Mosler Automotive; Grant of Application for a Temporary Exemption From Advanced Air Bag Requirements of FMVSS No. 208, 20744-20747 [E8-8101]
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Federal Register / Vol. 73, No. 74 / Wednesday, April 16, 2008 / Notices
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[FR Doc. E8–8102 Filed 4–15–08; 8:45 am]
BILLING CODE 4910–59–P
DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety
Administration
[Docket No. NHTSA–2008–0073]
Mosler Automotive; Grant of
Application for a Temporary
Exemption From Advanced Air Bag
Requirements of FMVSS No. 208
National Highway Traffic
Safety Administration (NHTSA),
Department of Transportation (DOT).
ACTION: Notice of grant of petition for
temporary exemption from certain
provisions of Federal Motor Vehicle
Safety Standard (FMVSS) No. 208,
Occupant Crash Protection.
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AGENCY:
SUMMARY: This notice grants the petition
of Mosler Automotive (Mosler) for a
temporary exemption from certain air
bag requirements of Federal Motor
Vehicle Safety Standard (FMVSS) No.
208, Occupant Crash Protection, for the
Mosler MT900 for the requested period
of thirty months. In accordance with 49
CFR Part 555, the basis for the grant is
that compliance would cause
substantial economic hardship to a
manufacturer that has tried in good faith
to comply with the standard, and the
exemption would have a negligible
impact on motor vehicle safety.
This action follows our publication in
the Federal Register of a document
announcing receipt of Mosler’s
application and soliciting public
comments.
DATES: The exemption is effective
immediately and remains in effect until
May 16, 2008.
FOR FURTHER INFORMATION CONTACT: Mr.
Ed Glancy or Mr. Ari Scott, Office of the
Chief Counsel, NCC–112, National
Highway Traffic Safety Administration,
1200 New Jersey Avenue, SE.,
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Washington, DC 20590. Telephone:
(202) 366–2992; Fax: (202) 366–3820.
manufacturer of a high-performance
sports car.
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 are
commonly known as ‘‘advanced air
bags’’ (see 65 FR 30680). 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 were 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 before
that. However, because the new
requirements were challenging, major
air bag suppliers have 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-ofposition 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
depowered 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
addressing a petition for a temporary
exemption from the advanced air bag
requirements submitted by a
II. 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
a 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.
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, as the first
manufacturer, they had a substantial
role in the development and
manufacturing process of that vehicle.
Finally, while 49 U.S.C. 30113(b)
states that exemptions from a Safety Act
standard are to be granted on a
‘‘temporary basis,’’ 1 the statute also
expressly provides for renewal of an
exemption on reapplication.
Manufacturers are nevertheless
cautioned that the agency’s decision to
grant an initial petition in no way
predetermines that the agency will
repeatedly grant renewal petitions,
thereby imparting semi-permanent
exemption from a safety standard.
Exempted manufacturers seeking
renewal must bear in mind that the
agency is directed to consider financial
hardship as but one factor, along with
the manufacturer’s on-going good faith
efforts to comply with the regulation,
the public interest, consistency with the
Safety Act, generally, as well as other
such matters provided in the statute.
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III. Petition of Mosler and Notice of
Receipt
In accordance with 49 U.S.C. 30113
and the procedures in 49 CFR Part 555,
Mosler has petitioned the agency for a
temporary exemption from certain
advanced air bag requirements of
1 49
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U.S.C. 30113(b)(1).
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FMVSS No. 208. The basis for the
application is that compliance would
cause substantial economic hardship to
a manufacturer that has tried in good
faith to comply with the standard. A
notice of receipt of this petition was
published in the Federal Register on
June 12, 2007 (72 FR 32392).
Mosler is a U.S. company, organized
as a Florida corporation in 1987 and
owned by a single American
shareholder. Mosler began production
in 1998 of high performance sports cars
based on an aluminum honeycomb
monocoque chassis. This application
concerns the MT900 (Model Year 2004,
currently the company’s only model),
which is expected to retail for $189,900.
To date, the MT900 has been in and out
of production, with the following
numbers of vehicles being produced
over the past three years: 12 vehicles in
2004; 8 vehicles in 2005; and 13
vehicles in 2006. Worldwide sales, as of
the time of the petition, were 10 race
cars, 3 U.S. street cars, and 8 European
specification cars. Mosler is requesting
an exemption for the MT900 from all of
the advanced air bag requirements in
S14 of FMVSS No. 208 (we are treating
this as a request for an exemption from
S14.5.2, Rigid barrier unbelted test), 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).
Mosler stated its intention to have its
advanced air bag system ready
approximately two and a half years from
the date of the petition. Accordingly, the
company seeks an exemption from the
above-specified requirements of FMVSS
No. 208 for a period of two and one half
years (thirty months).
