Group Lotus plc; Grant of Petition for a Temporary Exemption From an Advanced Air Bag Requirement of FMVSS No. 208, 15114-15119 [2013-05477]

Agencies

• National Highway Traffic Safety Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 78, Number 46 (Friday, March 8, 2013)]
[Notices]
[Pages 15114-15119]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-05477]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2012-0086]


Group Lotus plc; Grant of Petition for a Temporary Exemption From 
an Advanced Air Bag Requirement of FMVSS No. 208

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

ACTION: Notice of grant of a petition for a temporary exemption from a 
provision of Federal Motor Vehicle Safety Standard (FMVSS) No. 208, 
Occupant Crash Protection.

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SUMMARY: This notice grants the petition of Group Lotus plc (Lotus) for 
a temporary exemption of the front passenger position of its Evora 
model from one advanced air bag requirement of FMVSS No. 208, i.e., the 
higher maximum speed (56 km/h (35 mph)) belted test requirement using 
5th percentile adult female dummies. The agency finds that achieving 
compliance with that requirement would cause substantial economic 
hardship to Lotus and that the company has tried to comply with the 
requirement in good faith.

DATES: The exemption remains in effect until March 8, 2014.

FOR FURTHER INFORMATION CONTACT: David Jasinski, Office of the Chief 
Counsel, NCC-112, National Highway Traffic Safety Administration, 1200 
New Jersey Avenue SE., West Building 4th Floor, Room W41-326, 
Washington, DC 20590. Telephone: (202) 366-2992; Fax: (202) 366-3820.

SUPPLEMENTARY INFORMATION:

I. Advanced Air Bag Requirements and Small Volume Manufacturers

    In 2000, NHTSA published a final rule upgrading the requirements 
for air bags in passenger cars and light trucks, requiring what are 
commonly known as ``advanced air bags.'' \1\ The upgrade was designed 
to meet the twin 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. Prior to this rule, crash 
tests under FMVSS No. 208 used only one size dummy, a 50th percentile 
adult male dummy. However, the advanced air bag rule specified the use 
of both 50th percentile adult male and 5th percentile adult female 
dummies for the standard's crash tests.
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    \1\ See 65 FR 30680 (May 12, 2000).
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    The requirements for the vehicle performance in an unbelted 32 km/h 
(20 mph) to 40 km/h (25 mph) rigid barrier crash test and the belted 
rigid barrier crash test with a maximum test speed of 48 km/h (30 mph) 
for both the 50th percentile male dummy and the 5th percentile female 
dummy were phased in, beginning with the 2004 model year. Small volume 
manufacturers were not subject to these advanced air bag requirements 
until the end of the phase-in period, which was September 1, 2006.
    A second phase-in period required vehicles to be certified as 
meeting the belted rigid barrier test requirements at speeds up to 56 
km/h (35 mph) using the 50th percentile adult male dummy. This 
requirement was phased in, beginning with the 2008 model year. Small 
volume manufacturers were not subject to this requirement until the end 
of the phase-in period, which was September 1, 2010.
    The 2000 final rule did not include a higher speed belted rigid 
barrier test for a 5th percentile adult female dummy. Instead, NHTSA 
initiated testing to examine the practicability of such a 
requirement.\2\
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    \2\ See 65 FR 30690.
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    On August 31, 2006, NHTSA published a final rule that increased the 
maximum test speed for the belted rigid barrier test using the 5th 
percentile adult female test dummy from 48 km/h (30 mph) to 56 km/h (35 
mph).\3\ This new requirement was phased in, beginning with the 2010 
model year. Small manufacturers were not subject to this requirement 
until the completion of the phase in period, which was September 1, 
2012.
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    \3\ See 71 FR 51768.
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    In recent years, NHTSA has addressed a number of petitions for 
exemption from some of the initial advanced air bag requirements of 
FMVSS No. 208. The majority of these requests came from small 
manufacturers, each of which petitioned on the basis that achieving 
compliance would cause it substantial economic hardship and that it has 
tried in good faith to comply with the standard. In recognition of the 
more limited resources and capabilities of small manufacturers, 
authority to grant exemptions based on substantial economic hardship 
and good faith efforts was given the agency in 1972 to enable it to 
give those manufacturers additional time to comply with the Federal 
safety standards.

