[Federal Register Volume 77, Number 178 (Thursday, September 13, 2012)]
[Notices]
[Pages 56703-56708]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-22612]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2012-0133]


Public Hearing to Determine Whether ZAP Has Met Notification and 
Remedy Requirements

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

ACTION: Notice of public hearing.

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SUMMARY: NHTSA will hold a public hearing on whether ZAP,\1\ a publicly 
owned company based in Santa Rosa, California, has reasonably met its 
obligations to notify owners, purchasers, and dealers of noncompliances 
with Federal Motor Vehicle Safety Standard (FMVSS) No. 122, Motorcycle 
brake systems, and to remedy those noncompliances in two recalls 
involving Model Year (MY) 2008 ZAP Xebra three-wheeled vehicles, which 
ZAP imported from China.
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    \1\ ZAP also does business as ZAP Jonway. See http://www.zapworld.com/.

DATES: The public hearing will be held beginning at 10 a.m. ET on 
October 9, 2012 in the Oklahoma City room of the U.S. Department of 
Transportation Conference Center, located at 1200 New Jersey Avenue 
SE., Washington, DC 20590. NHTSA recommends that all persons attending 
the proceedings arrive at least 45 minutes early in order to facilitate 
entry into the Conference Center. NHTSA cannot ensure that late 
arrivals will be permitted access to the hearing. Attendees are 
strongly discouraged from bringing laptop computers to the hearing, as 
they will be subject to additional security measures. If you wish to 
attend or speak at the hearing, you must register in advance no later 
than October 2, 2012 (and September 28, 2012 for non-U.S. citizens), by 
following the instructions in the Procedural Matters section of this 
notice. NHTSA will consider late registrants to the extent time and 
space allows, but cannot ensure that late registrants will be able to 
attend or speak at the hearing. To ensure that NHTSA has an opportunity 
to consider comments, NHTSA must receive written comments by October 2, 
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2012.

ADDRESSES: You may submit comments to the docket number identified in 
the heading of this document by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
     Mail: Docket Management Facility, M-30, U.S. Department of 
Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New 
Jersey Avenue SE., Washington, DC 20590.
     Hand Delivery or Courier: West Building Ground Floor, Room 
W12-140, 1200 New Jersey Avenue SE., between 9 a.m. and 5 p.m. ET, 
Monday through Friday, except Federal holidays.
     Fax: (202) 493-2251.
    Regardless of how you submit your comments, you should mention the 
docket number of this document.
    You may call the Docket at 202-366-9324.
    Note that all comments received will be posted without change to 
http://www.regulations.gov, including any personal information 
provided.

[[Page 56704]]


FOR FURTHER INFORMATION CONTACT: For registration to attend or speak at 
the public hearing: Sabrina Fleming, National Highway Traffic Safety 
Administration, 1200 New Jersey Avenue SE., Washington, DC 20590 
(Telephone: 202-366-9896) (Fax: 202-366-3081). For hearing procedures: 
Kerry Kolodziej, Office of the Chief Counsel, National Highway Traffic 
Safety Administration, 1200 New Jersey Avenue SE., Washington, DC 20590 
(Telephone: 202-366-5263) (Fax: 202-366-3820). Information regarding 
the recalls is available on NHTSA's Web site: http://www.safercar.gov. 
To find these recalls: (1) In the drop-down menu under ``Safety 
Recalls,'' search for a recall by vehicle; (2) select model year 2008; 
(3) select ZAP as the make; (4) select Xebra as the model; and (5) 
click ``Retrieve Recalls.'' Once information on the recalls is 
displayed, clicking on the ``Document Search'' buttons will display 
recall-related documents.

SUPPLEMENTARY INFORMATION: Pursuant to 49 U.S.C. 30118(e) and 30120(e), 
and 49 CFR 557.6(d) and 557.7, NHTSA has decided to hold a public 
hearing on whether ZAP has reasonably met its obligations under the 
National Traffic and Motor Vehicle Safety Act, as amended (Safety Act), 
to provide notifications regarding the MY 2008 ZAP Xebra's 
noncompliances with FMVSS No. 122, Motorcycle brake systems (49 CFR 
571.122), and to remedy those noncompliances. The noncompliances are 
the subject of two recall campaigns, Recall Nos. 09V-177/12V-230 and 
09V-385/12V-363.

I. Initiation of a Recall

    A manufacturer of a motor vehicle that decides in good faith that 
the vehicle does not comply with an applicable FMVSS must notify NHTSA 
by submitting a Defect and Noncompliance Information Report, commonly 
referred to as a Part 573 Report. 49 U.S.C. 30118(c); 49 CFR 573.6. A 
Part 573 Report shall be submitted not more than 5 working days after a 
noncompliance with a FMVSS has been determined to exist. 49 CFR 
573.6(b). The manufacturer must subsequently file quarterly reports 
with NHTSA containing information including the status of the 
manufacturer's recall notification campaign and the number of vehicles 
that have been remedied. 49 CFR 573.7.
    Pursuant to the Safety Act, a ``manufacturer'' of a motor vehicle 
includes both a person manufacturing or assembling motor vehicles, and 
a person importing motor vehicles for resale. 49 U.S.C. 30102(a)(5). 
Both the importer of a motor vehicle and the vehicle's fabricating 
manufacturer are responsible for any noncompliance determined to exist 
in the vehicle. 49 CFR 573.5(a). As to imported motor vehicles, 
compliance with recall regulations by either the fabricating 
manufacturer or the importer of the vehicle shall be considered 
compliance by both. 49 CFR 573.3(b).

