Automobili Lamborghini SpA; Bugatti Automobiles S.A.S. and Bugatti Engineering GmbH; Group Lotus Plc; Morgan Motor Company Limited; Maserati Receipt of Applications for a Temporary Exemption From Advanced Air Bag Requirements of FMVSS No. 208, 39386-39392 [E6-10892]

Agencies

• National Highway Traffic Safety Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 71, Number 133 (Wednesday, July 12, 2006)]
[Notices]
[Pages 39386-39392]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-10892]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2006-25324, Notice 1]


Automobili Lamborghini SpA; Bugatti Automobiles S.A.S. and 
Bugatti Engineering GmbH; Group Lotus Plc; Morgan Motor Company 
Limited; Maserati Receipt of Applications for a Temporary Exemption 
From Advanced Air Bag Requirements of FMVSS No. 208

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

ACTION: Notice of receipt of petitions for temporary exemptions from 
provisions of Federal Motor Vehicle Safety Standard No. 208, Occupant 
crash protection.

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SUMMARY: In accordance with the procedures in 49 CFR part 555, 
Automobili Lamborghini SpA (``Lamborghini''); Bugatti Automobiles 
S.A.S. and Bugatti Engineering GmbH (collectively, ``Bugatti''); Group 
Lotus Plc (``Lotus''); Morgan Motor Company Limited (``Morgan''); and 
Maserati SpA (``Maserati'') have separately petitioned the agency for a 
Temporary Exemption from certain advanced air bag requirements of 
Federal Motor Vehicle Safety Standard (FMVSS) No. 208, Occupant crash 
protection. The basis for each application is that compliance would 
cause substantial economic hardship to a manufacturer that has tried in 
good faith to comply with the standard.\1\
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    \1\ To view the applications, go to: https://dms.dot.gov/search/
searchFormSimple.cfm and enter the docket number set forth in the 
heading of this document.
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    This notice of receipt of applications for temporary exemption is 
published in accordance with the statutory provisions of 49 U.S.C. 
30113(b)(2). NHTSA has made no judgment on the merits of the 
applications. Please note that we are publishing the notice of receipt 
of the five applications together to ensure efficient use of agency 
resources and to facilitate the timely processing of the applications. 
NHTSA will consider each application separately. We ask that commenters 
also consider each application separately and submit comments specific 
to individual applications.

DATES: You should submit your comments not later than July 27, 2006.

FOR FURTHER INFORMATION CONTACT: Ed Glancy or Eric Stas in the Office 
of Chief Counsel at NHTSA NCC-112, 400 7th

[[Page 39387]]

Street, SW., Room 5215, Washington, DC 20590 (Phone: 202-366-2992; Fax 
202-366-3820).
    Comments: We invite you to submit comments on the applications 
described above. We ask that the application from each manufacturer be 
considered separately and comments be submitted for individual 
manufacturers. You may submit comments identified by docket number at 
the heading of this notice by any of the following methods:
     Web site: https://dms.dot.gov. Follow the instructions for 
submitting comments on the DOT electronic docket site by clicking on 
``Help and Information'' or ``Help/Info.''
     Fax: 1-202-493-2251.
     Mail: Docket Management Facility, U.S. Department of 
Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, 
Washington, DC 20590.
     Hand Delivery: Room PL-401 on the plaza level of the 
Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 
a.m. and 5 p.m., Monday through Friday, except Federal Holidays.
     Federal eRulemaking Portal: Go to https://
www.regulations.gov. Follow the online instructions for submitting 
comments.
    Instructions: All submissions must include the agency name and 
docket number or Regulatory Identification Number (RIN) for this 
rulemaking. Note that all comments received will be posted without 
change to https://dms.dot.gov, including any personal information 
provided.
    Docket: For access to the docket in order to read background 
documents or comments received, go to https://dms.dot.gov at any time or 
to Room PL-401 on the plaza level of the Nassif Building, 400 Seventh 
Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through 
Friday, except Federal Holidays.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit 
https://dms.dot.gov.
    We shall consider all comments received before the close of 
business on the comment closing date indicated below. To the extent 
possible, we shall also consider comments filed after the closing date.

