[Federal Register Volume 85, Number 67 (Tuesday, April 7, 2020)]
[Rules and Regulations]
[Pages 19393-19396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06403]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 555

[Docket No. NHTSA-2018-0103]


Denial of Petition for Reconsideration; Temporary Exemption From 
Motor Vehicle Safety and Bumper Standards

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

ACTION: Denial of petition for reconsideration.

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SUMMARY: This document denies a petition for reconsideration submitted 
by Advocates for Highway and Auto Safety, Center for Auto Safety, 
Consumer Reports, Consumer Federation of America, and Ms. Joan 
Claybrook (collectively, the ``Petitioners'') of a final rule amending 
NHTSA's regulation on temporary exemption from the Federal Motor 
Vehicle Safety Standards (FMVSS). The final rule eliminated the 
provision calling for the agency to determine that an application for a 
temporary exemption from any FMVSS or bumper standard or for a renewal 
of exemption is complete before the agency publishes a notification 
summarizing the application and soliciting public comments on it.

DATES: April 7, 2020.

FOR FURTHER INFORMATION CONTACT: Daniel Koblenz, Office of Chief 
Counsel, National Highway Traffic Safety Administration, 1200 New 
Jersey Avenue SE, Washington, DC 20590; Telephone: (202) 366-2992.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Background
II. Petition for Reconsideration and Agency Response
    A. This Final Rule was Not Issued as a Direct Final Rule under 
49 CFR 553.14
    B. Immediate Adoption of a Final Rule Under the APA
    C. Advantages of Removing Completeness Requirement
    D. NHTSA Provided a Reasoned Justification for the Amendment
III. Conclusion

    This document denies a petition for reconsideration submitted by 
the Petitioners requesting reconsideration of a December 26, 2018 final 
rule (83 FR 66158) amending NHTSA's regulation on temporary exemption 
from the FMVSS. The intended effect of the final rule was to solicit 
public comments on a petition more quickly than had been

[[Page 19394]]

the case under part 555 prior to the change in procedure.

I. Background

    The National Traffic and Motor Vehicle Safety Act (Safety Act), as 
amended, authorizes the Secretary of Transportation to exempt, on a 
temporary basis, under specified circumstances, and on terms the 
Secretary deems appropriate, motor vehicles from an FMVSS 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.\1\
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    \1\ 49 CFR 1.94
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    In exercising this authority, NHTSA must look comprehensively at 
the request for exemption and find that an exemption would be 
consistent with the public interest and with the objectives of the 
Safety Act.\2\ In addition, the Secretary must make at least one of the 
following more-focused findings, which NHTSA commonly refers to as the 
``basis'' for the exemption:
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    \2\ 49 U.S.C. 30113(b)(3)(A).

    (i) compliance with the standard[s] [from which exemption is 
sought] would cause substantial economic hardship to a manufacturer 
that has tried to comply with the standard[s] 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.\3\
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    \3\ 49 U.S.C. 30113(b)(3)(B).

