Saleen, Inc.; Response to Application for Temporary Exemption From Certain Provisions of Federal Motor Vehicle Safety Standard No. 208, 52869-52871 [E6-14829]
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Federal Register / Vol. 71, No. 173 / Thursday, September 7, 2006 / Notices
DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety
Administration
[Docket No. NHTSA–2006–25323; Notice 2]
Saleen, Inc.; Response to Application
for Temporary Exemption From Certain
Provisions of Federal Motor Vehicle
Safety Standard No. 208
National Highway Traffic
Safety Administration (NHTSA),
Department of Transportation (DOT).
ACTION: Grant in part and denial in part
of application for temporary exemption
from certain provisions of Federal Motor
Vehicle Safety Standard No. 208,
Occupant Crash Protection.
AGENCY:
rwilkins on PROD1PC63 with NOTICES
SUMMARY: This document grants in part
and denies in part the Saleen
application for an extension of a
temporary exemption from the
automatic restraint requirements of
Federal Motor Vehicle Safety Standard
(FMVSS) No. 208, Occupant Crash
Protection, and grants an additional
exemption from the advanced air bag
requirements of that standard, both for
the Saleen S7. The basis for the request
was that compliance would cause
substantial economic hardship to a lowvolume manufacturer that has tried in
good faith to comply with the standard.
The extension of the exemption from
the automatic restraint requirements is
effective September 1, 2006 and will
remain in effect until August 31, 2007.
The exemption from the advanced air
bag requirements is effective September
1, 2006 and will remain in effect until
August 31, 2009.
FOR FURTHER INFORMATION CONTACT: Ed
Glancy or Eric Stas in the Office of Chief
Counsel, NCC–112, (Phone: 202–366–
2992; Fax 202–366–3820).
SUPPLEMENTARY INFORMATION:
I. Background
Under 49 U.S.C. 30113(b), NHTSA
may grant a temporary exemption from
a motor vehicle safety standard in
situations where compliance would
cause substantial economic hardship to
a low-volume manufacturer that has
tried in good faith to comply with the
standard. A manufacturer is eligible to
apply for an economic hardship
exemption if its total motor vehicle
production in its most recent year of
production does not exceed 10,000, as
determined by the NHTSA
Administrator (49 U.S.C. 30113(d)).
Saleen has manufactured less than 20
Saleen S7’s a year between model years
2003 and 2005. The applicant’s other
line of business consists of altering
vehicles. Saleen stated that it produced
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18:11 Sep 06, 2006
Jkt 208001
approximately 1500 Saleen Mustangs in
model year 2005. It indicated that sales
of these vehicles are expected to
increase in 2006. Saleen also stated that
it is adding new models such as the
2007 Ford 150-based Saleen S331.
Saleen will also be considered an alterer
for these new vehicles (other than the
S7).
In June 2001, NHTSA granted Saleen
a two-year hardship exemption from the
automatic restraint requirements of
FMVSS No. 208, expiring on April 16,
2003 (66 FR 33298; June 21, 2001). On
January 22, 2004, we granted a renewal
of the exemption for an additional three
years, expiring on September 1, 2006.1
In September of 2005, Saleen
submitted an application for further
exemption from the automatic restraint
requirements of FMVSS No. 208, as well
as an exemption from the advanced air
bag requirements of the standard. Saleen
subsequently withdrew the petition, and
later resubmitted the application in
January of 2006. Saleen then provided
supplemental information on May 11,
2006. In its petition, Saleen requested
that both the further exemption for the
automatic restraint requirements
(‘‘basic’’ air bag requirements) and the
exemption for the advanced air bag
requirements remain in effect for three
years, i.e., until September 1, 2009.
We note that, 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.
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
1 In accordance with 49 CFR 555.8(e), Saleen’s
original exemption remained in effect until the
publication of the 2004 grant notice because the
application for renewal was filed more than 60 days
prior to the expiration of the exemption.
2 See 65 FR 30680; May 12, 2000.
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52869
were challenging, major air bag
suppliers concentrated their efforts on
working with large-scale 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 indicated above, Saleen requested
not only an exemption from the
advanced air bag requirements, but also
a continued exemption from the
automatic restraint requirements
altogether.
On July 12, 2006, NHTSA published
in the Federal Register (71 FR 39392) a
notice of receipt of Saleen’s application
for temporary exemption, and invited
public comments.