II. Notification Requirements

    In addition to its notification to NHTSA, if the manufacturer of a 
motor vehicle decides in good faith that the vehicle does not comply 
with an applicable FMVSS, the manufacturer must notify owners, 
purchasers, and dealers of the vehicle of the noncompliance. 49 U.S.C. 
30118(c); see 49 CFR part 573; 49 CFR part 577.\2\
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    \2\ A manufacturer is required to furnish NHTSA with a copy of 
each communication involving a recall that the manufacturer issued 
to, or made available to, more than one dealer, distributor, lessor, 
lessee, other manufacturer, owner, or purchaser, no later than five 
working days after the end of the month in which it is issued. 49 
CFR 579.5.
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    The manufacturer must send a notification of the noncompliance, by 
first class mail, to each person registered under State law as the 
owner of the vehicle and whose name and address are reasonably 
ascertainable by the manufacturer through State records or other 
available sources. 49 U.S.C. 30119(d); 49 CFR 577.7(a)(2)(i).\3\ If the 
owner cannot be reasonably ascertained, the manufacturer shall notify 
the most recent purchaser known to the manufacturer. 49 U.S.C. 
30119(d); 49 CFR 577.7(a)(2)(i). As explained in NHTSA's Safety Recall 
Compendium: ``It is critically important that owners be informed 
promptly of unreasonable risks to their safety and failures of their 
products to meet minimum safety standards, and even in those cases 
where the manufacturer may not have perfected its free remedy or may 
not have sufficient parts to be able to remedy all the recalled 
products for all owners immediately. Accordingly, it is expected that 
manufacturers issue their owner notification letters within 60 days of 
making a safety defect or noncompliance decision.'' \4\
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    \3\ Among other things, the notification to owners must contain 
a clear description of the noncompliance, an evaluation of the risk 
to motor vehicle safety reasonably related to the noncompliance, the 
measures to be taken to obtain a remedy of the noncompliance, and 
the earliest date on which the noncompliance will be remedied 
without charge. 49 U.S.C. 30119(a); see 49 CFR part 577.
    \4\ NHTSA, Safety Recall Compendium at 7-8, http://www-odi.nhtsa.dot.gov/cars/problems/recalls/documents/recompendium.pdf.
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    Additionally, a manufacturer must send notifications to dealers and 
distributors, as specified by 49 CFR 577.13. These notifications must 
be sent within a reasonable time after the manufacturer first decides 
that a noncompliance exists. 49 U.S.C. 30119(c); 49 CFR 577.7(a). The 
notifications must include an advisory that it is a violation of 
Federal law for a dealer to deliver a new motor vehicle covered by the 
notification under a sale or lease until the noncompliance is remedied. 
49 CFR 577.13; see 49 U.S.C. 30112(a)(1) (prohibiting a person from 
selling or offering for sale a vehicle that does not comply with an 
applicable FMVSS).
    On its own motion or on petition of any interested person, NHTSA 
may conduct a hearing to decide whether a manufacturer has reasonably 
met its notification requirements. 49 U.S.C. 30118(e). If NHTSA decides 
that the manufacturer has not reasonably met the notification 
requirements, it shall order the manufacturer to take specified action 
to meet those requirements and may take any other action authorized by 
the Safety Act, including assessing civil penalties. See 49 U.S.C. 
30118(e), 30165(a)(1). A person that violates the Safety Act, including 
the notification requirements, or regulations prescribed thereunder, is 
liable to the United States Government for a civil penalty of not more 
than $6,000 for each violation. A separate violation occurs for each 
motor vehicle and for each failure to perform a required act. The 
maximum penalty for a related series of violations is $17,350,000. 49 
U.S.C. 30165(a)(1); 49 CFR 578.6.

III. Remedy Requirements

    A manufacturer of a noncomplying motor vehicle is required to 
remedy the vehicle without charge. 49 U.S.C. 30120(a). The manufacturer 
may remedy the noncompliance by repairing the vehicle, by replacing the 
vehicle with an identical or reasonably equivalent vehicle, or by 
refunding the purchase price, less a reasonable allowance for 
depreciation. 49 U.S.C. 30120(a). If a manufacturer decides to repair a 
noncomplying motor vehicle and the repair is not done adequately within 
a reasonable time, the manufacturer shall replace the vehicle without 
charge with an identical or reasonably equivalent vehicle, or refund 
the purchase price, less a reasonable allowance for depreciation. 49 
U.S.C. 30120(c).
    On its own motion or on application by any interested person, NHTSA 
may conduct a hearing to decide whether a manufacturer has reasonably 
met the remedy requirements. 49 U.S.C. 30120(e). If NHTSA decides that 
the manufacturer has not reasonably met

[[Page 56705]]

the remedy requirements, it shall order the manufacturer to take 
specified action to meet those requirements, including by ordering the 
manufacturer to refund the purchase price of the noncomplying vehicles, 
less a reasonable allowance for depreciation. 49 U.S.C. 30120(a), (c), 
(e). NHTSA may also take any other action authorized by the Safety Act, 
including assessing civil penalties. See 49 U.S.C. 30120(e), 
30165(a)(1). A person that violates the Safety Act, including the 
remedy requirements, or regulations prescribed thereunder, is liable to 
the United States Government for a civil penalty of not more than 
$6,000 for each violation. A separate violation occurs for each motor 
vehicle and for each failure to perform a required act. The maximum 
penalty for a related series of violations is $17,350,000. 49 U.S.C. 
30165(a)(1); 49 CFR 578.6.