I. Advanced Air Bag Requirements and Small Volume Manufacturers

    In 2000, NHTSA upgraded the requirements for air bags in passenger 
cars and light trucks requiring what is commonly known as ``advanced 
air bags.'' \2\ The upgrade was designed to meet the goals of improving 
protection for occupants of all sizes, belted and unbelted, in moderate 
to high speed crashes, and of minimizing the risks posed by air bags to 
infants, children, and other occupants, especially in low speed 
crashes.
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    \2\ See 65 FR 30680.
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    The advanced air bag requirements were a culmination of a 
comprehensive plan that the agency announced in 1996 to address the 
adverse effects of air bags. This plan also included an extensive 
consumer education program to encourage the placement of children in 
rear seats. The new requirements were phased in beginning with the 2004 
model year.
    Small volume manufacturers are not subject to the advanced air bag 
requirements until September 1, 2006, but their efforts to bring their 
respective vehicles into compliance with these requirements began 
several years ago. However, because the new requirements were 
challenging, major air bag suppliers concentrated their efforts on 
working with large-volume manufacturers and thus, until recently, small 
volume manufacturers had limited access to advanced air bag technology. 
Because of the nature of the requirements for protecting out-of-
position occupants, ``off-the-shelf'' systems could not be readily 
adopted. Further complicating matters, because small volume 
manufacturers build so few vehicles, the costs of developing custom 
advanced air bag systems compared to potential profits discouraged some 
air bag suppliers from working with small volume manufacturers.
    The agency has carefully tracked occupant fatalities resulting from 
air bag deployment. Our data indicate that the agency's efforts in the 
area of consumer education and manufacturers' providing de-powered air 
bags were successful in reducing air bag fatalities even before 
advanced air bag requirements were implemented.
    As always, we are concerned about the potential safety implication 
of any temporary exemptions granted by this agency. In the present 
case, we are seeking comments on five separate petitions for a 
temporary exemption from the advanced air bag requirements. The 
petitioners are all manufacturers of very expensive, low volume, exotic 
sports cars.

II. Petitioners for Economic Hardship Exemptions

    In accordance with 49 U.S.C. 30113 and the procedures in 49 CFR 
part 555, Lamborghini, Bugatti, Lotus, Morgan, and Maserati have 
separately petitioned the agency for a Temporary Exemption from certain 
advanced air bag requirements of FMVSS No. 208. The basis for each 
application is that compliance would cause substantial economic 
hardship to a manufacturer that has tried in good faith to comply with 
the standard.
    Each of the individual petitions are provided for review in the 
docket for this notice.

III. Statutory Background for Economic Hardship Exemptions

    A manufacturer is eligible to apply for a hardship exemption if its 
total motor vehicle production in its most recent year of production 
did not exceed 10,000 vehicles, as determined by the NHTSA 
Administrator (49 U.S.C. 30113).
    In determining whether a manufacturer of a vehicle meets that 
criterion, NHTSA considers whether a second vehicle manufacturer also 
might be deemed the manufacturer of that vehicle. The statutory 
provisions governing motor vehicle safety (49 U.S.C. Chapter 301) do 
not include any provision indicating that a manufacturer might have 
substantial responsibility as manufacturer of a vehicle simply because 
it owns or controls a second manufacturer that assembled that vehicle. 
However, the agency considers the statutory definition of 
``manufacturer'' (49 U.S.C. 30102) to be sufficiently broad to include 
sponsors, depending on the circumstances. Thus, NHTSA has stated that a 
manufacturer may be deemed to be a sponsor and thus a manufacturer of a 
vehicle assembled by a second manufacturer if the first manufacturer 
had a substantial role in the development and manufacturing process of 
that vehicle.

IV. Lamborghini

    Background. Lamborghini is an Italian corporation formed in 1963 to 
produce high-performance sports cars. This application concerns the 
Lamborghini Murcielago which was developed in the mid 1990s and is now 
scheduled to continue in production until 2009. Originally, Lamborghini 
planned to begin selling the Murcielago in 1999 and to end production 
before September 2006. Because of financial hardship and a change in 
corporate ownership, the

[[Page 39388]]

