[Federal Register Volume 71, Number 228 (Tuesday, November 28, 2006)]
[Notices]
[Pages 68888-68892]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-20091]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2006-25545, Notice 2]


YES! Sportscars; Response to Application for a Temporary 
Exemption From the Advanced Air Bag Requirements of FMVSS No. 208

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

ACTION: Grant of application for temporary exemption from certain 
provisions of Federal Motor Vehicle Safety Standard No. 208, Occupant 
Crash Protection.

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SUMMARY: This notice grants the YES! Sportscars application for 
temporary exemption from certain advanced air bag requirements of 
Federal Motor Vehicle Safety Standard (FMVSS) No. 208, Occupant Crash 
Protection. This exemption applies to the YES! Roadster 3.2 and 3.2 
Turbo (hereinafter collectively referred to as ``the YES! Roadster''). 
In accordance with 49 CFR part 555, the basis for the grant is that 
compliance would cause substantial economic hardship to a 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 for the YES! Roadster is effective September 1, 2006 
and will remain in effect until August 31, 2009.
    In accordance with the requirements of 49 U.S.C. 30113(b)(2), we 
published a notice of receipt of the application \1\ in the Federal 
Register and asked for public comments.\2\ We received no comments on 
the application.
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    \1\ To view the application, go to: http://dms.dot.gov/search/searchFormSimple.cfm and enter Docket No. NHTSA-2006-25545.
    \2\ See 71 FR 50980 (August 28, 2006) (Docket No. NHTSA-2006-
25545-1).

DATES: The exemption from the specified provisions of FMVSS No. 208 for 
the YES! Roadster is effective from September 1, 2006 until August 31, 
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2009.

FOR FURTHER INFORMATION CONTACT: Mr. Ed Glancy or Mr. Eric Stas in the 
Office of the Chief Counsel at the National Highway Traffic Safety 
Administration (NCC-112), 400 Seventh Street, SW., Room 5219, 
Washington, DC 20590 (Telephone: (202) 366-2992; Fax: (202) 366-3820).

SUPPLEMENTARY INFORMATION:

I. Advanced Air Bag Requirements and Small Volume Manufacturers

    In 2000, NHTSA upgraded the requirements for air bags in passenger 
cars and light trucks, requiring what are commonly known as ``advanced 
air bags.'' \3\ The upgrade was designed to meet the goals of improving 
protection for occupants of all sizes, belted and unbelted, in 
moderate-to-high-speed crashes, and of minimizing the risks posed by 
air bags to infants, children, and other occupants, especially in low-
speed crashes.
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    \3\ See 65 FR 30680 (May 12, 2000) (Docket No. NHTSA-2000-7013).
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    The advanced air bag requirements were a culmination of a 
comprehensive plan that the agency announced in 1996 to address the 
adverse effects of air bags. This plan also included an extensive 
consumer education program to encourage the placement of children in 
rear seats. The new requirements were phased in beginning with the 2004 
model year.
    Small volume manufacturers (i.e., original vehicle manufacturers 
producing or assembling fewer than 5,000 vehicles annually for sale in 
the United States) were not subject to the advanced air bag 
requirements until September 1, 2006, but their efforts to bring their 
respective vehicles into compliance with these requirements began 
several years ago. However, because the new requirements were 
challenging, major air bag suppliers concentrated their efforts on 
working with large volume manufacturers, and thus, until recently, 
small volume manufacturers had limited access to advanced air bag 
technology. Because of the nature of the requirements for protecting 
out-of-position occupants, ``off-the-shelf'' systems could not be 
readily adopted. Further complicating matters, because small volume 
manufacturers build so few vehicles, the costs of developing custom 
advanced air bag systems compared to potential profits discouraged some 
air bag suppliers from working with small volume manufacturers.
    The agency has carefully tracked occupant fatalities resulting from 
air bag deployment. Our data indicate that the agency's efforts in the 
area of consumer education and manufacturers' providing depowered air 
bags were successful in reducing air bag fatalities even before 
advanced air bag requirements were implemented.
    As always, we are concerned about the potential safety implication 
of any temporary exemptions granted by this agency. In the present 
case, we are addressing a petition for a temporary

[[Page 68889]]

exemption from the advanced air bag requirements submitted by a 
manufacturer of low volume, exotic sports cars.