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IV. Agency Analysis of Mosler’s
Petition
Because no comments were received
in response to the notice of receipt of
Mosler’s petition, the agency has based
its decision on the arguments and facts
put forth in the petition, and on its own
expertise.
a. Eligibility
In order to be eligible for an
exemption based on economic hardship,
a company must submit information on
the requirements put forth in 49 CFR
555.6(a). Among other things, the
manufacturer must state how failure to
acquire an exemption would cause
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economic hardship and the itemized
estimated cost to comply with the
standard. Additionally, it must provide
a description of efforts to comply with
the requirement and the estimated date
by which compliance will be met (or
production of the noncomforming
vehicle will cease). Finally, the
manufacturer must state the total
number of vehicles produced by or on
behalf of the manufacturer during the
12-month period prior to the petition,
which is not to exceed 10,000. As stated
in the notice of receipt of petition,
Mosler has presented adequate
information in order to be eligible to be
considered for an exemption.
As discussed in the petition, Mosler is
independently owned by a single
American shareholder. The entire
organization currently employs 25
people in the U.S. No other vehicle
manufacturer has an ownership interest
in Mosler. Mosler is an independent
automobile manufacturer which does
not have any common control nor is
otherwise affiliated with any other
vehicle manufacturer.
The company is a small volume
manufacturer whose total production
has ranged from 8 to 13 vehicles per
year over the period from 2004 to 2006.
According to its current forecasts,
Mosler anticipates that approximately
75 vehicles would be sold in the U.S.
during the period of its requested
exemption, if its request were granted.
b. Economic Hardship
Publicly available information and
also the financial documents submitted
to NHTSA by the petitioner indicate
that the company will suffer substantial
financial losses unless Mosler obtains a
temporary exemption from the
advanced air bag requirements.
According to the petition, the company
has determined that it cannot finance
the work necessary to develop and
install advanced air bags in its vehicles
unless U.S. sales continue. It argued that
NHTSA has previously ‘‘confirmed the
appropriateness of an exemption when
the sales of exempted vehicles generate
income to fund air bag development
expenditures in order to comply with
Standard 208 at the end of the
exemption period. 64 FR 6736.’’ Mosler
stated that it ‘‘therefore needs USA
exempted-vehicle sales to ‘bridge the
gap,’’’ until fully compliant vehicles can
be funded, developed, tooled, and
introduced for the U.S. market. The
petitioner further stated that it ‘‘will
suffer a significant market loss—the
US—in the event it does not receive the
exemption.’’
The petitioner argued that it tried in
good faith, but could not bring the
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vehicle into compliance with the
advanced air bag requirements, and
would incur substantial economic
hardship if it cannot sell vehicles in the
U.S. Mosler has an extremely long
product cycle (for the MT900, the
company estimates a lifespan of 11
years), which has thus far prevented it
from recouping its $600,000 investment
in its current standard air bag occupant
restraint system. Over the period 2004–
2006, Mosler has had net operational
losses totaling over $3 million, and the
retained deficit of the company exceeds
over $23 million. The petitioner stated
that significant engineering and funding
will be necessary to upgrade to an
advanced air bag system, and that the
projected overall cost of approximately
$2.0 to $2.5 million is beyond the
company’s current capabilities given its
current financial condition. The
company has stated that it cannot hope
to attain profitability if it incurs
additional research and development
expenses at this time.
Mosler stated that the estimated $2.0
to $2.5 million in costs associated with
advanced air bag engineering and
development included research and
development, testing, tooling, and test
vehicles, as well as internal costs. In its
petition, Mosler reasoned that sales in
the U.S. market must commence in
order to finance this work and that nonU.S. sales alone cannot generate
sufficient income for this purpose.
If the exemption is denied, Mosler
projects a net loss of over $3 million
during the period from 2007–2009.
However, if the petition is granted, the
company anticipates a profit of nearly
$6.4 million during that same period.
The petitioner argued that a denial of
this petition could preclude financing of
the project for U.S.-compliant vehicles,
a development which would have a
highly adverse impact on the company.
Upon review of the financial
information submitted by Mosler, the
agency has concluded that the company
is undergoing significant economic
hardship. Our review of documentation
provided by Mosler indicates that
Mosler has been and continues to
operate at a substantial loss, and
requires significant ongoing infusions of
investor capital in order to stay solvent.
NHTSA agrees with Mosler’s statement
that without the income generated by
U.S. sales, it will not have the resources
required to develop an air bag that is
compliant with the advanced air bag
requirements.
c. Good Faith Efforts To Comply
Mosler began production of the latest
version of the MT900 in 2004, at which
time it was certified for U.S. road use.
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The company has invested over $23
million on research and development
and tooling for the MT900 program.
This included $600,000 to re-engineer
the MT900 to include a standard air bag
system, which it intended to develop
into an advanced air bag system. In that
time, the company was able to bring the
vehicle into compliance with all
applicable NHTSA regulations, except
for the advanced air bag provisions of
FMVSS No. 208.
