ID: nht94-6.5

DATE: May 3, 1994

FROM: John Womack -- Acting Chief Counsel, NHTSA

TO: Peter Drymalski -- Investigator, Montgomery County Government, Office of Consumer Affairs

TITLE: None

ATTACHMT: Attached to letter dated 3/1/93 from Peter Drymalski to John Womack (OCC-8371)

TEXT:

This responds to your letter and telephone conversations with David Elias, formerly of this office, asking about a situation you term as the "cannibalization" of new, unsold vehicles. I apologize for the delay in our response.

The situation involves motor vehicle dealers who remove equipment (e.g., a power steering pump) from new vehicles to repair or replace malfunctioning equipment on previously-sold vehicles. The new vehicles are "cannibalized" to expedite repairs when replacement equipment for the repair is temporarily unavailable. The new vehicles have their cannibalized equipment replaced when the parts become available, before the vehicles are sold.

You ask whether the National Highway Traffic Safety Administration (NHTSA) permits dealers to cannibalize parts. As explained below, the answer is yes, provided that certain requirements are met.

By way of background, the National Traffic and Motor Vehicle Safety Act ("Safety Act") authorizes NHTSA to issue Federal motor vehicle safety standards ("FMVSS's) applicable to new motor vehicles and items of motor vehicle equipment. Section 108(a)(1)(A) of the Safety Act prohibits any person from manufacturing or selling a new vehicle manufactured on or after the effective date of any applicable FMVSS that does not comply with each of those standards. Under S114 of the Safety Act, each motor vehicle must be certified as conforming to the FMVSS's. NHTSA's certification regulations (49 CFR Part 567) require any person altering (i.e., performing extensive manufacturing operations on) a certified vehicle before the first purchase of the vehicle by the consumer to certify that the vehicle, as altered, conforms to all applicable standards affected by the alteration. 49 CFR S567.7. However, persons altering a certified vehicle only by the addition, substitution, or removal of "readily attachable components" (e.g., mirrors or tires and rim assemblies) or by performing minor finishing operations (e.g., painting), are not considered alterers, and need not re- certify the vehicle.

Whether modifications involve "readily attachable" components depends on the intricacy of the installation of those components. "Simple tools, a relatively short installation time, and the ability to install the device without extensively modifying the vehicle would all be factors pointing to a decision that a component is readily attachable." NHTSA letter to Fred Cords, March 4, 1975. Applying these considerations to the situation you present, we conclude that a power steering pump is a readily attachable component.

A power steering pump can be installed with extraordinary ease. The pump can be replaced on the dealer's lot in minutes, simply by opening the hood and popping the old pump out and inserting the new one, with no need to use special tools or have special expertise. The pump can be replaced without extensively modifying the vehicle in any manner.

Since the power steering pump is a readily attachable component, the dealer described in your letter is not an alterer under S567.7. The dealer can "cannibalize" the new unsold cars for power steering pumps and install new pumps when they arrive without applying its own new certification label.

I emphasize that a dealer would not be considered an alterer only in the narrow circumstances in which the component being "cannibalized" is readily attachable. If the component is not readily attachable, the dealer could "cannibalize" the new cars and later repair and sell them if the following requirements are met. First, the dealer would be responsible under S108(a)(1)(A) of the Safety Act for ensuring that each new vehicle it sells complies with the applicable FMVSS's. Thus, the new vehicle must comply with the FMVSS's. Second, the dealer would be responsible, as an "alterer," for certifying the new vehicles from which it removed and replaced the equipment. The dealer would be an alterer since the work performed would be more extensive than "the addition, substitution, or removal of readily attachable components" or the "minor finishing operations" described in S567.7. The dealer would certify the vehicle by allowing the original certification label of the type and form specified in S567.7.

In all cases, including where the dealer is replacing a readily attachable component, the dealer must also adhere to S108(a)(2)(A) of the Safety Act, which provides that:

No manufacturer, distributor, dealer, or motor vehicle repair business shall knowingly render inoperative, in whole or part, 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, unless such manufacturer, distributor, dealer, or repair business reasonably believes that such vehicle or item of equipment will not be used... during the time such device or element of design is rendered inoperative.

