B-222021, JUN 10, 1986

B-222021: Jun 10, 1986

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CANNOT REOPEN INVESTIGATION AT THE POINT AT WHICH IT WAS CLOSED. ONE FORM OF NEW INFORMATION WHICH NHTSA COULD CONSIDER IS POSTSETTLEMENT FATALITIES INVOLVING VEHICLES COVERED BY THE AGREEMENT. WHEN A VEHICLE COVERED BY THE SETTLEMENT BUT WHICH DOES NOT HAVE THE LABEL AFFIXED IS SOLD. (THE MANUFACTURER MAY HAVE AUTHORITY. THESE COMMITMENTS ARE NOT LEGALLY BINDING BUT WERE HONORED BY NHTSA. BACKGROUND A DETAILED DISCUSSION OF THE FACTS IS CONTAINED IN OUR REPORT. THE INVESTIGATION WAS OPENED ON THE BASIS OF 31 REPORTS OF FORD VEHICLES WHICH ALLEGEDLY FAILED TO HOLD OR ENGAGE IN PARK. THE SECRETARY IS TO NOTIFY A MANUFACTURER OF MOTOR VEHICLES OF AN INITIAL DETERMINATION THAT THE VEHICLES CONTAIN A SAFETY-RELATED DEFECT.

B-222021, JUN 10, 1986

TRANSPORTATION DEPARTMENT - NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION - ADMINISTRATION EFFICIENCY DIGEST: 1. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION (NHTSA), AFTER CLOSING AN INVESTIGATION OF A POSSIBLE SAFETY-RELATED DEFECT PURSUANT TO A SETTLEMENT AGREEMENT, CANNOT REOPEN INVESTIGATION AT THE POINT AT WHICH IT WAS CLOSED. NHTSA CAN, HOWEVER, BASED ON ITS STATUTORY AUTHORITY AND THE TERMS OF THE SETTLEMENT, OPEN AN INVESTIGATION, BASED ON NEW INFORMATION, IF IT AFFORDS THE MANUFACTURER ALL THE PROCEDURAL RIGHTS GUARANTEED BY THE NATIONAL TRAFFIC AND MOTOR VEHICLE SAFETY ACT, TITLE I, PART B, 15 U.S.C. SECS. 1411-1423. ONE FORM OF NEW INFORMATION WHICH NHTSA COULD CONSIDER IS POSTSETTLEMENT FATALITIES INVOLVING VEHICLES COVERED BY THE AGREEMENT. TRANSPORTATION DEPARTMENT - NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION - ADMINISTRATION EFFICIENCY 2. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION (NHTSA) SETTLED A DEFECT INVESTIGATION WITHOUT FINDING A DEFECT, BASED ON MANUFACTURER'S AGREEMENT TO SEND LETTERS AND REMAINDER LABELS. THIS OPINION DESCRIBES TERMS OF SETTLEMENT AND MONITORING RESPONSIBILITIES OF NHTSA. TRANSPORTATION DEPARTMENT - NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION - ADMINISTRATION EFFICIENCY 3. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION (NHTSA) SETTLED A DEFECT INVESTIGATION WITHOUT FINDING A DEFECT, BASED ON MANUFACTURER'S AGREEMENT TO SEND LETTERS AND REMINDER LABELS. NHTSA HAS NO AUTHORITY TO REQUIRE THAT INDIVIDUAL OWNERS DISPLAY THE LABEL ON THEIR CARS. WHEN A VEHICLE COVERED BY THE SETTLEMENT BUT WHICH DOES NOT HAVE THE LABEL AFFIXED IS SOLD, WE KNOW OF NO AUTHORITY OR RESPONSIBILITY TO REQUIRE DEALERS NOT CONTROLLED BY THE MANUFACTURER, TO AFFIX IT. (THE MANUFACTURER MAY HAVE AUTHORITY, BUT HAS NO RESPONSIBILITY, TO REQUIRE DEALERS WHICH IT OWNS TO AFFIX THE LABEL.) TRANSPORTATION DEPARTMENT - NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION - ADMINISTRATION EFFICIENCY 4. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION (NHTSA) SETTLED A DEFECT INVESTIGATION WITHOUT FINDING A DEFECT, BASED ON MANUFACTURER'S AGREEMENT TO SEND LETTERS AND REMINDER LABELS. OPINION DISCUSSES CENTER FOR AUTO SAFETY VS. LEWIS, 685 F.2D 656 (D.C. CIR. 1982), IN WHICH COURT OF APPEALS UPHELD NHTSA'S ACTION IN AGREEING TO THE SETTLEMENT. TRANSPORTATION DEPARTMENT - NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION - ADMINISTRATION EFFICIENCY 5. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION (NHTSA) SETTLED A DEFECT INVESTIGATION WITHOUT FINDING A DEFECT, BASED ON MANUFACTURER'S AGREEMENT TO SEND LETTERS AND REMINDER LABELS. NHTSA MADE "COMMITMENTS" AT CONGRESSIONAL HEARINGS AND DURING LITIGATION TO MONITOR THE SETTLEMENT AGREEMENT. THESE COMMITMENTS ARE NOT LEGALLY BINDING BUT WERE HONORED BY NHTSA. TRANSPORTATION DEPARTMENT - NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION - ADMINISTRATION EFFICIENCY 6. A "RECALL" OF CARS WITH A DEFECT-- WHEREBY THE NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION ORDERS THAT THE DEFECT BE REMEDIED AT THE MANUFACTURER'S EXPENSE-- CAN ONLY REACH VEHICLES PURCHASED WITHIN 8 YEARS OF NOTIFICATION TO OWNERS OF THE DEFECT. 15 U.S.C. SEC. 1414(A).