petitioner did not begin sales of Murcielago until the very end of 
2001, and is now forced to extend the product cycle of this vehicle.
    Lamborghini has experienced financial problems for several years. 
Over the last 4 years (2001-2004), the company lost more than 180 
million dollars. Lamborghini claims this economic hardship precluded 
the timely development of a new vehicle that could comply with advanced 
air bag requirements. With respect to the Murcielago, Lamborghini also 
has been unable to overcome a number of engineering problems associated 
with installing advanced air bags in the current vehicle configuration. 
If the exemption is not granted, the Murcielago model cannot be sold in 
the U.S. during the period 2006-2009, which petitioner stated could 
further delay the introduction of a fully compliant vehicle. 
Lamborghini thus asks for a temporary exemption from the advanced air 
bag requirements for the Murcielago until it is replaced by a brand new 
vehicle in 2009.
    Eligibility. Lamborghini's total motor vehicle production in the 
most recent year of production was less than 10,000 vehicles. However, 
in 1998, Lamborghini was acquired by Audi, a large motor vehicle 
manufacturer. In discussing its eligibility for hardship relief, 
Lamborghini asserts that its relationship with Audi is ``arm's-
length.'' Lamborghini operates independently, and services provided by 
Audi or Audi affiliates are paid for by Lamborghini.
    The agency examined the relationship between Lamborghini and Audi. 
We tentatively conclude that Lamborghini is eligible to apply for a 
temporary exemption based on the following factors. First, there is no 
similarity of design between the cars produced by Lamborghini and cars 
produced by Audi. Second, Lamborghini has indicated that it has paid 
for all services or assistance provided by Audi. Third, cars are 
imported and sold through separate distribution channels independent of 
the Audi dealer network. We note that our conclusions as to eligibility 
are tentative and the agency has not made a final determination as to 
whether Lamborghini is eligible to obtain an exemption.
    Requested exemptions. Lamborghini states that it intends to certify 
the Murcielago as complying with the rigid barrier belted test 
requirement using the 50th percentile adult male test dummy set forth 
in S14.5.1 of FMVSS No. 208. The petitioner states that it previously 
determined the Murcielago's compliance with rigid barrier unbelted test 
requirements using the 50th percentile adult male test dummy through 
the S13 sled test using a generic pulse rather than a full vehicle 
test. Lamborghini states that it, therefore, cannot at present say with 
certainty that the Murcielago will comply with the unbelted test 
requirement under S14.5.2, which is a 25 mph rigid barrier test.
    As for the Murcielago's compliance with the other advanced air bag 
requirements, Lamborghini states that it does not know whether the 
Murcielago will be compliant because to date it has not had the 
financial ability to conduct the necessary testing.
    As such, Lamborghini is requesting an exemption for the Murcielago 
from the rigid barrier unbelted test requirement with the 50th 
percentile adult male test dummy (S14.5.2), the rigid barrier test 
requirement using the 5th percentile adult female test dummy (belted 
and unbelted, S15), the offset deformable barrier test requirement 
using the 5th percentile adult female test dummy (S17), the 
requirements to provide protection for infants and children (S19, S21, 
and S23) and the requirement using an out-of-position 5th percentile 
adult female test dummy at the driver position (S25).
    Economic Hardship. Lamborghini states that over the last 4 years 
(2001-2004), it lost over $180 million with the yearly losses averaging 
~ $47 million. Lamborghini asserts that, notwithstanding engineering 
impracticability described below, it could not afford to develop an 
advanced air bag system for the Murcielago and engineer its replacement 
by 2009. If the exemption is denied and U.S. sales of the Murcielago 
end on September 1, 2006, Lamborghini projects a loss of $12.7 million 
between September of 2006 and September of 2009.
    Lamborghini estimates the total cost of an advanced air bag program 
to be about $24 million. Lamborghini states that the development of an 
advanced air bag system for the Murcielago's successor can be funded 
through the Murcielago's continued U.S. sales.
    Lamborghini initially did not foresee that the Murcielago would 
still be in production when advanced air bags became mandatory. It was 
designed in the mid-1990s and was intended to be launched in 1999, with 
production ending in 2006. Due to financial hardship and changes in 
ownership, the Murcielago was not sold until late in 2001. Further 
financial hardship compounded by shifts in the exchange rate between 
the U.S. dollar and the Euro and the need to amortize costs of 
developing the Murcielago necessitate continued production of that 
vehicle until 2009.
    Good faith efforts to comply. Once the petitioner realized that the 
Murcielago would have to continue beyond September 2006, Lamborghini 
undertook to development an advanced air bag system. As early as 2001, 
Lamborghini began contacting air bag manufacturers in an effort to 
develop a compliant advanced air bag system. It pursued this matter 
with at least four suppliers. However, none provided a workable 
solution. The efforts continued until the summer of 2005, at which 
point Lamborghini concluded that technical constraints prevented 
development of advanced air bags for the Murcielago. Specifics of the 
technical difficulties are described in the petition.
    Lamborghini argues that an exemption would be in the public 
interest. The petitioner argues that the number of vehicles affected by 
an exemption would be very small and will therefore have, at most, a 
negligible impact on the overall safety of U.S. highways. Further, the 
Murcielago is likely to be operated only on a limited basis. 
Lamborghini also argues that granting an exemption will assure proper 
parts and service are available in the U.S. to support existing owners 
of Lamborghini automobiles. Finally, it argues that the Murcielago 
features other voluntarily provided safety features including a 
passenger air bag ``on-off switch,'' ABS, Traction Control System, and 
4-wheel drive.

