Rice to A.R. Hirstein (A36; Std. 108)

TEXT:

One of our customers has asked for written verification that our SCOTCHLITE Diamond Grade Reflective Sheeting can be used in a red and white block pattern on the side of a trailer for conspicuity purposes and not be in violation of REG 108. It is our in terpretation that materials such as our SCOTCHLITE Reflective Sheeting can be used in addition to the requirements of REG 108 but not in place of.

We would appreciate your review and written direction so we can meet our customer's request.

ID: nht90-2.7

TYPE: INTERPRETATION-NHTSA

DATE: APRIL 9, 1990

FROM: STEPHEN P. WOOD -- ACTING CHIEF COUNSEL, NHTSA

TO: MEHDI ROWGHANI -- DALLAS EUROPEAN PARTS DISTRIBUTORS

TITLE: NONE

ATTACHMT: LETTER DATED 1-9-90 TO TAYLOR VINSON FROM MEHDI ROWGHANI ATTACHED; (OCC 4337) TEXT:

This is in reply to your letter of January 9, 1990, to Taylor Vinson of this Office. You have asked whether "importation and sale of European doors (without reinforcement bars) is in accordance with the rules and regulations of the Department of Transpo rtation."

Your question appears premised upon the fact that many EUropean passenger cars achieve compliance with Federal Motor Vehicle Safety Standard No. 214 side Door strength by being equipped with doors incorporating reinforcement bars. However, this standard applies only to new vehicles, and does not extend to replacement parts for such vehicles. Thus, if damage to a vehicle is such that its original door must be replaced, and that door incorporated a reinforcing bar, there is no requirement that the replac ement door restore the vehicle to a condition in which it continues to meet Standard No. 214. In short, the importation and sale of a replacement door that does not incorporate a reinforcing bar does not violate any of the statutes, standards, or other regulations administered by this agency.

If the replacement door is intended for use on a passenger car line that is subject to the Federal Motor Vehicle Theft Prevention Standard that this agency administers, however, you should be aware that it must nevertheless be marked with the registered trademark of the manufacturer of the door, or unique identifier if there is no registered trademark, and the letter "R". I enclose a copy of the standard for your information, as this requirement is a relatively new one, and may not be clearly understoo d. This marking must be on the door before the door is imported into the United States.

Enclosure (Part 541)

ID: nht90-2.70

TYPE: Interpretation-NHTSA

DATE: June 1, 1990

FROM: William F. Canever -- Staff Attorney, Office of the General Counsel, Ford Motor Company

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

TITLE: None

ATTACHMT: Attached to letter dated 8-1-90 from K. DeMeter to W.F. Canever; Also attached to letter dated 10-22-90 from P.J. Rice to W.F. Canever (A36; Sec. 501(8); Sec. 501(12)

TEXT:

You have requested information regarding Ford Motor Company's interest in Jaguar plc, and our intentions with regard to filing the Final 1989 Model Year Report for Ford and Jaguar.

We intend to file a combined 1989 report for Ford and Jaguar because Ford controlled the import of Ford vehicles during model year 1989. Having first obtained the agreement of the Board of Directors of Jaguar to recommend-the offer, Ford Motor Company, Ltd., a wholly-owned subsidiary of Ford Motor Company, publicly announced its tender offer for Jaguar shares on November 2, 1989. The offer document, which constituted the formal legal offer, was mailed on November 8. After over 50 percent of Jaguar st ock had been tendered, Ford declared the tender offer "unconditional" on December 10, 1989. Thus, Ford gained controlling interest in Jaguar and the importer of Jaguar vehicles, and under provisions of the CAFE laws, Ford became the manufacturer of Jagu ar vehicles imported during the 1989 model year and therefore these vehicles must be combined for purposes of calculating 1989 model year corporate average fuel economy levels.

During the period of negotiation, tender offer, and acceptance, and continuing through the end of calendar year 1989, Ford was manufacturing 1989 model year vehicles. Ford, by virtue of its acquired interest in Jaguar and the importer of Jaguar vehicles , was the manufacturer for CAFE calculation purposes of Jaguar vehicles imported into the United States customs territory during that period of time. Additionally, Ford's 1989 model year had not closed at the time of acquisition because Ford was the man ufacturer, for CAFE calculation purposes, of certain 1989 Aston Martin vehicles that were being imported into the United States through calendar year end 1989.

Because Ford controlled Jaguar and the importer of and Jaguar vehicles prior to the end of the 1989 model year, and because fuel economy standards apply to particular model years as a whole and not to separate parts of a model year, all Ford and Jaguar v ehicles produced and imported for model year 1989 should be placed in Ford's fleet. This treatment is consistent with that accorded Chrysler and AMC for model year 1987, the year Chrysler acquired AMC, as outlined in your letter of April 4, 1990 to Lewi s Goldfarb.

Therefore, Ford will file its Final 1989 Model Year Report with the Jaguar vehicles included in its import CAFE fleet. Because we anticipate that Ford and the importer of Jaguar vehicles will jointly earn credits in 1989, we may, at some future date, fi le a carryback plan to cover Jaguar's

shortfall for model years 1986 through 1988 and to recover civil penalties paid (see, for example, letter dated March 21, 1990 from Jaguar Ltd.). Again, this is consistent with the treatment accorded CAFE credits in the Chrysler/AMC situation.

If you have any further questions or concerns, please do not hesitate to contact this office. As we discussed, we will not file our Final 1989 Model Year Report until you have had an opportunity to review and respond to this information.