THE HONORABLE JOHN D. DINGELL:

CHAIRMAN, COMMITTEE ON ENERGY AND COMMERCE

HOUSE OF REPRESENTATIVES

THIS OPINION ADDRESSES THE LEGAL ISSUES RAISED BY YOUR FEBRUARY 6, 1985, REQUEST THAT WE REVIEW THE ACTIONS OF THE NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION (NHTSA) IN CONNECTION WITH THE ALLEGED TENDENCY OF AUTOMATIC TRANSMISSIONS IN CERTAIN 1966-1979 FORD MODEL VEHICLES TO SLIP FROM "PARK" TO "REVERSE." AT MEETINGS WITH YOUR STAFF ON MAY 16, 1985, AND JULY 15, 1985, WE REPORTED OUR PRELIMINARY VIEWS ON SOME OF THESE ISSUES. AS REQUESTED, THIS LETTER CONFIRMS THE ANALYSIS THEN PROVIDED. SEPARATE REPORT, "AUTO SAFETY-EFFECTIVENESS OF FORD TRANSMISSION SETTLEMENT STILL AT ISSUE," RCED-86-52, ALSO ISSUED TO YOU TODAY, ADDRESSES THE OTHER ISSUES RAISED BY YOUR REQUEST.

BACKGROUND

A DETAILED DISCUSSION OF THE FACTS IS CONTAINED IN OUR REPORT. A SUMMARY OF RELEVANT INFORMATION FOLLOWS.

ON OCTOBER 18, 1977, NHTSA OPENED AN INVESTIGATION OF FORD VEHICLES EQUIPPED WITH CERTAIN ALLEGEDLY DEFECTIVE AUTOMATIC TRANSMISSIONS. THE INVESTIGATION WAS OPENED ON THE BASIS OF 31 REPORTS OF FORD VEHICLES WHICH ALLEGEDLY FAILED TO HOLD OR ENGAGE IN PARK, RESULTING IN THE UNEXPECTED MOVEMENT OF THE VEHICLE AND SOMETIMES IN FATALITIES, INJURIES, AND PROPERTY DAMAGE. ON JUNE 9, 1980, NHTSA MADE AN INITIAL DETERMINATION, PURSUANT TO SECTION 152 OF THE NATIONAL TRAFFIC AND MOTOR VEHICLE SAFETY ACT (THE ACT), 15 U.S.C. SEC. 1412, THAT A SAFETY DEFECT EXISTED INVOLVING MODEL YEAR 1970-1979 FORD VEHICLES. IN AUGUST 1980, NHTSA HELD A PUBLIC MEETING TO PROVIDE FORD AN OPPORTUNITY TO ESTABLISH THAT A DEFECT DID NOT EXIST.

ON OCTOBER 3, 1980, THE ADMINISTRATOR OF NHTSA (ADMINISTRATOR) RECOMMENDED THAT THE SECRETARY OF TRANSPORTATION (SECRETARY) DECLARE A FINAL DETERMINATION OF DEFECT PURSUANT TO 15 U.S.C. SEC. 1412(B). HOWEVER, THE SECRETARY NEVER MADE A FINAL DETERMINATION OF DEFECT. RATHER, THE SECRETARY ENTERED INTO A SETTLEMENT AGREEMENT WITH FORD ON DECEMBER 31, 1980.

FOLLOWING THE SETTLEMENT AGREEMENT, THE CENTER FOR AUTO SAFETY (CFAS) FILED SUIT IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA CHALLENGING THE SECRETARY'S DECISION TO SETTLE. THE DISTRICT COURT HELD THAT THE SECRETARY DID NOT ACT ARBITRARILY OR CAPRICIOUSLY OR ABUSE HIS DISCRETION IN DECIDING TO SETTLE. /1/ THE COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT AFFIRMED. /2/

PURSUANT TO 15 U.S.C. SEC. 1410A, CFAS HAS PETITIONED NHTSA ON THREE OCCASIONS-- MOST RECENTLY IN MARCH 1985-- TO INITIATE A DEFECT INVESTIGATION INTO THE FORD TRANSMISSIONS. NHTSA HAS DENIED ALL THREE PETITIONS. ON SEPTEMBER 9, 1985, CFAS CHALLENGED IN DISTRICT COURT THE MOST RECENT DENIAL OF ITS PETITION. /3/ THE COURT, IN AN APRIL 16, 1986 DECISION, REFUSED TO OVERTURN NHTSA'S DENIAL.

QUESTION 1: CONSIDERING THE NHTSA AND FORD ENTERED INTO A SETTLEMENT AGREEMENT ON DECEMBER 30, 1980, AND THAT THE CASE HAS NOW BEEN CLOSED FOR MORE THAN 4 YEARS, CAN NHTSA NOW "REOPEN" THE CASE?

