[Federal Register Volume 74, Number 182 (Tuesday, September 22, 2009)]
[Notices]
[Pages 48345-48348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-22799]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2009-0157]


Automobili Lamborghini SpA; Receipt of Application for Extension 
of Temporary Exemption From 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 extension of a Temporary 
Exemption from certain provisions of Federal Motor Vehicle Safety 
Standard (FMVSS) No. 208, Occupant Crash Protection.

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SUMMARY: In accordance with the procedures of 49 CFR Part 555, 
Automobili Lamborghini SpA (``Lamborghini'') has applied for an 
extension of a previously received temporary exemption from certain 
requirements of FMVSS No. 208, Occupant Crash Protection, for the 
Lamborghini Murcielago model. Lamborghini requests extension of its 
temporary exemption for the advanced air bag requirements. The basis of 
the application is that compliance would cause substantial economic 
hardship to a manufacturer that has tried in good faith to comply with 
the standard.
    NHTSA is publishing this notice of receipt of the application in 
accordance with the requirements of 49 U.S.C. 30113(b)(2), and has made 
no judgment on the merits of the application.

DATES: You should submit your comments not later than October 22, 2009.
    Comments: We invite you to submit comments on the application 
described below. You may submit comments identified by docket number in 
the heading of this notice by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments on 
the electronic docket site by clicking on ``Help'' or ``FAQ.''
     Mail: DOT Docket Management Facility, M-30, U.S. 
Department of Transportation, West Building Ground Floor, Room W12-140, 
1200 New Jersey Avenue, SE., Washington, DC 20590.
     Hand Delivery or Courier: U.S. Department of 
Transportation, West Building Ground Floor, Room W12-140, 1200 New 
Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m. ET, 
Monday through Friday, except Federal holidays.
     Fax: (202) 493-2251.
    Instructions: All submissions must include the agency name and 
docket number. Note that all comments received will be posted without 
change to http://www.regulations.gov, including any personal 
information provided.
    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 (65 FR 19477-78).
    Docket: For access to the docket in order to read background 
documents or comments received, go to http://www.regulations.gov at any 
time, or to M-30, West Building Ground Floor, Room W12-140, 1200 New 
Jersey Avenue, SE., Washington, DC 20950, between 9 a.m. and 5 p.m. ET, 
Monday through Friday, except Federal holidays.
    Confidential Business Information: If you wish to submit any 
information under a claim of confidentiality, you should submit three 
copies of your complete submission, including the information you claim 
to be confidential business information, to the Chief Counsel, NHTSA, 
at the address given under FOR FURTHER INFORMATION CONTACT. In 
addition, you should submit two copies, from which you have deleted the 
claimed confidential business information, to Docket Management at the 
address given above. When you send a comment containing information 
claimed to be confidential business information, you should include a 
cover letter setting forth the information specified in our 
confidential business information regulation (49 CFR Part 512).

FOR FURTHER INFORMATION CONTACT: Sarah Alves, Office of the Chief 
Counsel, NCC-112, National Highway Traffic Safety Administration, 1200 
New Jersey Avenue, SE., Washington, DC 20590. Phone: 202-366-2992; Fax: 
202-366-3820; E-Mail: [email protected].

SUPPLEMENTARY INFORMATION:

[[Page 48346]]

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.'' \1\ 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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    \1\ 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 earlier. 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 air 
bag systems compared to potential benefits 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 an extension of a 
temporary exemption for certain advanced air bag requirements submitted 
by a manufacturer of high-performance 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, Lamborghini has petitioned the agency for an extension of a 
temporary exemption from certain 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. The requested exemption would apply to the 
Lamborghini Murcielago model and would extend the original exemption 
for a period of 18 months beginning on September 1, 2009, ending on 
February 28, 2011. The requested extension would apply to certain 
advanced air bag requirements, specifically the requirements in 
S14.5.2, S15, S17, S19, S21, S23, and S25. A copy of the petition \2\ 
is available for review and has been placed in the docket of this 
notice.
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    \2\ 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 such information 
that the agency has determined to be confidential.
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III. Statutory Background for Economic Hardship Exemption

    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(a)(5)) 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

    Background. 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)). Lamborghini manufactured 2,580 
automobiles in 2007 and estimated a total production of 2,450 
automobiles in 2008, and 2,500 automobiles in 2009. Lamborghini has 
gone through a number of owners over the last four decades. The current 
owner of Lamborghini is the German automobile manufacturer Audi, but 
Lamborghini stated in its petition that its relationship with Audi is 
``arms length'' and that Lamborghini operates independently.
    In a September 2006 notice granting Lamborghini's original 
exemption, NHTSA concluded that Lamborghini was eligible to apply for a 
temporary exemption and that Audi was not a manufacturer of Lamborghini 
vehicles by virtue of being a ``sponsor.'' The agency explained:

    Lamborghini S.p.A. is 100% owned by Audi AG (which, in turn is 
99.1% owned by Volkswagen AG). We have concluded that Lamborghini is 
eligible to apply for a temporary exemption based on the following 
factors. First, there is no similarity of design between the cars 
produced by Lamborghini and cars produced by Audi. There is no 
sharing of engines, transmissions, platforms, or interior systems, 
and production tooling is unique to Lamborghini. Second, Lamborghini 
has indicated that it has paid for all services or assistance 
provided by Audi in ``arm's-length'' transactions. Third, cars are 
imported and sold through separate distribution channels independent 
of the Audi dealer network. Accordingly, NHTSA concludes that Audi 
is not a manufacturer of Lamborghini vehicles by virtue of being a 
sponsor.\3\
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    \3\ 61 FR 52851, 52853 (Sept. 7, 2006).