The effect of S108(a)(2)(A) is to limit the modifications that a dealer may make to a new or used vehicle. If, in making the temporary repair affecting a new vehicle, the dealer "renders inoperative" a device or design installed on the new vehicle pursuant to an FMVSS, the dealer must return the vehicle to compliance before the new vehicle can be sold to the public, or even test-driven by a member of the public.

Section 108(a)(2)(A) also applies to the used vehicles into which the cannibalized equipment is installed. The dealer must ensure that it does not violate the Safety Act by "rendering inoperative" equipment or designs on the vehicles in the process of repairing them.

I hope this information has been helpful. If you have any further questions, please contact Deirdre Fujita of my staff at this address or

by phone at (202) 366-2992.

ID: 2835yy

Thomas R. Mounteer, Esq.
Keller & Heckman
1150 17th Street, N.W.
Suite 1000
Washington, D. C. 20037

Dear Mr. Mounteer:

This responds to your letter on behalf of your client, Heritage Motors, that asked whether Heritage, given the nature of its manufacturing process, must assign its own Vehicle Identification Numbers (VINs). I apologize for the delay in this response. As discussed below, since Heritage considers the vehicles it manufactures to be: (l) "new" vehicles and (2) manufactured in one stage, it must assign its own VINs to the cars. I note that this letter addresses the vehicles Heritage assembles and not the "kits" which Heritage also sells.

According to your letter, Heritage Motors makes replica Mercedes 500K passenger cars, using 1970-1981 Chevrolet Camaros as donor cars. An information brochure accompanying your letter describes the parts that are removed from the Camaros and then reused in the Mercedes replica. Since Heritage uses a new body, engine, transmission, and many other new or remanufactured parts, you have considered the completed vehicle to be a "new" motor vehicle. Moreover, Heritage manufactures the vehicles in one stage.

Under section S4.l of Federal Motor Vehicle Safety Standard No. ll5, Vehicle Identification Number--Basic Requirements, each vehicle manufactured in one stage must have a VIN that is assigned by the manufacturer. Heritage must therefore assign its own VIN numbers to the cars it manufactures.

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

Sincerely,

Paul Jackson Rice Chief Counsel ref:115 d:2/l/9l

ID: 77-2.19

TYPE: INTERPRETATION-NHTSA

DATE: 04/28/77

FROM: AUTHOR UNAVAILABLE; F. Berndt; NHTSA

TO: Onics Holdings, Inc.

TITLE: FMVSS INTERPRETATION

TEXT: This responds to your March 29, 1977, letter asking whether several vehicles that you describe would be considered "vehicles other than passenger cars" for purposes of Standard No. 120, Tire Selection and Rims for Motor Vehicles Other Than Passenger Cars.

Vehicles other than passenger cars includes: multipurpose passenger vehicles, trucks, buses, motorcycles, and trailers, all of which are defined in the Code of Federal Regulations, Title 49, Part 571.3. Since the vehicles you describe appear to fall within the definition of multipurpose passenger vehicle or truck, they are considered "vehicles other than passenger cars." Accordingly, they must comply with the rim marking requirements of Standard No. 120.

SINCERELY,

ONICS HOLDINGS INC.

March 29, 1977

NHTSA Office of the Chief Counsel

I note that for wheel rim marking purposes you define a "vehicle other than passenger car" as a "multipurpose passenger vehicle (MPV), truck, bus, motorcycle, or trailer". Would you be kind enough to give me a ruling as to whether the following vehicles fall into this category:

General Motors Pickups, Type C and K (100 Series)

General Motors Blazers, Type C and K (100 Series)

General Motors Suburban, Type C and K (100 Series)

General Motors Vans, Type G (100 Series)

Similar vehicles made by other manufacturers

I would appreciate a reply at your earliest convenience as the matter is urgent.