II. Saleen’s Statement of Need and
Good Faith Effort
Saleen stated that its previous
exemption extension request was
intended to provide sufficient time for
Saleen to sell and ship the Saleen S7
vehicles to generate the necessary cash
flow to support the development of an
air bag system that would be compliant
with the advanced air bag requirements.
The applicant stated that it intended to
produce and sell a total of 36 vehicles
by the end of 2003, with production
slowly increasing to a rate of 50 vehicles
per year. Saleen projected that this sales
rate would have generated
approximately $12.8 million in annual
gross revenue by the end of 2003, which
would then increase to approximately
$17.8 million in annual gross revenue
with the annual production of 50
vehicles. Saleen presented its actual
annual sales as 13 vehicles, 8 vehicles,
and 14 vehicles, in model years 2003,
2004, and 2005, respectively.
In the January 2006 application,
Saleen stated that it intended to sell a
total of 25 vehicles in the United States
per year, and an additional 10 vehicles
in Europe. Maintaining an annual sales
level of 35 vehicles, Saleen would
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Federal Register / Vol. 71, No. 173 / Thursday, September 7, 2006 / Notices
generate a total of approximately $17.8
million. Saleen subsequently revised
these projections stating that it was
uncertain whether it would manufacture
the Saleen S7 for international sale, as
European homologation is pending.
However, Saleen stated that increased
sales of its other products in
conjunction with the sales of the Saleen
S7 will allow it to develop an air bag
system that is compliant with FMVSS
No. 208 by the end of calendar year
2008 at a cost of approximately $3.8
million. Saleen stated that this
timeframe does not account for any
delays, and as such, it is requesting a
three year exemption, expiring
September 1, 2009.
Saleen noted that in its previous
application it explained that Saleen’s
relationship with Ford Motor Company
in assisting in the manufacture of the
Ford GT, an exotic sports car, would
allow Saleen to rely on many of the
components from the Ford GT.
However, Saleen stated that the Ford GT
was not manufactured as complying
with the advanced air bag requirements.
As such, Saleen stated that it was not
able to rely on the advanced air bag
technology used in the Ford GT.
Since the original air bag exemption,
Saleen stated that it has hired an
engineering project manger responsible
for air bag development, has been
working with engineers at Takata,
Autoliv, and Bosch in researching all of
the program requirements as well as
developing a test plan and component
designs for development of a system
compliant with the advanced air bag
requirement. Saleen also stated that it is
working with Kettering University in
Flint Michigan for additional research
and testing.
rwilkins on PROD1PC63 with NOTICES
III. Saleen’s Statement of Public
Interest
The applicant put forth several
arguments in favor of a finding that the
requested exemption is consistent with
the public interest. Specifically, Saleen
stated that the Saleen S7 is a unique
vehicle designed and produced in the
United States utilizing many domestic
sourced components. If an exemption
were granted, Saleen stated that it
would be able to maintain its current
payroll of 150 full time employees and
continue the purchase of domestic
sourced components. Further, Saleen
stated that the Saleen S7 otherwise
conforms to all applicable FMVSSs.
IV. Public Comments
NHTSA received eight comments
concerning Saleen’s application for a
temporary exemption. All were from
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18:11 Sep 06, 2006
Jkt 208001
private individuals, and all favored
granting the petition.
Commenters argued that S7 is
constructed to provide driver and
passenger safety at levels well above
those of other passenger vehicles. They
cited a fully welded roll cage, aluminum
honeycomb passenger compartment,
and carbon fiber bodywork. They stated
that the vehicle is used in racing
applications. They cited the extremely
small number of S7’s that are produced,
and that they are driven very few miles.
They cited economic hardship to Saleen
if the petition is denied, and stated that
jobs would be lost.
V. Agency Decision
NHTSA has decided to grant Saleen’s
petition in part and deny it in part. In
particular, we are granting Saleen a oneyear extension of its existing exemption
from the automatic restraint
requirements of FMVSS 208, and
denying its request as to the additional
two years. This extension will begin on
September 1, 2006 and will remain in
effect through August 31, 2007. We are
granting Saleen’s request for a three year
exemption from the standard’s
advanced air bag requirements. This
exemption will begin September 1,
2006, and remain in effect through
August 31, 2009.
