[Federal Register Volume 72, Number 112 (Tuesday, June 12, 2007)]
[Notices]
[Pages 32392-32395]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-11259]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2007-28430, Notice 1]


Mosler Automotive; Receipt of 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: Notice of receipt of petition for temporary exemption from 
provisions of Federal Motor Vehicle Safety Standard (FMVSS) No. 208, 
Occupant Crash Protection.

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SUMMARY: In accordance with the procedures in 49 CFR Part 555, Mosler 
Automotive 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 to a manufacturer that has tried in good faith to comply with 
the standard.\1\
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    \1\ To view the application, go to: http://dms.dot.gov/search/searchFormSimple.cfm and enter the docket number set forth in the 
heading of this document.
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    This notice of receipt of an application for temporary exemption is 
published in accordance with the statutory provisions of 49 U.S.C. 
30113(b)(2). NHTSA has made no judgment on the merits of the 
application.

DATES: You should submit your comments not later than July 12, 2007.

FOR FURTHER INFORMATION CONTACT: Mr. Ed Glancy or Ms. Rebecca Schade, 
Office of the Chief Counsel, NCC-112, National Highway Traffic Safety 
Administration, 1200 New Jersey Avenue, SE., West Building 4th Floor, 
Room W41-326, Washington, DC 20590. Telephone: (202) 366-2992; Fax: 
(202) 366-3820.
    Comments: We invite you to submit comments on the application 
described above. You may submit comments identified by docket number at 
the heading of this notice by any of the following methods:
     Web Site: http://dms.dot.gov. Follow the instructions for 
submitting comments on the DOT electronic docket site by clicking on 
``Help and Information'' or ``Help/Info.''
     Fax: 1-202-493-2251.
     Mail: U.S. Department of Transportation, Docket 
Operations, M-30, Room W12-140, 1200 New Jersey Avenue, SE., 
Washington, DC 20590.
     Hand Delivery: 1200 New Jersey Avenue, SE., West Building 
Ground Floor, Room W12-140, Washington, DC, between 9 a.m. and 5 p.m., 
Monday through Friday, except Federal holidays.
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
    Instructions: All submissions must include the agency name and 
docket number or Regulatory Identification Number (RIN) for this 
rulemaking. For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the Public 
Participation heading of the SUPPLEMENTARY INFORMATION section of this 
document. Note that all comments received will be posted without change 
to http://dms.dot.gov, including any personal information provided. 
Please see the Privacy Act discussion under the Public Participation 
heading.
    Docket: For access to the docket to read background documents or 
comments received, go to http://dms.dot.gov at any time or to 1200 New 
Jersey Avenue, SE., West Building Ground Floor, Room W12-140, 
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, 
except Federal holidays. Telephone: (202) 366-9826.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit 
http://dms.dot.gov.
    We shall consider all comments received before the close of 
business on the comment closing date indicated above. To the extent 
possible, we shall also consider comments filed after the closing date.

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

[[Page 32393]]

bags.'' \2\ 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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    \2\ See 65 FR 30680 (May 12, 2000).
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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 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 before that. However, because the new requirements were 
challenging, major air bag suppliers have 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 seeking comments on a petition for a temporary exemption 
from the advanced air bag requirements submitted by a manufacturer of 
very expensive, 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, Mosler Automotive 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 to a manufacturer that has tried in good 
faith to comply with the standard. A copy of the petition \3\ is 
available for review and has been placed in the docket for this notice.
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    \3\ The company requested confidential treatment under 49 CFR 
Part 512 for certain business and financial information submitted as 
part of its petition for temporary exemption. Accordingly, the 
information placed in the docket does not contain information 
subject to a claim of confidentiality.
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III. Statutory Background for Economic Hardship Exemptions

    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 a 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.

IV. Petition of Mosler Automotive

    Background. Mosler Automotive is a U.S. company, organized as a 
Florida corporation in 1987 and owned by a single American shareholder. 
Mosler began production in 1998 of high performance sports cars based 
on an aluminum honeycomb monocoque chassis. This application concerns 
the MT900 (MY 2004, currently the company's only model), which is 
expected to retail for $189,900. To date, the MT900 has been in and out 
of production, with the following numbers of vehicles being produced 
over the past three years: 12 vehicles in 2004; 8 vehicles in 2005; and 
13 vehicles in 2006. Worldwide sales, as of the time of the petition, 
were 10 race cars, 3 U.S. street cars, and 8 European specification 
cars.
    According to the petition, the company has determined that it 
cannot finance the work necessary to develop and install advanced air 
bags in its vehicles unless U.S. sales continue. It argued that NHTSA 
has previously ``confirmed the appropriateness of an exemption when the 
sales of exempted vehicles generate income to fund air bag development 
expenditures in order to comply with Standard 208 at the end of the 
exemption period. 64 FR 6736.'' Mosler Automotive stated that it 
``therefore needs USA exempted-vehicle sales to `bridge the gap.' '' 
The petitioner further stated that it ``will suffer a significant 
market loss--the U.S.--in the event it does not receive the 
exemption.''
    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. Mosler Automotive has an extremely 
long product cycle (for the MT900, the company estimates a lifespan of 
11 years), which has thus far prevented it from recouping its $600,000 
investment in its current standard air bag occupant restraint system. 
The petitioner states that significant engineering and funding will be 
necessary to upgrade to an advanced air bag system, and that the 
projected overall cost of approximately $2.0 to $2.5 million is beyond 
the company's current capabilities.
    Eligibility. As discussed in the petition, Mosler Automotive is 
independently owned by a single American shareholder. The entire 
organization currently employs 25 people in the U.S. No other vehicle 
manufacturer has an ownership interest in Mosler Automotive. Stated 
another way, Mosler Automotive is an independent automobile 
manufacturer which does not have any common control nor is otherwise 
affiliated with any other vehicle manufacturer.
    The company is a small volume manufacturer whose total production 
has ranged from 8 to 13 vehicles per year over the period from 2004 to 
2006. According to its current forecasts, Mosler Automotive anticipates 
that approximately 75 vehicles would be sold in the U.S. during the 
three-year period for its requested exemption, if such request were 
granted.
    Requested exemption. Mosler Automotive is requesting an exemption