    In its current petition, Lamborghini states that based on this 
previous finding, Lamborghini is eligible to apply for this petition. 
Lamborghini confirmed via a signed document submitted to NHTSA via e-
mail from its U.S. consultant that Lamborghini currently certifies that 
all the facts it certified in its original petition concerning 
Lamborghini's relationship with its parent company Audi continue to be 
true.\4\
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    \4\ This document will be placed in this docket along with the 
petition.
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    Requested exemption. Lamborghini has applied for an extension of 
its temporary exemption from the FMVSS No. 208 advanced air bag 
requirements. Lamborghini requested an additional 18 months for the 
exemption from the rigid

[[Page 48347]]

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 deformable barrier test requirement using the 5th percentile 
adult female test dummy (S17), the requirements to provide protection 
to 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). Lamborghini's current exemption extends until August 
31, 2009, and Lamborghini requested a one-and-a-half year extension 
that would exempt Lamborghini's Murcielago model from the listed 
advanced air bag requirements through February 28, 2011.
    Economic hardship. In its petition Lamborghini states that its 
previously established financial hardship \5\ continues. Lamborghini 
states that financial statement ``Forecasts for 2008 through 2011 are 
not good.'' Lamborghini states that although 2006 and 2007 financial 
statements have shown profitability, the recent upheaval in the global 
economy could have a substantial negative effect on these 
predictions.\6\ Specifically, Lamborghini's financial information 
submission showed that in the absence of the requested extension, it 
would lose between 120 and 200 U.S. Murcielago sales over the 
extension's 18 month period, and that alone would translate into lost 
revenue of between 32,000,000 and 55,000,000 Euros ($44,480,000-
$76,450,000), depending on the number of vehicles sold under the 
extension.\7\ Murcielago sales are 25 percent of total U.S. Lamborghini 
sales and in its petition Lamborghini stated that the profit margin on 
the top-of-the-line Murcielago is the highest of any model the company 
sells.
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    \5\ See 71 FR 52851 (September 7, 2006).
    \6\ In its petition, Lamborghini cites increased sales resulting 
from more dealers worldwide, the development of special series high 
margin vehicles, individualized made-to-order cars, and the offering 
of special options as reasons that its 2006-2007 results have been 
better than forecasted.
    \7\ All dollar values are based on an exchange rate of 1 Euro = 
$1.39.
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    Lamborghini states in its petition that the financial impact on 
Lamborghini of an extension denial would actually be even greater than 
mere lost U.S. sales or lost profits. First, by having no U.S. product 
in the ``supercar'' product range for 18 months, Lamborghini states 
that it would lose significant market share to competing brands which 
may never be regained. Second, because U.S. Murcielago sales are 
between 40 and 50 percent of total worldwide Murcielago sales, 
Lamborghini states in its petition that it would no longer be viable 
for Lamborghini to continue to produce that model for any markets. In 
its petition Lamborghini states that shutdown of the Murcielago 
production line would mean lost sales beyond lost U.S. sales and would 
mean layoffs at the factory that would raise the risk of permanently 
losing skilled workers to competing factories in the area, since the 
unemployment rate in the area is only between 2 and 3 percent. 
Lamborghini argues that such consequences demonstrate ``substantial 
economic hardship'' within the meaning of 49 U.S.C. 30113(b)(3)(B)(i).
    Good faith efforts to comply. Lamborghini stated that since the 
filing of the original petition for exemption, and since its granting 
in late 2006, further unexpected events have transpired that require 
the product cycle of the current Murcielago to be extended from 
September 2009 until March 2011. Specifically, the launch of the 
Murcielago successor has been delayed by up to 18 months due to the 
need to develop technologies and materials that permit an even lighter 
weight vehicle due to the need to comply with European Union carbon 
dioxide and noise requirements. In its petition Lamborghini stated that 
such development is a very time consuming endeavor and this is the same 
reason behind Ferrari's advanced air bag exemption request in November 
2007.\8\
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    \8\ 72 FR 66028.
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    Lamborghini referred to NHTSA's September 2006 decision granting 
Lamborghini's original petition for exemption which stated that 
``[l]ike Ferrari, Lamborghini stated that its product cycles must last 
longer than the industry average due to the high cost of development 
and extremely small sales volume.'' \9\ Lamborghini also quoted NHTSA's 
original grant as stating that ``[w]hile the petitioner was aware of 
the new requirements for some time, its business plans changed, and it 
was subsequently determined that the Murcielago's production run would 
need to be extended beyond 2006, thereby raising the problem of 
compliance with the advanced air bag requirements.'' \10\ In its 
petition Lamborghini explained that as happens in the small volume 
automotive industry, Lamborghini's business plan has changed again for 
reasons that Lamborghini could not control (i.e., the European Union 
requirements, as noted above), and Murcielago production must continue 
for 18 months longer.
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    \9\ 71 FR 52851, 52854.
    \10\ Id. at 52855 (emphasis added by Lamborghini).
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    Lamborghini stated in its petition that in 2008, when it realized 
that the Murcielago successor was going to be delayed, it revisited the 
possibility of fitting advanced air bags to the current Murcielago in 
case the technological and supplier situations had changed since the 
last efforts made by Lamborghini in 2005. Its petition stated that 
after this reexamination, Lamborghini reached the same conclusion it 
had reached in 2005: that fully compliant advanced air bags for the 
current Murcielago were infeasible. However, Lamborghini stated that 
testing that was part of this reexamination of the feasibility of 
advanced air bags revealed that the Murcielago could pass the upcoming 
belted 35 mile per hour (mph) 50th percentile dummy tests under 
S14.5.1(b) of FMVSS No. 208. As a result of this extra testing, 
Lamborghini stated that it can certify the Murcielago to the 35 mph 
belted 50th percentile dummy requirements in advance of the September 
1, 2010 small volume manufacturer deadline. In its petition, 
Lamborghini stated that this is further evidence that it is taking 
definitive good faith steps towards a full advanced air bag system and 
supports its request for the extension.
    Having reached the conclusion again that fully-compliant advanced 
air bags were not feasible for the current Murcielago, Lamborghini 
stated that it has continued its focus on developing advanced air bags 
for the Murcielago successor. In its petition Lamborghini explained 
that it has continued its efforts regarding 100 percent FMVSS No. 208 
compliance for the Murcielago successor. Lamborghini stated that the 
estimated costs for FMVSS No. 208 compliance for the successor 
Murcielago are 10,000,000 Euros ($13,900,000).
    Lamborghini argues that an exemption would be in the public 
interest. The petitioner states in its petition that the same reasons 
NHTSA determined that Lamborghini's original petition was consistent 
with the public interest remain valid. Lamborghini put forth several 
arguments in favor of a finding that the requested exemption is 
consistent with the public interest and the objectives of the National 
Traffic and Motor Vehicle Safety Act. Specifically:
    1. Lamborghini stated that the estimated 120 to 200 exempted 
vehicles that would be produced over 18 months under the requested 
exemption constitute a tiny fraction of the nation's vehicle fleet, and 
the requested