IV. MY 2008 ZAP Xebra

    ZAP is the importer of the MY 2008 ZAP Xebra and the registered 
agent for the fabricating manufacturer, China Qingqi Group Inc./Qingqi 
Group Motorcycle Co. Ltd. (``Qingqi Group'') of China. The MY 2008 ZAP 
Xebra is an electric, three-wheeled vehicle with a sedan or truck body 
style. As a three-wheeled vehicle, the MY 2008 ZAP Xebra is subject to 
the FMVSSs for motorcycles. See 49 CFR 571.3(b).

A. NHTSA's Investigation of the MY 2008 ZAP Xebra

    In late 2008, NHTSA tested a NHTSA-owned MY 2008 ZAP Xebra for 
compliance with FMVSS No. 122, Motorcycle brake systems, at 
Transportation Research Center Inc. (TRC) in East Liberty, Ohio.\5\
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    \5\ See NHTSA, Safety Compliance Testing for FMVSS 122, Final 
Report No. 122-TRC-10-004 (Nov. 8, 2010). The test report is 
publicly available by searching on http://www.nhtsa.gov/cars/problems/comply/.
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    NHTSA identified multiple apparent noncompliances with FMVSS No. 
122. Two of the apparent noncompliances related to the stopping 
distance requirements of FMVSS No. 122. First, the vehicle did not 
comply with the first effectiveness requirement of FMVSS No. 122, 
S5.2.1, Service brake system, because the service brakes were not 
capable of stopping the motorcycle from 30 m.p.h. within 54 feet during 
NHTSA's testing. Second, following the burnishing procedure specified 
in the Standard, the vehicle did not comply with FMVSS No. 122, S5.3, 
Service brake system--second effectiveness, because the service brakes 
were not capable of stopping the motorcycle from 30 m.p.h. within 43 
feet during NHTSA's testing. Due to these apparent noncompliances with 
the stopping distance requirements, NHTSA terminated its testing of the 
vehicle after the second effectiveness test.
    At various times, NHTSA also observed three additional apparent 
noncompliances with other requirements of FMVSS No. 122. First, the 
vehicle did not comply with FMVSS No. 122, S5.1.2.1, Master cylinder 
reservoirs, because it did not have a separate reservoir for each brake 
circuit with each reservoir filler opening having its own cover, seal, 
and cover retention device. Second, the vehicle did not comply with 
FMVSS No. 122, S5.1.2.2, Reservoir labeling, because the label was not 
correctly worded and some of the letters were not at the minimum 
required height. Finally, the vehicle did not comply with FMVSS No. 
122, S5.1.3.1, Failure indicator lamp, because the vehicle did not have 
a failure indicator lamp (which is required to activate for pressure 
failure, low fluid, and momentarily when the ignition switch is turned 
to the ``on'' or ``start'' position).
    NHTSA notified ZAP of the apparent noncompliances with the stopping 
distance and reservoir labeling requirements on April 9, 2009.\6\ NHTSA 
notified ZAP of the apparent noncompliance with the master cylinder 
reservoir requirement on August 21, 2009.\7\ NHTSA notified ZAP of the 
apparent noncompliance with the failure indicator lamp requirement on 
approximately June 9, 2010.\8\
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    \6\ Letter from H. Thompson, NHTSA to G. Starr, ZAP (Apr. 9, 
2009).
    \7\ Email from S. Seigel, NHTSA to J. Long, ZAP (Aug. 21, 2009).
    \8\ Phone call log of S. Seigel, NHTSA (June 9, 2010).
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B. ZAP's Notifications to NHTSA of FMVSS No. 122 Noncompliances

1. Initial Recall Campaigns (Recall Nos. 09V-177 and 09V-385) \9\
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    \9\ The Part 573 Reports and other documents relevant to the 
recalls are available at www.safercar.gov.
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    ZAP first notified NHTSA that the MY 2008 ZAP Xebra was 
noncompliant with the FMVSS No. 122 stopping distance requirements by 
submitting to NHTSA a Part 573 Report prepared on May 18, 2009.\10\ 
NHTSA assigned Recall Number 09V-177 to this recall campaign.
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    \10\ Recall No. 09V-177, Part 573 Report (prepared May 18, 
2009). Although ZAP submitted the Part 573 Report to NHTSA, it 
stated that Qingqi Group decided on April 27, 2009 that the 
noncompliance existed. Compliance with recall regulations by either 
the fabricating manufacturer or the importer of a vehicle is 
considered compliance by both. 49 CFR 573.3(b). Nothing herein 
limits Qingqi Group's responsibilities and liabilities for the 
noncompliances of these vehicles.
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    In a second Part 573 Report, prepared on September 30, 2009, ZAP 
notified NHTSA of its decision that the MY 2008 ZAP Xebra does not 
comply with FMVSS No. 122, S1.2.1, Master cylinder reservoirs.\11\ 
NHTSA assigned Recall Number 09V-385 to this recall campaign. ZAP 
subsequently submitted an untimely petition for inconsequential 
noncompliance, see 49 CFR 556.4(c), which NHTSA denied on November 25, 
2009.\12\ ZAP then submitted an amended Part 573 Report, prepared on 
December 9, 2009, for this noncompliance.\13\
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    \11\ Recall No. 09V-385, Part 573 Report (prepared Sept. 30, 
2009). Based on this Part 573 Report, ZAP decided that the 
noncompliance existed on September 30, 2009.
    \12\ Letter from C. Harris, NHTSA to J. Long, ZAP (Nov. 25, 
2009).
    \13\ Recall No. 09V-385, Amended Part 573 Report (prepared Dec. 
9, 2009).
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    Most recently, ZAP reported that there are 691 vehicles subject to 
the recalls.\14\
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    \14\ Recall 09V-177, Quarterly Report (dated July 30, 2012); 
Recall 09V-385, Quarterly Report (dated July 30, 2012). ZAP 
initially reported there were 738 vehicles subject to the recalls, 
but has not explained why the number has changed. See Recall No. 
09V-177, Part 573 Report II; Recall No. 09V-385, Part 573 Report 
Sec.  II.
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2. Renewed Recall Campaigns (Recall Nos. 12V-230 and 12V-363)
    At NHTSA's request, ZAP initiated renewed recall campaigns for 
these FMVSS No. 122 noncompliances. After several months of delay,\15\ 
ZAP submitted a new Part 573 Report, prepared May 18, 2012, addressing 
the noncompliance with the stopping distance requirements.\16\ NHTSA 
assigned Recall Number 12V-230 to this renewed recall campaign 
(previously designated as Recall No. 09V-177). ZAP later submitted a 
new Part 573 Report, prepared on July 18, 2012, for the noncompliance 
with the master cylinder reservoir requirement.\17\ NHTSA assigned 
Recall Number 12V-363 to this renewed recall campaign (previously 
designated as Recall No. 09V-385).
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    \15\ See Letter from S. Schneider, ZAP to H. Thompson and S. 
Seigel, NHTSA (Dec. 10, 2011); Letter from S. Schneider, ZAP to H. 
Thompson, NHTSA (Apr. 2, 2012).
    \16\ Recall No. 12V-230, Part 573 Report (prepared May 18, 
2012).
    \17\ Recall No. 12V-363, Part 573 Report (prepared July 18, 
2012).
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3. Other Apparent Noncompliances Identified by NHTSA
    As discussed above, NHTSA also identified apparent noncompliances 
with FMVSS No. 122, S5.1.2.2, Reservoir labeling, and with FMVSS No. 
122, S5.1.3.1, Failure indicator lamp. To date, ZAP has not submitted a 
Part 573 Report to notify NHTSA that it has