Stuart A. Mossman President

ID: nht91-1.32

DATE: February 1, 1991

FROM: Paul Jackson Rice -- Chief Counsel, NHTSA

TO: Thomas R. Mounteer -- Keller & Heckman

TITLE: None

ATTACHMT: Attached to letter dated 7-27-90 from Thomas R. Mounteer to Paul Jackson Rice (OCC 5031)

TEXT:

This responds to your letter on behalf of your client, Heritage Motors, that asked whether Heritage, given the nature of its manufacturing process, must assign its own Vehicle Identification Numbers (VINs). I apologize for the delay in this response. As discussed below, since Heritage considers the vehicles it manufactures to be: (1) "new" vehicles and (2) manufactured in one stage, it must assign its own VINs to the cars. I note that this letter addresses the vehicles Heritage assembles and not the "kits" which Heritage also sells.

According to your letter, Heritage Motors makes replica Mercedes 500K passenger cars, using 1970-1981 Chevrolet Camaros as donor cars. An information brochure accompanying your letter describes the parts that are removed from the Camaros and then reused in the Mercedes replica. Since Heritage uses a new body, engine, transmission, and many other new or remanufactured parts, you have considered the completed vehicle to be a "new" motor vehicle. Moreover, Heritage manufactures the vehicles in one stage.

Under section S4.1 of Federal Motor Vehicle Safety Standard No. 115, Vehicle Identification Number--Basic Requirements, each vehicle manufactured in one stage must have a VIN that is assigned by the manufacturer. Heritage must therefore assign its own VIN numbers to the cars it manufactures.

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

ID: aiam4805

"Dear Mr. Nishibori: This responds to your letter seeking to confir your understanding of the scope and application of the 'captive import' definition set forth at 49 CFR 533.4(b)(2), and used in specifying light truck CAFE standards. NHTSA's regulations define a 'captive import' as a light truck which is 'not domestically manufactured but which is imported in the 1980 model year or thereafter by a manufacturer whose principal place of business is in the United States.' The agency adopted this definition beginning with the 1980 model year in order to prevent the standards from encouraging the increased importation of these vehicles and exportation of domestic jobs. See 43 FR ll996, March 23, l978. Your letter explains that you do not believe that the light trucks manufactured in the U.S. by Nissan's U.S. manufacturing subsidiary (NMM, which is jointly-owned by the parent Nissan Motor Co. Ltd. (NML) in Japan and its wholly-owned U.S. importation and distribution subsidiary (NMC)), should be classified as captive imports. Your letter also states that light trucks imported by NMC should not be classified as captive imports. As explained below, I have concluded that neither the light trucks imported by your U.S. subsidiary, nor trucks manufactured by your U.S. manufacturing operation should be considered 'captive imports.' Section 501(8) of the Motor Vehicle Information and Cost Savings Act (the Act) defines the term 'manufacturer' as meaning 'any person engaged in the business of manufacturing automobiles. . . .' The term 'manufacture' is then defined in section 50l(9) as meaning to 'produce or assemble in the customs territory of the United States, or to import.' Under these definitions, which are also used in Part 533, NMC is a manufacturer of light trucks imported for the parent company. Since NMC's principal place of business is in the U.S., one might initially conclude that all of Nissan's imported light trucks should be classified as captive imports. However, that is not a necessary conclusion since there may be more than one manufacturer of these vehicles. NHTSA has concluded in the past that a second person may be regarded as a manufacturer of a vehicle manufactured by another person if that second person has a sufficient role in the manufacturing process that it can be deemed the 'sponsor' of the vehicle. See, for example, the enclosed February 19, 1987 interpretation to a confidential addressee. For Nissan's imported light trucks, the act of importation is the key manufacturing activity under the statute. While NMC does the actual importing, NML is responsible for