ANSWER 1: UNDER SECTION 152 OF THE ACT, 15 U.S.C. SEC. 1412, THE SECRETARY IS TO NOTIFY A MANUFACTURER OF MOTOR VEHICLES OF AN INITIAL DETERMINATION THAT THE VEHICLES CONTAIN A SAFETY-RELATED DEFECT. THE NOTIFICATION IS TO INCLUDE ALL INFORMATION UPON WHICH THE INITIAL DETERMINATION IS BASED. ID. THE SECRETARY MUST THEN AFFORD THE MANUFACTURER AN OPPORTUNITY TO ESTABLISH THAT NO DEFECT EXISTS OR THAT THE ALLEGED DEFECT DOES NOT RELATE TO MOTOR VEHICLE SAFETY. ID. IF, AFTER CONSIDERING THE MANUFACTURER'S PRESENTATION, THE SECRETARY REMAINS OF THE OPINION THAT A SAFETY-RELATED DEFECT EXISTS, HE MUST ORDER THE MANUFACTURER BOTH TO NOTIFY OWNERS, PURCHASERS, AND DEALERS RESPECTING THE DEFECT AND TO REMEDY THE DEFECT. 15 U.S.C. SEC. 1412(B). IN THIS CASE, WHILE THE THEN-ADMINISTRATOR NOTIFIED FORD IN JUNE 1980 OF AN INITIAL DETERMINATION OF DEFECT, NEITHER SHE NOR THE SECRETARY EVER ISSUED A FINAL DETERMINATION OF DEFECT. SEE CENTER FOR AUTO SAFETY, INC. V. LEWIS, 685 F.2D 656, 662 (D.C. CIR. 1982).

THE ANSWER TO WHETHER NHTSA CAN REOPEN A CASE THAT HAS BEEN SETTLED DEPENDS IN PART ON WHAT IS MEANT BY THE TERM "REOPEN". YOUR REQUEST RAISED THE QUESTION IN THE CONTEXT OF THE RECENT PETITION BY CFAS, WHICH YOU CHARACTERIZED AS SEEKING TO "REOPEN" THE FORD TRANSMISSION CASE.

SECTION 124 OF THE ACT, 15 U.S.C. SEC. 1410A, PERMITS ANY INTERESTED PERSONS TO PETITION THE SECRETARY "TO COMMENCE A PROCEEDING TO DETERMINE WHETHER TO ISSUE AN ORDER PURSUANT TO SECTION 1412(B) (FOR NOTIFICATION AND REMEDY)." ON THE BASIS OF SECTION 124, CFAS PETITIONED NHTSA "TO OPEN AN EXPEDITED FORMAL DEFECT INVESTIGATION INTO THE CONTINUED INCIDENCE OF ACCIDENT, INJURY AND DEATH RESULTING FROM" THE ALLEGED DEFECT. THE CFAS PETITION, AS WE READ IT, CALLS FOR A NEW INVESTIGATION, RATHER THAN A REVIVAL OF THE FORMER INVESTIGATION.

YOU SUGGEST THAT "NHTSA COULD NOT REOPEN THE OLD INVESTIGATION AT THE STAGE IT WAS CLOSED, AND EXPAND IT TO COVER A NEW GROUP OF VEHICLES," AND THAT ADOPTING CFAS' REQUEST WOULD CIRCUMVENT THE STATUTORY PROCESS FOR INITIATING AN INVESTIGATION THAT WAS APPARENTLY CLOSED SEVERAL YEARS AGO. WE AGREE THAT "REOPENING" THE FORMER INVESTIGATION-- IN THE SENSE OF RESUMING THE PROCEEDING WHICH NHTSA AGREED IN 1980 TO DISCONTINUE, AT THE STAGE AT WHICH IT WAS DISCONTINUED-- WOULD RAISE SIGNIFICANT ISSUES OF COMPLIANCE WITH THE PROCEDURAL REQUIREMENTS OF THE ACT.

AS NOTED ABOVE, SECTION 152(A) REQUIRES THE SECRETARY TO NOTIFY A MANUFACTURER OF ALL INFORMATION UPON WHICH HIS INITIAL DETERMINATION IS BASED AND AFFORD THE MANUFACTURER AN OPPORTUNITY TO PRESENT ITS VIEWS. AND, AS THE ADMINISTRATOR OF NHTSA RECENTLY OBSERVED IN DENYING CFAS' MOST RECENT PETITION, THE SETTLEMENT AGREEMENT WAS PREMISED ON THE SECRETARY'S AGREEMENT TO CLOSE THE INVESTIGATION AND NOT TO SEEK ADDITIONAL REMEDIES AGAINST FORD IN THE ABSENCE OF NEW INFORMATION. SEE LETTER FROM ADMINISTRATOR, NHTSA, TO CLARENCE M. DITLOW, CFAS, DATED JULY 12, 1985.

IF NHTSA WERE NOW TO "REOPEN" THE INVESTIGATION, PRESUMABLY ON THE BASIS OF ADDITIONAL FACTS AS ENVISIONED BY THE SETTLEMENT AGREEMENT, NHTSA MUST COMPLY WITH THE PROCEDURAL REQUIREMENTS OF SECTION 152. IF NHTSA WERE TO "REOPEN" THE INVESTIGATION WITHOUT "ADDITIONAL FACTS," FORD COULD SEEK JUDICIAL RELIEF FROM NHTSA'S BREACH OF THE SETTLEMENT AGREEMENT.