V. Bugatti

    Background. Bugatti was a manufacturer of high performance motor 
vehicles from 1909 until the outbreak of World War II. In the past two 
decades, several attempts were made to revive the marquee. Finally, 
under the new ownership in 1998, the petitioner began designing a new 
vehicle called the Veyron 16.4 (Veyron). Only 300 vehicles are to be 
made, each costing in excess of $1,000,000. Bugatti originally planned 
to begin selling the vehicle in September of 2003 and end production 
before the advanced air bag requirements went into effect. However, 
significant development issues delayed production until September of 
2005. The petitioner argues that it tried in good faith but could not 
bring the vehicle into compliance with the advanced air bag 
requirements, and would incur substantial economic hardship if it 
cannot sell approximately 100 vehicles in the U.S. after September 1, 
2006.

[[Page 39389]]

    Eligibility. Bugatti just began producing vehicles and its total 
production has not reached 100. However, in 1998, Bugatti was acquired 
by Volkswagen AG (VW), a large motor vehicle manufacturer. In 
discussing its eligibility for hardship relief, Bugatti asserts that 
its relationship with VW is ``arm's-length.'' Bugatti operates 
independently, and services provided by Bugatti affiliates were paid 
for by Bugatti.
    The agency examined the relationship between Bugatti and VW. We 
tentatively conclude that Bugatti is eligible to apply for a temporary 
exemption based on the following factors. First, there is no similarity 
of design between the cars produced by Bugatti and cars produced by VW. 
Second, Bugatti operated independently from VW in designing and 
developing the Veyron. Third, almost all of the parts used in the 
Veyron production are obtained from suppliers that do not supply parts 
to VW. Lastly, when Bugatti has used test tracks or other facilities of 
VW in the course of developing the Veyron, it has reimbursed Volkswagen 
AG for the costs of those facilities on an ``arms-length'' basis. We 
note that our conclusions as to eligibility are tentative, and the 
agency has not made a final determination as to whether Bugatti would 
be eligible to obtain an exemption.
    Requested exemptions. Bugatti stated its intention to certify 
compliance of the Veyron model, produced on and after September 1, 2006 
for sale in the United States, with rigid barrier belted and unbelted 
test requirements using the 50th percentile adult male test dummy 
(S14.5.1 and S14.5.2), the rigid barrier test requirements using the 
5th percentile adult female test dummy (belted and unbelted, S15), and 
the offset deformable barrier test requirement using the 5th percentile 
adult female test dummy (S17).
    As for the other advanced air bag requirements, Bugatti states that 
it does not know whether the Veyron will be compliant as it has not had 
the financial ability to conduct the necessary development and testing.
    Bugatti is requesting an exemption from the requirements to provide 
protection for infants and children (S19, S21, and S23) and the 
requirement using an out-of-position 5th percentile adult female test 
dummy at the driver position (S25).
    Economic hardship. Publicly available information and also the 
financial documents submitted to NHTSA by the petitioner indicate that 
the Veyron project will result in financial losses whether or not 
Bugatti obtains a temporary exemption. At the time of the application, 
Bugatti had spent over $360 million on the Veyron project with little 
or no return on their investment. If the exemption is granted, Bugatti 
projects a net loss of $3.7 million. If the exemption is denied, 
Bugatti projects a net loss of $22.5 million. Further, denial of the 
petition would likely preclude the petitioner from developing new fully 
compliant vehicles. The petitioner argues that a denial of this 
petition could ultimately put Bugatti out of business.
    Good faith efforts to comply. As stated above, Bugatti originally 
anticipated that all of the Veyrons destined for the U.S. market would 
be manufactured prior to September 1, 2006. As such, the company did 
not believe the vehicles would need to be equipped with advanced air 
bag systems. However, due to delays in completing the design and 
engineering of the vehicle, Bugatti did not begin production of the 
Veyron until the fall of 2005, nearly 2 years after the anticipated 
initial start date.
    To install an advanced air bag system on the Veyron, modifications 
would be required to the steering wheel, the seats, the air bag system, 
the safety belts, the knee bolsters, and the instrument panel. Bugatti 
sought proposals from several potential suppliers for the development 
of an advanced air bag system for the Veyron, but received only one 
proposal. According to the petitioner, the proposal showed that the 
development and implementation costs for such a system was far beyond 
its current financial capabilities, particularly when considered in 
terms of amortizing those costs over a population of just 100 vehicles. 
The proposal indicated that total development, testing, and 
implementation of an advanced air bag system for the Veyron would cost 
over $12 million. More important, development would take at least 24 
months, which would have required Bugatti to completely shut down its 
operations. The petitioner argued this scenario is not feasible for a 
manufacturer intending to produce a total of 300 vehicles. For further 
details, see the petition.
    Bugatti argues that an exemption would be in the public interest. 
The petitioner put forth several arguments in favor of a finding that 
the requested exemption is consistent with the public interest. 
Specifically, Bugatti asserted that there is consumer demand in the 
U.S. for the Veyron, and granting this application will allow the 
demand to be met. Bugatti also states that granting the exemption will 
``have negligible impact on motor vehicle safety because of the limited 
number of vehicles sold and because each vehicle is likely to travel on 
the public roads only infrequently.'' Further, Bugatti states that it 
is extremely unlikely that young children would often be passengers in 
this vehicle, and therefore permitting a vehicle to be sold without an 
air bag designed to protect small children is unlikely to have any 
adverse impact on safety. Finally, Bugatti indicates that the Veyron 
incorporates many safety features that are not required by the FMVSSs, 
including anti-lock brakes, electronic stability control, all-wheel 
drive, run-flat tires, and a dynamic rear spoiler that acts as a 
``parachute brake'' during high speed emergency braking.