According to its petition, even though
advanced air bags are beyond its current
capabilities, Mosler is nonetheless
planning for the introduction of these
devices. The company stated that
Siemens Restraint Systems GmbH will
spearhead this effort, and current plans
estimate a cost of between $2.0 and $2.5
million (excluding internal costs) and a
minimum lead time of 24 months for the
advanced air bag project. Mosler stated
that the following engineering efforts are
needed to upgrade the MT900’s
standard air bag system to an advanced
air bag system: (1) Tooling for
prototypes and production vehicles; (2)
contractor engineering; (3) air bag
system materials; (4) cost of test
vehicles; (5) integration of air bag
electronics; (6) radio frequency
interference/electromagnetic
compatibility testing; (7) significant
design and development of interior
components including seats and
dashboard; (8) crash testing; and (9)
system validation. In past reviews of
petitions for exemption of advanced air
bag systems, NHTSA has noted that
OEM supplier quotes provided by
Siemens to other small vehicle
manufacturers, plus those
manufacturers’ internal development
costs, have been in the range of
$2 to $4 million. The program costs
cited by Mosler, therefore, are consistent
with previous submissions.
In addition, Mosler emphasized that
finding suppliers willing to work with
a manufacturer with very low
production volumes has proven
extremely difficult, and as a result, the
company must wait for technology to
‘‘trickle down’’ from larger
manufacturers and suppliers. Mosler
further stated that, as a small volume
manufacturer, the company simply does
not have the internal resources to do full
U.S. homologation projects without
reliance on outside suppliers of
advanced engineering technologies. We
note that NHTSA has cited this
argument previously when granting
petitions for exemption from the
advanced air bag requirements to other
small vehicle manufacturers. See
Koenigsegg, 72 FR 17608.
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In short, Mosler argued that, despite
good faith efforts, limited resources
prevent it from bringing the vehicle into
compliance with all applicable
requirements, and it is beyond the
company’s current capabilities to bring
the vehicle into full compliance until
such time as additional resources
become available as a result of U.S.
sales. Mosler stated in its petition that
it expects its advanced air bag system to
be ready by the end of the requested
exemption period, and that an
exemption would allow it to maintain
continued operations until then.
d. Public Interest Considerations
The petitioner put forth several
arguments in favor of a finding that the
requested exemption is consistent with
the public interest and would not have
a significant adverse impact on safety.
Specifically, Mosler argued that the
vehicle would be equipped with a fully
compliant standard U.S. air bag system
(i.e., one meeting all requirements of
FMVSS No. 208 prior to implementation
of S14). Furthermore, the company
emphasized that the MT900 will comply
with all other applicable FMVSSs.
NHTSA agrees that granting the
exemption will benefit U.S.
employment, companies, and citizens,
because Mosler is a U.S. company and
employs 25 people at its Florida facility.
Mosler also argued that denial of the
exemption request would have an
adverse impact on consumer choice.
The agency also agrees that an
exemption is unlikely to have a
significant safety impact because these
vehicles are not expected to be used
extensively by their owners, due to their
‘‘second vehicle’’ nature, extreme design
and high cost. Given the nature of the
vehicle, it is less likely to be used to
transport young children than most
other vehicles.
As an additional basis for showing
that its requested exemption would be
in the public interest, Mosler stated that
the MT900 has an extremely strong
chassis, which is composed of
aluminum tubes and composite
structural parts. According to Mosler,
the vehicle design is such that
occupants are effectively placed in a
‘‘protective ‘cell’ ’’ with the chassis
structure built around them. The
petitioner asserts that this rigid
‘‘monocoque’’ structure stays firm
during impact, providing a hard frame
and resisting intrusion into the
passenger compartment.
V. Summary
In conclusion, we are granting the
Mosler petition to be exempted from
portions of the advanced air bag
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regulation required by FMVSS No. 208.
Specifically, Mosler is exempted from
S14.5.2, S15, S17, S19, S21, S23, and
S25 of 49 CFR 571.208. The exemption
does not extend to the provision
requiring a 50th percentile male barrier
impact test (S14.5.1(a)). In addition to
certifying compliance with S14.5.1(a),
Mosler must continue to certify to the
unbelted 50th percentile barrier impact
test in force prior to September 1, 2006
(S5.1.2(a)(1)). We note that the unbelted
sled test in S13 is an acceptable option
for that requirement. The agency’s
rationale for this decision is as follows.
The advanced air bag requirements
present a substantial challenge due to
the high cost of development for
advanced air bags and the extremely
low production numbers of the Mosler
automobiles. Because Mosler produces
only a handful of vehicles for sale, the
estimated $2.0 to $2.5 million in
development costs represents a
significant sum on a cost-per-vehicle
basis. Mosler’s financial disclosures
support its assertion that without the
revenue generated by U.S. sales, Mosler
will not be able to finance the
development of a compliant advanced
air bag system.