[[Page 15115]]

    NHTSA granted a number of these petitions, usually in situations in 
which the manufacturer was supplying standard air bags in lieu of 
advanced air bags.\4\ In addressing these petitions, NHTSA has 
recognized that small manufacturers may face particular difficulties in 
acquiring or developing advanced air bag systems.
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    \4\ See, e.g., grant of petition to Panoz, 72 FR 28759 (May 22, 
2007), or grant of petition to Koenigsegg, 72 FR 17608 (April 9, 
2007).
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    Notwithstanding those previous grants of exemption, NHTSA has 
considered two key issues--
    (1) Whether it is in the public interest to continue to grant such 
petitions, particularly in the same manner as in the past, given the 
number of years these requirements have now been in effect and the 
benefits of advanced air bags, and
    (2) To the extent such petitions are granted, what plans and 
countermeasures to protect child and infant occupants, short of 
compliance with the advanced air bags, should be expected of the 
petitioners.
    While the exemption authority was provided by Congress to address 
the problems of small manufacturers and the agency wishes to be 
appropriately attentive and responsive to those problems, it was not 
anticipated by the agency that use of this authority would result in 
small manufacturers being given much more than relatively short term 
exemptions from recently implemented safety standards, especially those 
addressing particularly significant safety problems.
    Given the passage of time since the advanced air bag requirements 
were established and implemented, and in light of the safety benefits 
of advanced air bags, NHTSA has determined that it is not in the public 
interest to continue to grant exemptions from these requirements under 
the same terms as in the past.\5\ The costs of compliance with the 
advanced air bag requirements of FMVSS No. 208 are costs that all 
entrants to the U.S. automobile marketplace should expect to bear. 
Furthermore, NHTSA understands that, in contrast to the initial years 
after the advanced air bag requirements went into effect, low volume 
manufacturers now have access to advanced air bag technology. 
Accordingly, NHTSA has concluded that the expense of advanced air bag 
technology is not now sufficient, in and of itself, to justify the 
grant of a petition for a hardship exemption from the advanced air bag 
requirements.\6\
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    \5\ See denial of petition of Pagani Automobili SpA, 76 FR 
47641-42 (Aug. 5, 2011).
    \6\ See id.
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    NHTSA further notes that the granting of hardship exemptions from 
motor vehicle safety standards is subject to the agency's finding that 
the petitioning manufacturer has ``tried to comply with the standard in 
good faith.'' \7\ In response to prior petitions, NHTSA has granted 
temporary exemptions from the advanced air bag requirements as a means 
of affording eligible manufacturers an additional transition period to 
comply with the exempted standard. In deciding whether to grant an 
exemption based on substantial economic hardship and good faith 
efforts, NHTSA considers the steps that the manufacturer has already 
taken to achieve compliance, as well as the future steps the 
manufacturer plans to take during the exemption period and the 
estimated date by which full compliance will be achieved.\8\
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    \7\ 49 U.S.C. 30113(b)(3)(B)(i).
    \8\ 49 CFR 555.6(a)(2).
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II. Statutory Basis for Requested Part 555 Exemption

