[Federal Register Volume 76, Number 188 (Wednesday, September 28, 2011)]
[Notices]
[Pages 60124-60127]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-24899]



[[Page 60124]]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2011-0110]


Tesla Motors, Inc.; Grant of Petition for Temporary Exemption 
From the Electronic Stability Control Requirements of FMVSS No. 126

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

ACTION: Notice of grant of a petition for temporary exemption from 
Federal Motor Vehicle Safety Standard (FMVSS) No. 126, Electronic 
Stability Control Systems.

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SUMMARY: This notice grants the petition of Tesla Motors, Inc. (Tesla) 
for the temporary exemption of its Roadster model from the electronic 
stability control requirements of FMVSS No. 126. The basis for the 
exemption is that the exemption would facilitate the development or 
field evaluation of a low-emission motor vehicle and would not 
unreasonably reduce the safety level of that vehicle.

DATES: The exemption is effective September 28, 2011, and remains in 
effect until November 7, 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 W41-326, 
Washington, DC 20590. Telephone: (202) 366-2992; Fax: (202) 366-3820.

SUPPLEMENTARY INFORMATION:

I. Statutory Basis for Temporary Exemptions

    The National Traffic and Motor Vehicle Safety Act (Safety Act), 
codified as 49 U.S.C. Chapter 301, authorizes the Secretary of 
Transportation 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 in this section to NHTSA.
    NHTSA established 49 CFR part 555, Temporary Exemption from Motor 
Vehicle Safety and Bumper Standards, to implement the statutory 
provisions concerning temporary exemptions. A vehicle manufacturer 
wishing to obtain an exemption from a standard must demonstrate in its 
application (A) That an exemption would be in the public interest and 
consistent with the Safety Act and (B) that the manufacturer satisfies 
one of the following four bases for an exemption: (i) Compliance with 
the standard would cause substantial economic hardship to a 
manufacturer that has tried to comply with the standard in good faith; 
(ii) 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; (iii) 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 (iv) 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.
    For an exemption petition to be granted on the basis that 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 the vehicle, the petition must include specified 
information set forth at 49 CFR 555.6(c). The main requirements of that 
section include: (1) Substantiation that the vehicle is a low-emission 
vehicle; (2) documentation establishing that a temporary exemption 
would not unreasonably degrade the safety of a vehicle; (3) 
substantiation that a temporary exemption would facilitate the 
development or field evaluation of the vehicle; (4) a statement of 
whether the petitioner intends to conform to the standard at the end of 
the exemption period; and (5) a statement that not more than 2,500 
exempted vehicles will be sold in the United States in any 12-month 
period for which an exemption may be granted.

II. Electronic Stability Control Systems Requirement

    In April 2007, NHTSA published a final rule requiring that vehicles 
with a gross vehicle weight rating of 4,536 kilograms (kg) (10,000 
pounds) or less be equipped with electronic stability control (ESC) 
systems. ESC systems use automatic computer-controlled braking of 
individual wheels to assist the driver in maintaining control in 
critical driving situations in which the vehicle is beginning to lose 
directional stability at the rear wheels (spin out) or directional 
control at the front wheels (plow out). An anti-lock brake system (ABS) 
is a prerequisite for an ESC system because ESC uses many of the same 
components as ABS. Thus, the cost of complying with FMVSS No. 126 is 
less for vehicle models already equipped with ABS.
    Preventing single-vehicle loss-of-control crashes is the most 
effective way to reduce deaths resulting from rollover crashes. This is 
because most loss-of-control crashes culminate in the vehicle leaving 
the roadway, which dramatically increases the probability of a 
rollover. NHTSA's crash data study of existing vehicles equipped with 
ESC demonstrated that these systems reduce fatal single-vehicle crashes 
of passenger cars by 55 percent and fatal single-vehicle crashes of 
light trucks and vans (LTVs) by 50 percent.\1\ NHTSA estimates that ESC 
has the potential to prevent 56 percent of the fatal passenger car 
rollovers and 74 percent of the fatal LTV first-event rollovers that 
would otherwise occur in single-vehicle crashes.\2\
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    \1\ Sivinski, R., Crash Prevention Effectiveness of Light-
Vehicle Electronic Stability Control: An Update of the 2007 NHTSA 
Evaluation; DOT HS 811 486 (June 2011).
    \2\ Id.
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    The ESC requirement became effective for substantially all vehicles 
on September 1, 2011.