II. Overview of Petition for Economic Hardship Exemption

    In accordance with 49 U.S.C. 30113 and the procedures in 49 CFR 
part 555, YES! Sportscars has petitioned the agency for a temporary 
exemption from certain advanced air bag requirements of FMVSS No. 208. 
The basis for the application is that compliance would cause 
substantial economic hardship \4\ to a manufacturer that has tried in 
good faith to comply with the standard. The agency closely examines and 
considers the information provided by manufacturers in support of these 
factors, and, in addition, pursuant to 49 U.S.C. 30113(b)(3)(A), 
determines whether exemption is in the public interest and consistent 
with the Safety Act.\5\
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    \4\ When considering financial matters involving companies based 
in the European Union (EU), it is important to recognize that EU and 
U.S. accounting principles have certain differences in their 
treatment of revenue, expenses, and profits. Public statements by EU 
manufacturers relating to financial results should be understood in 
this context. This agency analyzes claims of financial hardship 
carefully and in accordance with U.S. accounting principles.
    \5\ The Safety Act is codified as Title 49, United States Code, 
Chapter 301.
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    A manufacturer is eligible to apply for a hardship exemption if its 
total motor vehicle production in its most recent year of production 
did not exceed 10,000 vehicles, as determined by the NHTSA 
Administrator (49 U.S.C. 30113). In determining whether a manufacturer 
of a vehicle meets that criterion, NHTSA considers whether a second 
vehicle manufacturer also might be deemed the manufacturer of that 
vehicle. The statutory provisions governing motor vehicle safety (49 
U.S.C. Chapter 301) do not include any provision indicating that a 
manufacturer might have substantial responsibility as manufacturer of a 
vehicle simply because it owns or controls a second manufacturer that 
assembled that vehicle. However, the agency considers the statutory 
definition of ``manufacturer'' (49 U.S.C. 30102) to be sufficiently 
broad to include sponsors, depending on the circumstances. Thus, NHTSA 
has stated that a manufacturer may be deemed to be a sponsor and thus a 
manufacturer of a vehicle assembled by a second manufacturer if the 
first manufacturer had a substantial role in the development and 
manufacturing process of that vehicle.
    Finally, while 49 U.S.C. 30113(b) states that exemptions from a 
Safety Act standard are to be granted on a ``temporary basis,'' \6\ the 
statute also expressly provides for renewal of an exemption on 
reapplication. Manufacturers are nevertheless cautioned that the 
agency's decision to grant an initial petition in no way predetermines 
that the agency will repeatedly grant renewal petitions, thereby 
imparting semi-permanent exemption from a safety standard. Exempted 
manufacturers seeking renewal must bear in mind that the agency is 
directed to consider financial hardship as but one factor, along with 
the manufacturer's on-going good faith efforts to comply with the 
regulation, the public interest, consistency with the Safety Act, 
generally, as well as other such matters provided in the statute.
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    \6\ 49 U.S.C 30113(b)(1).
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III. YES! Sportscars