the creation and production of the vehicles imported to the U.S. It designs models specifically for the U.S. market, and created NMC for the purpose of importing and marketing these vehicles. NML can be seen as 'sponsoring' the importation of Nissan light trucks. Moreover, applying basic principles of the law of agency, NML, as sponsor, may be considered the principal. It is therefore our opinion that NML and NMC are both importers of the Nissan vehicles being brought into the U.S., and hence both are manufacturers under the statute. This situation is obviously distinguished from circumstances where the importer is not connected with the foreign manufacturer, e.g., so called grey market importers. NHTSA believes it is appropriate, in determining whether the vehicles are 'captive imports,' to look at the totality of the circumstances surrounding the production, importation and marketing of the vehicles. In this case, NML controls all aspects of the Nissan light trucks imported into the U.S. Further, NML exercises complete control over NMC, and created NMC for the purpose of importing and marketing NML's products in the U.S. Indeed, NMC exists primarily to serve NML as a conduit into the U.S. market. I note that this relationship is clearly distinguished from the circumstances of the typical captive import. In lieu of producing certain vehicles in this country, a domestic manufacturer imports and markets in this country vehicles (captive imports) supplied by a foreign manufacturer with which it has a special relationship. In such a case, the domestic manufacturer is not under control of the foreign company. Moreover, the domestic manufacturer does not serve primarily as a conduit to the U.S. market for the imported vehicles. Since NML has its principal place of business in Japan, and exercises complete control over NMC, I conclude that vehicles manufactured by NML and imported into the U.S. by NMC are not captive imports. Moreover, since almost all foreign manufacturers utilize U.S. subsidiaries to import vehicles into the U.S., any other conclusion would have the effect of making virtually all imports 'captive imports,' a result which would clearly be inconsistent with the agency's intent in establishing the captive import category. I also agree with the statement in your letter that light trucks manufactured in the U.S. by NMM are not captive imports. While we understand that these vehicles are not 'domestically manufactured' as that term is defined in the statute, neither are they imported. The term 'import' is defined in section 502(l0) of the Act as meaning 'to import into the customs territory of the United States.' Since these vehicles are not imported, it is impossible for them to be considered captive imports. Your letter also enclosed a copy of a letter you sent to EPA, requesting that agency's interpretation of portions of EPA's fuel economy calculation regulations at 40 CFR Part 600. You sought clarification from EPA on the apparent inconsistency between EPA's regulations, which provide separate treatment for 'domestically produced' and 'not domestically produced' light trucks, and NHTSA's classification regulations, which distinguish only between 'captive imports' and 'others.' You requested this agency's comments on the issues raised in the letter to EPA. I am not in a position to comment on EPA's regulations, or on that agency's interpretation of its regulations. I will confirm, however, that NHTSA intended for different procedures to be applied to the determination of CAFE for light trucks than those for passenger cars. The primary distinction is that under the statute, passenger cars are divided into 'domestically manufactured' and 'not domestically manufactured' fleets. The statute contains no comparable distinction for light trucks. However, under NHTSA's regulations, light trucks are divided into captive imports and 'others,' which encompasses all light trucks which are not captive imports. This issue is discussed in some detail in the final rule establishing the captive import definition. See, 43 FR 11995, 11998-9, March 23, 1978. I hope you have found this information helpful. Please do not hesitate to contact this office if you have any further questions. Sincerely, Paul Jackson Rice Chief Counsel Enclosure";