[[Page 32394]]

for the MT900 from all of the advanced air bag requirements in S14 of 
FMVSS No. 208, the rigid barrier test requirement using the 5th 
percentile adult female test dummy (belted and unbelted, S15), the 
offset 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).
    Mosler Automotive stated its intention to have its advanced air bag 
system ready in 2009. Accordingly, the company seeks an exemption from 
the above-specified requirements of FMVSS No. 208 from June 1, 2007 to 
December 31, 2009.
    Economic hardship. Publicly available information and also the 
financial documents submitted to NHTSA by the petitioner indicate that 
the MT900 project will result in financial losses unless Mosler 
Automotive obtains a temporary exemption.
    Over the period 2004-2006, Mosler Automotive has had net 
operational losses totaling over $3 million, and the retained deficit 
of the company exceeds over $23 million. The costs associated with 
development of an advanced air bag system for the vehicle have been 
estimated at about $2.0 to $2.5 million. The company has stated that it 
cannot hope to attain profitability if it incurs additional research 
and development expenses at this time.
    Mosler Automotive stated that the estimated $2.0 to $2.5 million in 
costs associated with advanced air bag engineering and development 
included research and development, testing, tooling, and test vehicles, 
as well as internal costs. In its petition, Mosler Automotive 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, Mosler Automotive 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, Mosler Automotive projects a net loss 
of over $3 million during the period from 2007-2009. However, if the 
petition is granted, the company anticipates a profit of nearly $6.4 
million during that same period. The petitioner argued that a denial of 
this petition could preclude financing of the project for U.S.-
compliant vehicles, a development which would have a highly adverse 
impact on the company.
    Good faith efforts to comply. Mosler Automotive began production of 
the latest version of the MT900 in 2004, at which time it was certified 
for U.S. road use. The company has invested over $23 million on 
research and development and tooling for the MT900 program. 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 $600,000 to re-engineer the MT900 to 
include a standard air bag system, which it stated will then be 
developed into an advanced air bag system.
    According to its petition, even though advanced air bags are beyond 
its current capabilities, Mosler Automotive 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 between $2.0 and $2.5 million (excluding internal 
costs) and a minimum lead time of 24 months for the advanced air bag 
project. Mosler Automotive stated that the following engineering 
efforts are needed to upgrade the MT900's standard air bag system to an 
advanced air bag system: (1) Tooling for prototypes and production 
vehicles; (2) contractor engineering; (3) air bag system materials; (4) 
cost of test vehicles; (5) integration of air bag electronics; (6) 
radio frequency interference/electromagnetic compatibility testing; (7) 
significant design and development of interior components including 
seats and dashboard; (8) crash testing; and (9) system validation. 
NHTSA notes that this estimate is based on a quotation from Siemens 
that appears to have expired, and has requested updated information 
from the petitioner to ensure that the estimate is still accurate.
    In addition, Mosler Automotive emphasized 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. Mosler Automotive further stated that, as a small volume 
manufacturer, the company simply does not have the internal resources 
to do full U.S. homologation projects without reliance on outside 
suppliers of advanced engineering technologies.
    In short, Mosler Automotive 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. Mosler Automotive stated in its petition that 
it expects its advanced air bag system to be ready in 2009, and that an 
exemption would allow it to maintain continued operations until then.
    Mosler Automotive 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, Mosler Automotive 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 MT900 will comply 
with all other applicable FMVSSs.
    The company asserted that granting the exemption will benefit U.S. 
employment, companies, and citizens, because Mosler Automotive is a 
U.S. company and employs 25 people at its Florida facility. Mosler 
Automotive also argued that denial of the exemption request would have 
an adverse impact on consumer choice. 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, extreme design and high cost. 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, Mosler Automotive stated that the 
MT900 has an extremely strong chassis, which is composed of aluminum 
tubes and composite structural parts. According to Mosler Automotive, 
the vehicle design is such that occupants are effectively placed in a 
``protective `cell' '' with the chassis structure built around them.

V. Issuance of Notice of Final Action

    We are providing a 30-day comment period. After considering public 
comments and other available information, we will publish a notice of

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final action on the application in the Federal Register.

    Issued on: June 5, 2007.
Stephen R. Kratzke,
Associate Administrator for Rulemaking.
[FR Doc. E7-11259 Filed 6-11-07; 8:45 am]
BILLING CODE 4910-59-P