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extension would therefore have a de minimus impact on the overall 
safety of U.S. highways.
    2. The petitioner stated that the exempted vehicles would comply 
with all FMVSSs other than the provisions that are subject to the 
extension request.
    3. Lamborghini stated that a denial of the requested exemption 
would affect its goodwill, dealers, and service personnel by their 
inability to continue business with the Murcielago (i.e., to have a 
top-of-the-line model available for U.S. dealers).
    4. Lamborghini stated that the Murcielago is likely to be operated 
only on a limited basis and the requested extension will have a 
negligible impact on the overall safety of U.S. highways. The 
petitioner stated that research indicates that the Murcielago is driven 
on average only about 5,000 miles per year.
    5. Lamborghini stated that by its very nature, it is extremely rare 
that the Murcielago transports children.
    6. The petitioner cited the Murcielago's safety record, which it 
called excellent. Both in the U.S. and the rest of the world, 
Lamborghini stated that it knows of no injuries caused by the 
Murcielago's current air bag system. Lamborghini stated that given the 
very low volume of Lamborghini sales, such instances of death or 
injury, if they were to occur, would be known to the company. 
Therefore, Lamborghini stated, the vehicle guarantees a very high 
safety level even without an advanced air bag system, due, in part, to 
the crashworthiness design of the vehicle necessitated by its very high 
performance.
    7. Lamborghini argued that if the exemption is not granted, U.S. 
consumer choice would be harmed and that the agency has long maintained 
that the National Traffic and Motor Vehicle Safety Act seeks, if 
possible, to avoid limiting consumer choice.
    8. Lamborghini stated that it provides as standard equipment safety 
features that are not required by the FMVSS, which it states are in the 
public interest, including: passenger air bag on-off switch (which 
serves a key purpose at which advanced air bags are aimed--protection 
of smaller occupants), antilock brake system (ABS), traction control, 
4-wheel drive, occupant protection in a frontal pole test at 35 
kilometers per hour, and roadster roof crush resistance at 2.5 times 
the a mass of vehicle.

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 
final action on the application in the Federal Register.

    Issued on: September 17, 2009.
Stephen R. Kratzke,
Associate Administrator for Rulemaking.
[FR Doc. E9-22799 Filed 9-21-09; 8:45 am]
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