    Background. YES! Sportscars is a division of Funke & Will 
Aktiengesellschaft (AG), a German corporation formed in 2000. Funke & 
Will AG is a specialized engineering firm which offers engineering 
services to the automobile industry on small volume projects. Although 
the parent company's two founders together own 85 percent of the 
corporation's shares, the German state of Saxony does have a 15-percent 
ownership stake.\7\
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    \7\ According to the petitioner, the German state government 
took an ownership interest in the firm in exchange for subsidies for 
capital investment in facilities and equipment. According to YES! 
Sportscars, these subsidies cannot be used for operational 
expenditures and research and development funding.
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    YES! Sportscars, a separate vehicle manufacturing part of the 
company, began production in 2001 of high-performance sports cars based 
on an aluminum spaceframe. This application concerns the YES! Roadster 
(currently the company's only model) which is expected to retail for 
$59,000. To date, the primary markets for the YES! Roadster have been 
Europe and the Middle East, with the following numbers of vehicles 
being produced over the past five years: 12 vehicles in 2001; 37 
vehicles in 2002; 42 vehicles in 2003; 48 vehicles in 2004, and 54 
vehicles in 2005. None of those vehicles has been sold in the U.S. 
market.
    According to the petition, the company had originally planned to 
prospectively produce vehicles for the European, Mid-East, and Far-East 
markets, but it has been determined to be a matter of financial 
necessity for YES! Sportscars to enter the U.S. market, particularly 
given the limited but global market for these high-end sports cars. The 
company anticipates that approximately 65 percent of its total sales 
will be to the U.S. market.
    As discussed in further detail below, the petitioner argued that it 
tried in good faith, but could not bring the vehicle into compliance 
with the advanced air bag requirements, and would incur substantial 
economic hardship if it cannot sell vehicles in the U.S. after 
September 1, 2006.
    Eligibility. As discussed in the petition, YES! Sportscars is a 
division of Funke & Will AG, a German corporation formed in 2000. The 
entire organization currently employs 49 people. No other vehicle 
manufacturer has an ownership interest in either YES! Sportscars or 
Funke & Will AG, and the reverse is likewise true. Stated another way, 
YES! Sportscars is an independent automobile manufacturer which does 
not have any common control or is otherwise affiliated with any other 
vehicle manufacturer.
    The company is a small volume manufacturer whose total production 
has ranged from 12 to 54 vehicles per year over the period from 2001 to 
2005. According to its current forecasts, YES! Sportscars anticipates 
that approximately 250 vehicles would be imported into the U.S. during 
the three-year period for its requested exemption, if such request were 
granted.
    Requested exemption. YES! Sportscars stated that it intends to 
certify the YES! Roadster as complying with the rigid barrier belted 
test requirement using the 50th percentile adult male test dummy set 
forth in S14.5.1 of FMVSS No. 208. The petitioner stated that it 
previously determined the YES! Roadster's compliance with rigid barrier 
unbelted test requirements using the 50th percentile adult male test 
dummy through the S13 sled test using a generic pulse rather than a 
full vehicle test. YES! Sportscars stated that it, therefore, cannot at 
present say with certainty that the YES! Roadster will comply with the 
unbelted test requirement under S14.5.2, which is a 20-25 mph rigid 
barrier test.
    As for the YES! Roadster's compliance with the other advanced air 
bag requirements, YES! Sportscars stated that it does not know whether 
the YES! Roadster will be compliant because to date it has not had the 
financial ability to conduct the necessary testing.
    As such, YES! Sportscars is requesting an exemption for the YES! 
Roadster from the rigid barrier unbelted test requirement with the 50th 
percentile adult male test dummy (S14.5.2), the rigid barrier test 
requirement using the 5th percentile adult female test dummy (belted 
and unbelted, S15), the offset

[[Page 68890]]

