[Federal Register Volume 71, Number 98 (Monday, May 22, 2006)]
[Notices]
[Pages 29389-29391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-7754]



[[Page 29389]]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2005-23093]


Ferrari S.p.A and Ferrari North America, Inc. Grant of 
Application for a Temporary Exemption From S14.2 of Federal Motor 
Vehicle Safety Standard No. 208

AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.

ACTION: Grant of Application for a Temporary Exemption from S14.2 of 
Federal Motor Vehicle Safety Standard No. 208, Occupant Crash 
Protection.

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SUMMARY: This notice grants the Ferrari S.p.A. and Ferrari North 
America (collectively, ``Ferrari'') application for a temporary 
exemption from the requirements of S14.2 of Federal Motor Vehicle 
Safety Standard (``FMVSS'') No. 208, Occupant Crash Protection. The 
exemption applies to the Ferrari F430 vehicle line. In accordance with 
49 CFR Part 555, the basis for the grant is that compliance would cause 
substantial economic hardship to a low-volume manufacturer that has 
tried in good faith to comply with the standard, and the exemption 
would have a negligible impact on motor vehicle safety. The exemption 
is effective September 1, 2006 and will remain in effect until August 
31, 2008.
    In accordance with the requirements of 49 U.S.C. 30113(b)(2), we 
published a notice of receipt of the application \1\ and asked for 
public comments.\2\ We received no comments on the application.
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    \1\ To view the application please got to: http://dms.dot.gov/search/searchFormSimple.cfm (Docket No. NHTSA-2005-23093).
    \2\ See 70 FR 71372 (November 28, 2005).

DATES: The exemption from S14.2 of FMVSS No. 208 is effective from 
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September 1, 2006 until August 31, 2008.

FOR FURTHER INFORMATION CONTACT: George Feygin in the Office of Chief 
Counsel at NHTSA NCC-112, 400 7th Street, SW., Room 5215, Washington, 
DC 20590 (Phone: 202-366-2992; Fax 202-366-3820; E-mail: 
[email protected]).

SUPPLEMENTARY INFORMATION:

I. Background

    Ferrari applied for an exemption in July of 2005. Ferrari is a 
well-known small volume manufacturer of high performance automobiles. 
Its vehicles have been sold in the United States for several decades. 
Because of high costs of development and because of very small sales 
volumes, the product cycles of Ferrari vehicles last longer that those 
of mass-produced vehicles. One of these vehicles is the Ferrari F430, 
which was originally designed in the mid-1990s, and is scheduled for 
production until late 2008.
    On September 1, 2006 certain ``advanced'' air bag requirements will 
go into effect for small volume manufacturers. Despite good-faith 
efforts, Ferrari has been unable to find a practicable way to bring the 
current F430 into compliance with these new ``advanced'' air bag 
requirements. Because the sales of F430 account for approximately 85 
percent of its U.S. sales, Ferrari's inability to sell that vehicle 
until the new fully compliant model is introduced would result in 
substantial economic hardship.

II. Why Ferrari Is Eligible To Petition for a Temporary Exemption

    A manufacturer is eligible to apply for a hardship exemption if its 
total motor vehicle production in its most recent year of production 
does not exceed 10,000, as determined by the NHTSA Administrator (15 
U.S.C. 1410(d)(1)). Ferrari's total production is approximately half of 
that amount. Fiat S.p.A., a major vehicle manufacturer, holds a 56% 
interest in Ferrari. Consistent with past determinations, NHTSA has 
determined that Fiat's interest in Ferrari does not result in the 
production threshold being exceeded.\3\
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    \3\ See 54 FR 46321; November 2, 1989.
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    The statutory provisions governing motor vehicle safety (49 U.S.C. 
Chapter 301) do not include any provision indicating that a person is a 
manufacturer of a vehicle by virtue of ownership or control of another 
person that is a manufacturer. NHTSA has stated, however, that a person 
may be a manufacturer of a vehicle manufactured by another person if 
the first person has a substantial role in the manufacturing process 
that it can be deemed the sponsor of the vehicle. The agency considers 
the statutory definition of ``manufacturer'' (15 U.S.C. 1391(5)) to be 
sufficiently broad to include sponsors, depending on the circumstances.
    In the present instance, the Ferrari F430 bears no resemblance to 
any motor vehicle designed or manufactured by Fiat, and the agency 
understands based on the information in the petition, that the F430 was 
designed and engineered without assistance from Fiat. Further, the 
agency understands that such assistance as Ferrari may receive from 
Fiat relating to use of test facilities and the like is an arms length 
transaction for which Ferrari pays Fiat. Accordingly, NHTSA concludes 
that Fiat is not a manufacturer of Ferrari vehicles by virtue of being 
a sponsor.