III. Overview of Petition

    In accordance with 49 U.S.C. 30113 and the procedures in 49 CFR 
Part 555, Tesla Motors, Inc. (Tesla) submitted a petition dated June 7, 
2011 asking the agency for a temporary exemption from the electronic 
stability control requirements of FMVSS No. 126. The bases for the 
application are, first, that the exemption would make the development 
or field evaluation of a low-emission vehicle easier and would not 
unreasonably lower the safety level of that vehicle and, second, that 
compliance would cause substantial economic hardship to a petitioner 
that has tried in good faith to comply with the standard. However, the 
agency has decided to grant the petition on the basis that an exemption 
would make the development or field evaluation of a low-emission 
vehicle easier and would not unreasonably lower the safety level of the 
vehicle. Accordingly, this document will not further discuss the 
portions of the petition related to only the economic hardship 
arguments.
    Tesla has requested an exemption for the Roadster model for a 
period from September 1, 2011 to December 31, 2011. In a supplemental 
filing, Tesla stated that it now intends to manufacture no more than 80 
vehicles under the requested exemption and that manufacturing would be 
complete by October 20, 2011.
    Tesla is a Delaware corporation headquartered in California with 
sales offices throughout the United States and overseas. Although Tesla 
currently sells

[[Page 60125]]

only one vehicle, the Roadster, Tesla is scheduled to begin production 
and sale of a new all-electric vehicle, the Model S, in 2012. Tesla is 
also developing electric vehicle power train solutions for the Toyota 
Motor Corporation RAV 4 sport utility vehicle and the Daimler AG 
Mercedes A Class electric vehicle.
    Tesla began production of the all-electric Roadster in 2008. The 
Roadster has a single-speed electrically actuated automatic 
transmission and three phase, four pole AC induction motor. The 
Roadster has a combined range of 245 miles on a single charge. Under an 
agreement with Group Lotus plc (Lotus), Tesla purchases the Roadster 
``glider,'' which uses the chassis and several other systems of the 
Lotus Elise. The gliders are manufactured under Tesla's supervision and 
direction at a Lotus factory in the United Kingdom and then shipped to 
Menlo Park, California, where installation of the power train and other 
final steps are taken prior to sale of the vehicle in the United 
States.
    According to Tesla, the Roadster was conceived as a limited proof-
of-concept vehicle for later generations of Tesla vehicles. Tesla is 
preparing to introduce its next electric vehicle, the four-door fully 
electric Model S sedan. Tesla states that the Model S will meet or 
exceed all FMVSSs in effect when the vehicle is released for production 
in 2012. The Model S will carry up to seven passengers for 300 miles on 
a single charge, but at less than half the price of the Tesla Roadster. 
In parallel with the development of the Model S, Tesla is developing 
electric power trains for two other vehicles intended for wide 
distribution--the Toyota RAV 4 and Mercedes A Class electric vehicles. 
For these reasons, Tesla asserts that granting the exemption will 
support the development and evaluation of electric vehicles by Toyota 
and Mercedes, as well as by Tesla itself.
    Tesla explains in its petition how the continued sale of Roadster 
vehicles will support development and field evaluation of a highway-
capable electric vehicle. Tesla states that the development and sale of 
the Roadster model has allowed it to develop its next all-electric 
vehicle, the Model S. Tesla states that, with the permission of vehicle 
owners, it has used data from computers installed in on-road Roadsters 
related to vehicle operation, operating conditions, charging 
conditions, state of charge, and other vehicle performance parameters 
to determine how best to optimize its battery design and vehicle 
software for future vehicle offerings such as the Model S. Tesla 
believes that allowing the sale of additional Roadsters will continue 
to enrich and add to its database of information for future electric 
vehicle development. Tesla states that it cannot replicate this data in 
laboratory or other non-highway conditions. Tesla contends that the 
database from Roadster vehicles is the most substantial real-world 
database available to government agencies such as NHTSA that are 