HOWEVER, IF THERE IS NEW INFORMATION PERTAINING TO FORD VEHICLES THAT WAS NOT CONSIDERED IN THE PRE-SETTLEMENT INVESTIGATION, BOTH THE SETTLEMENT AGREEMENT AND THE ACT AUTHORIZE NHTSA TO INVESTIGATE AND DECIDE WHETHER TO MAKE A DETERMINATION OF DEFECT. THE AGREEMENT EXPRESSLY RESERVES NHTSA'S RIGHT TO "TAKE WHATEVER ACTION MAY BE REQUIRED UNDER THE ACT AND WARRANTED BY THE DEVELOPMENT OF ITS KNOWLEDGE IN THIS MATTER BASED UPON ADDITIONAL FACTS." SEE ALSO 15 U.S.C. SECS. 1401, 1411, 1412, AND 1418, PERMITTING NHTSA TO DETERMINE, THROUGH ANY MEANS AVAILABLE TO IT, WHETHER A SAFETY- RELATED DEFECT EXISTS. WERE NHTSA TO "REOPEN" THE INVESTIGATION ON THE BASIS OF NEW EVIDENCE, SECTION 152(A) CLEARLY ENVISIONS THAT NHTSA WILL NOTIFY THE MANUFACTURER OF ALL INFORMATION UPON WHICH THE INITIAL DETERMINATION OF A DEFECT IS BASED AND PROVIDE THE MANUFACTURER AN OPPORTUNITY TO PRESENT DATA, VIEWS AND ARGUMENT TO REBUT THE INITIAL DETERMINATION.

YOU ALSO ASKED WHETHER, ASSUMING NHTSA WERE NOW TO MAKE A FINAL DETERMINATION OF DEFECT AND ORDER A RECALL OF FORD VEHICLES, NHTSA COULD REACH CARS MORE THAN 8 YEARS OLD ON THE EFFECTIVE DATE OF THE RECALL ORDER. NHTSA MAY NOT ORDER A MANUFACTURER TO REMEDY AT ITS EXPENSE A DEFECT IN CARS OR REPLACEMENT EQUIPMENT MORE THAN 8 YEARS OLD. NO OTHER PROCEDURES OR REMEDIES UNDER THE ACT ARE AFFECTED. 15 U.S.C. SEC. 1414(B).

QUESTION 2: UNDER THE TERMS OF THE SETTLEMENT AGREEMENT, WHAT ARE (1) NHTSA'S AND (2) FORD'S LEGAL RESPONSIBILITIES? FURTHER, WHAT IS REQUIRED OF FORD AND NHTSA RELATIVE TO REPORTING ACCIDENTS AND MONITORING IMPLEMENTATION OF THE SETTLEMENT AGREEMENT?

ANSWER 2: THE SETTLEMENT AGREEMENT CONSISTS OF TWO LETTERS, ONE FROM FORD TO THE SECRETARY, AND ONE FROM THE SECRETARY TO FORD, BOTH DATED DECEMBER 30, 1980, SUPPLEMENTED BY A THIRD DATED JANUARY 6, 1981, FROM FORD TO THE OFFICE OF DEFECTS INVESTIGATIONS, NHTSA. UNDER THE SETTLEMENT AGREEMENT, NHTSA AGREED TO CLOSE ITS INVESTIGATION INTO WHETHER FORD AUTOMATIC TRANSMISSIONS CONTAINED A DEFECT. FORD IN TURN AGREED TO MAIL TO THE OWNERS OF ALL VEHICLES COVERED BY NHTSA'S JUNE 9, 1980, INITIAL DETERMINATION OF A DEFECT: (1) A LETTER CONTAINING A REMINDER OF THE POSSIBLE HAZARDS WHICH MAY RESULT IF A VEHICLE IS LEFT UNATTENDED WITHOUT BEING IMMOBILIZED AND OF THE "COMMON SENSE STEPS" DRIVERS CAN TAKE TO PREVENT UNEXPECTED VEHICLE MOVEMENT; AND (2) A SELF STICKING LABEL LISTING IMPORTANT PRECAUTIONARY REMINDERS. THE LETTER TO OWNERS URGES THEM TO PLACE THE LABEL IN A CONSPICUOUS PLACE IN THEIR MOTOR VEHICLE.

ALSO, THE SETTLEMENT AGREEMENT CONDITIONED NHTSA'S CLOSURE OF THE CASE ON RECEIPT OF THE REPORT DESCRIBED BY 15 U.S.C. SEC. 1414(C) AND 49 C.F.R. PART 573. SUCH A REPORT SHALL INCLUDE: (1) AN IDENTIFICATION OF THE TOTAL NUMBER, AND THE PERCENTAGE OF, VEHICLES POTENTIALLY CONTAINING THE DEFECT; (2) A DESCRIPTION OF THE DEFECT; (3) A CHRONOLOGY OF ALL PRINCIPAL EVENTS THAT WERE THE BASIS FOR THE DETERMINATION THAT THE DEFECT RELATED TO MOTOR VEHICLE SAFETY; AND (4) A DESCRIPTION OF THE MANUFACTURER'S PROGRAM FOR REMEDYING THE DEFECT. IN AGREEING TO SUBMIT THIS REPORT, FORD STIPULATED THAT "NEITHER THE CONTENTS OF THIS REPORT NOR THE FORD ACTIONS NOTED HEREIN IN ANY SENSE CONSTITUTE AN ADMISSION BY FORD OF A SAFETY-RELATED DEFECT ***."