In discussing this decision, we begin
by noting that, in order to grant an
economic hardship petition, the agency
must, under 49 U.S.C. 30113(b), find
both that compliance with a standard
would cause substantial economic
hardship and that the manufacturer has
tried to comply with the standard in
good faith, as well as that the exemption
is in the public interest and consistent
with the Safety Act.3
In this case, Saleen has previously
received a temporary exemption from
FMVSS No. 208’s automatic restraint
requirements (the standard’s ‘‘basic’’ air
bag requirements), as well as an
extension of that temporary exemption.
These previous exemptions covered the
period from June 2001 through August
31, 2006.
In granting the first application in
June 2001, NHTSA noted that Saleen
estimated that it would take up to 20
months to fully develop an automatic
restraint system. 66 FR 33298, June 21,
2001. In granting the application for
extension of that exemption in January
2004, NHTSA noted that Saleen then
anticipated that it would be able to
begin developing advanced air bags by
July 2004 and expected full compliance
with the requirements of FMVSS No.
3 The Safety Act is codified as Title 49, United
States Code, Chapter 301.
PO 00000
Frm 00112
Fmt 4703
Sfmt 4703
208 by September 1, 2006. 69 FR 3192,
January 22, 2004.
Since this type of exemption is
temporary, and given the important
safety benefits provided by air bags, in
evaluating Saleen’s latest application we
particularly considered whether a
further extension would be in the public
interest and consistent with the Safety
Act, and whether Saleen has continued
to make good faith efforts to comply
with this requirement.
In considering this issue, we
recognize that Saleen was only able to
take limited advantage of the original
exemption, granted on June 21, 2001,
due to production delays. Sales did not
commence until March of 2003, only a
few months before the July 1, 2003
expiration date for the original
exemption. We also recognize that by
September 1, 2006, Saleen faced the
need (absent a new temporary
exemption) to meet the advanced air bag
requirements.
That company indicated in its
petition that it considered implementing
a ‘‘basic’’ air bag system. However, it
determined that ‘‘such a system would
only provide approximately $500,000.00
in savings, with a resulting estimated
development cost of $3,300,000.00.’’
Saleen concluded that this cost was
prohibitive, given that the system would
be outdated as of September 1, 2006.
While we understand that Saleen
prefers for economic reasons to go
directly to advanced air bags, NHTSA
must also consider the safety benefits
provided by ‘‘basic’’ air bags in
assessing whether a further extension of
the exemption from the ‘‘basic’’ air bag
requirements is consistent with the
Safety Act and the public interest, and
in whether Saleen has made good faith
efforts to meet these particular
requirements.
Given the facts before us, including
the previous exemptions granted to
Saleen, and taking account of all of the
efforts Saleen has made, we have
decided to grant a one year extension of
Saleen’s exemption from FMVSS No.
208’s ‘‘basic’’ air bag requirements, and
to deny its request as to the additional
two years. We believe that extending
this exemption further would not be in
the public interest or consistent with the
Safety Act. We believe that there is a
considerable difference between
providing a company such as Saleen
some additional time to develop an air
bag system, and granting repeated
‘‘temporary’’ exemptions. With the oneyear extension, Saleen will have had an
exemption for a full six years, and been
producing vehicles under it for about
four and one-half years.
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Federal Register / Vol. 71, No. 173 / Thursday, September 7, 2006 / Notices
As to advanced air bags, and as
indicated above, Saleen has hired an
engineering project manager responsible
for air bag development, has been
working with engineers at Takata,
Autoliv, and Bosch in researching all of
the program requirements as well as
developing a test plan and component
designs for development of a system
compliant with the advanced air bag
requirement. Saleen is also working
with Kettering University in Flint
Michigan for additional research and
testing.
We have concluded that Saleen has
made good faith efforts to meet the
advanced air bag requirements. We note
that Saleen’s situation in needing
additional time to meet the advanced air
bag requirements, which apply to low
volume manufacturers beginning
September 1, 2006, is not unlike that of
several other low volume
manufacturers.
If the petition were denied, the sale of
S7 automobiles would cease
immediately. In evaluating Saleen’s
current situation, the agency finds that
to require immediate compliance with
Standard No. 208 would cause the
petitioner substantial economic
hardship. While Saleen also alters motor
vehicles, the S7 is the only model that
Saleen manufactures.
Traditionally, the agency has found
that the public interest is served in
affording continued employment to a
small volume manufacturer’s work force
and to those of its U.S.-sourced
component suppliers. The agency has
also found that the public interest is
served by affording the consumers a
wider variety of motor vehicles. In this
instance, denial of the petition would
put in jeopardy the jobs of 150 full time
employees at Saleen dedicated to the
design, manufacture, and certification of
the S7. Denial of the petition could also
affect the payrolls of U.S.-sourced
component suppliers.