Based upon the information provided
by the petitioner, we understand that
Mosler made good faith efforts to bring
the MT900 into compliance with the
applicable requirements until such time
as it became apparent that there was no
practicable way to do so. As a small
specialty manufacturer, the company
had a difficult time in gaining access to
advanced air bag systems and
components (which reflects restraint
system suppliers’ initial focus on
meeting the needs of large volume
manufacturers). Additionally, small
manufacturers must amortize the
development costs of advanced air bags
into a much smaller number of
produced vehicles, resulting in
significantly higher per-vehicle costs.
Because Mosler is an independent
automobile manufacturer, there was no
possibility of technology transfer from a
larger parent company that also
manufactures motor vehicles.
Consequently, given Mosler’s
dependence on investor capital in order
to sustain operations, the financial
hardship is particularly acute.
Furthermore, we note that Mosler
made several arguments as to the public
interest considerations in granting the
exemption. First, we note that there will
be a limited effect on safety due to this
exemption. This is because the MT900
will continue to be equipped with a
standard air bag system, fewer than 100
vehicles are expected to be produced
during the period of the exemption, and
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the MT900 is utilized as a ‘‘second
vehicle,’’ due to its extreme design and
high cost, and therefore driven a limited
amount and generally without child
occupants. Second, we believe that
allowing production of the MT900 will
help further consumer choice, as well as
help to preserve the jobs of Mosler’s 25
U.S. based employees.
VI. Issuance of Notice of Final Action
In sum, the agency concludes that
Mosler has demonstrated good faith
effort to bring the MT900 into
compliance with the advanced air bag
requirements of FMVSS No. 208 and has
also demonstrated the requisite
financial hardship. Further, we find
these exemptions to be in the public
interest.
In consideration of the foregoing, we
conclude that compliance with the
advanced air bag requirements of
FMVSS No. 208, Occupant Crash
Protection, would cause substantial
economic hardship to a manufacturer
that has tried in good faith to comply
with the standard. We further conclude
that granting of an exemption from these
provisions would be in the public
interest and consistent with the
objectives of traffic safety.
We note that, as explained below,
prospective purchasers will be notified
that the vehicle is exempted from the
specified advanced 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 Standard 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.
We note that the text of § 555.9 does
not expressly indicate how the required
statement on the two labels should read
in situations where an exemption covers
part but not all of a Federal motor
vehicle safety standard. Specifically in
the case of FMVSS No. 208, we believe
that a statement that the vehicle has
been exempted from Standard No. 208
generally, without an indication that the
exemption is limited to the specified
advanced air bag provisions, could be
misleading. A consumer might
incorrectly believe that the vehicle has
been exempted from all of Standard No.
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17:19 Apr 15, 2008
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208’s requirements. Moreover, we
believe that the addition of a reference
to such provisions by number without
an indication of its subject matter would
be of little use to consumers, since they
would not know the subject of those
specific provisions. For these reasons,
we believe the two labels should read in
relevant part, ‘‘except for S14.5.2, S15,
S17, S19, S21, S23, and S25 (Advanced
Air Bag Requirements) of Standard No.
208, Occupant Crash Protection,
exempted pursuant to * * *.’’ We note
that the phrase ‘‘Advanced Air Bag
Requirements’’ is an abbreviated form of
the title of S14 of Standard No. 208.
In accordance with 49 U.S.C.
30113(b)(3)(B)(i), the Mosler MT900 is
granted NHTSA Temporary Exemption
No. EX 08–02, from S14.5.2, S15, S17,
S19, S21, S23, and S25 of 49 CFR
571.208. The exemption is effective
immediately and continues in effect for
thirty months.
Issued on: April 9, 2008.
James F. Ports, Jr.,
Deputy Administrator.
[FR Doc. E8–8101 Filed 4–15–08; 8:45 am]
BILLING CODE 4910–59–P
DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
[STB Docket No. AB–43 (Sub-No. 183X)]
Illinois Central Railroad Company—
Abandonment Exemption—in Dyer
County, TN
Illinois Central Railroad Company
(IC) 1 has filed a notice of exemption
under 49 CFR 1152 Subpart F—Exempt
Abandonments to abandon a 1.01-mile
line of railroad between milepost 48.51
and milepost 47.50 in Dyersburg, Dyer
County, TN. The line traverses United
States Postal Service Zip Code 38024.
IC has certified that: (1) No local
traffic has moved over the line for at
least 2 years; (2) there is no overhead
traffic on the line to be rerouted over
other lines; (3) no formal complaint
filed by a user of rail service on the line
(or by a state or local government entity
acting on behalf of such user) regarding
cessation of service over the line either
is pending with the Surface
Transportation Board or with any U.S.
District Court or has been decided in
favor of complainant within the 2-year
period; and (4) the requirements at 49
CFR 1105.7 (environmental reports), 49
CFR 1105.8 (historic reports), 49 CFR
1105.11 (transmittal letter), 49 CFR
1105.12 (newspaper publication), and
1 IC is a wholly owned subsidiary of Canadian
National Railway Company.
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20747
49 CFR 1152.50(d)(1) (notice to
governmental agencies) have been met.