    The National Traffic and Motor Vehicle Safety Act (Safety Act), 
codified as 49 U.S.C. Chapter 301, provides the Secretary of 
Transportation authority to exempt, on a temporary basis and under 
specified circumstances, motor vehicles from a motor vehicle safety 
standard or bumper standard. This authority is set forth at 49 U.S.C. 
30113. The Secretary has delegated the authority for implementing this 
section to NHTSA.
    More specifically, the Act authorizes the Secretary to grant a 
temporary exemption to a manufacturer of not more than 10,000 motor 
vehicles annually, on such terms as he deems appropriate, if he finds 
that the exemption would be consistent with the public interest and the 
Safety Act and if he also finds that ``compliance with the standard 
would cause substantial economic hardship to a manufacturer that has 
tried to comply with the standard in good faith.''
    NHTSA established Part 555, Temporary Exemption from Motor Vehicle 
Safety and Bumper Standards, to implement the statutory provisions 
concerning temporary exemptions. Under Part 555, a manufacturer 
petitioning for exemption is required to include specified information 
in its petition.\9\ Foremost among the requirements are that the 
petitioner must set forth the basis for the application, the 
information required by Sec.  555.6, and the reasons why the exemption 
would be in the public interest and consistent with the objectives of 
49 U.S.C. Chapter 301.
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    \9\ 49 CFR 555.5(b).
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    One of the permissible bases for an exemption specified in Sec.  
555.6 is hardship. 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 
production volume 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 state that a manufacturer has substantial responsibility as 
manufacturer of a vehicle simply because it owns or controls a second 
manufacturer that assembled that vehicle. However, the agency considers 
the statutory definition of ``manufacturer'' (49 U.S.C. 30102) to be 
sufficiently broad to include sponsors, depending on the circumstances. 
Thus, NHTSA has stated that a manufacturer may be deemed to be a 
sponsor and thus a manufacturer of a vehicle assembled by a second 
manufacturer if the first manufacturer had a substantial role in the 
development and manufacturing process of that vehicle.
    While 49 U.S.C. 30113(b) states that exemptions from a Safety Act 
standard are to be granted on a ``temporary basis,'' \10\ 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 
status to an 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 ongoing 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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    \10\ 49 U.S.C. 30113(b)(1).
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III. Overview of Petition

    In accordance with 49 U.S.C. 30113 and the procedures in 49 CFR 
Part 555, Group Lotus Plc (Lotus) has submitted a petition asking the 
agency for a temporary exemption from one advanced air bag requirement 
of FMVSS No. 208 for its Evora model.

[[Page 15116]]