[[Page 56706]]

decided in good faith that the MY 2008 ZAP Xebra does not comply with 
these aspects of FMVSS No. 122.\18\ However, as discussed below, ZAP's 
repair remedy does purport to address these apparent noncompliances.
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    \18\ ZAP likewise has not notified owners, purchasers, and 
dealers regarding these apparent noncompliances.
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C. ZAP's Recall Notifications to Owners, Purchasers, and Dealers

1. Initial Recall Campaigns (Recall Nos. 09V-177 and 09V-385)
    ZAP used an internal customer warranty database as its sole source 
of contact information for its recall notifications to owners and/or 
purchasers.\19\ ZAP repeatedly represented to NHTSA that it was working 
to obtain information on registered owners.\20\ However, as of its July 
30, 2012 response to a Special Order from NHTSA seeking additional 
information regarding the recalls, ZAP stated that it still had not 
obtained contact information for registered owners of MY 2008 ZAP 
Xebras, from State records or other available sources.\21\ See 49 CFR 
577.7(a)(2)(i).
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    \19\ See ZAP, Response to Special Order, Interrogatory No. 6 
(July 30, 2012).
    \20\ See Letter from S. Schneider, ZAP to H. Thompson and S. 
Seigel, NHTSA (Dec. 10, 2011); Letter from S. Schneider, ZAP to H. 
Thompson, NHTSA (Apr. 2, 2012); Letter from S. Schneider, ZAP to J. 
Timian, NHTSA (May 28, 2012).
    \21\ See ZAP, Response to Special Order, Interrogatory No. 8 
(July 30, 2012). ZAP represented in its Special Order response that 
it had entered into a contract with R.L. Polk to search for 
registered owners of the vehicles, and that it would take R.L. Polk 
approximately a month to complete the work. ZAP, Response to Special 
Order, Interrogatory No. 8 (July 30, 2012).
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    ZAP provided NHTSA with inconsistent information on when it began 
notifying purchasers and/or owners of the recalls. In its July 30, 2012 
response to the Special Order, ZAP stated that it sent its first owner 
notification letter for Recall No. 09V-177 on September 21, 2009, and 
for Recall No. 09V-385 on January 29, 2010.\22\ However, in quarterly 
reports, also dated July 30, 2012, ZAP indicated that it began 
notifying purchasers of both recalls in January of 2010. ZAP's owner 
letters indicated that owners should contact a dealer as soon as 
possible to arrange for repair.\23\
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    \22\ ZAP, Response to Special Order, Interrogatory No. 6 (July 
30, 2012).
    \23\ ZAP, Response to Special Order, Sch. D-E (July 30, 2012).
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    Despite NHTSA's request in its Special Order to ZAP dated July 13, 
2012, ZAP failed to provide NHTSA with a complete list of owners to 
whom it sent a notification letter for Recall Nos. 09V-177 and 09V-
385.\24\ Therefore, it is not known whether ZAP sent a notification 
letter to each individual or business listed in its customer warranty 
database.\25\ In ZAP's most recent quarterly reports to NHTSA for these 
recalls, dated July 30, 2012, ZAP did not provide a date that its 
notification to purchasers was completed, instead responding that the 
notification process was continuing.\26\ In its response to NHTSA's 
Special Order, ZAP explained that it plans to send additional 
notifications once it confirms through vehicle testing that it has an 
effective repair remedy.\27\
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    \24\ See NHTSA, Special Order to ZAP, Interrogatory No. 6 (July 
13, 2012). NHTSA's regulations require each manufacturer of a motor 
vehicle to maintain a list of the names and addresses of registered 
owners, as determined through State motor vehicle registration 
records or other sources or the most recent purchasers where the 
registered owners are unknown, for all vehicles involved in a 
noncompliance notification campaign. The list shall include the VIN 
for each vehicle and the status of remedy with respect to each 
vehicle. Each vehicle manufacturer shall also maintain a list of the 
names and addresses of all dealers and distributors to which a 
noncompliance notification was sent. 49 CFR 573.8(a).
    \25\ ZAP's customer warranty database only appears to include 
contact information related to approximately 116 MY 2008 ZAP Xebras 
(identified by VIN). Based on its most recent quarterly reports, 
dated July 30, 2012, there are 691 vehicles subject to these 
recalls.