As a condition to this exemption, any
employee adversely affected by the
abandonment shall be protected under
Oregon Short Line R. Co.—
Abandonment—Goshen, 360 I.C.C. 91
(1979). To address whether this
condition adequately protects affected
employees, a petition for partial
revocation under 49 U.S.C. 10502(d)
must be filed.
Provided no formal expression of
intent to file an offer of financial
assistance (OFA) has been received, this
exemption will be effective on May 16,
2008, unless stayed pending
reconsideration. Petitions to stay that do
not involve environmental issues,2
formal expressions of intent to file an
OFA under 49 CFR 1152.27(c)(2),3 and
trail use/rail banking requests under 49
CFR 1152.29 must be filed by April 28,
2008. Petitions to reopen or requests for
public use conditions under 49 CFR
1152.28 must be filed by May 6, 2008,
with: Surface Transportation Board, 395
E Street, SW., Washington, DC 20423–
0001.
A copy of any petition filed with the
Board should be sent to IC’s
representative: Thomas J. Healey, 17641
S. Ashland Avenue, Homewood, IL,
60430–1345.
If the verified notice contains false or
misleading information, the exemption
is void ab initio.
IC has filed a combined
environmental and historic report
addressing the effects, if any, of the
abandonment on the environment and
historic resources. SEA will issue an
environmental assessment (EA) by April
21, 2008. Interested persons may obtain
a copy of the EA by writing to SEA
(Room 1100, Surface Transportation
Board, Washington, DC 20423–0001) or
by calling SEA, at (202) 245–0305.
[Assistance for the hearing impaired is
available through the Federal
Information Relay Service (FIRS) at
1–800–877–8339.] Comments on
environmental and historic preservation
matters must be filed within 15 days
after the EA becomes available to the
public.
2 The Board will grant a stay if an informed
decision on environmental issues (whether raised
by a party or by the Board’s Section of
Environmental Analysis (SEA) in its independent
investigation) cannot be made before the
exemption’s effective date. See Exemption of Outof-Service Rail Lines, 5 I.C.C.2d 377 (1989). Any
request for a stay should be filed as soon as possible
so that the Board may take appropriate action before
the exemption’s effective date.
3 Each OFA must be accompanied by the filing
fee, which currently is set at $1,300. See 49 CFR
1002.2(f)(25).
E:\FR\FM\16APN1.SGM
16APN1
]]>Agencies
[Federal Register Volume 73, Number 74 (Wednesday, April 16, 2008)]
[Notices]
[Pages 20744-20747]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-8101]
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
[Docket No. NHTSA-2008-0073]
Mosler Automotive; Grant of Application 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 grant of petition for temporary exemption from
certain provisions of Federal Motor Vehicle Safety Standard (FMVSS) No.
208, Occupant Crash Protection.
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SUMMARY: This notice grants the petition of Mosler Automotive (Mosler)
for a temporary exemption from certain air bag requirements of Federal
Motor Vehicle Safety Standard (FMVSS) No. 208, Occupant Crash
Protection, for the Mosler MT900 for the requested period of thirty
months. In accordance with 49 CFR Part 555, the basis for the grant is
that compliance would cause substantial economic hardship to a
manufacturer that has tried in good faith to comply with the standard,
and the exemption would have a negligible impact on motor vehicle
safety.
This action follows our publication in the Federal Register of a
document announcing receipt of Mosler's application and soliciting
public comments.
DATES: The exemption is effective immediately and remains in effect
until May 16, 2008.
FOR FURTHER INFORMATION CONTACT: Mr. Ed Glancy or Mr. Ari Scott, Office
of the Chief Counsel, NCC-112, National Highway Traffic Safety
Administration, 1200 New Jersey Avenue, SE., Washington, DC 20590.
Telephone: (202) 366-2992; Fax: (202) 366-3820.
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 are commonly known as ``advanced
air bags'' (see 65 FR 30680). 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 were 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 before that. However, because the new requirements were
challenging, major air bag suppliers have 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 depowered 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 addressing a petition for a temporary exemption from the
advanced air bag requirements submitted by a manufacturer of a high-
performance sports car.
II. 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 a 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. 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, as the first manufacturer, they had a substantial role
in the development and manufacturing process of that vehicle.
Finally, while 49 U.S.C. 30113(b) states that exemptions from a
Safety Act standard are to be granted on a ``temporary basis,'' \1\ the
statute also expressly provides for renewal of an exemption on
reapplication. Manufacturers are nevertheless cautioned that the
agency's decision to grant an initial petition in no way predetermines
that the agency will repeatedly grant renewal petitions, thereby
imparting semi-permanent exemption from a safety standard. Exempted
manufacturers seeking renewal must bear in mind that the agency is
directed to consider financial hardship as but one factor, along with
the manufacturer's on-going good faith efforts to comply with the
regulation, the public interest, consistency with the Safety Act,
generally, as well as other such matters provided in the statute.
---------------------------------------------------------------------------
\1\ 49 U.S.C. 30113(b)(1).