III. Why Ferrari Needs a Temporary Exemption and How Ferrari Has Tried 
in Good Faith To Comply With FMVSS No. 208

    Ferrari states that the F430 was originally designed in the mid-
1990s and designated as the 360 model. The petitioner states that the 
Modena (coupe) version of the 360 was launched in 1999, followed by the 
Spider (convertible) version in 2000, and the Challenge Stradale in 
2003. Production of these vehicles continued until the end of 2004. 
According to the petitioner, shortly thereafter Ferrari began an 
aesthetic redesign of the vehicle, relying on the same chassis. Ferrari 
stated that the redesigned vehicle, the F430, will be produced until 
late 2008. According to Ferrari, 2008 will mark the end of the life 
cycle for the 360/F430 vehicle. The petitioner states that the 360 and 
F430 were designed to comply, and do comply, with all of the FMVSSs in 
effect at the time the 360 was originally designed. The petitioner 
stated that the provisions of FMVSS No. 208 established in 2000 (65 FR 
30680; May 12, 2000; Advanced Air Bag rule) were not anticipated by 
Ferrari when the 360 vehicle model was designed.
    Ferrari stated that it has been able to bring the F430 into 
compliance with all of the high-speed belted and unbelted crash test 
requirements of the Advanced Air Bag rule. However, it stated that it 
has not been able to bring the vehicle into compliance with the child 
out-of-position requirements (S19, S21, and S23), and the 5th 
percentile adult female out-of-position requirements for the driver 
seat (S25).
    Ferrari stated that despite efforts to involve numerous potential 
suppliers, it has not identified any that are willing to work with the 
company to develop an occupant classification system that would enable 
the vehicle to comply with S19, S21, S23, and S25. Moreover, Ferrari 
stated that it is unable to reconfigure the F430 to accommodate an 
occupant classification system and air bag design that would comply 
with these requirements.
    Ferrari has requested an exemption for the F430 from the advanced 
air bag provisions in FMVSS No. 208 during model years 2007 and 2008 
(i.e., September 1, 2006 through August 31, 2008). Ferrari claims that 
compliance with the advanced air bag provisions would result in 
substantial economic

[[Page 29390]]

hardship and has filed this petition under 49 CFR 555.6(a).
    Ferrari stated that its inability to sell the F430 in the United 
States through 2007 would lead to a substantial loss of sales and 
revenue. Ferrari stated that in 2004, sales of the 8-cylinder 360 
models, those models being replaced by the F430, accounted for 86 
percent of its U.S. sales. Ferrari projected that if it were unable to 
sell the F430 model in the U.S., it would realize a decrease in net 
profit of approximately 44 million Euros ($53,000,000) in 2007. Ferrari 
stated that such consequences demonstrate ``substantial economic 
hardship'' within the meaning of 49 U.S.C. 30113(b)(3)(B)(i).
    Ferrari has requested that additional specific details regarding 
its finances and financial forecasts be afforded confidential treatment 
under 49 CFR 512.4, Asserting a claim for confidential information. We 
have determined that this information is to be afforded such treatment.