IT IS OUR UNDERSTANDING THAT FORD AGREED TO FOLLOW THE TIME AND METHOD OF NOTIFICATION SET OUT IN 15 U.S.C. SECS. 1413(B) AND (C) IN NOTIFYING THE OWNERS, WITHOUT IN ANY SENSE AGREEING OR ADMITTING THAT SUCH ACTIONS INDICATED A SAFETY-RELATED DEFECT. HOWEVER, SINCE THE SECRETARY OF TRANSPORTATION HAD MADE NO FINAL DETERMINATION OF DEFECT UNDER 15 U.S.C. SEC. 1412(B), FORD WAS NOT OBLIGATED BY STATUTE TO FOLLOW THESE PROCEDURES. SEE 15 U.S.C. SECS. 1413(B) AND (C).

NOTHING IN THE AGREEMENT EXPRESSLY ADDRESSES WHETHER EITHER FORD OR NHTSA MUST REPORT ACCIDENTS AND MONITOR IMPLEMENTATION OF THE AGREEMENT. HOWEVER, NHTSA'S RESERVATION OF ITS RIGHT TO "TAKE WHATEVER ACTION MAY BE REQUIRED UNDER THE ACT AND WARRANTED BY THE DEVELOPMENT OF KNOWLEDGE IN THIS MATTER BASED UPON ADDITIONAL FACTS" SUGGESTS THAT NHTSA INTENDED TO RESERVE THE RIGHT TO MONITOR IMPLEMENTATION OF THE AGREEMENT. ALSO, DOT'S LETTER TO FORD STATES THAT "IF FORD SHOULD DEVELOP SUCH (ADDITIONAL) FACTS, WE FULLY EXPECT THAT FORD WILL IMMEDIATELY BRING THEM TO NHTSA'S ATTENTION ***."

OF COURSE, NHTSA'S RIGHT TO MONITOR DOES NOT DEPEND ON THE AGREEMENT. WHILE THE ACT DOES NOT SPECIFICALLY OBLIGATE NHTSA TO TRACK ALL ACCIDENTS, NHTSA HAS AUTHORITY TO DETERMINE, THROUGH ANY MEANS AVAILABLE TO IT, WHETHER A SAFETY-RELATED DEFECT EXISTS. SEE 15 U.S.C. SECS. 1401, 1411, 1412, AND 1418. FOR EXAMPLE, UNDER 15 U.S.C. SEC. 1412(A), THE SECRETARY IS AUTHORIZED TO DETERMINE WHETHER A DEFECT EXISTS "THROUGH TESTING, INSPECTION, INVESTIGATION, OR RESEARCH CARRIED OUT PURSUANT TO THIS CHAPTER, OR EXAMINATION OF COMMUNICATIONS UNDER SECTION 1418(A)(1) OF THIS TITLE, /4/ OR OTHERWISE ***." MOREOVER, INTERESTED PERSONS MAY PETITION THE SECRETARY TO COMMENCE A PROCEEDING FOR THE ISSUANCE OF AN ORDER UNDER SECTION 152(B). 15 U.S.C. SEC. 1410A.

ACCORDINGLY, AND AS RECOGNIZED BY THE RESERVATION OF ITS RIGHT "TO TAKE WHATEVER ACTION MAY BE REQUIRED UNDER THE ACT AND WARRANTED BY THE DEVELOPMENT OF ITS KNOWLEDGE IN THIS MATTER BASED UPON ADDITIONAL FACTS," NHTSA MAY TRACK ACCIDENTS TO DETERMINE WHETHER THEY INVOLVE "ADDITIONAL FACTS" INDICATIVE OF A DEFECT. ALSO, FORD, AS A MANUFACTURER, MUST NOTIFY THE SECRETARY IF IT OBTAINS KNOWLEDGE OF SUCH FACTS THAT INDICATE ANY OF ITS MOTOR VEHICLE CONTAIN A DEFECT. SEE 15 U.S.C. SEC. 1411, DECEMBER 30, 1980, DOT LETTER TO FORD.

QUESTION 3: THE SETTLEMENT AGREEMENT PROVIDED THAT FORD WOULD SEND A LETTER TO OWNERS OF THE APPROPRIATE MODEL-YEAR VEHICLES ADDRESSING THE DANGER OF LEAVING A CAR WITH THE ENGINE RUNNING AND INCLUDE A REMINDER LABEL TO THAT EFFECT. THE FOLLOWING QUESTION RELATE TO THE REMINDER LABEL.

A. DOES NHTSA HAVE THE AUTHORITY TO REQUIRE THAT INDIVIDUAL AUTOMOBILE OWNERS DISPLAY THE LABEL?

B. WHEN A VEHICLE COVERED BY THE AGREEMENT IS TRADED IN AND/OR SOLD BY A USED CAR DEALER, BUT THE VEHICLE DOES NOT DISPLAY THE LABEL, DOES (1) NHTSA, (2) ANY OTHER FEDERAL AGENCY SUCH AS THE FEDERAL TRADE COMMISSION, (3) INDIVIDUAL STATE AGENCIES, OR (4) FORD HAVE THE AUTHORITY TO REQUIRE THAT AUTOMOBILE DEALERS AFFIX THE LABEL?

C. WHAT RESPONSIBILITY DOES FORD HAVE UNDER THE SETTLEMENT AGREEMENT TO ASSURE THAT ITS DEALERS PLACE THE LABELS ON VEHICLES IT SELLS, TAKES IN TRADE, OR SERVICES THAT DO NOT ALREADY DISPLAY THEM?