ID: nht90-2.71

TYPE: Interpretation-NHTSA

DATE: June 1, 1990

FROM: William F. Canever -- Staff Attorney, Office of the General Counsel, Ford Motor Company

TO: Stephen P. Wood -- Acting Chief Counsel, U.S. Department of Transportation, NHTSA

TITLE: None

ATTACHMT: Attached to letter dated 3-14-91 from Paul Jackson Rice to William F. Canever (A37; Part 535; CSA S 502(1))

TEXT:

As we discussed, Ford Motor Company will be submitting a credit allocation plan to cover a CAFE credit shortfall for its 1989 Domestic Light Truck Fleet. You have asked us to explain our proposed method of credit allocation.

Our credit allocation method is consistent with the methodology that was reviewed and approved by NHTSA when Ford filed a 1985 light truck credit allocation plan. (See letter from Diane K. Steed, dated April 26, 1988, approving the 1985 credit allocatio n plan.) Under that approved plan, Ford utilized 1986 CAFE credits earned on a combined reporting basis and prorated the credits based upon the sales mix of individual 4x2 and 4x4 vehicles to cover the 4x4 portion of its 1985 credit shortfall. Proratio n was necessary because Ford had elected to report its 1985 light truck CAFE on a class basis (4x4 and 4x2), while reporting its 1986 light truck CAFE on a combined basis. After proration, application of 4x4 credits to the 1985 shortfall and recombinati on, Ford has 3,208,660 combined light truck credits available from 1986. Ford intends to apply those credits to its 1989 combined light truck CAFE credit shortfall.

The proration method was approved by NHTSA in a Notice of Interpretation. In the Notice, NHTSA's Chief Counsel stated:

The Agency interprets . . . the Act to require as much commonality as possible between classes in transferring credits, but not absolute identity. . . . In transferring credits earned in 1979-1980 model years the agency will attempt to assure that those credits are applied to offset civil penalties on the same type of vehicles as those which generated the credits. This will be pursue d by pro-rating the earned credits according to the number of vehicles in the credit-earning class which would fall in the class subject to the civil penalty in the prior or subsequent year. 44 Fed. Reg. 64943 (1979).

While the Notice of Interpretation was prompted by new standards which permitted manufacturers to comply with light truck CAFE standards on a combined basis or a class basis, the proration methodology was not specifically limited to any particular model year nor was it limited to a one time only application. In fact, the preamble to the final rule which established the three-year carryforward and carryback of fuel economy credits for manufacturers of light trucks reaffirmed the proration methodology ci ting examples which indicated that the methodology could be used in several different years.

This notice also reaffirms the policy set forth in the November 1979 notice of interpretation regarding the transfer of credits by a manufacturer between a year in which it complies with a single fuel economy standard applicable to al l light trucks and a year in which it complies with several standards for different classes of light trucks. 45 Fed. Reg. 83233 (1980).

Neither the preamble nor the notice of interpretation limit the proration methodology to any given year or to a single opportunity. Indeed, it is instructive to note that at the time the preamble was published light truck CAFE standards had been set onl y through 1985, and the preamble discussed the proration of credits as a choice available to a manufacturer for all of those years:

Additional examples are set forth below to illustrate how this procedure will be applied in light of the manufacture(r)s' choice in model years 1983-1985 to comply with either a single standard for all light trucks or with optional se parate standards for two-wheel (4x2) and four-wheel drive (4x4) light trucks.

(45 C.F.R. S535.4(e)) While the regulation states that credits may not be transferred between classes of light truck, it is clear that the proration methodology protects against such an occurrence. Prorating of combined credits assures that credits are applied to offset civi l penalties on the same types of light trucks as those that generated the credits. This fact was recognized by NHTSA when it first proposed and approved the use of the proration methodology.

The regulatory scheme creates two methods of complying with light truck CAFE standards, it does not create three classes of light trucks. Manufacturers can comply with light truck CAFE standards on a combined basis or on a class basis. However, there ar e only two classes of light trucks--4x4 and 4x2. No where is the term "class" applied to the combined light truck fleet. In fact, if a combined fleet were a separate "class" of light trucks, then the proration methodology would be prohibited even in th e circumstances identified in the Notice of Interpretation and in the preamble. Both the regulation and the discussion in the preamble to the final rule make it clear that there are only two "classes" of light trucks, and that there are two separate met hods of complying with the light truck CAFE standards. Complying with a single fuel economy standard applicable to all light trucks is a method of compliance--it does not create a new and separate class of trucks.

As you know, Ford has elected different means of compliance for different model years. In the past, Ford has reported its light truck CAFE on a combined basis for model years 1982, 1986, 1987, 1988, and 1989, while reporting on a class basis for model y ears 1980, 1981, 1983, 1984, and 1985. Ford has, with NHTSA approval, utilized the proration method of credit allocation to cover shortfalls in 1982 and 1985. (Because NHTSA has eliminated the option of complying with the standard on a class basis begi nning in 1992, it can be anticipated that the proration

methodology may be employed by manufacturers to determine credit allocation. However, if NHTSA maintains a combined fleet standard, these issues will resolve themselves after the 1995 model year.)

The proposed use of 1986 credits to cover 1989 does not directly involve the use of prorated credits. Ford elected to report both 1986 and 1989 on a combined basis. Proration is involved here only to the extent that Ford prorated some of its 1986 credi ts to cover 1985 and then recombined the remaining credits to carry forward for future allocation. Because the proration and recombination of 1986 credits was previously accepted by NHTSA when it approved Ford's 1985 credit allocation plan, we do not be lieve that there are any outstanding issues to be addressed. However, as we discussed, we will not file our credit allocation plan for 1989 until you have had an opportunity to review this information. Please let us know if you require any additional i nformation or if we can be of assistance in any way.