The vehicle in question will be
manufactured in extremely limited
quantities. Saleen anticipates selling no
more than 25 of the vehicles per year in
the United States. The current
Manufacturer’s Suggested Retail Price is
$555,000. The vehicles are also driven
on an extremely limited basis. Saleen
stated that the vehicles generally do not
accrue more than 2,000 miles per year.
In light of these factors, the agency
anticipates that the S7 vehicles will
have a negligible impact on the overall
safety of U.S. highways. The agency also
notes that Saleen has indicated that the
vehicle subject to this petition complies
with all other applicable Federal motor
vehicle safety standards.
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19:26 Sep 06, 2006
Jkt 208001
We are granting Saleen a three-year
exemption from the advanced air bag
requirements, beginning September 1,
2006. As indicated above, we are also
granting that company an extension of
the exemption from the ‘‘basic’’ air bag
requirements for the first of the three
years. Saleen’s ability to utilize the final
two years of the exemption from the
advanced air bag requirements will be
dependent on whether it implements an
air bag system that enables the S7 to at
least meet FMVSS No. 208’s ‘‘basic’’ air
bag requirements.
Given the discussion presented above,
we conclude that Saleen has made
sufficient good faith efforts to comply
with FMVSS No. 208 to support these
exemptions for the prescribed time
periods, that requiring immediate
compliance would cause substantial
economic hardship, and that the
exemptions are in the public interest
and consistent with the Safety Act. We
note that while this document includes
some discussion of those good faith
efforts and economic hardship, NHTSA
has also considered additional
information submitted by Saleen which
has been determined to be confidential.
We should caution that manufacturers
that receive temporary exemptions
should not assume that the agency will
necessarily grant extensions. On this
basic issue, we note that Saleen cited in
its petition a particular sales rate that it
needs to sustain in order to continue to
fund the development of advanced air
bags for implementation by September
1, 2009. See p. 2 of Saleen’s petition.
The petitioner should not assume that if
it is unable to maintain a particular
sales rate or for other reasons does not
continue to fund the development of
advanced air bags, that the agency will
then grant an extension of the
exemption for advanced air bags
provided in this document.
As to the specific paragraphs of
FMVSS No. 208 that will be covered by
the exemptions, we note that the
original exemption for Saleen cited
S4.1.5.3 of 49 CFR 571.208. On review,
we believe that it would be clearer to
cite both S4.1.5.1(a)(1) and S4.1.5.3. The
former paragraph requires passenger
cars, at each front outboard seating
position, to meet specified frontal crash
protection requirements ‘‘by means that
require no action by vehicle occupants.’’
S4.1.5.3 then requires that passenger
cars meet that requirement by means of
inflatable restraint systems. Since the
intent of the exemption is to exempt the
S7 from automatic crash protection
requirements, we believe that
S4.1.5.1(a)(1) should be cited. We note
that the S7 is still subject, among other
things, to S4.1.5.1(a)(3), which requires
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Frm 00113
Fmt 4703
Sfmt 4703
52871
it to meet specified performance
requirements in a belted crash test. The
relevant paragraph for the advanced air
bag requirements is S14.2.
We also note that prospective
purchasers will be notified that the
vehicle is exempted from the air bag
requirements of Standard No. 208.
Under § 555.9(b), a manufacturer of an
exempted passenger car must affix
securely to the windshield or side
window of each exempted vehicle a
label containing a statement that the
vehicle conforms to all applicable
Federal motor vehicle safety standards
in effect on the date of manufacture
‘‘except for Standards Nos. [listing the
standards by number and title for which
an exemption has been granted]
exempted pursuant to NHTSA
Exemption No. lll.’’ This label
notifies prospective purchasers about
the exemption and its subject. Under
§ 555.9(c), this information must also be
included on the vehicle’s certification
label.
In accordance with 49 U.S.C.
30113(b)(3)(B)(i), Saleen S7 is granted
NHTSA Temporary Exemption No. EX
06–7, from S4.1.5.1(a)(1) and S4.1.5.3.
This exemption is effective September
1, 2006 to August 31, 2007. Saleen S7
is granted NHTSA Temporary
Exemption No. EX 06–8, from S14.2 of
§ 571.208. This exemption is effective
September 1, 2006 to August 31, 2009.