    \26\ Recall 09V-177, Quarterly Report (dated July 30, 2012); 
Recall 09V-385, Quarterly Report (dated July 30, 2012).
    \27\ ZAP, Response to Special Order, Interrogatory Nos. 8-9 
(July 30, 2012).
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    In October 2011, NHTSA requested that ZAP renotify owners of Recall 
Nos. 09V-177 and 09V-385.\28\ See 49 U.S.C. 30119(e). In its Special 
Order, NHTSA asked ZAP to provide a list including name, address, and 
date for each owner to whom ZAP sent a renotification letter for these 
recalls.\29\ ZAP failed to respond.\30\ Thus, it appears that ZAP has 
not sent out any renotification letters, despite repeatedly promising 
to do so.\31\
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    \28\ See, e.g., Letter from R. Willard, NHTSA to S. Schneider, 
ZAP (Oct. 6, 2011) (Recall No. 09V-177); Letter from R. Willard, 
NHTSA to S. Schneider, ZAP (Oct. 11, 2011) (Recall No. 09V-385).
    \29\ NHTSA, Special Order to ZAP, Interrogatory No. 6 (July 13, 
2012).
    \30\ See ZAP, Response to Special Order, Interrogatory No. 6 
(July 30, 2012).
    \31\ See Letter from S. Schneider, ZAP to H. Thompson and S. 
Seigel, NHTSA (Dec. 10, 2011); Letter from S. Schneider, ZAP to H. 
Thompson, NHTSA (Apr. 2, 2012); see also Letter from J. Timian, 
NHTSA, to S. Schneider, ZAP (Mar. 9, 2012) (indicating that NHTSA 
had not received draft renotification letters or evidence of 
renotification).
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    It also appears ZAP never sent MY 2008 ZAP Xebra dealers the 
required notification of Recall Nos. 09V-177 and 09V-385. See 49 CFR 
577.13. ZAP has not sent NHTSA a representative copy of any dealer 
notification. Although ZAP's customer warranty database appears to 
include some dealers, it is not clear whether it includes all MY 2008 
ZAP Xebra dealers. Furthermore, as noted above, NHTSA is not aware 
whether ZAP sent each individual and business listed in that database a 
notification.\32\ Moreover, the notifications ZAP sent were addressed 
to owners and did not include information required to be disclosed to 
dealers, including the advisory regarding sales or leases of 
noncompliant vehicles.\33\ See 49 CFR 577.13. Dealers, including ZAP's 
wholly owned subsidiary, Voltage Vehicles, have continued to offer for 
sale and sell MY 2008 ZAP Xebras despite the recalls.\34\
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    \32\ ZAP's customer warranty database indicates that some 
vehicles are still for sale, despite the prohibition against 
offering for sale a motor vehicle that does not comply with 
applicable FMVSSs. See 49 U.S.C. 30112(a)(1); ZAP, Response to 
Special Order, Sch. F (July 30, 2012).
    \33\ ZAP, Response to Special Order, Sch. D-E (July 30, 2012).
    \34\ See, e.g., http://www.voltagevehicles.com/; Letter from S. 
Schneider, ZAP to J. Timian, NHTSA (May 28, 2012) (indicating that 
ZAP has 9 vehicles ``sold--in inventory,'' which are reserved for 
certain customers).
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2. Renewed Recall Campaigns (Recall Nos. 12V-230 and 12V-363)
    ZAP has not sent out any notification letters to owners, 
purchasers, or dealers of the renewed recall campaigns.\35\ ZAP 
represented in its July 30, 2012 response to the Special Order that it 
does not plan to send additional notifications until it confirms 
through vehicle testing that it has an effective repair remedy.\36\ ZAP 
did not indicate any plans to send dealer notifications for the renewed 
recall campaigns.
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    \35\ See ZAP, Response to Special Order, Interrogatory No. 6 
(July 30, 2012).
    \36\ See ZAP, Response to Special Order, Interrogatory Nos. 8-9 
(July 30, 2012). In its Part 573 Reports initiating the renewed 
recalls, ZAP indicated that it will send notices to purchasers of 
the MY 2008 ZAP Xebra sedan once it has confirmed through vehicle 
testing that it has an effective repair remedy. According to those 
Part 573 Reports, 337 of the 691 vehicles subject to the recalls are 
sedans. ZAP did not indicate that it plans to send notifications to 
owners and purchasers of MY 2008 ZAP Xebra trucks, which are 354 of 
the 691 vehicles subject to the recalls.
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D. ZAP's Repair Remedy

    ZAP elected the remedy of repairing the FMVSS No. 122 
noncompliances subject to the recalls. See 49 U.S.C. 30120(a). However, 
as of the end of July 2012, ZAP conceded none of the vehicles subject 
to the recalls has been fully and successfully repaired.\37\ While

[[Page 56707]]

