[Federal Register Volume 76, Number 110 (Wednesday, June 8, 2011)]
[Notices]
[Pages 33406-33409]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-14180]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2011-0069]


Lotus Cars Ltd. Receipt of Petition for Renewal of 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 a petition for renewal 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 in 49 CFR Part 555, Lotus 
Cars Ltd. has petitioned the agency for renewal of a temporary 
exemption from certain advanced air bag requirements of FMVSS No. 208. 
The basis for the application is that the petitioner avers that 
compliance would cause it substantial economic hardship and that it has 
tried in good faith to comply with the standard.\1\ This notice of 
receipt of an application for renewal of temporary exemptions is 
published in accordance with statutory and administrative provisions. 
NHTSA has made no judgment on the merits of the application.
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    \1\ To view the applications, go to http://www.regulations.gov 
and enter the docket number set forth in the heading of this 
document.

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DATES: You should submit your comments not later than July 8, 2011.

FOR FURTHER INFORMATION CONTACT: David Jasinski, Office of the Chief 
Counsel, NCC-112, National Highway Traffic Safety Administration, 1200 
New Jersey Avenue, SE., West Building 4th Floor, Room W41-213, 
Washington, DC 20590. Telephone: (202) 366-2992; Fax: (202) 366-3820.

ADDRESSES: 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://www.regulations.gov. Follow the 
instructions for submitting comments on the 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 am and 5 pm, 
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. Note that all comments received will be posted without 
change to http://www.regulations.gov, including any personal 
information provided. Please see the Privacy Act discussion below. We 
will consider all comments received before the close of business on the 
comment closing date indicated above. To the extent possible, we will 
also consider comments filed after the closing date.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov at any time or to 
1200 New Jersey Avenue, SE., West Building Ground Floor, Room W12-140, 
Washington, DC 20590, between 9 am and 5 pm, 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://www.dot.gov/privacy.html.
    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).

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.'' \2\ The upgrade was designed to meet the twin 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 issuance of the advanced air bag requirements was 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 the end of the phase-in period, i.e., September 
1, 2006.
    In recent years, NHTSA has addressed a number of petitions for 
exemption from the advanced air bag requirements of FMVSS No. 208. The 
majority of these requests have come from small manufacturers, each of 
which has petitioned on the basis that compliance would cause it 
substantial economic hardship and that it has tried in good faith to 
comply with the standard. In recognition of the more limited resources 
and capabilities of small motor vehicle manufacturers, authority to 
grant exemptions based on substantial economic hardship and good faith 
efforts was added to the Vehicle Safety Act in 1972 to enable the 
agency to give those manufacturers additional time to comply with the 
Federal safety standards.
    NHTSA has granted a number of these petitions, usually in 
situations in which

[[Page 33407]]

the manufacturer is supplying standard air bags in lieu of advanced air 
bags.\3\ In addressing these petitions, NHTSA has recognized that small 
manufacturers may face particular difficulties in acquiring or 
developing advanced air bag systems.
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    \3\ See, e.g., grant of petition to Panoz, 72 FR 28759 (May 22, 
2007), or grant of petition to Koenigsegg, 72 FR 17608 (April 9, 
2007).
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    Notwithstanding those previous grants of exemption, NHTSA is 
considering two key issues--
    (1) Whether it is in the public interest to continue to grant such 
petitions, particularly in the same manner as in the past, given the 
number of years these requirements have now been in effect and the 
benefits of advanced air bags, and
    (2) To the extent such petitions are granted, what plans and 
countermeasures to protect child and infant occupants, short of 
compliance with the advanced air bags, should be expected.