(49 U.S.C. 30113; delegations of authority at
49 CFR 1.50. and 501.8)
Issued on: August 31, 2006.
Nicole R. Nason,
Administrator.
[FR Doc. E6–14829 Filed 9–6–06; 8:45 am]
BILLING CODE 4910–59–P
DEPARTMENT OF TRANSPORTATION
Pipeline and Hazardous Materials
Safety Administration
[Docket No. PHMSA—2006–24058;
Notice 1]
Pipeline Safety: Petition for Waiver;
TransCanada Pipelines Limited
Pipeline and Hazardous
Materials Safety Administration
(PHMSA), Department of Transportation
(DOT).
ACTION: Notice; petition for waiver.
AGENCY:
SUMMARY: TransCanada Pipelines
Limited, operator of the Portland
Natural Gas Transmission System
(PNGTS), requests a waiver of
compliance from PHMSA regulations
for selected gas transmission pipeline
segments in Windham, Maine. These
E:\FR\FM\07SEN1.SGM
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Agencies
[Federal Register Volume 71, Number 173 (Thursday, September 7, 2006)]
[Notices]
[Pages 52869-52871]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-14829]
[[Page 52869]]
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
[Docket No. NHTSA-2006-25323; Notice 2]
Saleen, Inc.; Response to Application for Temporary Exemption
From Certain Provisions of Federal Motor Vehicle Safety Standard No.
208
AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).
ACTION: Grant in part and denial in part of application for temporary
exemption from certain provisions of Federal Motor Vehicle Safety
Standard No. 208, Occupant Crash Protection.
-----------------------------------------------------------------------
SUMMARY: This document grants in part and denies in part the Saleen
application for an extension of a temporary exemption from the
automatic restraint requirements of Federal Motor Vehicle Safety
Standard (FMVSS) No. 208, Occupant Crash Protection, and grants an
additional exemption from the advanced air bag requirements of that
standard, both for the Saleen S7. The basis for the request was that
compliance would cause substantial economic hardship to a low-volume
manufacturer that has tried in good faith to comply with the standard.
The extension of the exemption from the automatic restraint
requirements is effective September 1, 2006 and will remain in effect
until August 31, 2007. The exemption from the advanced air bag
requirements is effective September 1, 2006 and will remain in effect
until August 31, 2009.
FOR FURTHER INFORMATION CONTACT: Ed Glancy or Eric Stas in the Office
of Chief Counsel, NCC-112, (Phone: 202-366-2992; Fax 202-366-3820).
SUPPLEMENTARY INFORMATION:
I. Background
Under 49 U.S.C. 30113(b), NHTSA may grant a temporary exemption
from a motor vehicle safety standard in situations where compliance
would cause substantial economic hardship to a low-volume manufacturer
that has tried in good faith to comply with the standard. A
manufacturer is eligible to apply for an economic hardship exemption if
its total motor vehicle production in its most recent year of
production does not exceed 10,000, as determined by the NHTSA
Administrator (49 U.S.C. 30113(d)). Saleen has manufactured less than
20 Saleen S7's a year between model years 2003 and 2005. The
applicant's other line of business consists of altering vehicles.
Saleen stated that it produced approximately 1500 Saleen Mustangs in
model year 2005. It indicated that sales of these vehicles are expected
to increase in 2006. Saleen also stated that it is adding new models
such as the 2007 Ford 150-based Saleen S331. Saleen will also be
considered an alterer for these new vehicles (other than the S7).
In June 2001, NHTSA granted Saleen a two-year hardship exemption
from the automatic restraint requirements of FMVSS No. 208, expiring on
April 16, 2003 (66 FR 33298; June 21, 2001). On January 22, 2004, we
granted a renewal of the exemption for an additional three years,
expiring on September 1, 2006.\1\
---------------------------------------------------------------------------
\1\ In accordance with 49 CFR 555.8(e), Saleen's original
exemption remained in effect until the publication of the 2004 grant
notice because the application for renewal was filed more than 60
days prior to the expiration of the exemption.
---------------------------------------------------------------------------
In September of 2005, Saleen submitted an application for further
exemption from the automatic restraint requirements of FMVSS No. 208,
as well as an exemption from the advanced air bag requirements of the
standard. Saleen subsequently withdrew the petition, and later
resubmitted the application in January of 2006. Saleen then provided
supplemental information on May 11, 2006. In its petition, Saleen
requested that both the further exemption for the automatic restraint
requirements (``basic'' air bag requirements) and the exemption for the
advanced air bag requirements remain in effect for three years, i.e.,
until September 1, 2009.