Specifically, the petition requests an exemption from the advanced air 
bag requirement in S14.7, which requires vehicles manufactured on or 
after September 1, 2012, to meet the higher maximum speed (56 km/h (35 
mph)) belted test requirement using the 5th percentile adult female 
dummy.\11\ Lotus requested this exemption only for the front passenger 
seat. The basis for the application is that compliance would cause the 
petitioner substantial economic hardship and that the petitioner has 
tried in good faith to comply with the standard. In its petition, Lotus 
requested an exemption for a period of 31 months from September 1, 2012 
to March 31, 2015.
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    \11\ In its petition, Lotus asks for exemption from S15.1(b) and 
S16.1(a)(2) as well. However, those provisions apply to only those 
vehicles certified as complying with S14.6 or S14.7. If an exemption 
is granted, the vehicle would not be required to be certified to 
S14.7. S14.6 is the phase in for the higher speed 5th percentile 
adult female belted barrier test requirement that is not applicable 
to Lotus. In that instance, neither provision would apply to the 
exempted vehicles. Furthermore, S16.1(a)(2) is the test procedure 
for conducting the rigid barrier test using 5th percentile adult 
female dummies. This test procedure contains no substantive 
requirements for which Lotus would need exemption.
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    Lotus is a United Kingdom corporation. In the year prior to the 
filing of its petition, Lotus produced a total of 3,115 vehicles.\12\ 
Lotus stated that, since its inception, it has never manufactured more 
than 10,000 vehicles in any year. Lotus stated further that, although 
it is owned by the Malaysian automobile manufacturer Proton, Proton is 
not a ``sponsor'' of Lotus and its production should not be (and 
historically has not been) aggregated with Lotus's production for the 
purpose of determining eligibility for a temporary exemption. Lotus 
anticipates that the number of exempted vehicles imported to the U.S. 
if this petition is granted would be approximately 800.
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    \12\ This total includes 690 vehicles that were assembled for 
Tesla Motors, Inc.
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    Lotus previously obtained an exemption from the advanced air bag 
requirements for its Elise model.\13\ In its petition for exemption 
from the advanced air bag requirements for the Elise, Lotus committed 
to equipping its next model, the Evora, with compliant advanced air 
bags. Lotus stated when the Evora was introduced into the U.S. market 
in 2010, the Evora was fully compliant with FMVSS No. 208. However, 
Lotus stated that its sales have been lower than projected because of 
Lotus's financial hardship, exacerbated by the global recession; 
emergence of competition in its market segment; and the withdrawal of 
the Elise from the U.S. market. Furthermore, Lotus stated the Evora's 
advanced air bag system does not comply with the higher speed 5th 
percentile female belted occupant (passenger side, fully forward seat 
position) barrier crash test, which became effective for the Evora on 
September 1, 2012, without sourcing new components and conducting a 
complete revalidation of the system. Lotus previously believed that 
Evora sales would have been augmented by a new product using 
substantially the same platform, upon which compliance with the higher 
speed 5th percentile female belted requirements would have been 
developed. However, Lotus stated that it stopped that development 
program due to poor Evora sales and repositioning of its business 
(moving from the entry level premium segment to the high performance, 
luxury sports car segment).
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    \13\ See 71 FR 52851, 52859-62 (Docket No. NHTSA-2006-25324).
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    Lotus stated that the Evora cannot meet the higher speed 5th 
percentile female belted test requirements because the Evora's air bag 
electronic control unit (ECU) does not have the capability to monitor 
whether the seat belt is buckled and its seat belt supplier does not 
have a suitable buckle switch. A buckle switch would allow the ECU to 
fire only the first stage of the air bag inflator for buckled occupants 
while firing two stages for unbuckled occupants, allowing the stiffness 
of the air bag to be different for belted and unbelted occupants. In 
order to incorporate a buckle switch in the Evora, Lotus stated that a 
new air bag ECU would need to be sourced, calibrated, and validated; a 
new seat belt system would need to be sourced; and a complete series of 
development tests would need to be conducted.
    Lotus expects that this development would cost over $4 million. 
Lotus's financial statements show that between April 2007 and March 
2010, the company experienced losses of approximately $40 million. 
Lotus stated that, without the exemption, it would withdraw from the 
U.S. market and lose its market share, resulting in intangible losses 
such as loss of brand image, complication of reentry into the U.S. 
market in the future, and job losses.
    Lotus stated that it has considered alternative means of 
compliance, but these alternatives have been found to be incapable of 
providing a solution. Lotus stated that it could not use a seat belt 
buckle sensor from its current seat belt supplier because the switch is 
inadequate and there is not a suitable ECU. Lotus stated that it 
considered moving the passenger seat rearward, but concluded it would 
need to reevaluate compliance with the 50th percentile male tests in 
both the belted and unbelted conditions which would result in similar 
costs to those described above. Lotus also stated that it considered 
fixing the passenger seat in the mid-position, but concluded that 
occupant ingress/egress would be adversely affected and it would 
prevent a 95th percentile occupant from fitting in the passenger seat.
    Lotus stated that, if an exemption were granted, the company would 
provide advice and warnings in its owner's manual identifying the risks 
associated with incorrect positioning of the seat belt and sitting too 
close to the air bag.