involved in the evaluation of electric vehicles. Tesla also contends 
that the 80 additional Roadster vehicles covered by its exemption 
request have the most up-to-date software, hardware, controls and power 
electronics of any Tesla vehicles, and that their operation therefore 
will generate particularly valuable additional data that is most 
valuable addition to the Tesla database. Because these Roadsters 
incorporate the latest generation of technology and apply the most up-
to-date knowledge developed by Tesla, the company also asserts that 
they are the most valuable vehicles for the development and release of 
Tesla's next electric vehicle, the Model S.
    Tesla believes that safety will not be unduly compromised if the 
exemption is granted. In support of this assertion, Tesla cites its 
inclusion of a traction control system (TCS) on its vehicles. Tesla's 
TCS is comprised of software, wheel speed sensors, and the drive system 
electronic control unit (ECU). Tesla states that its TCS has many 
elements of an ESC system required by FMVSS No. 126. Tesla claims that 
the TCS is able to detect slip in the drive wheels through the 
vehicle's ECU and that the vehicle will limit drive power until wheel 
spin is controlled. However, Tesla notes that the TCS does not have the 
capability to independently monitor or adjust steering inputs to 
prevent oversteer or understeer, nor is it capable of applying brakes 
independent of driver input, both of which are required by FMVSS No. 
126.
    Further, Tesla believes that the lack of ESC systems on the 
Roadster will not unduly compromise safety based on the intended use of 
the Roadster. The Roadster is a low, two-seat sport coupe. Tesla 
believes that, while the Roadster is capable of handling slippery roads 
due to ice and snow, most owners either do not use their Roadsters 
during winter months or sharply limit their use.
    Tesla contends that denial of its petition will jeopardize Tesla's 
ability to make the transition to production of the Model S and other 
electric vehicles. Tesla states that it currently employs approximately 
1,100 people, primarily in Palo Alto and Fremont, California. Tesla had 
intended its manufacturing and production line workers to complete 
manufacture of the remaining Roadsters and then so shift their duties 
over to the Model S. Tesla asserts that it is not yet ready to transfer 
many Roadster manufacturing employees to the production operations for 
the Model S, and that it therefore cannot support Roadster 
manufacturing employees for the final quarter of 2011. Without the 
additional 80 vehicles covered by its exemption request, Tesla's 
production and manufacturing would have a significant gap in production 
time lines. As a result, Tesla may be forced to lay off a significant 
number of employees if it is not granted an exemption. Further, because 
the Roadster is the only vehicle Tesla offers for sale in the United 
States, Tesla contends that the cancellation of the program would 
result in a significant loss of market for Tesla.
    In its petition, Tesla asserts that the continued sale of a high-
profile vehicle like the Roadster will make the U.S. public familiar 
with the new possibilities of electric vehicles. The Roadster was 
intended to demonstrate that electric vehicles can provide all the 
performance, range and capabilities of internal combustion engine 
vehicles, but without any emissions. Tesla contends that continued 
production of the Roadster will help to ensure that the public remains 
aware of the viability and practicality of high performance, long range 
electric vehicles, as it makes the transition to the Model S.
    Tesla also believes that the exemption is in the public interest. 
As stated above, Tesla asserts that, without the exemption, it may be 
required to lay off a significant number of employees. Further, Tesla 
notes that denying this petition would result in fewer electric 
vehicles for sale in the United States. Tesla points out that, on the 
basis of each mile driven, vehicles like the Roadster that operate only 
on electricity have the greatest impact on reducing U.S. dependence on 
foreign oil. As Tesla states in its petition, electric vehicles are not 
just low-emission vehicles that would qualify for this exemption, but 
zero emission vehicles. Finally, Tesla believes that continuing to sell 
a long range, highway-capable, battery-powered electric vehicle in the 
United States will lead to more electric vehicles entering the fleet.