ID: aiam4320

Dear Mr. Rogers: This responds to your letter to Mr. Barry Felrice, our Associat Administrator for Rulemaking, in which you explained why General Motors (GM) believes that it is not subject to the reporting requirements set forth in 49 CFR Part 544, *Insurer Reporting Requirements*. We conclude that GM is an 'insurer' as that term is defined in section 612(a)(3) of the Motor Vehicle Information and Cost Savings Act 15 U.S.C. 2032(a)(3) , that GM is therefore subject to the requirements of Part 544, and that GM is overdue in filing its report for the 1985 calendar year.; 49 CFR S544.3 specifies that, 'This part applies to the issuers o motor vehicle insurance policies listed in Appendices A or B, and *to any person which has a fleet of 20 or more motor vehicles (other than a governmental entity) which are used primarily for rental or lease and are not covered by theft insurance policies issued by insurers of motor vehicles,*' (Emphasis added). The emphasized language in the regulation is simply a quotation of the language used in section 612(a)(3) of the Cost Savings Act. Because the regulation uses the same language as the statute to describe this type of insurer, Part 544 applies only to those insurers that are statutorily-required to file these reports.; You noted in your letter that, 'GM has an employee lease fleet of 400 cars on which it does not have theft insurance.' As such, GM is an insurer within the meaning of section 612(a)(3), because it:; >>>1. Has a fleet of 20 or more vehicles, 2. Uses the vehicles primarily for rental or lease, and 3. Does not have theft insurance policies for this fleet.<<< GM appeared to agree that it was an insurer within the meaning of th statute when it filed its July 29, 1986 comments to the proposed Part 544. On page 2 of its comments, GM stated that the proposed criterion of exempting only those fleets with fewer than 20 vehicles would result in voluminous additional individual reports which would account for a relatively small percentage of the total vehicle population. GM stated that its lease fleet represents less than 5000 of one percent of all U.S. passenger cars. On page 3 of those comments, GM stated: ' The proposal requests additional information to aid in the agency's efforts to establish an appropriate exemption for small rental and leasing companies. As stated above, GM's lease program is expected to have no more than 5000 participants in 1987.' GM then stated that no data on costs or thefts were available for its leased fleet. This comment certainly implies that GM believed it would be required to report if the proposed requirements were adopted. Since the proposed requirements were adopted in this area, NHTSA thought that the vehicle manufacturers clearly understood that they were subject to these requirements, if they had a fleet of vehicles that were rented or leased to employees.; However, in your recent letter, you stated that you now believe tha you were not required to report theft data for this fleet for three reasons. First you stated that the GM 'evaluation fleet', which consists of 41,000 vehicles is *not* used primarily for rental or lease. According to your letter, slightly more than 4,000 vehicles are leased to employees. Since only 4,000 out of 41,000 vehicles in this fleet are leased to employees, you concluded that the 41,000 vehicle fleet is not used primarily for rental or lease. Hence, you believe that the statute does not require GM to report theft data for the 41,000 vehicle fleet. NHTSA agrees that GM is not required to file a report for the 41,000 vehicle fleet. The law requires GM to report *only* for the 4,000 vehicle fleet that is leased to employees.; Second, you argued that GM's 'evaluation lease' establishes conditional contract that limits the rights of the employee lessees. You sated that, 'Conventionally, the term 'lease' is applied to hiring on a lease with full rights of use for the lessee.' Since GM's evaluation lease limits the rights of the lessee, you stated that it is not a 'lease' within the conventional meaning of that word, so GM is not required to report by the statute. NHTSA agrees that the term 'lease' was used in its conventional sense in section 612. However, neither standard dictionaries of the English language nor Black's Law Dictionary define a lease as a transaction that gives *unconditional* rights of use to the lessee. Instead, a lease is generally defined as a transaction whereby an owner gives another the use of his property for a period of time in return for some compensation. GM's employee lease program satisfies this test, so GM is required to report theft data on the vehicles in its employee lease fleet.; Third, GM noted that the preamble to the final rule establishing Par 544 referred to this type of insurer as 'rental and leasing companies.' Since GM is not a rental *and* leasing company, it concludes that Part 544 was not intended to apply to it. NHTSA agrees that GM is not a rental and leasing company. That term was used as a shorthand notation for the following language in the application section of Part 544 and in the statute: 'any person which has a fleet of 20 or more motor vehicles (other than a governmental entity) which are used primarily for rental or lease and are not covered by theft insurance policies ...' This shorthand notation was not intended in any way to limit the requirement in Part 544 and the statute for such persons to file reports. Moreover, the language of Part 544 and the statute prevail over the language in a preamble in any event. Accordingly, GM is required to comply with its statutory duty to file reports.; GM has not yet filed its report for the 1985 calendar year, which wa due by January 31, 1987. Since the report was not filed because of a misunderstanding as to whether GM was subject to the requirements of Part 544, NHTSA will not take any enforcement action against GM for this failure to file a timely report if we receive your report under Part 544 for the 1985 calendar year within 45 days of the date of this letter.; Sincerely, Erika Z. Jones, Chief Counsel