---------------------------------------------------------------------------
III. Petition of Mosler and Notice of Receipt
In accordance with 49 U.S.C. 30113 and the procedures in 49 CFR
Part 555, Mosler has petitioned the agency for a temporary exemption
from certain advanced air bag requirements of
[[Page 20745]]
FMVSS No. 208. The basis for the application is that compliance would
cause substantial economic hardship to a manufacturer that has tried in
good faith to comply with the standard. A notice of receipt of this
petition was published in the Federal Register on June 12, 2007 (72 FR
32392).
Mosler is a U.S. company, organized as a Florida corporation in
1987 and owned by a single American shareholder. Mosler began
production in 1998 of high performance sports cars based on an aluminum
honeycomb monocoque chassis. This application concerns the MT900 (Model
Year 2004, currently the company's only model), which is expected to
retail for $189,900. To date, the MT900 has been in and out of
production, with the following numbers of vehicles being produced over
the past three years: 12 vehicles in 2004; 8 vehicles in 2005; and 13
vehicles in 2006. Worldwide sales, as of the time of the petition, were
10 race cars, 3 U.S. street cars, and 8 European specification cars.
Mosler is requesting an exemption for the MT900 from all of the
advanced air bag requirements in S14 of FMVSS No. 208 (we are treating
this as a request for an exemption from S14.5.2, Rigid barrier unbelted
test), 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).
Mosler stated its intention to have its advanced air bag system
ready approximately two and a half years from the date of the petition.
Accordingly, the company seeks an exemption from the above-specified
requirements of FMVSS No. 208 for a period of two and one half years
(thirty months).
IV. Agency Analysis of Mosler's Petition
Because no comments were received in response to the notice of
receipt of Mosler's petition, the agency has based its decision on the
arguments and facts put forth in the petition, and on its own
expertise.
a. Eligibility
In order to be eligible for an exemption based on economic
hardship, a company must submit information on the requirements put
forth in 49 CFR 555.6(a). Among other things, the manufacturer must
state how failure to acquire an exemption would cause economic hardship
and the itemized estimated cost to comply with the standard.
Additionally, it must provide a description of efforts to comply with
the requirement and the estimated date by which compliance will be met
(or production of the noncomforming vehicle will cease). Finally, the
manufacturer must state the total number of vehicles produced by or on
behalf of the manufacturer during the 12-month period prior to the
petition, which is not to exceed 10,000. As stated in the notice of
receipt of petition, Mosler has presented adequate information in order
to be eligible to be considered for an exemption.
As discussed in the petition, Mosler is independently owned by a
single American shareholder. The entire organization currently employs
25 people in the U.S. No other vehicle manufacturer has an ownership
interest in Mosler. Mosler is an independent automobile manufacturer
which does not have any common control nor is otherwise affiliated with
any other vehicle manufacturer.
The company is a small volume manufacturer whose total production
has ranged from 8 to 13 vehicles per year over the period from 2004 to
2006. According to its current forecasts, Mosler anticipates that
approximately 75 vehicles would be sold in the U.S. during the period
of its requested exemption, if its request were granted.
b. Economic Hardship
Publicly available information and also the financial documents
submitted to NHTSA by the petitioner indicate that the company will
suffer substantial financial losses unless Mosler obtains a temporary
exemption from the advanced air bag requirements. According to the
petition, the company has determined that it cannot finance the work
necessary to develop and install advanced air bags in its vehicles
unless U.S. sales continue. It argued that NHTSA has previously
``confirmed the appropriateness of an exemption when the sales of
exempted vehicles generate income to fund air bag development
expenditures in order to comply with Standard 208 at the end of the
exemption period. 64 FR 6736.'' Mosler stated that it ``therefore needs
USA exempted-vehicle sales to `bridge the gap,''' until fully compliant
vehicles can be funded, developed, tooled, and introduced for the U.S.
market. The petitioner further stated that it ``will suffer a
significant market loss--the US--in the event it does not receive the
exemption.''
The petitioner argued 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 vehicles in the U.S. Mosler has an extremely long product
cycle (for the MT900, the company estimates a lifespan of 11 years),
which has thus far prevented it from recouping its $600,000 investment
in its current standard air bag occupant restraint system. Over the
period 2004-2006, Mosler has had net operational losses totaling over
$3 million, and the retained deficit of the company exceeds over $23
million. The petitioner stated that significant engineering and funding
will be necessary to upgrade to an advanced air bag system, and that
the projected overall cost of approximately $2.0 to $2.5 million is
beyond the company's current capabilities given its current financial
condition. The company has stated that it cannot hope to attain
profitability if it incurs additional research and development expenses
at this time.
Mosler stated that the estimated $2.0 to $2.5 million in costs
associated with advanced air bag engineering and development included
research and development, testing, tooling, and test vehicles, as well
as internal costs. In its petition, Mosler reasoned that sales in the
U.S. market must commence in order to finance this work and that non-
U.S. sales alone cannot generate sufficient income for this purpose.