While the exemption authority was created to address the problems of 
small manufacturers and the agency wishes to be appropriately attentive 
to those problems, it was not anticipated by the agency that use of 
this authority would result in small manufacturers being given much 
more than relatively short term exemptions from recently implemented 
safety standards, especially those addressing particularly significant 
safety problems.
    Given the passage of time since the advanced air bag requirements 
were established and implemented, and in light of the benefits of 
advanced air bags, NHTSA is considering whether it is in the public 
interest to continue to grant exemptions from these requirements, 
particularly under the same terms as in the past. The costs of 
compliance with the advanced air bag requirements of FMVSS No. 208 are 
costs that all entrants to the U.S. automobile marketplace should 
expect to bear. Furthermore, NHTSA understands that, in contrast to the 
initial years after the advanced air bag requirements went into effect, 
low volume manufacturers now have access to advanced air bag 
technology. Accordingly, NHTSA tentatively concludes that the expense 
of advanced air bag technology is not now sufficient, in and of itself, 
to justify the grant of a petition for a hardship exemption from the 
advanced air bag requirements.
    NHTSA further notes that the granting of exemptions from motor 
vehicle safety standards is subject to the agency's finding that the 
petitioning manufacturer has ``tried to comply with the standard in 
good faith.'' \4\ In response to prior petitions, NHTSA has granted 
temporary exemptions from the advanced air bag requirements as a means 
of affording eligible manufacturers an additional transition period to 
comply with the exempted standard. In deciding whether to grant an 
exemption based on substantial economic hardship and good faith 
efforts, NHTSA considers the steps that the manufacturer has already 
taken to achieve compliance, as well as the future steps the 
manufacturer plans to take during the exemption period and the 
estimated date by which full compliance will be achieved.\5\
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    \4\ 49 U.S.C. 30113(b)(3)(B)(i).
    \5\ 49 CFR 555.6(a)(2).
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    NHTSA invites comment on whether and in what circumstances (e.g., 
nature of vehicles, number of vehicles, level of efforts to comply with 
the requirements, timing as to number of years since the requirements 
were implemented, etc.) it should continue to grant petitions for first 
time exemptions from the advanced air bag requirements of FMVSS No. 208 
and petitions for renewed exemptions from those requirements. We note 
that any policy statements we may make in this area would not have the 
effect of precluding manufacturers from submitting subsequent petitions 
for exemption. However, we believe it could be helpful for 
manufacturers to know our general views in advance of submitting a 
petition.
    We also request comment on the issue of, to the extent any future 
hardship exemptions from the advanced air bag requirements are granted, 
what plans and countermeasures to protect child and infant occupants, 
short of compliance with the advanced air bag requirements, should be 
expected. In this regard, we note the agency is authorized to condition 
the granting of exemptions on such terms as the Secretary considers 
appropriate.\6\ In responding to some recent petitions for exemption 
from the advanced air bag requirements of FMVSS No. 208, NHTSA has 
considered the fact that the petitioner planned to install some 
countermeasures for the protection of child passengers.\7\
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    \6\ 49 U.S.C. 30113(b).
    \7\ See, e.g., grant of petition of Think Technology AS, 74 FR 
40634-01 (Aug. 12, 2009); grant of petition of Ferrari S.p.A., 74 FR 
36303-02 (July 22, 2009).
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    NHTSA also invites comment on the likelihood that a child or infant 
will be a passenger in any vehicles that would be produced and sold in 
the U.S. under the requested exemptions.

II. Statutory Authority for Temporary Exemptions

    The National Traffic and Motor Vehicle Safety Act (Safety Act), 
codified as 49 U.S.C. Chapter 301, provides the Secretary of 
Transportation authority to exempt, on a temporary basis and under 
specified circumstances, motor vehicles from a motor vehicle safety 
standard or bumper standard. This authority is set forth at 49 U.S.C. 
30113. The Secretary has delegated the authority for implementing this 
section to NHTSA.
    The Act authorizes the Secretary to grant a temporary exemption to 
a manufacturer of not more than 10,000 motor vehicles annually, on such 
terms as he deems appropriate, if he finds that the exemption would be 
consistent with the public interest and the Safety Act and if he also 
finds that ``compliance with the standard would cause substantial 
economic hardship to a manufacturer that has tried to comply with the 
standard in good faith.''
    The Act also authorizes the Secretary to grant a temporary 
exemption from a standard, for not more than 2,500 motor vehicles per 
year, to a manufacturer of any size, on such terms as he deems 
appropriate, if he finds that the exemption would be consistent with 
the public interest and the Safety Act and if he also finds either that
    [dec221] The exemption would make easier the development or field 
evaluation of a new motor vehicle safety feature providing a safety 
level at least equal to the safety level of the standard;
    [dec221] The exemption would make the development or field 
evaluation of a low-emission motor vehicle easier and would not 
unreasonably lower the safety level of that vehicle; or
    [dec221] Compliance with the standard would prevent the 
manufacturer from selling a motor vehicle with an overall safety level 
at least equal to the overall safety level of nonexempt vehicles.
    NHTSA established Part 555, Temporary Exemption from Motor Vehicle 
Safety and Bumper Standards, to implement the statutory provisions 
concerning temporary exemptions. Under Part 555, a petitioner must 
provide specified information in submitting a petition for exemption. 
These requirements are specified in 49 CFR 555.5, and include a number 
of items. Foremost among them are that the petitioner must set forth 
the basis of the application under Sec.  555.6, and the reasons why the 
exemption would be in the public interest and consistent with the 
objectives of 49 U.S.C. Chapter 301.
    A manufacturer is eligible to apply for a hardship exemption if its 
total motor vehicle production in its most recent