We note that, 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.
---------------------------------------------------------------------------
\2\ See 65 FR 30680; May 12, 2000.
---------------------------------------------------------------------------
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-scale 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 indicated above, Saleen requested not only an exemption from the
advanced air bag requirements, but also a continued exemption from the
automatic restraint requirements altogether.
On July 12, 2006, NHTSA published in the Federal Register (71 FR
39392) a notice of receipt of Saleen's application for temporary
exemption, and invited public comments.
II. Saleen's Statement of Need and Good Faith Effort
Saleen stated that its previous exemption extension request was
intended to provide sufficient time for Saleen to sell and ship the
Saleen S7 vehicles to generate the necessary cash flow to support the
development of an air bag system that would be compliant with the
advanced air bag requirements. The applicant stated that it intended to
produce and sell a total of 36 vehicles by the end of 2003, with
production slowly increasing to a rate of 50 vehicles per year. Saleen
projected that this sales rate would have generated approximately $12.8
million in annual gross revenue by the end of 2003, which would then
increase to approximately $17.8 million in annual gross revenue with
the annual production of 50 vehicles. Saleen presented its actual
annual sales as 13 vehicles, 8 vehicles, and 14 vehicles, in model
years 2003, 2004, and 2005, respectively.
In the January 2006 application, Saleen stated that it intended to
sell a total of 25 vehicles in the United States per year, and an
additional 10 vehicles in Europe. Maintaining an annual sales level of
35 vehicles, Saleen would
[[Page 52870]]
generate a total of approximately $17.8 million. Saleen subsequently
revised these projections stating that it was uncertain whether it
would manufacture the Saleen S7 for international sale, as European
homologation is pending.
However, Saleen stated that increased sales of its other products
in conjunction with the sales of the Saleen S7 will allow it to develop
an air bag system that is compliant with FMVSS No. 208 by the end of
calendar year 2008 at a cost of approximately $3.8 million. Saleen
stated that this timeframe does not account for any delays, and as
such, it is requesting a three year exemption, expiring September 1,
2009.
Saleen noted that in its previous application it explained that
Saleen's relationship with Ford Motor Company in assisting in the
manufacture of the Ford GT, an exotic sports car, would allow Saleen to
rely on many of the components from the Ford GT. However, Saleen stated
that the Ford GT was not manufactured as complying with the advanced
air bag requirements. As such, Saleen stated that it was not able to
rely on the advanced air bag technology used in the Ford GT.
Since the original air bag exemption, Saleen stated that it has
hired an engineering project manger responsible for air bag
development, has been working with engineers at Takata, Autoliv, and
Bosch in researching all of the program requirements as well as
developing a test plan and component designs for development of a
system compliant with the advanced air bag requirement. Saleen also
stated that it is working with Kettering University in Flint Michigan
for additional research and testing.
III. Saleen's Statement of Public Interest
The applicant put forth several arguments in favor of a finding
that the requested exemption is consistent with the public interest.
Specifically, Saleen stated that the Saleen S7 is a unique vehicle
designed and produced in the United States utilizing many domestic
sourced components. If an exemption were granted, Saleen stated that it
would be able to maintain its current payroll of 150 full time
employees and continue the purchase of domestic sourced components.
Further, Saleen stated that the Saleen S7 otherwise conforms to all
applicable FMVSSs.
IV. Public Comments
NHTSA received eight comments concerning Saleen's application for a
temporary exemption. All were from private individuals, and all favored
granting the petition.
Commenters argued that S7 is constructed to provide driver and
passenger safety at levels well above those of other passenger
vehicles. They cited a fully welded roll cage, aluminum honeycomb
passenger compartment, and carbon fiber bodywork. They stated that the
vehicle is used in racing applications. They cited the extremely small
number of S7's that are produced, and that they are driven very few
miles. They cited economic hardship to Saleen if the petition is
denied, and stated that jobs would be lost.
V. Agency Decision
NHTSA has decided to grant Saleen's petition in part and deny it in
part. In particular, we are granting Saleen a one-year extension of its
existing exemption from the automatic restraint requirements of FMVSS
208, and denying its request as to the additional two years. This
extension will begin on September 1, 2006 and will remain in effect
through August 31, 2007. We are granting Saleen's request for a three
year exemption from the standard's advanced air bag requirements. This
exemption will begin September 1, 2006, and remain in effect through
August 31, 2009.