If the exemption is denied, Mosler projects a net loss of over $3
million during the period from 2007-2009. However, if the petition is
granted, the company anticipates a profit of nearly $6.4 million during
that same period. The petitioner argued that a denial of this petition
could preclude financing of the project for U.S.-compliant vehicles, a
development which would have a highly adverse impact on the company.
Upon review of the financial information submitted by Mosler, the
agency has concluded that the company is undergoing significant
economic hardship. Our review of documentation provided by Mosler
indicates that Mosler has been and continues to operate at a
substantial loss, and requires significant ongoing infusions of
investor capital in order to stay solvent. NHTSA agrees with Mosler's
statement that without the income generated by U.S. sales, it will not
have the resources required to develop an air bag that is compliant
with the advanced air bag requirements.
c. Good Faith Efforts To Comply
Mosler began production of the latest version of the MT900 in 2004,
at which time it was certified for U.S. road use.
[[Page 20746]]
The company has invested over $23 million on research and development
and tooling for the MT900 program. This included $600,000 to re-
engineer the MT900 to include a standard air bag system, which it
intended to develop into an advanced air bag system. In that time, the
company was able to bring the vehicle into compliance with all
applicable NHTSA regulations, except for the advanced air bag
provisions of FMVSS No. 208.
According to its petition, even though advanced air bags are beyond
its current capabilities, Mosler is nonetheless planning for the
introduction of these devices. The company stated that Siemens
Restraint Systems GmbH will spearhead this effort, and current plans
estimate a cost of between $2.0 and $2.5 million (excluding internal
costs) and a minimum lead time of 24 months for the advanced air bag
project. Mosler stated that the following engineering efforts are
needed to upgrade the MT900's standard air bag system to an advanced
air bag system: (1) Tooling for prototypes and production vehicles; (2)
contractor engineering; (3) air bag system materials; (4) cost of test
vehicles; (5) integration of air bag electronics; (6) radio frequency
interference/electromagnetic compatibility testing; (7) significant
design and development of interior components including seats and
dashboard; (8) crash testing; and (9) system validation. In past
reviews of petitions for exemption of advanced air bag systems, NHTSA
has noted that OEM supplier quotes provided by Siemens to other small
vehicle manufacturers, plus those manufacturers' internal development
costs, have been in the range of $2 to $4 million. The program costs
cited by Mosler, therefore, are consistent with previous submissions.
In addition, Mosler emphasized that finding suppliers willing to
work with a manufacturer with very low production volumes has proven
extremely difficult, and as a result, the company must wait for
technology to ``trickle down'' from larger manufacturers and suppliers.
Mosler further stated that, as a small volume manufacturer, the company
simply does not have the internal resources to do full U.S.
homologation projects without reliance on outside suppliers of advanced
engineering technologies. We note that NHTSA has cited this argument
previously when granting petitions for exemption from the advanced air
bag requirements to other small vehicle manufacturers. See Koenigsegg,
72 FR 17608.
In short, Mosler argued that, despite good faith efforts, limited
resources prevent it from bringing the vehicle into compliance with all
applicable requirements, and it is beyond the company's current
capabilities to bring the vehicle into full compliance until such time
as additional resources become available as a result of U.S. sales.
Mosler stated in its petition that it expects its advanced air bag
system to be ready by the end of the requested exemption period, and
that an exemption would allow it to maintain continued operations until
then.
d. Public Interest Considerations
The petitioner put forth several arguments in favor of a finding
that the requested exemption is consistent with the public interest and
would not have a significant adverse impact on safety. Specifically,
Mosler argued that the vehicle would be equipped with a fully compliant
standard U.S. air bag system (i.e., one meeting all requirements of
FMVSS No. 208 prior to implementation of S14). Furthermore, the company
emphasized that the MT900 will comply with all other applicable FMVSSs.
NHTSA agrees that granting the exemption will benefit U.S.
employment, companies, and citizens, because Mosler is a U.S. company
and employs 25 people at its Florida facility. Mosler also argued that
denial of the exemption request would have an adverse impact on
consumer choice. The agency also agrees that an exemption is unlikely
to have a significant safety impact because these vehicles are not
expected to be used extensively by their owners, due to their ``second
vehicle'' nature, extreme design and high cost. Given the nature of the
vehicle, it is less likely to be used to transport young children than
most other vehicles.
As an additional basis for showing that its requested exemption
would be in the public interest, Mosler stated that the MT900 has an
extremely strong chassis, which is composed of aluminum tubes and
composite structural parts. According to Mosler, the vehicle design is
such that occupants are effectively placed in a ``protective `cell' ''
with the chassis structure built around them. The petitioner asserts
that this rigid ``monocoque'' structure stays firm during impact,
providing a hard frame and resisting intrusion into the passenger
compartment.
V. Summary
In conclusion, we are granting the Mosler petition to be exempted
from portions of the advanced air bag regulation required by FMVSS No.
