[Federal Register Volume 63, Number 65 (Monday, April 6, 1998)]
[Notices]
[Pages 16856-16857]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8967]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration
[Docket No. NHTSA-97-3268; Notice 2]


Panoz Auto Development Company; Grant of Application for Second 
Renewal of Temporary Exemption From Federal Motor Vehicle Safety 
Standard No. 208

    This notice grants the application by Panoz Auto Development 
Company of Hoschton, GA., for a second renewal of its exemption from 
paragraph S4.1.4 of Federal Motor Vehicle Safety Standard No. 208 
Occupant Crash Protection. The basis of the reapplication is that 
compliance will cause substantial economic hardship to a manufacturer 
that has tried to comply with the standard in good faith.
    Notice of receipt of the application was published on December 30, 
1997, and an opportunity afforded for comment (62 FR 67931).
    Panoz received NHTSA Exemption No. 93-5 from S4.1.4 of Standard No. 
208, an exemption for two years which was initially scheduled to expire 
August 1, 1995 (58 FR 43007). It applied for, and received, a renewal 
of this exemption for an additional two years, scheduled to expire on 
November 1, 1997 (61 FR 2866). On August 28, 1997, NHTSA received 
Panoz's application for second renewal, which was more than 60 days 
before the scheduled expiration date of its exemption. In accordance 
with 49 CFR 555.8(e), Panoz' filing of its application before the 60th 
day stays the expiration until the Administrator grants or denies the 
application for second renewal.
    Panoz's original exemption was granted pursuant to the 
representation that its Roadster would be equipped with a Ford-supplied 
driver and passenger airbag system, and would comply with Standard No. 
208 by April 5, 1995 after estimated expenditures of $472,000. As of 
April 1993, the company had expended 750 man hours and $15,000 on the 
project.
    According to its 1995 application for renewal:

    Panoz has continued the process of researching and developing 
the installation of a driver and passenger side airbag system on the 
Roadster since the original exemption petition was submitted to 
NHTSA on April 5, 1993. To date, an estimated 1680 man-hours and 
approximately $50,400 have been spent on this project.

    At that time, Panoz used a 5.0L Ford Mustang GT engine and five 
speed manual transmission in its car. Because ``the 1995 model year and 
associated emission components were revised by Ford'', this caused

 a delay in the implementation of the airbag system on the Roadster 
due to further research and development time requirements and 
expenditure of additional monies to evaluate the effects of these 
changes on the airbag adaptation program.

    Shortly before filing its application for first renewal, Panoz 
learned that Ford was replacing the 5.0L engine and emission control 
system on the 1996 Mustang and other passenger cars with a modular 4.6L 
engine and associated emission components. The 1995 system did not meet 
1996 On-Board Diagnostic emission control requirements, and Panoz was 
faced with using the 1996 engine and emission control system as a 
substitute. The majority of the money and man hours at that time had 
been spent on adapting an airbag system to the 5.0L engine car, and the 
applicant had to concentrate on adapting it to a 4.6L engine car. Panoz 
listed eight types of modifications and testing necessary for 
compliance that would cost it $337,000 if compliance were required at 
the end of a one-year period. It asked for and received a two-year 
renewal of its exemption.
    However, Panoz found integration of the 4.6L engine into its 
existing chassis more difficult than anticipated, primarily because the 
4.6L was 10 inches wider than the engine it replaced. This required a 
total redesign of the chassis, requiring expenditure of ``a significant 
amount of resources.'' Simultaneously, it designed the vehicle to allow 
for the integration of the Ford Mustang driver-side and passenger-side

[[Page 16857]]

airbag systems. Panoz describes these steps in some detail and 
estimates that between May 1995 and August 1997 it spent 2200 man-hours 
and $66,000 on these efforts. In the same time period, it spent $47,000 
in static and dynamic crash testing of a 4.6L car related to airbag 
system development. Panoz concludes by describing the additional 
modifications and testing required to adapt the Ford system to its car. 
These costs total $358,000. A two-year renewal of its exemption would 
provide sufficient time to generate sufficient income (approximately 
$15,000 a month through sales of vehicles and private funding) to fund 
the modifications and testing.
    Panoz sold 13 cars in 1993 and 13 more in 1994. It did not state 
its sales in 1995. Because of the effort needed to meet Federal 
emission and safety requirements, Panoz did not build any 1996 model 
year vehicles. It reports sales of 23 model year 1997 vehicles in the 
12 months preceding its application for second renewal. At the time of 
its original petition, Panoz's cumulative net losses since 
incorporation in 1989 were $1,265,176. It lost an additional $249,478 
in 1993, $169,713 in 1994, $721,282 in 1995, and $1,349,241 in 1996.
    The applicant reiterated its original arguments that an exemption 
would be in the public interest and consistent with the objectives of 
traffic safety. Specifically, the Roadster is built in the United 
States and uses 100 percent U.S. components, bought from Ford and 
approximately 80 other companies. It provides employment for 45 full 
time and three part time employees. The Roadster is said to provide the 
public with a classic alternative to current production vehicles. It is 
the only vehicle that incorporates ``molded aluminum body panels for 
the entire car'', a process which continues to be evaluated by other 
manufacturers and which ``results in the reduction of overall vehicle 
weight, improved fuel efficiency, shortened tooling lead times, and 
increased body strength.'' With the exception of S4.1.4 of Standard No. 
208, the Roadster meets all other Federal motor vehicle safety 
standards including the 1997 side impact provisions of Standard No. 
214.
    No comments were received on the application.
    It is unusual for an applicant to request a second renewal of a 
temporary exemption. By the time the original exemption, or its 
extension, has expired, an applicant has either been able to bring the 
exempted vehicle into compliance or it has withdrawn from the market. 
The statute imposes no limitations on the number of renewals of 
temporary exemptions that may be granted, leaving the matter to the 
discretion of the Administrator in his findings. In this regard, NHTSA 
notes that Panoz has continually applied for two-year exemptions 
(rather than the three years it is entitled to under the hardship 
procedures), and that had it applied for three-year exemptions, its 
first renewal would be expiring at approximately the same time that its 
second renewal will.
    The hardship factors that led to the initial grant and initial 
renewal of the exemption from S4.1.4 of Standard No. 208 remain. 
Production remains only a handful of vehicles, approximately 23 being 
manufactured under the extension to the original exemption. Panoz 
continues to manifest net losses in its income statements. Design and 
engineering difficulties continue because of the necessity to 
accommodate an engine not of its own manufacture. The same public 
interest and safety factors continue as well, including 100 per cent 
use of motor vehicle equipment manufactured in the United States, and 
employment for 45 full time and three part time employees.
    In consideration of the foregoing, it is hereby found that to 
require immediate compliance with S4.1.5 (the now-appropriate 
paragraph) of Standard No. 208 would cause substantial economic 
hardship to a manufacturer that has tried in good faith to comply with 
Standard No. 208, and that a temporary exemption would be in the public 
interest and motor vehicle safety. Accordingly, Panoz Auto Development 
Company is hereby granted an extension of NHTSA Exemption No. 93-5 from 
S4.1.5 of 49 CFR 571.208 Standard No. 208 Occupant Crash Protection, 
expiring March 1, 2000.

(49 U.S.C. 30113; delegation of authority at 49 CFR 1.50.)

    Dated: April 1, 1998.
Ricardo Martinez,
Administrator.
[FR Doc. 98-8967 Filed 4-3-98; 8:45 am]
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