[[Page 33408]]

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 state that a manufacturer has 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.
    While 49 U.S.C. 30113(b) states that exemptions from a Safety Act 
standard are to be granted on a ``temporary basis,'' \8\ 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 
status to an 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 ongoing 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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    \8\ 49 U.S.C. 30113(b)(1).
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    Finally, we note that under 49 CFR 555.8(e), ``If an application 
for renewal of temporary exemption that meets the requirements of Sec.  
555.5 has been filed not later than 60 days before the termination date 
of an exemption, the exemption does not terminate until the 
Administrator grants or denies the application for renewal.'' This 
petition for renewal has been submitted by the deadline stated in 49 
CFR 555.8(e).

III. Overview of Petition

    In accordance with 49 U.S.C. 30113 and the procedures in 49 CFR 
Part 555, Lotus Cars Ltd. (Lotus) has submitted a petition asking the 
agency for renewal of its temporary exemption from certain advanced air 
bag requirements of FMVSS No. 208. The basis for the application is 
that compliance would cause the petitioner substantial economic 
hardship and that the petitioner has tried in good faith to comply with 
the standard. Lotus has requested a renewal of its exemption for a 
period of two years, from September 1, 2009 to August 31, 2011.
    Lotus is petitioning for a renewal of its exemption from certain 
requirements of FMVSS No. 208, Occupant Crash Protection. Specifically, 
the petition requests an exemption 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 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) in FMVSS No. 208, which relate to the advanced air bag 
requirements. Lotus has requested a two-year extension of its exemption 
for the Elise platform, which includes a convertible, a coupe, and the 
Exige variant of the coupe.
    In a Federal Register document dated September 7, 2006, Lotus was 
granted a temporary exemption from the advanced air bag requirements of 
FMVSS No. 208 listed above for the Elise.\9\ The exemption was granted 
for the period from September 1, 2006 to August 31, 2009. The basis for 
the grant was that compliance with the advanced air bag requirements of 
FMVSS No. 208 would cause substantial economic hardship to a 
manufacturer that has tried in good faith to comply with the standard 
and that such exemption was in the public interest and consistent with 
the objectives of traffic safety.
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    \9\ 71 FR 52851, 52859-62 (Docket No. NHTSA-2006-25324).
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    Lotus sought renewal of its exemption in a petition dated June 15, 
2009. The basis for Lotus's application is substantial economic 
hardship to a manufacturer that has tried in good faith to comply with 
the standard. Lotus is a corporation organized under the laws of 
England. Lotus has never manufactured more than 6,000 vehicles in any 
calendar or model year.\10\ Lotus maintains that its eligibility for a 
financial hardship exemption has been confirmed four times since 1999 
and the material facts underlying those determinations have not 
changed.\11\
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    \10\ This number includes vehicles that Lotus has manufactured 
for Tesla Motors, Inc.
    \11\ See 64 FR 61379 (Nov. 10, 1999); 68 FR 10066 (Mar. 3, 
2003); 69 FR 5658 (Feb. 5, 2004); 71 FR 52851, 52859-62 (Feb. 5, 
2004).
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    The Elise platform is a sports car that has been the only model 
Lotus sells in the United States. Lotus introduced the Evora in 2010, 
which has a fully compliant advanced air bag system. The Evora is more 
expensive than the Elise, which remains Lotus's lowest-priced, entry-
level model.
    Lotus set forth five factors that favor granting its exemption. 
First, Lotus cited its continued financial hardship, which has been 
exacerbated by the global recession that has hit the automobile 
industry particularly hard. Second, Lotus noted the technical 
roadblocks to including advanced air bags in the Elise discussed in the 
2006 notice. Third, Lotus stated that the next-generation Elise is 
behind schedule. Fourth, Lotus explained that the Evora's advanced air 
bag system will not carry over to the Elise, and that the company faces 
the challenge of developing a second advanced air bag system for the 
next-generation Elise. Fifth, Lotus stated that it needs to continue 
U.S. sales of the current Elise for 24 months while the development of 
the next-generation Elise and its advanced air bag system continues and 
is brought to completion.
    Lotus contends that it continues to experience substantial economic 
hardship. Although Lotus states that it has had one profitable year in 
the last five years, it has suffered a substantial cumulative loss over 
a five-year period. Lotus's financial projections indicate that Lotus 
will be profitable with or without an exemption. However, Lotus 
contends that its projections of profitability with or without an 
exemption do not preclude a finding that the requisite financial 
hardship for a temporary exemption exists. Furthermore, Lotus states 
that its profits would be used to pay debt incurred as a result of its 
adoption of advanced air bags in the Evora and the next-generation 
Elise. Lotus claims that, without the exemption, it would lose at least 
750 U.S. sales of the Elise, costing Lotus $10.5 million in projected 
profit, in addition to loss of market share of its entry-level model to 
other brands.
    Lotus also alleges that it has made a good faith effort to develop 
advanced air bags. First, it notes that it has developed the Evora 
model with advanced air bags, as it promised in its original exemption 
petition. Lotus stated that the final version of the next-generation 
Elise with