IV. Notice of Receipt and Summary of Comments

    On July 3, 2012, we published in the Federal Register (77 FR 39564) 
a notice of receipt of Lotus's petition for a temporary exemption, and 
provided an opportunity for public comment. We received three comments, 
two comments from Lotus and one from the Advocates for Highway & Auto 
Safety (Advocates).
    In Lotus's first comment, it addressed three issues. First, Lotus 
stated that, although its majority shareholder continues to be Proton, 
Proton has been acquired by DRB-Hicom. Lotus stated that the transfer 
of ownership of Proton should have no bearing on its eligibility for an 
exemption. Lotus also stated that the evaluation of its business plan 
by new management indicated that the actual fiscal year 2012 results 
for Lotus would be far worse than forecasted in the petition. Finally, 
Lotus stated that, upon further evaluation of Evora usage, its annual 
mile usage was actually 5,127 miles, which Lotus suggested was evidence 
that the Evora is not used as a primary vehicle.
    Advocates addressed several issues in its comments. First, 
Advocates stated that, in spite of Lotus's assertion to the contrary, 
NHTSA's policy that it is no longer in the public interest to continue 
to grant exemptions from the advanced air bag requirements in the same 
circumstances and under the same terms as in the past would apply to 
Lotus's petition. Although Lotus only seeks exemption from one of the 
advanced air bag requirements, Advocates noted that other companies 
have sought partial exemptions.
    Advocates also asserted that the Evora could be used to carry 
children or other smaller statured occupants in the front passenger 
seat. Advocates stated that it does not believe that the exemption 
should be based upon Lotus's

[[Page 15117]]

assumptions of the target population. The organization stated that, 
although many consumers would not purchase an Evora as the primary 
means of transporting their children, there was no reason why Lotus's 
vehicles would not be used to transport children and, in vehicles with 
two seats, any child riding in the vehicle would be located in the 
front seat. Additionally, Advocates stated that the requirements from 
which exemption is sought are meant to address the safety of small-
statured adult females, and that Lotus did not indicate why these 
smaller statured people would not be occupants of the vehicles.
    Advocates also questioned Lotus's good faith efforts to comply with 
the standard. Advocates asserted that Lotus dismissed one possible 
alternative means of compliance, fixing the seat in the middle 
position, on the grounds of passenger comfort. Advocates stated that 
Lotus did not provide any evidence that such a solution would not lead 
to compliance. Advocates also questioned Lotus's good faith efforts in 
light of the six-year lead time for compliance with the higher speed 
belted requirement for the 5th percentile female.
    Advocates raised two other reasons for denying Lotus's petition. 
Advocates questioned the degree of Lotus's economic hardship based on 
the financial projections set forth in its original petition. Finally, 
Advocates stated that exemptions should only be granted when absolutely 
necessary and that public safety concerns must outweigh the costs of 
compliance.
    Advocates stated that, based on the foregoing, it could not support 
granting Lotus's petition for renewal of its temporary exemption.
    Lotus submitted a second comment that provided new information 
regarding the company and addressed Advocates' comments.
    First, Lotus addressed its change of ownership to DRB Hicom and how 
that affects its product plan. Lotus stated that the introduction of 
new vehicles would be delayed and that Lotus would invest in the Evora 
to keep the model in production until 2017 to 2020. Lotus stated that, 
under prior management, bank financing could only be used for new 
products and could not be spent on the Evora. Thus, Lotus had little 
funding for improving the Evora, including full FMVSS No. 208-
compliance. The new management intends full compliance with FMVSS No. 
208 by the end of March 2015.
    Lotus also provided updated financial results and projections. 
Unlike its original projections, Lotus forecasted a loss over the next 
three years.
    Regarding Advocates' comment that Lotus did not consider all 
alternatives to asking for a waiver, Lotus noted that its inability to 
spend funds on Evora development meant that it could not pursue any 
compliance solution that required redesigning and re-certifying its air 
bag system. Furthermore, Lotus stated that any alternative compliance 
solution that required redesign and re-certification would result in 
costs that would be comparable to full FMVSS No. 208-compliance. Lotus 
stated that other alternatives such as installing an on/off switch, 
fixing the passenger seat, or withdrawing the 2-seat model from the 
U.S. market could not guarantee any real-world improvement in safety.
    Regarding Advocates' assertion that the public interest does not 
support granting the exemption, Lotus noted that the limited exemption 
it seeks is not a complete exemption from the advanced air bag 
requirements. Lotus also stated its support for NHTSA's general policy 
that complete exemptions should not be granted as they previously were, 
but Lotus stated that this request is much narrower.