deformable barrier test requirement using the 5th percentile adult 
female test dummy (S17), the requirements to provide protection for 
infants and children (S19, S21, and S23) and the requirement using an 
out-of-position 5th percentile adult female test dummy at the driver 
position (S25).
    YES! Sportscars stated its intention to produce a second generation 
of the YES! Roadster by September 1, 2009, which would be certified as 
complying with all applicable U.S. standards, including the advanced 
air bag requirements. Accordingly, the company is requesting an 
exemption from the above-specified requirements of FMVSS No. 208 for 
the period from September 1, 2006 to August 31, 2009.
    Economic hardship. Publicly available information and also the 
financial documents submitted to NHTSA by the petitioner indicate that 
the YES! Roadster project will result in financial losses unless YES! 
Sportscars obtains a temporary exemption.
    Over the period 2001-2005, the YES! Sportscars division of Funke & 
Will AG has experienced net operational losses totaling $618,000 
(484,000 euros at an exchange rate of 1 euro = $1.277).\8\ As of the 
time of the application, YES! Sportscars has invested over $3.0 million 
on the design, development, and homologation of the YES! Roadster 
project in order to have the vehicle meet U.S. standards--not including 
the advanced air bag requirements which are the subject of the present 
petition for temporary exemption. The company has stated that it cannot 
hope to attain profitability if it incurs additional research and 
development expenses at this time.
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    \8\ According to the YES! petition, the engineering portion of 
Funke & Will AG has made a modest profit in the past few years, but 
in total, such profits would only amount to 45 percent of the 
funding needed to finance the requisite advanced air bag work.
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    YES! Sportscars stated that costs associated with advanced air bag 
engineering and development (including research and development, 
testing, tooling, and test vehicles) have been estimated to be $1.7 
million (including internal costs). In its petition, YES! Sportscars 
reasoned that sales in the U.S. market must commence in order to 
finance this work and that non-U.S. sales alone cannot generate 
sufficient income for this purpose. In essence, YES! Sportscars argued 
that the exemption is necessary to allow the company to ``bridge the 
gap'' until fully compliant vehicles can be funded, developed, tooled, 
and introduced for the U.S. market.
    If the exemption is denied, YES! Sportscars projects a net loss of 
$1.1 million over the period from 2006-2008 (assuming a delayed start 
of U.S. sales until 2008). However, if the petition is granted, the 
company anticipates a profit of nearly $1.4 million during that same 
period. The petitioner argued that a denial of this petition could 
preclude financing of the project for USA-compliant vehicles, a 
development which would have a highly adverse impact on the company.
    Good faith efforts to comply. As stated above, YES! Sportscars 
initially planned to produce vehicles for the European, Mid-East, and 
Far-East markets, but once it was determined in 2005 that entry into 
the U.S. market was a necessary part of its business plan, the company 
invested over $3.0 million on research and development and tooling for 
its U.S. YES! Roadster program (including adoption of a U.S.-certified 
engine and drive train). In that time, the company was able to bring 
the vehicle into compliance with all applicable NHTSA regulations, 
except for the advanced air bag provisions of FMVSS No. 208.
    In light of limited resources, the petitioner stated that it was 
necessary to first develop the vehicle with a standard U.S. air bag 
system. The company has spent over $630,000 to reengineer the YES! 
Roadster to include a standard air bag system, which it stated will 
then be ``expanded'' into an advanced air bag system.
    According to its petition, even though advanced air bags are beyond 
its current capabilities, YES! Sportscars is nonetheless planning for 
the introduction of these devices. The company stated that Siemens 
Restraint Systems will spearhead this effort, and current plans 
estimate a cost of $1.1 million (excluding internal costs) and a 
minimum lead time of 24 months for the advanced air bag project. YES! 
Sportscars stated that the following engineering efforts are needed to 
upgrade the YES! Roadster's standard air bag system to an advanced air 
bag system: (1) Interior redesign work to the dashboard, steering 
column, and electronic systems; (2) sourcing and organization of 
supplier and engineering personnel and resources for development work 
(including sensor calibration); (3) construction of prototypes, and (4) 
testing.
    In addition, YES! Sportscars stated that finding suppliers willing 
to work with a manufacturer with very low production volumes has proven 
extremely difficult, and as a result, the company must wait for 
technology to ``trickle down'' from larger manufacturers and suppliers. 
YES! Sportscars further stated that small volume manufacturers simply 
do not have the internal resources to do full U.S. homologation 
projects without reliance on outside suppliers of advanced engineering 
technologies.
    In short, YES! Sportscars argued that, despite good faith efforts, 
limited resources prevent it from bringing the vehicle into compliance 
with all applicable requirements, and it is beyond the company's 
current capabilities to bring the vehicle into full compliance until 
such time as additional resources become available as a result of U.S. 
sales. With funding from the sale of the current generation of YES! 
Roadsters, the company expects that additional development efforts 
could start in 2007, thereby allowing introduction of a fully compliant 
vehicle in September 2009.
    YES! Sportscars argues that 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 and would not have a significant adverse impact on safety. 
Specifically, YES! Sportscars argued that the vehicle would be equipped 
with a fully-compliant standard U.S. air bag system (i.e., one meeting 
all requirements of FMVSS No. 208 prior to implementation of S14). 
Furthermore, the company emphasized that the YES! Roadster will comply 
with all other applicable FMVSSs.
    The company asserted that granting the exemption will benefit U.S. 
employment, companies, and citizens, because YES! Roadsters will be 
sold and serviced through a network of U.S. dealers. YES! Sportscars 
also argued that denial of the exemption request would have an adverse 
impact on consumer choice, suggesting that there is domestic demand for 
a performance vehicle in the YES! Roadster's price range. The company 
also argued that an exemption is unlikely to have a significant safety 
impact because these vehicles are not expected to be used extensively 
by their owners, due to their ``second vehicle'' nature and 
``minimalist design.'' The company also reasoned that given the nature 
of the vehicle, it is less likely to be used to transport young 
children than most other vehicles.
    As an additional basis for showing that its requested exemption 
would be in the public interest, YES! Sportscars stated that the YES! 
Roadster has an extremely strong and protective chassis, which is 
composed of aluminum tubes and composite structure parts. According to 
YES! Sportscars, the