In discussing this decision, we begin by noting that, in order to
grant an economic hardship petition, the agency must, under 49 U.S.C.
30113(b), find both that compliance with a standard would cause
substantial economic hardship and that the manufacturer has tried to
comply with the standard in good faith, as well as that the exemption
is in the public interest and consistent with the Safety Act.\3\
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\3\ The Safety Act is codified as Title 49, United States Code,
Chapter 301.
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In this case, Saleen has previously received a temporary exemption
from FMVSS No. 208's automatic restraint requirements (the standard's
``basic'' air bag requirements), as well as an extension of that
temporary exemption. These previous exemptions covered the period from
June 2001 through August 31, 2006.
In granting the first application in June 2001, NHTSA noted that
Saleen estimated that it would take up to 20 months to fully develop an
automatic restraint system. 66 FR 33298, June 21, 2001. In granting the
application for extension of that exemption in January 2004, NHTSA
noted that Saleen then anticipated that it would be able to begin
developing advanced air bags by July 2004 and expected full compliance
with the requirements of FMVSS No. 208 by September 1, 2006. 69 FR
3192, January 22, 2004.
Since this type of exemption is temporary, and given the important
safety benefits provided by air bags, in evaluating Saleen's latest
application we particularly considered whether a further extension
would be in the public interest and consistent with the Safety Act, and
whether Saleen has continued to make good faith efforts to comply with
this requirement.
In considering this issue, we recognize that Saleen was only able
to take limited advantage of the original exemption, granted on June
21, 2001, due to production delays. Sales did not commence until March
of 2003, only a few months before the July 1, 2003 expiration date for
the original exemption. We also recognize that by September 1, 2006,
Saleen faced the need (absent a new temporary exemption) to meet the
advanced air bag requirements.
That company indicated in its petition that it considered
implementing a ``basic'' air bag system. However, it determined that
``such a system would only provide approximately $500,000.00 in
savings, with a resulting estimated development cost of
$3,300,000.00.'' Saleen concluded that this cost was prohibitive, given
that the system would be outdated as of September 1, 2006.
While we understand that Saleen prefers for economic reasons to go
directly to advanced air bags, NHTSA must also consider the safety
benefits provided by ``basic'' air bags in assessing whether a further
extension of the exemption from the ``basic'' air bag requirements is
consistent with the Safety Act and the public interest, and in whether
Saleen has made good faith efforts to meet these particular
requirements.
Given the facts before us, including the previous exemptions
granted to Saleen, and taking account of all of the efforts Saleen has
made, we have decided to grant a one year extension of Saleen's
exemption from FMVSS No. 208's ``basic'' air bag requirements, and to
deny its request as to the additional two years. We believe that
extending this exemption further would not be in the public interest or
consistent with the Safety Act. We believe that there is a considerable
difference between providing a company such as Saleen some additional
time to develop an air bag system, and granting repeated ``temporary''
exemptions. With the one-year extension, Saleen will have had an
exemption for a full six years, and been producing vehicles under it
for about four and one-half years.
[[Page 52871]]
As to advanced air bags, and as indicated above, Saleen has hired
an engineering project manager responsible for air bag development, has
been working with engineers at Takata, Autoliv, and Bosch in
researching all of the program requirements as well as developing a
test plan and component designs for development of a system compliant
with the advanced air bag requirement. Saleen is also working with
Kettering University in Flint Michigan for additional research and
testing.
We have concluded that Saleen has made good faith efforts to meet
the advanced air bag requirements. We note that Saleen's situation in
needing additional time to meet the advanced air bag requirements,
which apply to low volume manufacturers beginning September 1, 2006, is
not unlike that of several other low volume manufacturers.
If the petition were denied, the sale of S7 automobiles would cease
immediately. In evaluating Saleen's current situation, the agency finds
that to require immediate compliance with Standard No. 208 would cause
the petitioner substantial economic hardship. While Saleen also alters
motor vehicles, the S7 is the only model that Saleen manufactures.
Traditionally, the agency has found that the public interest is
served in affording continued employment to a small volume
manufacturer's work force and to those of its U.S.-sourced component
suppliers. The agency has also found that the public interest is served
by affording the consumers a wider variety of motor vehicles. In this
instance, denial of the petition would put in jeopardy the jobs of 150
full time employees at Saleen dedicated to the design, manufacture, and
certification of the S7. Denial of the petition could also affect the
payrolls of U.S.-sourced component suppliers.
