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17608 Federal Register / Vol. 72, No.

67 / Monday, April 9, 2007 / Notices

DEPARTMENT OF TRANSPORTATION This noncompliance pertains solely to submitted electronically by logging onto
the failure of these reflectors to meet the the Docket Management System Web
National Highway Traffic Safety applicable color requirements. The site at Click on
Administration subject reflex reflectors were ‘‘Help’’ to obtain instructions for filing
[Docket No. NHTSA–2007–27437; Notice 1] manufactured for Grote by a third-party the document electronically. Comments
supplier. The third-party supplier may be faxed to 1–202–493–2251, or
Grote Industries, LLC, Receipt of incorporated reflective tape that it may be submitted to the Federal
Petition for Decision of purchased from a reflective material eRulemaking Portal: go to http://
Inconsequential Noncompliance supplier. Based on the results of tests Follow the online
conducted for Grote, Grote believes the instructions for submitting comments.
Grote Industries, LLC (Grote) has intermediate supplier had been using The petition, supporting materials,
determined that the amber reflex retroreflective tape that was and all comments received before the
reflectors on certain trucks manufactured to the specification for close of business on the closing date
manufactured between 2004 through ‘‘selective yellow,’’ instead of the indicated below will be filed and will be
2007 do not comply with S5.1.5 of 49 correct specification for ‘‘amber,’’ as set considered. All comments and
CFR 571.108, Federal Motor Vehicle forth in the SAE J578c requirement. The supporting materials received after the
Safety Standard (FMVSS) No. 108, intermediate supplier was operating closing date will also be filed and will
‘‘Lamps, reflective devices, and under a certification letter from the be considered to the extent possible.
associated equipment.’’ Grote has filed reflective material supplier, which When the petition is granted or denied,
an appropriate report pursuant to 49 erroneously listed the material as notice of the decision will be published
CFR Part 573, ‘‘Defect and compliant. in the Federal Register pursuant to the
Noncompliance Reports.’’ Grote believes the failure of these authority indicated below.
Pursuant to 49 U.S.C. 30118(d) and reflex reflectors to meet the color Comment closing date: May 9, 2007.
30120(h), Grote has petitioned for an specification does not reduce their
exemption from the notification and (Authority: 49 U.S.C. 30118, 30120:
effectiveness in providing proper
remedy requirements of 49 U.S.C. delegations of authority at CFR 1.50 and
visibility to allow identification of the 501.8)
Chapter 301 on the basis that this front and (where applicable)
noncompliance is inconsequential to intermediate side points of a vehicle. Issued on: April 3, 2007.
motor vehicle safety. Grote believes the difference between Claude H. Harris,
This notice of receipt of Grote’s compliant amber reflex reflectors and Director, Office of Vehicle Safety Compliance.
petition is published under 49 U.S.C. the subject noncompliant selective [FR Doc. E7–6462 Filed 4–6–07; 8:45 am]
30118 and 30120 and does not represent yellow colored reflex reflectors is barely BILLING CODE 4910–59–P
any agency decision or other exercise of discernible to the naked eye when
judgment concerning the merits of the reflected with ‘‘Illuminant A’’ light
petition. under conditions of ambient darkness. DEPARTMENT OF TRANSPORTATION
Affected are approximately 137,050 Such conditions are intended to imitate
reflex reflectors that have been sold for nighttime driving conditions when National Highway Traffic Safety
installation as original equipment on reflex reflectors serve their primary Administration
trucks and were manufactured between purpose. [Docket No. NHTSA–2006–25546, Notice 2]
December 28, 2004 and January 22, Grote states that it knows of no
2007. S5.1.5 of FMVSS No. 108 requires: accidents or other issues associated with Koenigsegg Automotive AB; Response
The color in all lamps, reflective devices, this noncompliance. The noncompliant to Application for a Temporary
and associated equipment to which this reflex reflectors continue to perform Exemption From the Headlamp
standard applies shall comply with SAE their intended function without any Requirements of FMVSS No. 108;
Standard J578c, Color Specification for identifiable reduction in safety. Advanced Air Bag Requirements of
Electric Signal Lighting Devices, February Therefore, Grote believes that this
1977. FMVSS No. 208
noncompliance is inconsequential to
The reflex reflectors do not contain motor vehicle safety and that all other AGENCY: National Highway Traffic
the correct reflective material required requirements under FMVSS No. 108 are Safety Administration (NHTSA),
to meet the requirements of S5.1.5. met. Department of Transportation (DOT).
Grote has corrected the problem that Interested persons are invited to ACTION: Grant of application for
caused these errors so that they will not submit written data, views, and temporary exemption from certain
be repeated in future production. Grote arguments on this petition. Comments provisions of Federal Motor Vehicle
believes that the noncompliance is must refer to the docket and notice Safety Standard (FMVSS) No. 208,
inconsequential to motor vehicle safety number cited at the beginning of this Occupant Crash Protection, and from
and that no corrective action is notice and be submitted by any of the certain provisions of FMVSS No. 108,
warranted. following methods. Mail: Docket Lamps, Reflective Devices, and
Grote first became aware of the Management Facility, U.S. Department Associated Equipment.
noncompliance of these reflex reflectors of Transportation, Nassif Building,
when a report was received from one of Room PL–401, 400 Seventh Street, SW., SUMMARY: This document grants the
its customers who noticed a shipment of Washington, DC 20590–0001. Hand Koenigsegg Automotive AB
reflex reflectors it had received from Delivery: Room PL–401 on the plaza (‘‘Koenigsegg’’) application 1 for
Grote were a different color than level of the Nassif Building, 400 temporary exemption from certain
previous shipments. The customer was Seventh Street, SW., Washington, DC. It advanced air bag requirements of
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supposed to receive amber reflex is requested, but not required, that two
1 While Koenigsegg also petitioned for an
reflectors that met the requirements of copies of the comments be provided.
exemption from the 49 CFR Part 581 Bumper
FMVSS No. 108 for use as front side- The Docket Section is open on Standard, it subsequently withdrew that portion of
mounted and intermediate side- weekdays from 10 am to 5 pm except its petition (see Docket No. NHTSA–2006–25546–
mounted reflex reflectors. Federal Holidays. Comments may be 4).