    Per the Safety Act, once NHTSA receives a petition for an 
exemption, the agency is required to publish a notice of receipt of the 
petition and provide the public the opportunity to comment. However, 
NHTSA does have a certain amount of discretion to set procedural rules 
regarding time and way in which a petition is filed, as well as the 
contents of the petition.\4\
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    \4\ 49 U.S.C. 30113(b)(2).
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    NHTSA's procedural regulations implementing these statutory 
requirements are codified at 49 CFR part 555, ``Temporary Exemption 
from Motor Vehicle Safety and Bumper Standards.'' Per the requirements 
in 49 CFR 555.5, a petition for a temporary exemption must, among other 
things, provide supporting documentation that would enable NHTSA to 
make the findings required to grant the exemption under one of the four 
exemption bases. In addition, the petition must also explain why the 
exemption would be in the public interest and consistent with the 
objectives of the Safety Act. NHTSA's procedures for processing 
exemption petitions once they are received are described in 49 CFR 
555.7.
    The final rule made no changes to the ability of the public to 
comment on a published petition for exemption, nor to the substantive 
requirements for a petition. The opportunity for the public to comment 
on a petition remains the same today as it has always been: The agency 
publishes a notification in the Federal Register summarizing the 
application and inviting public comment on whether the application 
should be granted or denied. Before NHTSA issued its December 26, 2018, 
final rule (83 FR 66158), however, this Federal Register notification 
would only be published after the agency determined that the 
application was complete (i.e., that the application included all the 
information required under 49 U.S.C. 30113 and 49 CFR part 555). 
However, if NHTSA found that the application was incomplete, NHTSA 
informed the applicant, pointed out the areas of insufficiency, and 
stated that the application would not receive further consideration 
until the required information was submitted. Prior to the final rule, 
the agency would not make the application available to the public and 
request public comment at this stage in the process unless the 
additional required information was submitted. Only then would the 
agency publish the notification requesting public comment.
    Importantly, the final rule did not amend 49 CFR 555.7(d) or (e), 
which describe what steps NHTSA must take after the agency determines 
whether an exemption petition contains ``adequate justification'' to 
grant the petition. 49 CFR 555.7(d) states that, if NHTSA determines 
that the application does not contain adequate justification to grant 
an exemption after considering the application and the public comments, 
the Administrator denies the petition and notifies the petitioner in 
writing. 49 CFR 555.7(e) states that, if the Administrator determines 
that the application does contain adequate justification to grant the 
petition, the Administrator grants the petition and notifies the 
applicant in writing. Under both cases, the Administrator also 
publishes a notification in the Federal Register stating the decision 
to grant or deny the petition, and the reasons for the decision.
    The December 26, 2018 final rule amended 49 CFR 555.7 by 
eliminating the provision stating that the agency will not publish a 
notice of receipt of an exemption petition to solicit public comments 
prior to making a determination that the petition is ``complete.'' \5\ 
As was noted in the final rule, the reason for this was NHTSA's 
difficulty in differentiating between incomplete petitions (for which, 
prior to the final rule, a notice of receipt would not be published) 
and petitions which were complete, but which failed to provide adequate 
justification to grant (for which, prior to the final rule, a notice of 
receipt would be published). This was especially the case in the 
context of complex petitions involving new or innovative vehicle 
designs, which has in the past led to delays in processing these 
petitions.\6\ This final rule did not change the substantive 
requirements that exemption petitions must meet; the amended regulation 
continues to provide that the agency will determine whether an 
application for exemption contains adequate justification in deciding 
whether to grant or deny the application.\7\
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    \5\ 83 FR 66158 (Dec. 26, 2018).
    \6\ Id.
    \7\ Id.
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II. Petition for Reconsideration and Agency Response

    The Petitioners submitted a petition for reconsideration requesting 
that NHTSA stay the effective date of the December 26, 2018 final rule, 
and to proceed with a new notice of proposed rulemaking along with a 
notice and comment period.
    First, the Petitioners argue that by issuing the final rule, NHTSA 
did not follow its direct final rulemaking procedures for amendments 
that involve complex or controversial issues because, pursuant to 49 
CFR 553.14, direct final rules may not be issued when they are likely 
to result in ``adverse public comment.'' The Petitioners argue that the 
final rule would have resulted in adverse public comments because the 
new procedure is controversial among the Petitioners. (Under NHTSA's 
direct final rulemaking procedures, if NHTSA receives an adverse 
comment after issuing a direct final rule, the agency must withdraw the 
rule and issue an NPRM proposing the amendment.)
    Second, the Petitioners argue that, if the agency did not intend 
for the final rule to be a direct final rule, the agency violated the 
Administrative Procedure Act's (APA) notice and comment requirement 
because the agency did not issue an NPRM proposing the change.

[[Page 19395]]

    Third, the Petitioners argue that the final rule is not in the 
public interest because it deprives the public of the opportunity to 
``review issues of great importance to safety'' and permits the agency 
to publish incomplete applications. The Petitioners believe that the 
regulatory change would impose additional burdens on the public because 
to fully evaluate an incomplete application and its implications on 
safety, the public would be required to conduct independent research 
and investigation to obtain missing information not contained in an 
incomplete application.
    Finally, the Petitioners argue that NHTSA has not put forth data or 
evidence to show that the requirement of waiting until an application 
is complete before publication has caused an undue delay or hardship on 
any applicant, the agency, or the public.