[[Page 33409]]

advanced air bags has been delayed 24 months because the cost of the 
Evora project was greater than expected, Lotus's revenues were less 
than expected, and its financial constraints were exacerbated by the 
global economic recession and automobile market downturn in late 2008. 
As a result, Lotus alleges that it was unable to fully fund the next-
generation Elise program while developing the Evora.
    Lotus also reiterates that the Evora's advanced air bag system does 
not carry over to the next generation Elise. Lotus notes that, after 
discovering this, it reexamined the possibility of equipping the 
current Elise with advanced air bags, in light of changes in the 
supplier situation since its last effort in 2005. However, Lotus 
concluded that advanced air bags for the current Elise remain 
infeasible.
    Lotus also contends that an extension is in the public interest and 
consistent with the objectives of the Safety Act, citing the reasons 
stated in the September 2006 grant. Lotus states that the air bags in 
the Elise do not pose a safety risk. In support, Lotus cites the fact 
that there are no known injuries or deaths to infants, children, or 
other occupants caused by its air bags; that its crashworthy design 
provides a high level of safety without advanced air bags; and that its 
passenger seat is fixed in the rearmost position. In addition, Lotus 
makes clear in its owner's manual that it does not recommend the Elise 
be used for transporting children. Lotus also notes that, if an 
exemption is not granted, consumers would be adversely affected due to 
the loss of the Elise from the marketplace. Further, Lotus notes that 
the Elise is fuel efficient and it will comply with all other FMVSSs.

IV. Completeness and Comment Period

    Upon receiving a petition, NHTSA conducts an initial review of the 
petition with respect to whether the petition is complete and whether 
the petitioner appears to be eligible to apply for the requested 
petition. The agency has tentatively concluded that the petition from 
Lotus is complete and that Lotus is eligible for an extension of its 
temporary exemption. The agency has not made any judgment on the merit 
of the application, and is placing a non-confidential copy of the 
petition in the docket.
    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: June 1, 2011.
Christopher J. Bonanti,
Associate Administrator for Rulemaking.
[FR Doc. 2011-14180 Filed 6-7-11; 8:45 am]
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