IV. Why an Exemption Would Be in the Public Interest

    The petitioner put forth several arguments in favor of a finding 
that the requested exemption is consistent with the public interest. 
Specifically:
    1. Ferrari states that the vehicle is equipped with a variety of 
``active safety'' systems beyond that required by the FMVSSs and that 
these systems ``significantly improve vehicle handling and enhance 
controllability.'' Such systems include the Manettino control system, 
which adjusts vehicle handling and stability to specific driving 
conditions; the Control Stability System, an electronic stability 
control system; Electro-Hydraulic Differential, a system that manages 
torque distribution between the two rear wheels to improve stability; 
Continuous Damping Control, a system that adjusts to road conditions in 
order to improve braking; and a ``Sky-Hook'' strategy \4\.
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    \4\ The ``Skyhook'' strategy detaches the vehicle body, as a 
sprung mass, from what is taking place on the axles and wheels by 
calming the movement of the body * * * In addition to improved 
comfort, this provides for optimal control of the vehicle body at 
all times.'' Page 10 of the petition.
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    2. The petitioner states that the F430 also has a variety of 
passive safety features not required under the FMVSS, including seat 
belt pretensioners and a fuel system that complies with the upgraded 
fuel system integrity requirements in advance of the compliance date.
    3. Ferrari notes that the requirements for which the F430 does not 
comply are primarily designed to protect children from injuries due to 
air bag deployment. Ferrari argues that it is unlikely that young 
children would be passengers in the vehicles covered by the exemption.
    4. Ferrari states that the F430 will have a manual on/off switch 
for the passenger air bag. Ferrari also notes that a child restraint 
system that automatically suppresses the passenger air bag when 
properly installed would be available upon request of a consumer at no 
cost.
    5. Ferrari states that the F430 was designed and marketed as a high 
performance, racing type vehicle, and therefore would have negligible 
on-road operation. Thus, Ferrari states the impact of the exemption is 
expected to be minimal.
    6. Ferrari argues that granting the exemption would increase 
choices available to the U.S. driving population in the high-
performance vehicle segment.
    7. The petitioner argues that granting the exemption would maintain 
the viability of U.S. firms associated with the sales and maintenance 
associated with the F430. Ferrari projects the F430 to be a major part 
of Ferrari sales in the U.S. during the two-year period for which an 
exemption has been requested.

V. Agency Decision

    We are granting the petition. The ``Advanced Air Bag'' requirements 
present a unique challenge because they would require Ferrari to 
completely redesign its vehicles two years before it planned to do so. 
While the petitioner was aware of the new requirements for some time, 
it continued its good faith efforts to bring the F430 into compliance 
with the applicable requirements until such time as it became apparent 
that there was no practicable way to do so. No viable alternatives 
remain. The petitioner is unable to design a new vehicle by the time 
the new advanced air bag requirements go into effect on September 1, 
2006. If the petitioner is forced to discontinue selling the current 
model, the resulting loss of sales would cause substantial economic 
hardship. In addition to loss of prospective sales in the United 
States, its biggest market, Ferrari would also be unable to recoup all 
of its investment into developing the current model.
    While some of the information submitted by Ferrari has been granted 
confidential treatment and is not detailed in this document, the 
petitioner made a comprehensive showing of its good faith efforts to 
comply with the requirements of S14.2 of FMVSS No. 208, and detailed 
engineering and financial information demonstrating that failure to 
obtain the exemption would cause substantial economic hardship. 
Specifically, the petitioner provided the following:
    1. Chronological analysis of Ferrari's efforts to comply, showing 
the relationship to the rulemaking history of the advanced air bag 
requirements.
    2. Itemized costs of each component that would have to be modified 
in order to achieve compliance.
    3. Discussion of alternative means of compliance and reasons for 
rejecting these alternatives.
    4. List of air bag suppliers that were approached in hopes of 
procuring necessary components.
    5. Explanation as to why components from newer, compliant vehicle 
lines could not be borrowed.
    6. Corporate balance sheets for the past 3 years, and projected 
balance sheets if the petition is denied.
    We note that Ferrari is a well-established company with a small but 
not insignificant U.S. presence and we believe that an 85 percent sales 
reduction would negatively affect U.S. employment. Specifically, 
reduction in sales would likely affect employment not only at Ferrari 
North America, but also at Ferrari dealers, repair specialists, and 
several small service providers that transport Ferrari vehicles from 
the port of entry to the rest of the United States. Traditionally, the 
agency has concluded that the public interest is served in affording 
continued employment to the petitioner's U.S. work force. As discussed 
in previous decisions on temporary exemption applications, the agency 
believes that the public interest is served by affording consumers a 
wider variety of motor vehicle choices.
    We also note that the F430 features several advanced ``active'' 
safety features. These features are listed in the petitioner's 
application.\5\ While the availability of these features is not 
critical to our decision, it is a factor in considering whether the 
exemption is in the public interest.
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    \5\ See page 10 of the petition.
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    We also believe this exemption will have negligible impact on motor 
vehicle safety because of the limited number of vehicles affected (not 
more than 2,000 for the duration of the exemption), and because Ferrari 
vehicles are not typically used for daily transportation. Their yearly 
usage is substantially lower compared to vehicles used for everyday 
transportation.
    In addition, Ferrari has voluntarily included two alternative means 
for passenger air bag suppression for the protection of children being 
transported in the right front seating position. First,