V. Agency Analysis, Response to Comment, and Decision

    In this section, we provide our analysis and decision regarding 
Lotus's temporary exemption request concerning FMVSS No. 208, including 
our response to the comments received from Advocates and Lotus.

A. General Issues Related to Petitions for Exemptions From Advanced Air 
Bag Requirements

    NHTSA requested comments in the notice of receipt for Lotus's 
petition about a number of issues related to the justification for 
continuing to grant petitions for a hardship exemption from the 
advanced air bag requirements. We summarized our new position in the 
notice of receipt and again earlier in this document. We specifically 
sought comment on how this position could be applied to Lotus's 
request.
    Given the passage of time since the advanced air bag requirements 
were established and implemented, and in light of the benefits of 
advanced air bags, NHTSA has determined that it is not in the public 
interest to continue to grant exemptions from these requirements in the 
same circumstances and under the same terms as in the past. The costs 
of compliance with the advanced air bag requirements of FMVSS No. 208 
are costs that all entrants to the U.S. automobile marketplace should 
expect to bear. Furthermore, NHTSA understands that, in contrast to the 
initial years after the advanced air bag requirements went into effect, 
low volume manufacturers now have access to advanced air bag 
technology.\14\ Accordingly, NHTSA has concluded that the expense of 
advanced air bag technology is not now sufficient, in and of itself, to 
justify the grant of a petition for a hardship exemption from the 
advanced air bag requirements.
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    \14\ The recent petitions for exemption support NHTSA's 
conclusion that advanced air bag technology has become more 
accessible to small volume manufacturers in recent years. In 
addition to the fact that several manufacturers who received 
exemptions in the past have been able to produce fully-compliant 
vehicles, many of the manufacturers who have recently sought 
exemption from the advanced air bag requirements have been 
developing advanced air bag systems in-house or are working with 
suppliers to develop such systems. See, e.g., Notice of Receipt of 
Application of Spyker Automobielen, B.V., 76 FR 19179 (Apr. 6, 2011) 
(manufacturer is working with a supplier to develop advanced air bag 
system); Notice of Receipt of Petition of Lotus Cars Ltd., 76 FR 
33406 (June 8, 2011) (manufacturer has another model that fully 
complies with the advanced air bag requirements).
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    We have stated that manufacturers are not precluded from submitting 
petitions for exemption in this area, and NHTSA may grant some such 
exemptions. However, manufacturers should understand that the 
circumstances in which we would grant such exemptions are expected to 
be significantly more limited than in the past.
    We believe that Lotus's petition for exemption is significantly 
more limited in nature than those in the past. Rather than seeking 
exemption from all or most of the advanced air bag requirements for the 
Evora, Lotus seeks exemption from only one requirement, higher maximum 
speed belted rigid barrier test for a 5th percentile adult female 
dummy, and only seeks this exemption for the passenger seat position. 
Because of the very limited nature of the exemption sought by Lotus, we 
consider it to be within the circumstances under which we would 
consider granting an exemption.
    Although Advocates cite examples of what it characterizes as 
limited exemptions, the examples involve manufacturers seeking 
exemption from most of the advanced air bag requirements. Furthermore, 
the documents issued by NHTSA and cited by Advocates related to these 
exemption requests are notices of receipt, which do not represent a 
decision of the agency. We have sought comment on the applicability of 
this policy in all recent notices of receipt of petitions for exemption 
from any advanced air bag requirement and we will continue to do so if 
we receive any additional advanced air bag exemption petitions.