The vehicle in question will be manufactured in extremely limited
quantities. Saleen anticipates selling no more than 25 of the vehicles
per year in the United States. The current Manufacturer's Suggested
Retail Price is $555,000. The vehicles are also driven on an extremely
limited basis. Saleen stated that the vehicles generally do not accrue
more than 2,000 miles per year. In light of these factors, the agency
anticipates that the S7 vehicles will have a negligible impact on the
overall safety of U.S. highways. The agency also notes that Saleen has
indicated that the vehicle subject to this petition complies with all
other applicable Federal motor vehicle safety standards.
We are granting Saleen a three-year exemption from the advanced air
bag requirements, beginning September 1, 2006. As indicated above, we
are also granting that company an extension of the exemption from the
``basic'' air bag requirements for the first of the three years.
Saleen's ability to utilize the final two years of the exemption from
the advanced air bag requirements will be dependent on whether it
implements an air bag system that enables the S7 to at least meet FMVSS
No. 208's ``basic'' air bag requirements.
Given the discussion presented above, we conclude that Saleen has
made sufficient good faith efforts to comply with FMVSS No. 208 to
support these exemptions for the prescribed time periods, that
requiring immediate compliance would cause substantial economic
hardship, and that the exemptions are in the public interest and
consistent with the Safety Act. We note that while this document
includes some discussion of those good faith efforts and economic
hardship, NHTSA has also considered additional information submitted by
Saleen which has been determined to be confidential.
We should caution that manufacturers that receive temporary
exemptions should not assume that the agency will necessarily grant
extensions. On this basic issue, we note that Saleen cited in its
petition a particular sales rate that it needs to sustain in order to
continue to fund the development of advanced air bags for
implementation by September 1, 2009. See p. 2 of Saleen's petition. The
petitioner should not assume that if it is unable to maintain a
particular sales rate or for other reasons does not continue to fund
the development of advanced air bags, that the agency will then grant
an extension of the exemption for advanced air bags provided in this
document.
As to the specific paragraphs of FMVSS No. 208 that will be covered
by the exemptions, we note that the original exemption for Saleen cited
S4.1.5.3 of 49 CFR 571.208. On review, we believe that it would be
clearer to cite both S4.1.5.1(a)(1) and S4.1.5.3. The former paragraph
requires passenger cars, at each front outboard seating position, to
meet specified frontal crash protection requirements ``by means that
require no action by vehicle occupants.'' S4.1.5.3 then requires that
passenger cars meet that requirement by means of inflatable restraint
systems. Since the intent of the exemption is to exempt the S7 from
automatic crash protection requirements, we believe that S4.1.5.1(a)(1)
should be cited. We note that the S7 is still subject, among other
things, to S4.1.5.1(a)(3), which requires it to meet specified
performance requirements in a belted crash test. The relevant paragraph
for the advanced air bag requirements is S14.2.
We also note that prospective purchasers will be notified that the
vehicle is exempted from the air bag requirements of Standard No. 208.
Under Sec. 555.9(b), a manufacturer of an exempted passenger car must
affix securely to the windshield or side window of each exempted
vehicle a label containing a statement that the vehicle conforms to all
applicable Federal motor vehicle safety standards in effect on the date
of manufacture ``except for Standards Nos. [listing the standards by
number and title for which an exemption has been granted] exempted
pursuant to NHTSA Exemption No. ------.'' This label notifies
prospective purchasers about the exemption and its subject. Under Sec.
555.9(c), this information must also be included on the vehicle's
certification label.
In accordance with 49 U.S.C. 30113(b)(3)(B)(i), Saleen S7 is
granted NHTSA Temporary Exemption No. EX 06-7, from S4.1.5.1(a)(1) and
S4.1.5.3. This exemption is effective September 1, 2006 to August 31,
2007. Saleen S7 is granted NHTSA Temporary Exemption No. EX 06-8, from
S14.2 of Sec. 571.208. This exemption is effective September 1, 2006
to August 31, 2009.
(49 U.S.C. 30113; delegations of authority at 49 CFR 1.50. and
501.8)
Issued on: August 31, 2006.
Nicole R. Nason,
Administrator.
[FR Doc. E6-14829 Filed 9-6-06; 8:45 am]
BILLING CODE 4910-59-P