ANSWER 3: THE DEFECT DISCOVERY AND NOTIFICATION PROVISIONS OF THE ACT AUTHORIZE NHTSA TO REQUIRE CERTAIN ACTIONS OF MOTOR VEHICLE MANUFACTURER'S NOT INDIVIDUAL CAR OWNERS OR DEALERS. UNDER SECTION 152 OF THE ACT, 15 U.S.C. SEC. 1412, NHTSA MAY ORDER A MANUFACTURER TO NOTIFY OWNERS, PURCHASERS AND DEALERS RESPECTING VEHICLES DETERMINED TO HAVE A SAFETY- RELATED DEFECT. SECTION 153, 15 U.S.C. SEC. 1413, DESCRIBES THE STATUTORY REQUIREMENTS FOR CONTENT, TIME AND METHOD OF NOTIFICATION WHICH A MANUFACTURE MUST FOLLOW WHEN NOTIFYING OWNERS AND DEALERS. HOWEVER, NEITHER SECTION 152 NOR 153, NOR THE ACT IN GENERAL, AUTHORIZE NHTSA TO REQUIRE INDIVIDUAL OWNERS OR DEALERS TO AFFIX THE LABEL TO A MOTOR VEHICLE. MOREOVER, WE ARE NOT AWARE THAT ANY STATE OR FEDERAL AGENCY HAS MOVED TO REQUIRE THAT USED CAR DEALERS AFFIX THE REMINDER LABEL FORD MAILED TO OWNERS OF CARS COVERED BY THE SETTLEMENT AGREEMENT.

FORD ADVISES US THAT, UNDER ITS FRANCHISE AGREEMENTS, IT COULD NOT REQUIRE FRANCHISED DEALERS (OR, A FORTIORI, INDEPENDENT USED CAR DEALERS) TO AFFIX THE REMINDER LABEL TO USED CARS OR TO CARS THEY SERVICE. (FORD COULD HAVE IMPOSED SUCH A REQUIREMENT ON THE RELATIVELY FEW DEALERSHIPS WHICH IT CONTROLS BUT DID NOT DO SO SINCE FORD DOES NOT BELIEVE A DEFECT EXISTS, NOR, OF COURSE, WAS FORD REQUIRED TO DO SO.)

TO DISCHARGE ITS RESPONSIBILITIES UNDER THE SETTLEMENT AGREEMENT, FORD NEEDED ONLY TO MAIL THE LETTERS AND LABELS TO THE OWNERS OF ALL VEHICLES COVERED BY NHTSA'S JUNE 9, 1980, INITIAL DETERMINATION OF A DEFECT (AND TO MAKE THE REPORT CALLED FOR BY THE DECEMBER 30 DOT LETTER TO FORD). (SEE ANSWER 2, ABOVE.) UNDER THE SETTLEMENT AGREEMENT, FORD DID NOT OBLIGATE ITSELF TO REQUIRE INDIVIDUAL OWNERS OR ITS DEALERS TO AFFIX THE LABEL TO A MOTOR VEHICLE.

QUESTION 4: IN ITS REVIEW OF THE SECRETARY'S DECISION TO SETTLE WITH FORD, THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT OFFERED ITS VIEW ON NHTSA'S ABILITY TO PROVE A DEFECT EXISTED AND THE EFFECTIVENESS OF THE REMINDER LABEL. WHAT IS THE LEGAL SIGNIFICANCE AND IMPORT OF THE COURT'S VIEWS ON (1) PROVING A DEFECT EXISTED AND (2) THE EFFECTIVENESS OF THE REMINDER LABEL? ARE THE COURT'S STATEMENTS STILL PERTINENT TODAY?

ANSWER 4: IN CENTER FOR AUTO SAFETY, INC. V. LEWIS, 685 F.2D 656, 663-664 (D.C. CIR. 1982), THE COURT OF APPEALS HELD THAT THE SECRETARY OF TRANSPORTATION DID NOT ACT ARBITRARILY OR CAPRICIOUSLY OR ABUSE HIS DISCRETION IN ENTERING INTO THE SETTLEMENT AGREEMENT. THE COURT OF APPEALS POINTED OUT SEVERAL REASONS WHY "THE SECRETARY'S DECISION TO SETTLE CANNOT BE TERMED IRRATIONAL OR ARBITRARY." ID. AT 663. FIRST, THE COURT OBSERVED THAT THE EXISTENCE OF A DEFECT HAD NOT BEEN CONCLUSIVELY ESTABLISHED AND, ACCORDING TO THE NHTSA ASSOCIATE ADMINISTRATOR FOR ENFORCEMENT, "MAJOR NEW INVESTIGATIVE EFFORTS" WOULD PROBABLY HAVE BEEN NECESSARY TO ESTABLISH THAT A DEFECT EXISTED. ID. EVEN IF NHTSA HAD ISSUED A FINAL DETERMINATION OF DEFECT, FORD WOULD PROBABLY HAVE CHALLENGED IT. BECAUSE THE INTERACTION BETWEEN DRIVER AND VEHICLE SEEMED A CRITICAL FACTOR IN THE TRANSMISSION MALFUNCTIONS, THE COURT STATED THAT THE DEPARTMENT OF TRANSPORTATION WOULD HAVE BEEN CONFRONTED WITH THE DIFFICULT TASK OF ESTABLISHING THE EXISTENCE OF A DEFECT. ID. THE COURT ALSO REMARKED THAT THE FORD INVESTIGATION WAS A DRAIN ON THE RESOURCES OF THE OFFICE OF DEFECTS INVESTIGATIONS. AND AS A FINAL PRACTICAL CONSIDERATION, SINCE AN ENFORCEMENT ACTION PROBABLY WOULD HAVE LASTED AT LEAST 4 YEARS, THE NUMBER OF POTENTIALLY DEFECTIVE CARS PURCHASED WITHIN THE 8-YEAR LIMITATIONS PERIOD WOULD DECREASE SIGNIFICANTLY AS THESE CARS WOULD WEAR OUT AND BE TAKEN OFF THE ROAD. ID.