[[Page 68891]]

vehicle design is such that occupants are effectively placed in a 
``protective `cell' '' with the chassis structure built around them.
    Agency Decision on YES! Sportscars Petition. We are granting the 
YES! Sportscars petition to be exempted from portions of the advanced 
air bag regulation required by S14.2 (specifically S14.5.2, S15, S17, 
S19, S21, S23, and S25). The exemption does not extend to the provision 
requiring a belted 50th percentile male barrier impact test 
(S14.5.1(a)). In addition to certifying compliance with S14.5.1(a), 
YES! Sportscars must continue to certify to the unbelted 50th 
percentile barrier impact test in force prior to September 1, 2006 
(S5.1.2(a)). We note that the unbelted sled test in S13 is an 
acceptable option for that requirement. The agency's rationale for this 
decision is as follows.
    The advanced air bag requirements present a unique challenge 
because they would require YES! Sportscars to undertake a major 
redesign of its vehicles, in order to overcome the engineering 
limitations of the YES! Roadster. Specifically, YES! Sportscars would 
be required to undertake significant interior redesign in order to 
upgrade the vehicle's standard air bag system to an advanced air bag 
system. While the petitioner was aware of the new requirements for some 
time, its business plans did not initially involve sales in the U.S. 
However, YES! Sportscars subsequently determined that it would be 
necessary to introduce the YES! Roadster into the U.S., thereby raising 
the problem of compliance with the advanced air bag requirements. Once 
the determination was made to seek entry into the U.S. market, YES! 
Sportscars undertook significant homologation efforts in order to meet 
applicable U.S. requirements, but compliance with the advanced air bag 
provisions of FMVSS No. 208 were beyond the company's capabilities at 
the present time. YES! Sportscars plans to utilize proceeds from sales 
of the current generation of YES! Roadsters to finance the development 
of a fully compliant successor vehicle.
    YES! Sportscars explained the main engineering challenges 
precluding incorporation of advanced air bag into the YES! Roadster at 
this time, as follows. The company must undertake redesign work to the 
vehicle's dashboard, steering column, and electronic systems. 
Furthermore, the petitioner stated that it would need additional time 
to work with an advanced air bag supplier, because very low volume 
manufacturers have had to wait for technology to ``trickle down'' from 
larger manufacturers and suppliers. YES! Sportscars has made clear that 
such a prospect would pose a unique challenge to the company, due to 
the high cost of development and its extremely small sales volumes.
    Based upon the information provided by the petitioner, we 
understand that YES! Sportscars made good faith efforts to bring the 
YES! Roadster into compliance with the applicable requirements until 
such time as it became apparent that there was no practicable way to do 
so. As a small specialty manufacturer, the company had a difficult time 
in gaining access to advanced air bag systems and components (which 
presumably reflects restraint system suppliers' initial focus on 
meeting the needs of large volume manufacturers), so alternative means 
of compliance were not available as a practical matter. Small 
manufacturers such as YES! Sportscars are dependent upon air bag 
suppliers for the engineering expertise and technology transfer 
necessary for compliance with FMVSS No. 208. This further reduced the 
lead time available for development.
    Furthermore, because YES! Sportscars is an independent automobile 
manufacturer, there was no possibility of technology transfer from a 
larger parent company that also manufactures motor vehicles. 
Consequently, no viable alternatives remain. The petitioner is unable 
to redesign its vehicle in time to meet the new advanced air bag 
requirements that became effective on September 1, 2006.
    After review of the income statements provided by the petitioner, 
the agency notes that the company has faced ongoing financial 
difficulties, experiencing net operating losses of about $618,000 
(484,000 euros) over the past five years (2001-2005). The company was 
not profitable in any year during that period. If the petitioner's 
request for a temporary exemption is denied, the company will be 
precluded from selling any vehicles in the U.S. market at this time. 
The resulting loss of sales would cause substantial economic hardship 
within the meaning of the statute, potentially amounting to the 
difference between a profit of nearly $1.4 million (if an exemption is 
granted) and a loss of $1.1 million (if an exemption is denied) over 
the period from 2006-2008. Ultimately, denial of the exemption request 
could preclude development of a U.S.-compliant vehicle and jeopardize 
the continued existence of YES! Sportscars.
    According to YES! Sportscars, absent the exemption, the company 
anticipates being unable to enter the U.S. market during the period 
from 2006-2008. However, YES! Sportscars' problems would be compounded 
without its requested temporary exemption, because it needs the revenue 
from sales of the YES! Roadster over the next two years to finance 
development of a fully compliant vehicle for delivery to the U.S. 
market. Granting the exemption will allow YES! Sportscars to earn the 
resources necessary to bridge the gap in terms of development of a 
successor vehicle for the current YES! Roadster that meets all U.S. 
requirements.
    While some of the information submitted by YES! Sportscars 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 YES Sportscars' 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. A detailed OEM price-volume quotation from an advanced air bag 
supplier, including detailed costs for the necessary components for 
each stage of the development program.
    5. Explanations as to why components from newer, compliant vehicle 
lines could not be borrowed.
    6. Corporate income statements and balance sheets for the period 
from 2000-2005, and projected profits for the period from 2006-2008 
(analyzing alternative scenarios in which the petition is granted and 
denied).
    While noting that reduction of sales revenue resulting from a 
denial of the company's requested temporary exemption would have a 
negative impact on YES! Sportscars' financial circumstances, we also 
sought to evaluate a denial's affect on U.S. employment, in light of 
the company's statement that it anticipates selling the YES! Roadster 
through a network of U.S. dealers. Traditionally, the agency has 
concluded that the public interest is served in affording continued 
employment to the petitioner's U.S. work force. As a corollary, the 
agency also may consider prospective employment gains as part of its 
analysis of what is in the public interest.

