[Federal Register Volume 66, Number 14 (Monday, January 22, 2001)]
[Notices]
[Pages 6757-6759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1691]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2000-8133; Notice 2]


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

    This notice grants the application by Panoz Auto Development 
Company of Hoschton, Georgia, for a temporary exemption from paragraph 
S4.1.4 of Federal Motor Vehicle Safety Standard No. 208 Occupant Crash 
Protection. The basis of the application 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 October 25, 
2000, and an opportunity afforded for comment (65 FR 63913).
    Panoz received NHTSA Exemption No. 93-5 from S4.1.4 of Standard No.

[[Page 6758]]

208, an exemption for two years which was initially scheduled to expire 
August 1, 1995 (58 FR 43007). It applied for, and received, two two-
year renewals of this exemption (61 FR 2866; 63 FR 16856), the last of 
which expired March 1, 2000. Panoz now seeks a new exemption from 
S4.1.4 on hardship grounds, that would expire March 31, 2003. This 
exemption would apply to the Panoz Roadster but not to the company's 
other product, the Panoz Esperante, which, during the term of the last 
exemption, has been designed to comply with S4.1.4.
    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 
the time of its application, 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 in 1995, 
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, between 1995 and 1997, 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, 
Panoz designed the vehicle to allow for the integration of the Ford 
Mustang driver-side and passenger-side airbag systems. Panoz described 
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 
concluded by describing the additional modifications and testing 
required to adapt the Ford system to its car. These costs totaled 
$358,000. In 1997, the company argued that a two-year renewal of its 
exemption would provide time to generate sufficient income 
(approximately $15,000 a month through sales of vehicles and private 
funding) to fund the modifications and testing. After August 1997, 
Panoz spent an additional 1779 man hours and $87,375 in airbag 
development for the Roadster, a large portion of which was to adapt the 
1997-98 Ford Mustang mechanical system. In September 1998, NHTSA issued 
its Notice of Proposed Rulemaking (NPRM) on advanced airbags which 
would have required Panoz to begin the phase-in of the new system as of 
September 1, 2002. Panoz decided that the mechanical airbag system it 
was developing could not comply with the proposed advanced system. It 
also lacked the resources to develop two systems simultaneously, so it 
turned its development efforts towards the advanced system, which will 
be in its new model, Esperante. In November 1999, NHTSA issued a 
Supplemental NPRM under which implementation of the advanced airbag 
rule would be delayed for small manufacturers until September 1, 2005 
(subsequently adopted in the final rule of May 2000). This resulted in 
Panoz's resumption of efforts to adapt the Ford Mustang airbag system 
to its Roadster. However, with its 1999 models, Ford had replaced the 
mechanical airbag system with an electronic one, ``which dictated that 
Panoz would have to conduct further crash testing in order to properly 
calibrate the [Restraint Control Module] for application on the AIV 
Roadster.'' Panoz intends to have the electronic system adapted by the 
end of the exemption it has requested. The foregoing is a summary of 
Panoz's compliance efforts which are set forth in detail in its 
application.
    In sum, Panoz has been exempted from compliance with the airbag 
requirements for all passenger cars that it manufactured between August 
1, 1993, and March 1, 2000, approximately 6\1/2\ years. These, however, 
total only 178 units.
    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. Its losses continued in 1997, 1998, and 1999, respectively 
$3,253,111, $4,264,689, and $2,996,903. Thus, Panoz's losses for the 
years that the exemption was in effect, 1993-99, total $13,004,417.
    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 95 other companies (``at least 250 employees'' of which 
``remain involved in the Panoz project''). Panoz provides employment 
for 47 full time and three part time employees. The company now has 33 
U.S. dealers. 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.
    No comments were received on the application.
    In spite of its previous exemptions, Panoz has accumulated more 
than $13,000,000 in net losses during the exemption periods, over half 
of that occurring in 1998 and 1999 when its latest extension was in 
effect. After NHTSA had granted the previous extension on April 6, 1998 
(63 FR 16856), the agency issued its advanced airbag NPRM, in September 
1998, and Panoz turned its limited resources towards an attempt to 
develop an advanced airbag system in compliance with the proposal, and 
anticipated that it would have to comply as of September 1, 2002. 
Fourteen months

[[Page 6759]]

later, in November 1999, NHTSA issued a supplemental NPRM under which 
compliance would be deferred until September 1, 2005 for small 
manufacturers such as Panoz. At this point, Panoz resumed its efforts 
to modify the Ford mechanical airbag system only to find that Ford had 
changed to an electronic system with its 1999 models. Panoz could not 
adopt the system without additional crash testing, and it now 
anticipates that it will be in compliance at the end of the two-year 
extension it has requested. Although this is the fourth time that Panoz 
has applied to NHTSA for an exemption from the automatic restraint 
requirements of Standard No. 208, the statute imposes no limit on the 
number of times that a manufacturer may apply, and a further exemption 
may be granted upon appropriate findings of hardship and good faith 
efforts to comply.
    We have concurred before with Panoz's arguments that an exemption 
would be in the public interest and consistent with the objectives of 
motor vehicle safety. The Roadster is built in the United States and 
100% of its components are bought from Ford and from other domestic 
suppliers. With the exception of Standard No. 208, the Roadster is said 
to meet all other applicable Federal motor vehicle safety standards.
    In consideration of the foregoing, we hereby find that Panoz has 
met its burden of persuasion that, to require compliance with S4.1.4. 
of Federal Motor Vehicle Safety Standard No. 208 would cause 
substantial economic hardship to a manufacturer that has tried in good 
faith to comply with the standard. We further find that a temporary 
exemption is in the public interest and consistent with the objectives 
of motor vehicle safety. Accordingly, Panoz Auto Development Company is 
hereby granted NHTSA Temporary Exemption No. EX2001-1 from S4.1.4 of 49 
CFR 571.208 Motor Vehicle Safety Standard No. 208 Occupant Crash 
Protection. This exemption applies only to the Panoz Roadster and will 
expire on January 1, 2003.

(49 U.S.C. 30113; delegations of authority at 49 CFR 1.50. and 
501.8)

    Issued on January 11, 2001.
Rosalyn G. Millman,
Deputy Administrator.
[FR Doc. 01-1691 Filed 1-19-01; 8:45 am]
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