VI. Lotus

    Background. Lotus, which was founded in 1955, produces small 
quantities of performance cars. The company has experienced significant 
financial hardship issues for many years. In 1998, Lotus began to 
develop a fully compliant vehicle for the U.S. market. However, due to 
lack of capital, the project was cancelled in 2001. The petitioner 
instead decided to sell a vehicle designed for the European market, the 
Lotus Elise, in the U.S. Prior to the U.S. launch of the Elise in 2004, 
Lotus requested and received a part 555 temporary exemption for the 
Bumper Standard and certain headlamp requirements. Over the last 18 
months, the petitioner continued to experience economic hardship. 
Nevertheless, Lotus has worked on the development of compliant bumpers 
and headlamps at the cost of $27 million. These systems will be put 
into production in September 2006 and April 2007, respectively. 
However, the petitioner has been unable to develop an advanced air bag 
system for the Elise. According to Lotus, the sales of the fully 
complaint vehicle are slated to begin in 2008, but only if it is able 
to derive revenue from the U.S. sales of the Elise in the interim.
    Eligibility. Lotus produced approximately 5,600 vehicles in 2005. 
The issue of Lotus' eligibility for a financial hardship exemption was 
previously addressed by NHTSA on three separate occasions.\3\ Although 
Lotus is owned by Proton Holdings Berhad, Lotus remains an 
operationally independent small volume manufacturer and the material 
facts regarding its ownership have not changed.
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    \3\ See 64 FR 61379 (November 10, 1999); 68 FR 10066 (March 3, 
2003); 69 FR 5658 (February 5, 2004).
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    Requested exemptions. Lotus states that its United States vehicle 
production on and after September 1, 2006 will

[[Page 39390]]