[[Page 68892]]

However, YES! Sportscars provided no information on prospective U.S. 
dealers, projected sales per outlet, or employment. Thus, it is 
difficult to assess the likely employment impacts associated with 
granting the petition, as any such conclusions would be largely 
speculative.
    We believe that this exemption will have negligible impact on motor 
vehicle safety because of the limited number of vehicles affected 
(approximately 250 imported for the duration of the exemption). 
Furthermore, 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 note that, as explained below, prospective purchasers will be 
notified that the vehicle is exempted from the specified 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 Standard 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 the specified advanced air 
bag provisions, 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 such provisions by number without an indication of its 
subject matter would be of little use to consumers, since they would 
not know the subject of those specific provisions. For these reasons, 
we believe the two labels should read in relevant part, ``except for 
S14.5.2, S15, S17, S19, S21, S23, and S25 (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 YES! Sportscars has demonstrated 
good faith effort to bring the YES! Roadster into compliance with the 
advanced air bag requirements 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 advanced air bag requirements 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), the YES! Roadster 
is granted NHTSA Temporary Exemption No. EX 06-9, from S14.5.2, S15, 
S17, S19, S21, S23, and S25 of 49 CFR 571.208. The exemption is 
effective from September 1, 2006 to August 31, 2009.

    Issued on: November 21, 2006.
Nicole R. Nason,
Administrator.
 [FR Doc. E6-20091 Filed 11-27-06; 8:45 am]
BILLING CODE 4910-59-P