ZAP previously reported that some vehicles had been remedied, ZAP 
acknowledged that those vehicles will need to be re-remedied.\38\
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    \37\ See Recall 09V-177, Quarterly Report (dated July 30, 2012) 
(indicating ``[s]ince we have not successfully passed the Testing, 
none of the reported vehicles fixed can be reported as successfully 
completed'').
    \38\ See ZAP, Response to Special Order, Interrogatory No. 9 
(July 30, 2012). NHTSA has also received complaints from MY 2008 ZAP 
Xebra owners that their vehicles were not repaired. See www-odi.nhtsa.dot.gov/complaints (NHTSA ODI Nos. 10320166 and 10415384).
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    After recalling the vehicles, ZAP claimed that, in 2009, it 
developed a successful repair remedy that was over engineered for 
stopping and not economically feasible.\39\ ZAP elected not to 
implement this remedy, and contracted with Wilwood Engineering 
(Wilwood) to develop a different repair remedy. Wilwood provided ZAP 
with a report in April 2010 recommending certain modifications for the 
vehicle to meet the requirements of FMVSS No. 122.\40\ Wilwood's 
recommendations addressed the stopping distance and master cylinder 
requirements, which are the subject of the recalls. Additionally, 
Wilwood recommended that, to meet FMVSS No. 122, the reservoirs or caps 
need to have a warning statement (FMVSS No. 122, S5.1.2.2), and the 
indicator on the dash needs to have a legend that reads ``Brake 
Failure'' and needs to turn on momentarily when the key is moved to the 
``on'' or ``start'' position (FMVSS No. 122, S5.1.3.1).\41\
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    \39\ Letter from S. Schneider, ZAP to H. Thompson, NHTSA (Apr. 
2, 2012).
    \40\ See ZAP, Response to Special Order, Sch. C (July 30, 2012).
    \41\ ZAP, Response to Special Order, Sch. C at 6 (July 30, 
2012).
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    After receiving Wilwood's recommendations, between May and December 
2010, ZAP purported to repair the NHTSA-owned MY 2008 ZAP Xebra.\42\ 
Prior to retesting its vehicle, NHTSA made repeated inquiries of ZAP to 
confirm that ZAP performed its proposed repair remedy on the vehicle. 
After ZAP was unresponsive to NHTSA's informal requests,\43\ NHTSA sent 
a formal Information Request (IR) to ZAP on November 22, 2011.\44\ ZAP 
responded on December 10, 2011.\45\ ZAP stated in its response that it 
was unable to confirm what modifications were made to the NHTSA-owned 
vehicle and vehicles in the field, and that additional modifications 
may be necessary to the vehicles to ensure full compliance with FMVSS 
No. 122. ZAP also indicated that it would use an independent third-
party testing facility to confirm that its repair remedy would make the 
vehicles compliant with FMVSS No. 122.\46\
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    \42\ See Letter from H. Thompson, NHTSA, to S. Schneider, ZAP 
(Nov. 22, 2011).
    \43\ ZAP has also repeatedly failed to file required quarterly 
reports regarding the recalls. See, e.g., Letter from R. Willard, 
NHTSA to S. Schneider, ZAP (Oct. 6, 2011) (Recall No. 09V-177); 
Letter from R. Willard, NHTSA to S. Schneider, ZAP (Oct. 11, 2011) 
(Recall No. 09V-385).
    \44\ Letter from H. Thompson, NHTSA, to S. Schneider, ZAP (Nov. 
22, 2011).
    \45\ Letter from S. Schneider, ZAP to H. Thompson, NHTSA (Dec. 
10, 2011).
    \46\ Letter from S. Schneider, ZAP to H. Thompson, NHTSA (Dec. 
10, 2011).
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    NHTSA sent a second IR to ZAP on March 9, 2012 to obtain additional 
information regarding the status of the recalls.\47\ ZAP responded on 
April 2, 2012.\48\ ZAP stated that it had contracted with KARCO 
Engineering (KARCO) in January 2012 to test a repaired MY 2008 ZAP 
Xebra, and that the vehicle failed to meet the FMVSS No. 122 stopping 
distance requirements based on KARCO's testing. KARCO retested the 
vehicle in March 2012, and it again failed to meet the stopping 
distance requirements. ZAP indicated that it had since made additional 
modifications to the vehicle and would send the vehicle back to KARCO 
for further testing. ZAP represented that it expected to be able to 
implement a repair remedy by July 15, 2012.\49\
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    \47\ Letter from J. Timian, NHTSA, to S. Schneider, ZAP (Mar. 9, 
2012).
    \48\ Letter from S. Schneider, ZAP to H. Thompson, NHTSA (Apr. 
2, 2012). At that time, ZAP represented that if it has not developed 
a successful repair remedy by September 30, 2012, it will initiate a 
repurchase campaign. However, ZAP subsequently claimed to have 
developed a repair remedy that will bring the recalled vehicles into 
full compliance with FMVSS No. 122. ZAP, Response to Special Order, 