IV. Notice of Receipt

    On August 5, 2011, we published in the Federal Register (76 FR 
47639) a notice of receipt of Tesla's petition for temporary exemption, 
and provided an opportunity for public comment. We received one comment 
from the Advocates for Highway & Auto Safety (Advocates).

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V. Agency Analysis, Response to Comment, and Decision

    In this section, we provide our analysis and decision regarding 
Tesla's temporary exemption request concerning the ESC requirements of 
FMVSS No. 126, including our response to the comment received by the 
Advocates.
    As discussed below, we are granting Tesla's petition for the 
Roadster to be exempted, for a period of 40 days after the date of 
publication of this notice in the Federal Register, from the 
requirements of FMVSS No. 126. The agency's rationale for this decision 
is as follows:
    First, we conclude that Tesla has shown that an exemption from the 
ESC requirements would make the development or field evaluation of a 
low-emission motor vehicle easier. Specifically, we agree with Tesla 
that, by producing additional Roadster models, Tesla will be able to 
use data from computers installed on those vehicles to assist it in 
optimizing its battery design and vehicle software for future all-
electric vehicle offerings, including its upcoming Model S, as well as 
vehicles produced by other manufacturers working with Tesla. 
Furthermore, Tesla's willingness to share data from its Roadster 
database with NHTSA and other federal agencies means that the 
additional data from the operation of these additional Roadsters will 
help to advance the development, and to ensure the safety, of other 
electric vehicles. We believe that the data from the Roadster database 
can be used to ensure the safety of not only Tesla's future vehicles, 
but also electric vehicles produced by all other manufacturers.
    Further, the production of additional Roadster models would allow 
consumers of all-electric vehicles an additional option during the 
exemption period. We agree with Tesla that continued production of a 
high-profile vehicle like the Roadster, even for the very limited 
period of 40 days and in the limited quantity of 80 vehicles, will help 
to demonstrate to the U.S. public the performance, range and 
capabilities of electric vehicles. We also agree with Tesla that 
continued production of the Roadster for the limited period requested 
by Tesla will ease Tesla's transition to the development and production 
of the all-electric Model S. For that reason we agree that denial of 
the petition could jeopardize Tesla's ability to produce the Model S 
and other electric vehicles in the future. For these reasons, we agree 
with Tesla that granting this petition will encourage the development 
and sale of highway-capable electric vehicles by Tesla and also by 
other manufacturers.
    Second, NHTSA concludes that the grant of this exemption would not 
unreasonably lower the safety or impact protection level of the 
vehicle. In particular, we have considered that Tesla produces a low, 
two-seat sport vehicle. The low center of gravity provides some 
additional protection from loss-of-control crashes. Furthermore, the 
nature of the vehicle is such that we agree with Tesla's assertion that 
Roadster owners would be less likely to use their vehicles in winter 
months or during rain. Because the Roadster would be used less during 
winter months or during rain, a Roadster is likely to be driven fewer 
miles compared to an average vehicle. We believe that this factor 
diminishes the likelihood that the failure to include an ESC system on 
the Roadster would unreasonably lower the safety level of the vehicle.
    The Advocates argue that ESC is an important and proven safety 
improvement. In support of their argument, the Advocates cite agency 
and industry research, including the agency's most recent study of ESC 
system effectiveness.\3\ While the agency continues to believe that ESC 
has a substantial effect on the number of vehicle crashes, the relevant 
inquiry is not the effectiveness of ESC systems. Rather, the relevant 
inquiry is whether an exemption would unreasonably lower the safety 
level of the vehicle in question. Although the agency has found 
substantial benefits resulting from ESC systems on passenger cars, the 
agency finds that the absence of ESC on the Roadster does not 
unreasonably lower the safety level of that specific vehicle. We 
believe that the expected use patterns of the Roadster, including the 
relatively low number of miles driven by the average Roadster owner, 
support this finding.
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    \3\ See supra, note 1.
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    The Advocates also argue that Tesla cannot guarantee the conditions 
under which the vehicle will be used. That is, although Tesla argues 
that Roadsters are less likely to be driven in winter months or during 
rain, Tesla cannot guarantee that. However, we believe that the 
Advocates would hold Tesla to too high of a burden of proof that would 
essentially foreclose the possibility of any exemption being granted. 
Moreover, although Tesla has not provided data in support of its 
assertions, we find Tesla's assertions that a low, soft-top convertible 
vehicle is less likely to be driven in the rain, snow, or winter months 
to be plausible and persuasive.
    The Advocates also argue that Tesla's limited production of 
exempted vehicles does not justify an exemption. The Advocates argue 
that rarer vehicles are not safer just because they are rarer. While 
the agency cannot dispute the assertion that rarer vehicles are not 
safer because they are rarer, it does not follow that the agency should 
not consider the expected production volume in support of an exemption 
request. If Tesla intended to produce 2,500 vehicles per year over two 
years rather than 80 vehicles in a little over a month, the agency 
would judge Tesla's petition differently than the petition now before 
it.
    Moreover, it is not just the limited number of Roadsters that would 
be produced under the exemption, but the limited number of miles the 
average Roadster is driven compared to other cars that Tesla cites in 
support of its petition. The Advocates do not dispute the relatively 
small number of vehicles that Tesla intends to produce under the 
exemption and the relatively low-mileage use of the Roadster when 
compared to other vehicles.
    The Advocates also contend that, because an FMVSS establishes only 
the minimum performance requirements necessary for occupant protection, 
an exemption must only be granted when absolutely necessary. However, 
the statutory requirements for granting an exemption require only a 
finding that an exemption is in the public interest and meets the 
objectives of the Safety Act, in addition to the specific requirements 
set forth for each of the four bases for an exemption.
    We also observe that a very limited number of vehicles would be 
produced under this temporary exemption. Manufacturers granted 
exemptions on the basis of furthering the development or field 
evaluation of a low-emission vehicle are allowed to sell as many as 
2,500 exempted vehicles in any 12-month period. Tesla has stated that 
it intends to produce only 80 vehicles during the exemption period.
    The Advocates express a concern that Tesla has, in this petition, 
requested a shorter exemption period than in its request for an 
exemption from the advanced air bag requirements of FMVSS No. 208. The 
Advocates suggest that the longer exemption period sought in the 
advanced air bag exemption petition suggests that Tesla may continue 
Roadster production beyond the date sought for this exemption. We 
reject this argument as a basis for denying Tesla's petition. We give 
greater weight to Tesla's most recent statement