comply with the rigid barrier belted test requirement using the 50th 
percentile adult male test dummy (S14.5.1). The petitioner states that 
it previously determined the Elise's compliance with rigid barrier 
unbelted test requirements using the 50th percentile adult male test 
dummy through the S13 sled test using a generic pulse rather than a 
full vehicle test. Therefore, Lotus states, it cannot at present say 
with certainty that the Elise would comply with the unbelted test 
requirement under S14.5.2, which is a 25 mph rigid barrier test.
    As for the other advanced air bag requirements, Lotus states that 
it does not know whether the Elise would be compliant as Lotus has not 
had the financial ability to conduct the necessary research and 
development.
    As such, Lotus is requesting an exemption for the Elise from the 
rigid barrier unbelted test requirement with the 50th percentile adult 
male test dummy (S14.5.2), the rigid barrier test requirement using the 
5th percentile adult female test dummy (belted and unbelted, S15), the 
offset deformable barrier test requirement using the 5th percentile 
adult female test dummy (S17), the requirements to provide protection 
for infants and children (S19, S21, and S23) and the requirement using 
an out-of-position 5th percentile adult female test dummy at the driver 
position (S25).
    Economic Hardship. Lotus has suffered substantial economic hardship 
for many years. In the past five years, its losses total almost $125 
million. When Lotus successfully petitioned NHTSA for an exemption in 
2004, it forecasted profits for fiscal years 2004 and 2005. However, 
these profits never materialized, and Lotus instead lost $13 million in 
2004 and approximately $5 million in 2005.\4\
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    \4\ Lotus also derives profits from engineering consulting for 
other small volume manufacturers. However, that business has 
declined. The weak dollar has also had a major effect on profits.
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    Lotus asserts that if the exemption is not granted, the company 
will be forced out of the U.S. market starting in September 2006 until 
sometime in 2008 for lack of any product to sell. Without an exemption, 
Lotus predicts losses totaling over $100 million in the next three 
years. Lotus argues that the cash required for Lotus to maintain a 
presence in the U.S. and to compensate its dealers for no product would 
not be sustainable. Further, there would not be funds to develop a new 
fully compliant vehicle. In short, the company could be forced entirely 
out of business.
    Good faith efforts to comply. Lotus asserts that it has tried in 
good faith to comply with the advanced air bag requirements. The 
development work for advanced air bags did not begin until 2003 because 
Lotus was not originally planning on selling the Elise in the U.S. 
Instead a new fully compliant vehicle was intended to be sold in the 
U.S. That project was cancelled.
    Lotus has been unable to acquire an ``off-the-shelf'' advanced air 
bag system. First, many existing advanced air bag designs, technical 
specifications, and tooling are the intellectual property of the 
original equipment manufacturer (OEM) and not the supplier. Lotus 
experienced reluctance to allow the transfer of this intellectual 
property for its use. Second, the passenger air bag size, inflator 
pressure, venting and deployment angle have been specifically designed 
for the original OEM vehicle crash pulse and interior geometry. 
Therefore, to source a passenger air bag requires reverse engineering, 
suiting the vehicles' interior package, and modifying the vehicle crash 
pulse to suit the OEM air bag. Third, the suppression option for 
compliance was not possible due to the lack of available sensor 
technology. Instead, to pursue the low risk deployment option, Lotus 
would need a top mounted passenger air bag. However, to package the top 
mounted passenger air bag in the Elise would require a complete 
redesign of a major structural part of the extruded aluminum chassis. 
At the location where the passenger air bag would need to be situated, 
there is a major structural cross beam that is bonded into the chassis. 
New tooling for the instrument panel would also be required along with 
a new air bag cover. The air bag cover would require a new unique 
design to overcome the issues of out-of-position, small occupant air 
bag deployments. Fourth, advanced air bag occupant classification 
systems require a compliant seat frame base. The Lotus Elise has a 
rigid shell seat with only a minimum level of foam; therefore, another 
technical solution would be required, such as seat frame weight 
sensors. Currently, this solution is under development by suppliers but 
is not now available as a production solution.
    Lotus argues that an exemption would be in the public interest. 
First, Lotus asserts that the current Elise standard air bag system 
does not pose a safety risk. Lotus indicates that it knows of no 
injuries or deaths to infants, children, or other occupants caused by 
the Elise's current standard air bag system. Lotus further notes that 
the passenger seat is fixed in its rearmost position, thereby offering 
improved passenger safety. Lotus intends to use all available resources 
to try to engineer a passenger air bag on-off switch to be ready by 
September 2006. This switch will further reduce air bag risks to 
children.
    Second, Lotus argues that denial of the petition would result in 
loss of jobs within Lotus and by independent dealers and repair 
specialists in the U.S. because the petitioner would be forced to 
abandon the U.S. market. Lotus also argued that consumer choice would 
be adversely affected.

VII. Morgan

    Background. Founded in 1909, Morgan is a small privately owned 
vehicle manufacturer producing approximately 600 specialty sports cars 
per year. Morgan manufactures several models, but only sells the Aero 8 
in the U.S. Morgan intended to produce a vehicle line specific to the 
U.S. market, with Ford supplying the engine and transmission. However, 
for technical reasons, the project did not work out, and Morgan 
temporarily stopped selling vehicles in the U.S. in 2004. In May of 
2005, Morgan obtained a temporary exemption from the Bumper Standard 
and began selling the Aero 8 in the U.S. Morgan now asks for a 
temporary exemption from advanced air bag requirements because of 
financial hardship.
    Eligibility. Morgan produces approximately 600 vehicles per year. 
Morgan is an independent company.
    Requested exemptions. Morgan stated that it intends for its U.S. 
Aero production on and after September 1, 2006 to comply with the rigid 
barrier belted test requirement using the 50th percentile adult male 
test dummy (S14.5.1) and the rigid barrier belted test requirement 
using the 5th percentile adult female test dummy (S15.1).
    Morgan states that the Aero's compliance with the rigid barrier 
unbelted test requirement using the 50th percentile adult male test 
dummy was determined through the S13 sled test using a generic pulse 
rather than a full vehicle test. This petitioner further states that it 
cannot at present say with certainty that the Aero would comply with 
the unbelted test requirement under S14.5.2, which is a 25 mph rigid 
barrier test.
    As for the other advanced air bag requirements, Morgan states that 
it does not know whether the Aero would be compliant as Morgan has not 
had the financial ability to conduct the necessary development and 
testing.
    Morgan is requesting an exemption for the Aero from the rigid 
barrier unbelted test requirement with the 50th percentile adult male 
test dummy (S14.5.2), the rigid barrier unbelted test