Interrogatory No. 1 (July 30, 2012).
    \49\ Letter from S. Schneider, ZAP to H. Thompson, NHTSA (Apr. 
2, 2012). Although ZAP recognized at that time that it had not yet 
developed a repair remedy that brings the vehicles into full 
compliance with FMVSS No. 122, it continued to report to NHTSA that 
it had remedied vehicles. See Recall No. 09V-177, Quarterly Report 
(May 7, 2012).
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    In May and June 2012, KARCO again tested a MY 2008 ZAP Xebra sent 
to it by ZAP, and that vehicle also failed to meet the stopping 
distance requirements of FMVSS No. 122.\50\ KARCO's test report further 
indicated that the vehicle's brake failure indicator lamp did not meet 
the minimum height requirement of three-thirty seconds of an inch.\51\ 
See 49 CFR 571.122, S5.1.3.1(d).\52\
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    \50\ See KARCO, Response to Special Order, Interrogatory No. 1 
(July 30, 2012). According to KARCO, the vehicle initially did not 
pass the first effectiveness test. ZAP requested that KARCO make 
modifications to the vehicle; through trial and error modifications, 
the vehicle subsequently passed the first effectiveness test. 
However, the vehicle could not pass the second effectiveness test, 
and testing was terminated. KARCO, Response to Special Order, 
Interrogatory No. 1 (July 30, 2012).
    \51\ KARCO, Response to Special Order, Ex. Test Report for ZAP 
Jonway, 2008 ZAP Xebra at 3, 10 (test date: May 16, 2012-June 27, 
2012).
    \52\ As of July 30, 2012, KARCO indicated that no further 
testing was planned. See KARCO, Response to Special Order, 
Interrogatory No. 3 (July 30, 2012). ZAP, on the other hand, 
indicated in its July 30, 2012 response to NHTSA's Special Order 
that it planned to send its mechanic to KARCO between August 6 and 
20, 2012 to make further modifications to the vehicle, which would 
then be retested by KARCO. ZAP, Response to Special Order, 
Interrogatory Nos. 4, 5 (July 30, 2012). However, as of August 20, 
2012, KARCO indicated that ZAP had picked up the vehicle from 
KARCO's facility.
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    After informally learning that the vehicle failed KARCO's most 
recent testing, NHTSA sent Special Orders to ZAP and to KARCO on July 
13, 2012 to obtain additional information about the recalls and KARCO's 
testing. ZAP and KARCO each responded on July 30, 2012. ZAP represented 
in its response, made under oath, that it has developed a repair remedy 
to bring the MY 2008 Xebra into full compliance with FMVSS No. 122.\53\ 
ZAP cited the recommendations provided to it by Wilwood in April 2010 
as the basis for its contention that this remedy will bring the 
vehicles into full compliance.\54\ ZAP did not provide any test results 
or other information demonstrating that its repair remedy will make the 
vehicles fully compliant with FMVSS No. 122, and instead indicated that 
it planned further testing at KARCO to confirm its belief that this 
latest repair remedy is effective.\55\ However, according to KARCO's 
response to NHTSA's Special Order, no further testing was planned.\56\
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    \53\ ZAP, Response to Special Order, Interrogatory No. 1 (July 
30, 2012). The repair remedy identified by ZAP in response to the 
Special Order included the heading ``Xebra 2008--Dealer Power Brake 
Recall Fix--Version 6.'' See ZAP, Response to Special Order, Sch. B 
at 3 (July 30, 2012). However, a later version (Version 7) of this 
document was attached as Exhibit A to ZAP's earlier Part 573 Report 
for Recall No. 12V-230.
    \54\ See ZAP, Response to Special Order, Interrogatory No. 2 
(July 30, 2012).
    \55\ See ZAP, Response to Special Order, Interrogatory Nos. 4-5 
(July 30, 2012).
    \56\ See KARCO, Response to Special Order, Interrogatory No. 3 
(July 30, 2012).
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    ZAP's Special Order response also provided contradictory 
information regarding the substance of its repair remedy. In one 
portion of its response, ZAP indicated that the repair remedy it 
contends will make the vehicles fully compliant with FMVSS No. 122 is 
the same remedy it performed on the vehicle which failed KARCO's 
testing.\57\ However, another portion of ZAP's response indicated that 
additional modifications are needed to the vehicle.\58\
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    \57\ Compare ZAP, Response to Special Order, Interrogatory Nos. 
1-2 (July 30, 2012), with ZAP, Response to Special Order, Request 
for the Production of Documents Nos. 1-2 (July 30, 2012).
    \58\ See ZAP, Response to Special Order, Interrogatory No. 4 
(July 30, 2012).
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    ZAP provided a copy of procedures for its repair remedy in response 
to the