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that it intends to end Roaster production within less than 50 days of 
the grant of this exemption than to any prior statements regarding its 
production plans made in the context of prior submissions to the 
agency.\4\
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    \4\ Furthermore, the effect of Tesla expressing different 
production plans in its submissions related to this petition than in 
its submissions on the advanced air bag petition are better 
addressed in the context of the agency's response to the advanced 
air bag petition because Tesla sought a longer exemption from the 
advanced air bag requirements.
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    Based on the foregoing, we believe that any impact on safety from 
granting the petition would be negligible and that Tesla has satisfied 
the eligibility criteria for an exemption for the development or field 
evaluation of a low-emission motor vehicle.
    The Advocates raise other issues in their comments that the agency 
need not address in detail. Specifically, the Advocates argue that 
Tesla had ample time to develop an FMVSS No. 126-compliant ESC system 
because the final rule mandating ESC systems was published in the same 
year that Roadster production first began. The Advocates also state 
that the cost of including an ESC system is small relative to the cost 
of the Roadster.\5\ The Advocates further argue that the loss of income 
from sales of Roadsters that Tesla did not intend to produce cannot be 
considered an economic hardship. Each of these comments relate to 
requirements for economic hardship petitions. Because the agency has 
determined that Tesla's exemption is justified under a different basis, 
the agency need not address these three issues specifically in this 
notice.
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    \5\ The agency does take note, however, that the cost of 
implementing design modifications to the Roadster to accommodate ESC 
would not be trivial.
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    We also find that this exemption would be consistent with the 
public interest and the objectives of the Safety Act. NHTSA has 
traditionally found that the public interest is served by affording 
consumers a wider variety of motor vehicles, by encouraging the 
development of fuel-efficient and alternative-energy vehicles, and 
providing additional employment opportunities. We believe that all 
three of these public interest considerations would be served by 
granting Tesla's petition.
    We note that the denial of this request would remove one of the few 
electric vehicles that is currently being sold in the U.S. market and 
that granting this petition would afford U.S. consumers the continued 
choice of this all-electric vehicle. As explained above, granting this 
petition will ease the development of the Model S as well as other 
electric vehicles, while conversely denial of the petition could 
compromise Tesla's ability to move forward with the Model S. We believe 
that granting this petition will have a positive impact on U.S. 
employment in the automotive industry, and that denial of the petition 
could directly impact the jobs of current Tesla employees supporting 
the Roadster.
    Additionally, we believe that the requested exemption will have a 
limited impact on general motor vehicle safety because of the small 
number of vehicles that can be produced under this exemption. Finally, 
it is critical to the agency's decision that Tesla is requesting a very 
short exemption period and intends to sell only vehicles that comply 
with all applicable FMVSS after the exemption period.
    We note that, as explained below, prospective purchasers will be 
notified that the vehicle is exempted from the ESC requirements of 
Standard No. 126. Under Sec.  555.9(b), a manufacturer of an exempted 
vehicle 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 FMVSSs 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.\6\
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    \6\ Tesla's label would be required to list both its exemption 
from FMVSS No. 126 and its exemption from the advanced air bag 
requirements of FMVSS No. 208, which has been extended in a separate 
decision that is published in today's Federal Register.
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    In consideration of the foregoing, we conclude that granting the 
requested exemption from FMVSS No. 126, Electronic Stability Control 
Systems, would facilitate the field evaluation or development of a low-
emission vehicle, and would not unreasonably lower the safety or impact 
protection level of that vehicle. We further conclude that granting 
this exemption would be in the public interest and consistent with the 
objectives of the Safety Act.
    In accordance with 49 U.S.C. 30113(b)(3)(B)(iii), Tesla is granted 
NHTSA Temporary Exemption No. EX 11-03 from FMVSS No. 126. The 
exemption is for the Roadster model and shall remain effective from the 
date on which notice of this decision is published in the Federal 
Register for a period of 40 days, as indicated in the DATES section of 
this document.

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

    Issued on: September 22, 2011.
David L. Strickland,
Administrator.
[FR Doc. 2011-24899 Filed 9-27-11; 8:45 am]
BILLING CODE 4910-59-P