WITH RESPECT TO CFAS' CONTENTION THAT THE NOTIFICATION LETTERS AND REMINDER LABELS WILL BE INEFFECTIVE, THE COURT OF APPEALS STATED THAT:

"BOTH COMMON SENSE AND THE STATEMENTS OF NHTSA OFFICIALS INDICATE THAT THE LIKELIHOOD OF SUCH ACCIDENTS CAN BE SUBSTANTIALLY REDUCED IF THE DRIVER FOLLOWS INSTRUCTIONS BY SHUTTING OFF THE ENGINE AND SETTING THE PARKING BRAKE BEFORE LEAVING THE VEHICLE."

THE COURT MADE ITS STATEMENTS ABOUT THE DIFFICULTY OF PROVING THAT A DEFECT EXISTED AND THE EFFECTIVENESS OF THE REMINDER LABEL TO SUPPORT ITS LIMITED HOLDING THAT THE SECRETARY OF TRANSPORTATION DID NOT ABUSE HIS DISCRETION IN ENTERING INTO THE SETTLEMENT AGREEMENT. THAT IS, THE COURT WAS NOT HOLDING THAT THE SECRETARY'S DECISION WAS THE BEST ONE OR THAT THE COURT NECESSARILY AGREED WITH IT. RATHER, THE COURT HELD ONLY THAT, AS A MATTER OF LAW, THE SECRETARY HAD A RATIONAL BASIS IN THE RECORD BEFORE HIM FOR DOING WHAT HE DID. THUS, THE COURT'S STATEMENTS CANNOT BE VIEWED AS CONCLUSIVE CONCERNING WHETHER A DEFECT IN FACT DOES OR DOES NOT EXIST AND WHETHER THE SETTLEMENT AGREEMENT WAS AN EFFECTIVE SOLUTION TO THE ALLEGED DEFECT. ALTHOUGH THE COURT'S CONCLUSIONS OR REMARKS WOULD NOT PRECLUDE NHTSA FROM OPENING A NEW INVESTIGATION INTO WHETHER THE FORD TRANSMISSIONS ARE DEFECTIVE SHOULD ADDITIONAL NEW INFORMATION SUGGEST THE NEED, THEY CERTAINLY HIGHLIGHT THE PRACTICAL CONSIDERATIONS AND LEGAL HURDLES THAT ANY NHTSA DECISION TO INITIATE A NEW DEFECTS INVESTIGATION INTO THIS MATTER WOULD HAVE TO ADDRESS.

MOREOVER, THE COURT'S STATEMENTS ABOUT THE EFFECT OF THE 8-YEAR PERIOD ARE SIGNIFICANT. THE LAST FORD VEHICLES TO HAVE THE ALLEGED DEFECT ARE ITS 1979 MODELS. THUS, PROBABLY SOMETIME IN 1987, AS A RESULT OF THE 8- YEAR LIMIT, 15 U.S.C. SEC. 1414(A)(4), FORD COULD NOT BE LEGALLY RESPONSIBLE FOR REMEDYING WITHOUT CHARGE THE ALLEGED DEFECT IN ANY MORE OF THESE MODEL YEAR VEHICLES. FURTHER, SHOULD FORD CHALLENGE A FINAL DETERMINATION OF DEFECT, AN ENFORCEMENT ACTION BY THE DEPARTMENT OF TRANSPORTATION COULD LAST SEVERAL YEARS, MEANING THAT, FOR PRACTICAL PURPOSES, FEW PRE-1980 FORD MODELS WOULD STILL BE ON THE ROAD EVEN IF THE DEPARTMENT OF TRANSPORTATION WOULD ULTIMATELY PREVAIL IN AN ENFORCEMENT ACTION AND ORDER A RECALL.

QUESTION 5: WHAT LEGAL RESPONSIBILITY DOES NHTSA HAVE TO INVESTIGATE POST -SETTLEMENT FATALITIES INVOLVING VEHICLES COVERED BY THE SETTLEMENT AGREEMENT?

ANSWER 5: NOTHING IN THE SETTLEMENT AGREEMENT OR THE ACT EXPRESSLY OBLIGATES NHTSA TO INVESTIGATE SUCH FATALITIES. HOWEVER, AS DISCUSSED IN ANSWER TO QUESTION 2, ABOVE, NHTSA SPECIFICALLY RESERVED THE RIGHT TO TAKE WHATEVER ACTION MAY BE REQUIRED UNDER THE ACT AND WARRANTED BY DEVELOPMENT OF ITS KNOWLEDGE BASED UPON ADDITIONAL FACTS. THIS WOULD INCLUDE MONITORING THIS MATTER TO DETERMINE, THROUGH ANY MEANS AVAILABLE TO IT, WHETHER A SAFETY-RELATED DEFECT EXISTS. SEE 15 U.S.C. SECS. 1401, 1411, 1412, AND 1418. ACCORDINGLY, AND AS RECOGNIZED BY THE RESERVATION OF ITS RIGHT IN THE SETTLEMENT AGREEMENT, NHTSA MAY INVESTIGATE POST-SETTLEMENT FATALITIES INVOLVING VEHICLES COVERED BY THE AGREEMENT TO DETERMINE WHETHER "ADDITIONAL FACTS" EXIST TO SUPPORT THE INITIATION OF A NEW DEFECT INVESTIGATION.