[[Page 56708]]

Special Order.\59\ The repair remedy purports to address the 
noncompliances with the stopping distance and master cylinder reservoir 
requirements, which are the subject of the recalls. The remedy also 
purports to address the apparent noncompliances NHTSA identified with 
FMVSS No. 122, S5.1.2.2, Reservoir labeling, and FMVSS No. 122, 
S5.1.3.1, Failure indicator lamp, despite the fact that ZAP has never 
submitted a Part 573 Report acknowledging the MY 2008 ZAP Xebra is 
noncompliant with those provisions. However, ZAP's procedures to 
address the reservoir labeling and the failure indicator lamp do not 
satisfy the requirements of FMVSS No. 122.\60\ Moreover, ZAP has failed 
to provide notifications to NHTSA and to owners, purchasers, and 
dealers of these noncompliances as required by 49 U.S.C. 30118 and 49 
CFR Parts 573 and 577.\61\
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    \59\ ZAP, Response to Special Order, Sch. A-B (July 30, 2012).
    \60\ The reservoir labeling is not worded as required by FMVSS 
No. 122, S5.1.2.2. See ZAP, Response to Special Order, Sch. B at 10. 
It also appears that the labeling may not be permanently affixed, as 
required. See KARCO, Response to Special Order, Ex. Test Report for 
ZAP Jonway, 2008 ZAP Xebra at A6 (test date: May 16, 2012-June 27, 
2012) (showing peeling label). The failure indicator lamp also does 
not have the legend ``Brake Failure,'' as required by FMVSS No. 122, 
S1.3.1(d). See KARCO, Response to Special Order, Ex. KARCO 036-KARCO 
037 (July 30, 2010) (photographs produced for ``May 2012 Testing''). 
According to KARCO, the lamp's lettering also does not comply with 
the height requirements of the Standard. KARCO, Response to Special 
Order, Ex. Test Report for ZAP Jonway, 2008 ZAP Xebra at 3, 10 (test 
date: May 16, 2012-June 27, 2012).
    \61\ The potential penalty for each violation of such 
requirements is $6,000. 49 U.S.C. 30165(a)(1); 49 CFR 578.6.
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    Furthermore, ZAP proposes to remedy the vehicles by either sending 
each customer an installation kit or having the customer send the 
vehicle to ZAP, to have ZAP complete the installation of the 
remedy.\62\ Thus, an owner would either need to bring its vehicle to 
Santa Rosa, California (where ZAP is located), or install the remedy 
based on ZAP's kit.\63\ The procedures for the repair remedy are over 
twenty pages long and require, among other things, placing the vehicle 
on a car lift and removing all of its wheels, removing and replacing 
brake reservoirs, removing and replacing brake pressure sensors, 
replacing brake lines, replacing brake pads, installing a proportioning 
valve, and rewiring brake sensors and floats.\64\
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    \62\ See Recall No. 12V-230, Part 573 Report Sec.  VI (prepared 
May 18, 2012); Recall No. 12V-363, Part 573 Report Sec.  VI 
(prepared July 18, 2012).
    \63\ This conflicts with the notifications sent to owners, which 
told owners: ``Please contact your ZAP/Voltage Vehicles dealer as 
soon as possible to arrange a service date so the dealer may order 
the necessary parts for the repair * * * Your ZAP/Voltage Vehicles 
dealer is best equipped to obtain parts and provide service to 
ensure that your vehicle is corrected as promptly as possible.'' 
ZAP, Response to Special Order, Sch. D-E (July 30, 2012). While 
there was no mention of a repair kit in the owner letters, ZAP 
indicated that it sent 56 kits out to customers. See ZAP, Response 
to Special Order, Interrogatory No. 7 (July 30, 2012).
    \64\ ZAP, Response to Special Order, Sch. B (July 30, 2012).
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    Over three years has passed since ZAP initially recalled the MY 
2008 ZAP Xebra. Although ZAP continues to elect a repair remedy, it has 
failed to successfully repair any vehicles. Moreover, contrary to its 
representation, under oath, in response to NHTSA's Special Order, ZAP 
has provided no evidence that it has developed a repair remedy that 
would bring the recalled vehicles into full compliance with FMVSS No. 
122.

V. Decision to Conduct a Public Hearing

    NHTSA has decided that it is necessary to conduct a public hearing 
to decide whether ZAP has reasonably met the notification and remedy 
requirements under 49 U.S.C. 30118 and 30120. See 49 U.S.C. 30118(e), 
30120(e); 49 CFR 557.6(d), 557.7. NHTSA will conduct the public hearing 
in the Oklahoma City room of the U.S. Department of Transportation 
Conference Center, located on the first floor of the West Building at 
1200 New Jersey Avenue SE., Washington, DC 20590. Any interested person 
may make written and/or oral presentations of information, views, and 
arguments on whether ZAP has reasonably met the notification and/or 
remedy requirements. There will be no cross-examination of witnesses. 
49 CFR 557.7.
    NHTSA will consider the views of participants in deciding whether 
ZAP has reasonably met the notification and/or remedy requirements 
under 49 U.S.C. 30118 and 30120, and in developing the terms of an 
order (if any) requiring ZAP to take specified action as the remedy for 
the noncompliances and/or take other action. 49 U.S.C. 30118(e), 
30120(e); 49 CFR 557.8.
    Procedural Matters: Interested persons may participate in these 
proceedings through written and/or oral presentations. Persons wishing 
to attend must notify Sabrina Fleming, National Highway Traffic Safety 
Administration, 1200 New Jersey Avenue SE., Washington, DC 20590 
(Telephone: 202-366-9896) (Fax: 202-366-3081), before the close of 
business on October 2, 2012 (and September 28, 2012 for non-U.S. 
citizens). Each person wishing to attend must provide his or her name 
and country of citizenship. Non-U.S. citizens must also provide date of 
birth, title or position, and passport or diplomatic ID number, along 
with expiration date. Each person wishing to make an oral presentation 
must also specify the amount of time that the presentation is expected 
to last, his or her organizational affiliation, phone number, and email 
address. NHTSA will prepare a schedule of presentations. Depending upon 
the number of persons who wish to make oral presentations and the 
anticipated length of those presentations, NHTSA may add an additional 
day or days to the hearing, and/or may limit the length of oral 
presentations.
    The hearing will be held at a site accessible to individuals with 
disabilities. Individuals who require accommodations, such as sign 
language interpreters, should contact Ms. Kerry Kolodziej using the 
contact information in the FOR FURTHER INFORMATION CONTACT section 
above no later than September 28, 2012. A transcript of the proceedings 
will be placed in the docket for this notice at a later date.
    Persons who wish to file written comments should submit them so 
that they are received by NHTSA no later than October 2, 2012. 
Instructions on how to submit written comments to the docket is located 
under the ADDRESSES section of this notice.

    Authority: 49 U.S.C. 30118(e), 30120(e); 49 CFR 557.6(d), 557.7; 
delegations of authority at 49 CFR 1.95(a), 501.2(a)(1), and 49 CFR 
501.8.

    Issued: September 7, 2012.
Daniel C. Smith,
Senior Associate Administrator for Vehicle Safety.
[FR Doc. 2012-22612 Filed 9-12-12; 8:45 am]
BILLING CODE 4910-59-P