ID: aiam1182

Dear Mr. Utsunomiya: This is in reply to your letter of June 11, 1973, regarding th application of section 114 of the National Traffic and Motor Vehicle Safety Act (15 U.S.C S1403) to Motor Vehicle Safety Standard No. 107, 'Reflecting Surfaces'. You refer to language in a letter dated April 10, 1973, from this agency to Mr. Kazushi Sakashita of Toyo Kogyo., Ltd., in which we indicated that certification of replacement vehicle parts pursuant to section 114 is required only with respect to parts to which a safety standard specifically applies.; Standard No. 107 applies to motor vehicles--passenger cars multipurpose passenger vehicles, trucks, and busses (paragraph S2 of Standard No. 107)-- and not to items of motor vehicle equipment. Consequently the certification of conformity to the standard required by section 114 is accomplished by the label affixed to each vehicle in accordance with 49 CFR Part 567, 'Certification'. That label represents a certification of conformity to all standards, including Standard No. 107, applicable to the vehicle. There is no requirement that the individual components listed in S4 of the standard, i.e. the windshield wiper arms and blades, the inside windshield moldings, the horn ring and hub of the steering wheel assembly, and the inside rearview mirror frame and mounting bracket, be certified independently.; Your truly, Richard B. Dyson, Assistant Chief Counsel

ID: aiam1829

Dear Mr. Andrews: This responds to your February 18, 1975, request for information i behalf of a constituent, concerning any Federal regulation which might require bulk oil trucks to have a 120-inch wheelbase and be equipped with certain wheels, tires, and axles.; Neither the National Highway Traffic Safety Administration (NHTSA) no the Bureau of Motor Carrier Safety of the Federal Highway Administration has issued a safety standard which requires a certain wheelbase or the components listed by your constituent.; NHTSA has issued Standard No. 121, *Air brake systems*, whic establishes minimum performance requirements for air-braked vehicles. A major requirement is that an air-braked vehicle must be capable of stopping within a distance that is comparable to average passenger car performance. This requirement is intended to reduce the incompatibility in braking performance between heavy trucks and passenger cars which must share the nation's highways.; Manufacturers are free to choose any design which permits thei vehicles to stop in the required distance. It is possible that the manufacturer of your constituent's vehicle has found that a longer wheelbase and stronger axles, brakes, wheels, and tires are necessary to insure that the vehicle is capable of consistently stopping without loss of control in a distance comparable to the average passenger car. We consider the modification of vehicles in this fashion to be a significant contribution to motor vehicle safety.; Sincerely, James C. Schultz, Chief Counsel

ID: aiam1512

Dear Mr. Stallsmith: In your letters of January 10, 1974, and May 17, 1974, you have aske if a trailer would comply with S5.8 of Standard No. 121, *Air brake systems*, ('have a parking brake system. . . when the air pressure in the supply line is at atmospheric pressure') if its parking brake system contained a valve that allows manual release of the parking brake with the supply line at atmospheric pressure but automatically resets itself when the supply line is pressurized, so that the parking brake system operates as specified by S5.8. Such a valve would permit limited motion of trailers on flat cars to cushion shock experienced during transit.; Such a valve does not appear to conflict with the intent of S5.8 tha the parking brake system apply when the supply line is at atmospheric pressure. The requirement is not intended to interfere with intentional manual release of the parking brakes after automatic application has occurred. The danger of inadvertent disablement of the parking brake system during subsequent highway travel is avoided by the automatic features which would return the system to normal operation as soon as the trailer is connected to a source of air pressure, i.e., a tractor.; Sincerely, Richard B. Dyson, Acting Chief Counsel

ID: aiam1085

Dear Mr. Eisberg: Thank you for your letter of March 16, 1973, concerning fuel tank fire incidental to vehicular collisions.; Federal Motor Vehicle Safety Standard No. 301, Fuel System Integrity which was effective January 1, 1968, requires that the fuel system of passenger cars shall withstand a 30 mile- per-hour frontal fixed barrier collision with a fuel loss rate no greater than one ounce per minute after impact. A copy of this standard is enclosed for your information, along with a copy of a proposed amendment (*Federal Register*, Volume 35, No. 169, August 29, 1970), which is intended to expand this standard to include rollover situations, as well as rear impacts.; The need for a protective fire wall between the fuel tank and passenge compartment has been studied and is being considered as part of the passive protective measures to insure driver and passenger protection within the occupant compartment. A study by Derwyn M. Severy, et al., 'Postcrash Fire Studies Show Need for Rear-Seat Fire Wall and Rupture-Proof Fuel Tank,' was published in the July 1969 issue of *The SAE Journal.* This article may also be of interest in your research.; If we can be of any further assistance, please do not hesitate t contact us.; Sincerely, Robert L. Carter, Associate Administrator, Motor Vehicl Programs;