[[Page 15118]]

B. Decision on Lotus's Petition

    In response to Lotus's petition, and after considering all of the 
information provided as a response to the notice of receipt of the 
petition, NHTSA has decided to grant Lotus's petition for temporary 
exemption of the front passenger seat in the Evora from the higher 
speed belted rigid barrier test for a 5th percentile adult female dummy 
in FMVSS No. 208 for a period of one year after publication of notice 
of this decision in the Federal Register. We are not providing the full 
28-month revised exemption period sought by Lotus because we believe 
that Lotus should give additional consideration to alternative means of 
compliance that may not require full revalidation of the advanced air 
bag system or, alternatively, to the acceleration of its plans for full 
FMVSS No. 208 compliance.
    Our reasoning for granting this exemption is as follows. First, we 
find that Lotus is eligible for an economic hardship exemption. As 
discussed above, 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. 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.
    Accordingly, we considered whether an entity other than Lotus can 
be considered to manufacture the Evora. We considered the effect of 
Proton's ownership of Lotus on its eligibility for an economic hardship 
exemption in prior notices and concluded that Lotus is eligible under 
the requirements of 49 U.S.C. 30113(d).\15\ For the purpose of this 
exemption request only, we conclude that the recent transfer in 
ownership of Proton to DRB Hicom has no effect on our prior conclusions 
regarding Lotus's eligibility. Accordingly, we determine that Lotus is 
eligible for an economic hardship exemption.
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    \15\ See 64 FR 61379 (Nov. 10, 1999); 68 FR 10066 (Mar. 3, 
2003); 69 FR 5658 (Feb. 5, 2004); 71 FR 52851, 52859-62 (Feb. 5, 
2004).
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    Based on the information provided in Lotus's petition and its 
comments, NHTSA concludes that Lotus has demonstrated a good faith 
effort to bring its vehicle into full compliance with the requirements 
of FMVSS No. 208. We note that, after filing its petition, Lotus 
underwent a change of ownership and management. As a result of this 
change, Lotus has reconsidered aspects of its petition and has revised 
its petition to request a shorter exemption period. Moreover, Lotus has 
clarified that it intends to make the Evora fully compliant with FMVSS 
No. 208 at the end of the requested exemption period.
    In reaching this conclusion regarding good faith efforts, we also 
placed substantial weight on the fact that Lotus examined alternative 
means to bring the vehicle into compliance such as fixing the seat 
position or moving it rearward. Nevertheless, we believe Lotus should 
reconsider using these or other alternative means to bring the Evora 
into full compliance.
    As noted earlier, Advocates stated that, in considering alternative 
means of compliance, Lotus would not need to perform full vehicle 
tests. However, we note that, in considering alternative means of 
compliance with the higher maximum speed belted test requirement using 
5th percentile adult female dummies, Lotus must also consider the 
vehicle's compliance with the other requirements of FMVSS No. 208, 
particularly the unbelted test requirements.
    We accept Lotus's assertion that, to ensure compliance with the 
other advanced air bag requirements, Lotus would need to revalidate 
some portion of its air bag system. For example, Lotus could achieve 
compliance with the higher speed belted test requirement by restricting 
the forward movement of the seat beyond some point. We recognize that 
restricting the forward movement of the seat would move both the full 
forward and middle seat track positions rearward, which could affect 
performance on the unbelted tests. Although Lotus stated that the costs 
of revalidating its system with the forward movement of the seat 
restricted would result in similar costs to replacing the ECU, Lotus 
has not provided any specific explanation of what tests it believes it 
would need to perform and how much money such a program would cost.
    Lotus could fix the passenger seat in the middle position, which 
would not affect the belted or unbelted test performance with the 50th 
percentile male. However, it could affect the performance of the 5th 
percentile female unbelted tests. Although Lotus states that this 
approach could adversely affect the comfort of larger occupants and 
could affect ingress or egress, Lotus has not provided the agency with 
support for these assertions.
    Although Lotus suggests that real world safety may not be improved 
with these alternative means of compliance, Lotus has not provided any 
data or other evidence to support its assertion that these alternative 
means for compliance would result in lower real world safety. To the 
contrary, for a belted 5th percentile female sitting in the passenger 
seat fixed at the current middle position, this alternative means of 
compliance would likely result in a higher level of safety as compared 
to the current full forward position.
    Notwithstanding these observations, we conclude that Lotus has 
acted in good faith in exploring alternative means of compliance and 
reasonably concluded that such alternative means of compliance are not 
feasible or desirable at this time. Lotus did not have the benefit of 
NHTSA's views on these alternative means of compliance prior to filing 
its petition. The agency's decision to grant this petition for a 
substantially shorter time period than sought by Lotus will allow Lotus 
to revisit its assessment of these or other alternative means of 
compliance or accelerate its schedule for replacing the ECU of its 
current advanced air bag system.
    NHTSA also concludes that Lotus has demonstrated the requisite 
potential financial hardship. Although Advocates noted that, in its 
initial projections, Lotus expected to be profitable throughout the 
exemption period, its revised projections indicate it will incur 
financial losses, with or without an exemption.
    Several factors support a finding that granting Lotus's exemption 
is in the public interest. NHTSA has traditionally found that the 
public interest is served by affording consumers the choice of a wider 
variety of motor vehicles and providing additional employment 
opportunities. We believe that both of these public interest 
considerations would be served by granting Lotus's petition and note 
that the denial of this request would remove a vehicle that is 
currently being sold in the U.S. market. Furthermore, as the Evora is 
the only vehicle currently being sold by Lotus, the withdrawal of the 
Evora from the market would result in Lotus leaving the U.S. market.
    There are other relevant considerations. The number of vehicles at 
issue is small. In the last three years, Lotus has produced between 333 
and 409 vehicles annually for the U.S. market. We agree with Lotus that 
the relatively low number of miles driven by the vehicle because of its 
nature as a second vehicle will mean that the vehicle is less likely to 
be involved in a crash. Finally, Lotus is including in its owner's 
manual information regarding the risk of sitting too close to the air 
bag. As a condition of this grant, we require Lotus to encourage its 
dealers to