QUESTION 6: FOLLOWING THE SETTLEMENT, NHTSA MADE "COMMITMENTS" TO MONITOR THE SETTLEMENT AGREEMENT WITH FORD. THESE COMMITMENTS WERE MADE DURING ORAL ARGUMENT ON CENTER FOR AUTO SAFETY V. LEWIS, TO JUDGE EDWARDS OF THE UNITED STATES COURT OF APPEALS, DISTRICT OF COLUMBIA CIRCUIT, AND REAFFIRMED BY NHTSA'S ACTING ADMINISTRATOR IN A LETTER TO CHAIRMAN TIMOTHY E. WIRTH, SUBCOMMITTEE ON ENERGY AND COMMERCE, ON JUNE 3, 1983. IN AN OCTOBER 3, 1983, LETTER TO CHAIRMAN WIRTH, NHTSA'S ADMINISTRATOR-DESIGNATE REAFFIRMED A VIEW EXPRESSED IN OVERSIGHT HEARINGS IN JULY 1983 BEFORE CHAIRMAN WIRTH'S SUBCOMMITTEE THAT NHTSA COULD DO NO MORE TO INFORM THE PUBLIC ABOUT THE SAFETY HAZARDS OF LEAVING ANY CAR WITH ITS ENGINE RUNNING. THESE COMMITMENTS RAISE SEVERAL QUESTIONS.

A. ARE THE NHTSA COMMITMENTS TO (1) THE COURT AND (2) CHAIRMAN WIRTH LEGALLY BINDING?

B. WHAT LATITUDE DOES NHTSA HAVE TO (1) DISCONTINUE MONITORING AND (2) NOT PURSUE A PUBLIC INFORMATION PROGRAM GIVEN ITS COMMITMENTS?

ANSWER 6: NHTSA'S "COMMITMENTS" DO NOT APPEAR TO BE LEGALLY BINDING. TYPICALLY, COURTS SPEAK THROUGH JUDGMENTS AND ORDERS, AND THE COURTS' POWERS AND PROCESS ARE GENERALLY AVAILABLE TO ENFORCE SUCH JUDGMENTS AND ORDERS. HOWEVER, NEITHER THE DISTRICT COURT NOR THE COURT OF APPEALS JUDGMENT, ORDERS, OR OPINIONS IMPOSED ON NHTSA AN OBLIGATION TO CONTINUE MONITORING AND TO PURSUE A PUBLIC INFORMATION PROGRAM. VIEWED FROM THIS PERSPECTIVE, NHTSA'S COMMITMENT, IN OPEN COURT, IS NOT LEGALLY BINDING ALTHOUGH THE DISTRICT COURT JUDGE IS ENTITLED TO EXPECT THAT THE AGENCY WILL HONOR SUCH AN AGREEMENT. SIMILARLY, WE DO NOT THINK THAT "COMMITMENTS" MADE IN OVERSIGHT HEARINGS ARE LEGALLY BINDING IN THE SENSE THAT CONGRESS CAN COMPEL AN AGENCY, THROUGH THE JUDICIAL PROCESS, TO ACT IN ACCORDANCE WITH A COMMITMENT.

AS DISCUSSED IN ANSWERS 2 AND 5 ABOVE, NHTSA HAS AUTHORITY TO DETERMINE WHETHER ADDITIONAL FACTS INDICATE THE EXISTENCE OF A SAFETY RELATED DEFECTS IN FORD TRANSMISSIONS. WHOLLY APART FROM ANY COMMITMENTS NHTSA MAY HAVE MADE, CONTINUED MONITORING BY NHTSA, IF DEEMED NECESSARY TO CARRY OUT ITS STATUTORY FUNCTIONS, WOULD BE REQUIRED. AS DISCUSSED IN MORE DETAIL IN THE ACCOMPANYING REPORT, NHTSA HAS TAKEN VARIOUS STEPS CONSISTENT WITH ITS COMMITMENTS TO THE COURT AND TO CONGRESSMAN WIRTH'S SUBCOMMITTEE.

WE TRUST THE FOREGOING INFORMATION WILL BE USEFUL TO YOU.

/1/ CENTER FOR AUTO SAFETY, INC. V. LEWIS, CIV. ACTION NO. 81-0550 (D.D.C. 1981).

/2/ CENTER FOR AUTO SAFETY, INC. V. LEWIS, 685 F.2D 656 (D.C. CIR. 1982).

/3/ CENTER FOR AUTO SAFETY, INC. V. DOLE, CIV. ACTION NO. 85-2861 (D.D.C. FILED SEPT. 9, 1985).

/4/ SECTION 1418(A)(1) REQUIRES A MANUFACTURER TO FURNISH TO THE SECRETARY A COPY OF ALL ITS COMMUNICATIONS TO OWNERS, PURCHASERS, AND DEALERS REGARDING ANY DEFECTS.