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Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices 17609

FMVSS No. 208, Occupant Crash advanced air bag requirements until now-superseded request concerning the
Protection, and from the headlamp September 1, 2006, but their efforts to bumper standard.
requirements of FMVSS No. 108 bring their respective vehicles into The basis for each portion of the
through December 31, 2009. These compliance with these requirements application is that compliance would
exemptions apply to the Koenigsegg began several years ago. However, cause substantial economic hardship 5
CCX. In accordance with 49 CFR Part because the new requirements were to a manufacturer that has tried in good
555, the basis for the grant is that challenging, major air bag suppliers faith to comply with these standards. A
compliance would cause substantial concentrated their efforts on working copy of the petition 6 is available for
economic hardship to a manufacturer with large volume manufacturers, and review and has been placed in the
that has tried in good faith to comply thus, until recently, small volume docket for this notice. The agency
with the standard, and the exemption manufacturers had limited access to closely examines and considers the
would have a negligible impact on advanced air bag technology. Because of information provided by manufacturers
motor vehicle safety. the nature of the requirements for in support of these factors, and, in
In accordance with the requirements protecting out-of-position occupants, addition, pursuant to 49 U.S.C.
of 49 U.S.C. 30113(b)(2), we published ‘‘off-the-shelf’’ systems could not be 30113(b)(3)(A), determines whether
a notice of receipt of the application 2 in readily adopted. Further complicating exemption is in the public interest and
the Federal Register and asked for matters, because small volume consistent with the Safety Act.7
public comments.3 We received no manufacturers build so few vehicles, the A manufacturer is eligible to apply for
comments on the application. costs of developing custom advanced air a hardship exemption if its total motor
DATES: The exemption from the bag systems compared to potential vehicle production in its most recent
specified provisions of FMVSS No. 208 profits discouraged some air bag year of production did not exceed
and FMVSS No. 108 is effective suppliers from working with small 10,000 vehicles, as determined by the
immediately and remains in effect volume manufacturers. NHTSA Administrator (49 U.S.C.
through December 31, 2009. The agency has carefully tracked 30113). In determining whether a
FOR FURTHER INFORMATION CONTACT: Mr. occupant fatalities resulting from air bag manufacturer of a vehicle meets that
Ed Glancy or Mr. Eric Stas, Office of the deployment. Our data indicate that the criterion, NHTSA considers whether a
Chief Counsel, NCC–112, National agency’s efforts in the area of consumer second vehicle manufacturer also might
Highway Traffic Safety Administration, education and manufacturers’ providing be deemed the manufacturer of that
400 Seventh Street, SW., Room 5219, depowered air bags were successful in vehicle. The statutory provisions
Washington, DC 20590. Telephone: reducing air bag fatalities even before governing motor vehicle safety (49
(202) 366–2992; Fax: (202) 366–3820. advanced air bag requirements were U.S.C. Chapter 301) do not include any
implemented. provision indicating that a manufacturer
I. Advanced Air Bag Requirements and As always, we are concerned about might have substantial responsibility as
Small Volume Manufacturers the potential safety implication of any manufacturer of a vehicle simply