A. This Final Rule was Not Issued as a Direct Final Rule Under 49 CFR 
553.14

    The Petitioners' assumption that NHTSA intended for this rulemaking 
to be considered a direct final rule, subject to 49 CFR 553.14, is 
incorrect. The APA includes two circumstances when notice and comment 
rulemaking procedures do not apply: (1) ``to interpretative rules, 
general statements of policy, or rules of agency organization, 
procedure, or practice; or'' (2) ``when the agency for good cause finds 
(and incorporates the finding and a brief statement of reasons therefor 
in the rules issued) that notice and public procedure thereon are 
impracticable, unnecessary, or contrary to the public interest.'' 5 
U.S.C. 553(b). As described below, this rule falls into the first 
exception, as a rule of agency procedure. NHTSA's direct final 
rulemaking regulation is primarily directed at the second exception, as 
it requires a threshold ``good cause'' finding. See 49 CFR 553.14.
    In any event, the procedures in 49 CFR 553.14 are not mandatory. 49 
CFR 553.14 states that if the Administrator makes a ``good cause'' 
finding, ``a direct final rule may [emphasis added] be issued'' 
according to the direct final rulemaking procedures. Likewise, it 
provides that: ``[r]ules that the Administrator judges to be non-
controversial and unlikely to result in adverse public comment may 
[emphasis added] be published as direct final rules,'' \8\ thereby 
giving NHTSA discretion to publish a rule according to the specified 
``direct final rule'' procedures. NHTSA did not purport to issue the 
final rule that is the subject of this petition according to those 
procedures. The petitioned final rule did not refer to 49 CFR 553.14 
and instead expressly indicated that it was issued without notice and 
comment pursuant to the APA exception for procedural rules in 5 U.S.C. 
553(b)(3)(A).\9\ Petitioners do not support their claim that NHTSA 
somehow acted ``in violation of'' its discretionary direct final 
rulemaking procedures in 49 CFR 553.14, when the agency instead applied 
a statutory exception in the APA.
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    \8\ 49 CFR 553.14(a).
    \9\ 83 FR 66158, 66159.
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B. Immediate Adoption of a Rule Under the APA

    NHTSA fully complied with the APA when it issued a final rule for 
immediate adoption without a notice and comment period. Section 
553(b)(3)(A) of the APA (U.S.C., Title 5) provides that notice and 
comment procedures do not apply to rules of agency organization, 
procedure, or practice, except when notice or hearing is required by 
statute. Under this section, an agency may issue a final rule without 
seeking comment prior to the rulemaking. Procedural rules are agency 
provisions that are primarily directed toward improving the efficient 
and effective operations of an agency, not toward the determination of 
the rights or interests of affected parties.\10\ A rule that simply 
prescribes the manner in which the parties present themselves or their 
viewpoints to the agency does not alter the underlying rights or 
interests of the parties.\11\
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    \10\ Clarian Health West, LLC v. Burwell, 206 F. Supp. 3d 393, 
414 (D.D.C. 2016), rev'd on other grounds, Clarian Health West, LLC 
v. Hargan, 878 F.3d 346 (DC Cir. 2017).
    \11\ Inova Alexandria Hospital v. Shalala, 244 F.3d 342, 349 
(2001).
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    The purpose of the petitioned final rule is to expedite the 
publishing of documents soliciting public comment on exemption 
applications,\12\ which is directly related to improving the efficient 
and effective operations of the agency. It amended a provision of 
NHTSA's regulations concerning the agency's ``[p]rocessing of 
applications.'' \13\ The final rule simply eliminated the provision 
calling for the agency to determine that an application for exemption 
is complete before publishing a notification summarizing an application 
and soliciting public comments on it, which is a prescription of the 
manner in which applicants present themselves to the agency. Therefore, 
this procedural final rule is not directed toward the determination of 
the rights or interests of the Petitioners as the Petitioners' public 
interest argument seems to suggest; it does not alter the underlying 
rights or interest of interested parties.
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    \12\ 83 FR 66158 (Dec. 26, 2018).
    \13\ See revised heading of 49 CFR 555.7.
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    Petitioners' assertion that the final rule ``contravenes NHTSA's 
notice-and-comment obligations under the Administrative Procedure Act'' 
is unpersuasive. NHTSA expressly found that the final rule met the 
exception in APA section 553(b)(3)(A) because ``[t]he sole purpose of 
this rule is to eliminate the provision calling for the agency to 
determine that a petition is complete before the agency publishes a 
notification summarizing the petition and soliciting public comments on 
it. This rule does not impose any additional requirements on exemption 
applicants or the public. Therefore, NHTSA has determined that notice 
and public comment are unnecessary.'' \14\ Petitioners provided no 
explanation for why they believe notice-and-comment procedures apply 
notwithstanding the APA exception cited by the agency in the final 
rule.
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    \14\ 83 FR 66158, 66159--60.
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C. Advantages of Removing Completeness Determination Requirement