[[Page 39391]]

requirement using the 5th percentile adult female test dummy (S15.2), 
the offset deformable barrier test requirement using the 5th percentile 
adult female test dummy (S17), the requirements to provide protection 
for infants and children (S19, S21, and S23) and the requirement using 
an out-of-position 5th percentile adult female test dummy at the driver 
position (S25).
    Economic Hardship. Morgan argues that meeting the advanced air bag 
requirements is estimated to cost between $3,196,179 and $5,066,938 and 
is not within the financial capability of the company.\5\ Morgan's 
financial submission indicates the company's losses over the last 5 
years have totaled more than 3.6 million dollars. In 2004, Morgan made 
a small profit for the first time in 3 years. Morgan predicted a net 
loss for fiscal year 2005 and will submit updated financial statements 
prior to the agency making a final decision on the petition.
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    \5\ When costs for interior redesign, crash cars, and tooling 
are included, the estimate raises to between $5,648,679 and 
$7,519,438.
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    Without an exemption, Morgan would be forced once again to withdraw 
from the U.S. market. With no income from U.S. sales, Morgan asserts 
that it will not be able to fund an advanced air bag program for a 
future vehicle or return to profitability. A loss of $8.6 million is 
projected. Morgan further asserts that if the petition is denied, it 
could soon become insolvent.
    Good faith efforts to comply. Morgan has been working with the air 
bag supplier Siemens to develop an advanced air bag system for the Aero 
8. However, a lack of funds and technical problems precluded the 
implementation of an advanced air bag system for the Aero 8. The 
minimum time needed to develop an advanced air bag system (provided 
that there is a source of revenue) is 2 years. With no other product to 
sell in the meantime, Morgan needs to rely on the Aero 8 sales to 
finance this project.
    Specific technical challenges include the following. Morgan does 
not have access to necessary sensor technology to pursue the ``full 
suppression'' passenger air bag option. Due to the design of the Aero 8 
platform dashboard, an entirely new interior solution and design must 
be developed. Chassis modifications are anticipated due to the 
originally stiff chassis design.
    Morgan argues that an exemption would be in the public interest. 
Morgan put forth several arguments in favor of a finding that the 
requested exemption is consistent with the public interest. 
Specifically, Morgan asserts the current Aero 8's standard air bag 
system does not pose a safety risk. Morgan knows of no injuries caused 
by the Aero 8's current standard air bag system. If the exemption is 
denied and Morgan stops U.S. sales, Morgan's U.S. dealers would 
unavoidably have numerous lay-offs, resulting in decreased U.S. 
unemployment. Denial of an exemption would reduce the consumer choice 
in the specialty sports car market sector into which Morgan cars are 
offered. The Aero 8 will not be used extensively by owners, and is 
unlikely to carry small children. Finally, according to Morgan, 
granting an exemption would assure the continued availability of proper 
parts and service support for existing Morgan owners. Without an 
exemption, Morgan would be forced from the U.S. market, and Morgan 
dealers will find it difficult to support existing customers.