In 2000, NHTSA upgraded the temporary exemptions granted by this because it owns or controls a second
requirements for air bags in passenger agency. In the present case, we are manufacturer that assembled that
cars and light trucks, requiring what are addressing a petition that seeks, in part, vehicle. However, the agency considers
commonly known as ‘‘advanced air a temporary exemption from the the statutory definition of
bags.’’ 4 The upgrade was designed to advanced air bag requirements. As part ‘‘manufacturer’’ (49 U.S.C. 30102) to be
meet the goals of improving protection of the same document, we are sufficiently broad to include sponsors,
for occupants of all sizes, belted and addressing the petitioner’s request for depending on the circumstances. Thus,
unbelted, in moderate-to-high-speed temporary exemptions from the agency’s NHTSA has stated that a manufacturer
crashes, and of minimizing the risks headlamp requirements. The petitioner may be deemed to be a sponsor and thus
posed by air bags to infants, children, is a manufacturer of low volume, exotic a manufacturer of a vehicle assembled
and other occupants, especially in low- sports cars. by a second manufacturer if the first
speed crashes. II. Overview of Petition for Economic manufacturer had a substantial role in
The advanced air bag requirements Hardship Exemption the development and manufacturing
were a culmination of a comprehensive process of that vehicle.
plan that the agency announced in 1996 In accordance with 49 U.S.C. 30113 Finally, while 49 U.S.C. 30113(b)
to address the adverse effects of air bags. and the procedures in 49 CFR Part 555, states that exemptions from a Safety Act
This plan also included an extensive Koenigsegg petitioned the agency for a standard are to be granted on a
consumer education program to temporary exemption from certain
encourage the placement of children in headlamp requirements of FMVSS No. 5 When considering financial matters involving
rear seats. The new requirements were 108 (S7), advanced air bag requirements companies based in the European Union (EU), it is
phased in beginning with the 2004 of FMVSS No. 208 (S14), and bumper important to recognize that EU and U.S. accounting
model year. requirements of 49 CFR Part 581. principles have certain differences in their
treatment of revenue, expenses, and profits. Public
Small volume manufacturers (i.e., However, in a letter dated December 12, statements by EU manufacturers relating to
original vehicle manufacturers 2006, Koenigsegg advised the agency financial results should be understood in this
producing or assembling fewer than that recently completed testing had context. This agency analyzes claims of financial
5,000 vehicles annually for sale in the indicated that its modified bumper hardship carefully and in accordance with U.S.
accounting principles.
United States) were not subject to the system complied with the Part 581 6 The company requested confidential treatment
bumper standard and that it was under 49 CFR Part 512 for certain business and
2 To view the application, go to: http:// withdrawing the portion of its petition
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financial information submitted as part of its and requesting an exemption from that petition for temporary exemption. Accordingly, the
enter Docket No. NHTSA–2006–25546. information placed in the docket does not contain
3 See 71 FR 50974 (August 28, 2006) (Docket No.
standard (See Docket No. NHTSA–
such information that the agency has determined to
NHTSA–2006–25546–1). 2006–25546–4). Accordingly, we need be confidential.
4 See 65 FR 30680 (May 12, 2000) (Docket No. not further discuss that portion of the 7 The Safety Act is codified as Title 49, United