208. Specifically, Mosler is exempted from S14.5.2, S15, S17, S19, S21,
S23, and S25 of 49 CFR 571.208. The exemption does not extend to the
provision requiring a 50th percentile male barrier impact test
(S14.5.1(a)). In addition to certifying compliance with S14.5.1(a),
Mosler must continue to certify to the unbelted 50th percentile barrier
impact test in force prior to September 1, 2006 (S5.1.2(a)(1)). We note
that the unbelted sled test in S13 is an acceptable option for that
requirement. The agency's rationale for this decision is as follows.
The advanced air bag requirements present a substantial challenge
due to the high cost of development for advanced air bags and the
extremely low production numbers of the Mosler automobiles. Because
Mosler produces only a handful of vehicles for sale, the estimated $2.0
to $2.5 million in development costs represents a significant sum on a
cost-per-vehicle basis. Mosler's financial disclosures support its
assertion that without the revenue generated by U.S. sales, Mosler will
not be able to finance the development of a compliant advanced air bag
system.
Based upon the information provided by the petitioner, we
understand that Mosler made good faith efforts to bring the MT900 into
compliance with the applicable requirements until such time as it
became apparent that there was no practicable way to do so. As a small
specialty manufacturer, the company had a difficult time in gaining
access to advanced air bag systems and components (which reflects
restraint system suppliers' initial focus on meeting the needs of large
volume manufacturers). Additionally, small manufacturers must amortize
the development costs of advanced air bags into a much smaller number
of produced vehicles, resulting in significantly higher per-vehicle
costs. Because Mosler is an independent automobile manufacturer, there
was no possibility of technology transfer from a larger parent company
that also manufactures motor vehicles. Consequently, given Mosler's
dependence on investor capital in order to sustain operations, the
financial hardship is particularly acute.
Furthermore, we note that Mosler made several arguments as to the
public interest considerations in granting the exemption. First, we
note that there will be a limited effect on safety due to this
exemption. This is because the MT900 will continue to be equipped with
a standard air bag system, fewer than 100 vehicles are expected to be
produced during the period of the exemption, and
[[Page 20747]]
the MT900 is utilized as a ``second vehicle,'' due to its extreme
design and high cost, and therefore driven a limited amount and
generally without child occupants. Second, we believe that allowing
production of the MT900 will help further consumer choice, as well as
help to preserve the jobs of Mosler's 25 U.S. based employees.
VI. Issuance of Notice of Final Action
In sum, the agency concludes that Mosler has demonstrated good
faith effort to bring the MT900 into compliance with the advanced air
bag requirements of FMVSS No. 208 and has also demonstrated the
requisite financial hardship. Further, we find these exemptions to be
in the public interest.
In consideration of the foregoing, we conclude that compliance with
the advanced air bag requirements of FMVSS No. 208, Occupant Crash
Protection, would cause substantial economic hardship to a manufacturer
that has tried in good faith to comply with the standard. We further
conclude that granting of an exemption from these provisions would be
in the public interest and consistent with the objectives of traffic
safety.
We note that, as explained below, prospective purchasers will be
notified that the vehicle is exempted from the specified advanced 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 Standard Nos. [listing the standards by number and title for which
an exemption has been granted] exempted pursuant to NHTSA Exemption
No.------'' This label notifies prospective purchasers about the
exemption and its subject. Under Sec. 555.9(c), this information must
also be included on the vehicle's certification label.
We note that the text of Sec. 555.9 does not expressly indicate
how the required statement on the two labels should read in situations
where an exemption covers part but not all of a Federal motor vehicle
safety standard. Specifically in the case of FMVSS No. 208, we believe
that a statement that the vehicle has been exempted from Standard No.
208 generally, without an indication that the exemption is limited to
the specified advanced air bag provisions, could be misleading. A
consumer might incorrectly believe that the vehicle has been exempted
from all of Standard No. 208's requirements. Moreover, we believe that
the addition of a reference to such provisions by number without an
indication of its subject matter would be of little use to consumers,
since they would not know the subject of those specific provisions. For
these reasons, we believe the two labels should read in relevant part,
``except for S14.5.2, S15, S17, S19, S21, S23, and S25 (Advanced Air
Bag Requirements) of Standard No. 208, Occupant Crash Protection,
exempted pursuant to * * *.'' We note that the phrase ``Advanced Air
Bag Requirements'' is an abbreviated form of the title of S14 of
Standard No. 208.
In accordance with 49 U.S.C. 30113(b)(3)(B)(i), the Mosler MT900 is
granted NHTSA Temporary Exemption No. EX 08-02, from S14.5.2, S15, S17,
S19, S21, S23, and S25 of 49 CFR 571.208. The exemption is effective
immediately and continues in effect for thirty months.
Issued on: April 9, 2008.
James F. Ports, Jr.,
Deputy Administrator.
[FR Doc. E8-8101 Filed 4-15-08; 8:45 am]
BILLING CODE 4910-59-P