    Contrary to the assertion by Petitioners, the subject final rule is 
in the public's interest for several reasons. First, the final rule 
increases transparency by giving the public the opportunity to 
thoroughly review exemption applications that otherwise may not have 
been disclosed to the public or subject to public input. Under the 
prior rule, NHTSA first had to make a threshold finding before opening 
a public docket on the petition. If NHTSA found that the application 
was incomplete, NHTSA informed the applicant, pointed out the areas of 
insufficiency, and stated that the application would not receive 
further consideration until the required information was submitted. The 
public did not have the opportunity to review the incomplete 
application. Under the amended rule, the public can review incomplete 
exemption applications.
    Second, under the final rule, both the agency and the public can 
comprehensively evaluate applications for exemption. Prior to the final 
rule, only the agency would make a completeness determination, without 
input on that issue from the public. The final rule increases the 
public's opportunity to evaluate the application and provide input 
because the agency will decide whether to grant an exemption 
application, complete or not,

[[Page 19396]]

based on the application and the public comments. Among its comments, 
the public can submit opinions as to whether the application is 
complete. The public gets to see an application sooner as opposed to 
not seeing it until NHTSA makes a threshold completeness determination. 
The public can point out what it sees as insufficiencies to the agency; 
and if the agency agrees, the application will be denied unless it is 
later supplemented. If an application is supplemented, the public will 
have access to any supplemental information to the same extent as if 
the supplement happened before the application became public under the 
old rule. In addition, the public can, if it so chooses, comment on 
completeness, or on any other supplemental information submitted 
through the public comment process.
    Finally, the final rule does not impose additional requirements on 
the public to perform research, as the Petitioners claimed without 
support. Although published exemption applications may be incomplete, 
NHTSA is still required to make an ``adequate justification'' 
determination based on the information provided by the applicant. An 
application that lacks merit or critical information will be denied, 
based on public input and the agency's analysis, regardless of whether 
there is a threshold completeness determination. A determination that 
an application is complete is not a determination that the application 
should be granted. If NHTSA determines that the application does not 
contain ``adequate justification,'' the Administrator denies it and 
notifies the applicant in writing, pointing out the areas of 
insufficiency.\15\ It is not the public's duty to perform research to 
determine areas of insufficiency. The Administrator also publishes in 
the Federal Register a notification of the denial and the reasons for 
it, which is available to the public. Further, if a member of the 
public believes the agency's explanation for granting an application 
lacks sufficient supporting arguments and facts, he or she may seek to 
have the agency reconsider the grant.
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    \15\ 49 CFR 555.7(d).
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D. NHTSA Provided a Reasoned Justification for the Amendment

    NHTSA articulated the purpose behind changing this procedural rule 
in the preamble to the rule. Specifically, NHTSA changed its procedure 
``to expedite the publishing of documents soliciting public comment on 
exemption petitions.'' \16\ Petitioners' argument that ``NHTSA has put 
forth no data or evidence in the Final Rule that the current 
requirement of waiting until the application is complete before 
publishing it in the Federal Register has caused undue delay or 
hardship on any applicant, the agency, or the public'' lacks merit. 
NHTSA provided a reasoned explanation of its change in procedure. See 
F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009). 
NHTSA explained how the prior procedure led to delays.\17\ The agency 
also explained that the prior procedure was unnecessary under the 
statute, particularly in light of the substantive determination it will 
continue to make regarding whether a petition contains an adequate 
justification.\18\ Petitioners' assertions regarding the public 
interest have not convinced the agency that it should return to its 
prior procedure, which would reduce transparency and delay the ability 
of the public to obtain and comment on exemption applications.
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    \16\ 83 FR 66158, 66159.
    \17\ Id.
    \18\ Id.
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III. Conclusion

    For the reasons discussed above, the agency is denying the 
Petitioners' petition for reconsideration of the December 26, 2018 
final rule (83 FR 66158).

    Issued in Washington, DC, under authority delegated in 49 CFR 
1.95 and 501.4.
James Clayton Owens,
Acting Administrator.
[FR Doc. 2020-06403 Filed 4-6-20; 8:45 am]
 BILLING CODE 4910-59-P