VIII. Maserati

    Background. Maserati is a small volume Italian automobile 
manufacturer formed in 1914 that produces performance sports cars and 
luxury automobiles. Maserati has experienced frequent changes in 
ownership and financial hardship. The exemption is being sought for the 
Maserati Coupe and Spyder for a period of 16 months.
    Eligibility. Maserati produced less than 6,000 vehicles in the most 
recent year of production. However, Maserati is owned by Fiat, a large 
vehicle manufacturer. Maserati asserts that its relationship with Fiat 
is ``arm's-length.'' Maserati operates independently, and services 
provided by Fiat are paid for by Maserati.
    The agency examined the relationship between Maserati and Fiat. We 
tentatively conclude that Maserati is eligible to apply for a temporary 
exemption based on the following factors. First, there is no similarity 
of design between the cars produced by Maserati and cars produced by 
Fiat, and the Maserati Coupe/Spyder was designed without assistance 
from Fiat. Second, Maserati cars are imported and sold through separate 
distribution channels independent of Fiat, which does not sell vehicles 
in the U.S. We note that our conclusions as to eligibility are 
tentative, and the agency has not made a final determination as to 
whether Maserati is eligible to obtain an exemption.
    Requested exemptions. Maserati stated that it intends for the 
Coupe/Spyder produced for the United States market on and after 
September 1, 2006 to comply with the rigid barrier belted and unbelted 
test requirements using the 50th percentile adult male test dummy 
(S14.5)
    As for the Coupe/Spyder's compliance with the other advanced air 
bag requirements, Maserati states that it does not know whether the 
Coupe/Spyder will be compliant as it has not had the financial ability 
to conduct the necessary development and testing.
    Accordingly, Maserati is requesting an exemption from the rigid 
barrier test requirement using the 5th percentile adult female test 
dummy (belted and unbelted, S15), the offset deformable barrier test 
requirement using the 5th percentile adult female test dummy (S17), the 
requirements to provide protection for infants and children (S19, S21, 
and S23) and the requirement using an out-of-position 5th percentile 
adult female test dummy at the driver position (S25).
    Economic hardship. Over the period of 2000-2005, the company lost 
320,996,665 Euros ($385,195,998) \6\. The petitioner argues that an 
exemption is needed in order to avoid massive disruptions to the 
Maserati production system and loss of revenue until a fully-compliant 
model is introduced in early 2008. The exempted-vehicles will ``bridge 
the gap'' between the current Coupe/Spyder, with standard air bags, and 
the next version of the model line arriving in 2008 with advanced air 
bags. If the exemption is denied, the petitioner anticipates layoffs 
and a delay in introducing a new, fully complaint vehicle.
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    \6\ The dollar-euro exchange rate used herein is 1 euro = $1.20.
---------------------------------------------------------------------------

    Good faith efforts to comply. Maserati states that it has been 
unable to overcome engineering problems associated with installing 
advanced air bags in the current Coupe/Spyder, a model line that is 
soon to go out of production. The design of the current Coupe/Spyder 
started in 1996, before the advanced air bag rule was promulgated. In 
the late 1990s, when Maserati decided to re-enter the U.S. market, it 
made the decision that the Coupe/Spyder would have a life span in the 
U.S. of 5 years, from 2002 through 2006. This decision was based on the 
fact that the model was introduced in Europe in 1997, and that the 
basic platform would therefore have a total life span of 9 years. Only 
in late 2005, Maserati concluded that it had to extend the life span of 
the Coupe/Spyder, by 16 months beyond the planned 2006 end date, 
because a fully compliant vehicle is not yet ready.
    According to Maserati, it tried, but could not overcome the 
technical challenges associated with borrowing the advanced air bag 
system from Maserati's other model, the

[[Page 39392]]

Quattroporte, because the steering column and steering wheel are 
incompatible with the electrical system in the Coupe/Spyder. Use of the 
Quattroporte's passenger air bag would require redesigning the entire 
Coupe-Spyder dashboard. To position the Quattroporte's sensors in the 
Coupe-Spyder, it would have been necessary to change the seats. The 
sensors also could not be packaged in the Coupe-Spyder due to space 
problems, and the sensor software was incompatible with the Coupe-
Spyder's electrical system.
    Maserati argues that an exemption would be in the public interest. 
Maserati put forth several arguments in favor of a finding that the 
requested exemption is consistent with the public interest. 
Specifically, Maserati asserts the current Coupe-Spyder's air bag 
system does not pose a safety risk. Maserati knows of no injuries 
caused by the Coupe-Spyder's current standard air bag system. If the 
exemption is denied and Maserati stops U.S. sales, Maserati states that 
its goodwill with its U.S. dealer's would be negatively impacted. 
Further, Maserati asserts that denial of an exemption would reduce the 
consumer choice in the specialty sports car market sector into which 
Maserati cars are offered. Masearti asserts that the Coupe-Spyder will 
not be used extensively by owners, and is unlikely to carry small 
children. Finally, according to Maserati, granting an exemption would 
assure the continued availability of proper parts and service support 
for existing Maserati owners.

IX. Issuance of Notice of Final Action

    We are providing a 15 day comment period in light of the short 
period of time between now and the time the advanced air bag 
requirements become effective for small volume manufacturers, i.e., 
September 1, 2006. After considering public comments and other 
available information, we will publish a notice of final action on the 
application in the Federal Register.

    Issued on: July 5, 2006.
Ronald L. Medford,
Senior Associate Administrator for Vehicle Safety.
[FR Doc. E6-10892 Filed 7-11-06; 8:45 am]
BILLING CODE 4910-59-P