[[Page 29391]]

Ferrari has provided a manual on/off switch. This will enable the 
passenger air bag to be manually turned off when a child is present. 
Second, Ferrari offers a special child restraint system that 
automatically suppresses the passenger air bag when it is properly 
installed in the right front passenger seat. Ferrari offers this 
automatic child restraint system at no cost to the consumer, upon 
request. Both of these features offer passenger air bag suppression 
capability in the event a child needs to be transported in the right 
front seating position, and support our findings that this exemption 
will have negligible impact on motor vehicle safety.
    We note that the agency examined the Fatality Analysis Reporting 
System (FARS) and the National Automotive Sampling System 
Crashworthiness Data System (NASS CDS) data for years 1995-2004. These 
data indicate that over the past 10 years, there were no NASS CDS 
cases, and two FARS cases involving 360 Modena or the F430. Neither of 
the two FARS cases involved children or small women. Thus, there were 
no children or small women involved in crashes of Ferrari 360 or F430 
included in these databases.
    We also note that, as explained below, prospective purchasers will 
be notified that the vehicle is exempted from the advanced air bag 
requirements of Standard No. 208. Under Sec.  555.9(b), a manufacturer 
of an exempted passenger car must affix securely to the windshield or 
side window of each exempted vehicle a label containing a statement 
that the vehicle conforms to all applicable Federal motor vehicle 
safety standards in effect on the date of manufacture ``except for 
Standards Nos. [listing the standards by number and title for which an 
exemption has been granted] exempted pursuant to NHTSA Exemption No. --
----.'' This label notifies prospective purchasers about the exemption 
and its subject. Under Sec.  555.9(c), this information must also be 
included on the vehicle's certification label.
    The text of Sec.  555.9 does not expressly indicate how the 
required statement on the two labels should read in situations where an 
exemption covers part but not all of a Federal motor vehicle safety 
standard. In this case, we believe that a statement that the vehicle 
has been exempted from Standard No. 208 generally, without an 
indication that the exemption is limited to S14.2, could be misleading. 
A consumer might incorrectly believe that the vehicle has been exempted 
from all of Standard No. 208's requirements. Moreover, we believe that 
the addition of a reference to S14.2 without an indication of its 
subject matter would be of little use to consumers, since they would 
not know the subject of S14.2. For these reasons, we believe the two 
labels should read, in relevant part, ``except for S14.2 (Advanced Air 
Bag Requirements) of Standard No. 208, Occupant Crash Protection, 
exempted pursuant to * * *.'' We note that the phrase ``Advanced Air 
Bag Requirements'' is an abbreviated form of the title of S14 of 
Standard No. 208. We believe it is reasonable to interpret Sec.  555.9 
as requiring this language.
    In sum, the agency concludes that Ferrari has demonstrated good 
faith effort to bring the F430 into compliance with S14.2 of FMVSS No. 
208, and has also demonstrated the requisite financial hardship. 
Further, we find the exemption to be in the public interest.
    In consideration of the foregoing, we conclude that compliance with 
the requirements of S14.2 of FMVSS No. 208, Occupant Crash Protection, 
would cause substantial economic hardship to a manufacturer that has 
tried in good faith to comply with the standard. We further conclude 
that granting of an exemption would be in the public interest and 
consistent with the objectives of traffic safety.
    In accordance with 49 U.S.C. 30113(b)(3)(B)(i), Ferrari F430 is 
granted NHTSA Temporary Exemption No. EX 06-1, from S14.2 of Sec.  
571.208. The exemption is effective September 1, 2006 to August 31, 
2008.

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

    Issued on: May 17, 2006.
Jacqueline Glassman,
Deputy Administrator.
[FR Doc. E6-7754 Filed 5-19-06; 8:45 am]
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