[[Page 15119]]

highlight this information for its consumers at the point of sale.
    After considering all of the relevant information, we have decided 
to grant Lotus a temporary exemption of the front passenger position in 
its Evora model from the higher maximum speed (56 km/h (35 mph)) belted 
test requirement using 5th percentile adult female dummies in S14.7 of 
FMVSS No. 208 for a period of one year after publication of this notice 
in the Federal Register. Furthermore, the total number of vehicles that 
may be produced under this exemption is limited to 450, which is 
approximately 10% higher than the highest number of vehicles produced 
for the U.S. market by Lotus in the last three years and approximately 
half of the number of vehicles Lotus intended to manufacture with a 28-
month exemption.
    We note that, as explained below, prospective purchasers will be 
notified that the vehicle is exempted from S14.7 of FMVSS No. 208. 
Under Sec.  555.9(b), a manufacturer of an exempted passenger car must 
securely affix to the windshield or side window of each exempted 
vehicle a label containing a statement that the vehicle conforms to all 
applicable FMVSSs 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.
    The text of Sec.  555.9 does not expressly indicate how the 
required statement on the two labels should read in situations in which 
an exemption covers part, but not all, of a FMVSS. In this case, 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 FMVSS No. 208's requirements. Although we 
have said in the past that the addition of a reference to individual 
provisions would be of limited use to consumers in the case of advanced 
air bag exemptions, in the case of Lotus, which seeks exemption from 
only a single provision, we will allow Lotus to list the exempted 
paragraph on the label. For this reason, we believe the two labels 
should read in relevant part, ``except for S14.7 of Standard No. 208, 
Occupant Crash Protection, exempted pursuant to * * *.''
    In accordance with 49 U.S.C. 30113(b)(3)(B)(i), Lotus is granted 
NHTSA Temporary Exemption No. EX 13-01, from S14.7 of 49 CFR 571.208 
for the front passenger seat of its Evora model. The exemption is for 
no more than 450 vehicles and it shall remain effective until one year 
following publication of notice of this decision in the Federal 
Register, as indicated in the DATES section of this document.

    Authority: 49 U.S.C. 30113; delegation of authority at 49 CFR 
1.95.

    Issued on: February 27, 2013.
David L. Strickland,
Administrator.
[FR Doc. 2013-05477 Filed 3-7-13; 8:45 am]
BILLING CODE 4910-59-P