NHTSA–2000–7013). Koenigsegg petition dealing with the States Code, Chapter 301.

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17610 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices

‘‘temporary basis,’’ 8 the statute also requested exemptions were to be In the past three years (2003 to 2005),
expressly provides for renewal of an granted: 25 in calendar year (CY) 2007; the company has had losses totaling
exemption on reapplication. 30 in CY 2008, and 30 in CY 2009. $1,637,398, and during this time period,
Manufacturers are nevertheless Requested exemptions. Koenigsegg the company’s factory burned to the
cautioned that the agency’s decision to stated that it intends to certify the CCX ground and had to be rebuilt.
grant an initial petition in no way as complying with the rigid barrier Koenigsegg did make a profit of $58,341
predetermines that the agency will belted test requirement using the 50th in 2003 and $722,406 in 2004, but it
repeatedly grant renewal petitions, percentile adult male test dummy set incurred a substantial loss of $2,418,145
thereby imparting semi-permanent forth in S14.5.1 of FMVSS No. 208. The in 2005.
exemption from a safety standard. petitioner stated that it previously As of the time of the application,
Exempted manufacturers seeking determined the CCX’s compliance with Koenigsegg has invested over $3.2
renewal must bear in mind that the rigid barrier unbelted test requirements million in the CCX project in order to
agency is directed to consider financial using the 50th percentile adult male test have the vehicle meet U.S. standards—
hardship as but one factor, along with dummy through the S13 sled test using not including the provisions which are
the manufacturer’s on-going good faith a generic pulse rather than a full vehicle the subject of the present petition for
efforts to comply with the regulation, test. Koenigsegg stated that it, therefore, temporary exemption. The company has
the public interest, consistency with the cannot at present say with certainty that stated that it cannot hope to attain
Safety Act, generally, as well as other the CCX will comply with the unbelted profitability if it incurs additional
such matters provided in the statute. test requirement under S14.5.2, which is research and development expenses at
III. Petition of Koenigsegg a 20–25 mph rigid barrier test. this time.
As for the CCX’s compliance with the Koenigsegg stated that costs for
Background. Koenigsegg Automotive other advanced air bag requirements, external assistance with developing an
is a Swedish corporation formed in 1999 Koenigsegg stated that it does not know advanced air bag system would cost
to produce high-performance sports whether the CCX will be compliant over $3 million (over $9 million if
cars. This application concerns the because to date it has not had the internal costs are included for interior
Koenigsegg CCX which was developed financial ability to conduct the redesign, testing, and tooling), and
as the next generation of Koenigsegg necessary testing. meeting the headlamp requirements
vehicles after production of the CCR As such, Koenigsegg is requesting an would entail an additional expenditure
model ended on December 30, 2005. exemption for the CCX from the rigid of at least $500,000.
The CCX model (the company’s only barrier unbelted test requirement with In its petition, Koenigsegg reasoned
model at this point) is scheduled to go the 50th percentile adult male test that worldwide sales (including the U.S.
into production in 2006 and to continue dummy (S14.5.2), the rigid barrier test market) of the current CCX in higher
at least through the end of 2009. requirement using the 5th percentile volumes over the next three years is
Originally, Koenigsegg planned to sell adult female test dummy (belted and necessary to reduce production costs
vehicles only in the European, Mid-East, unbelted, S15), the offset deformable and to make available funding for
and Far-East markets, but the company barrier test requirement using the 5th development of the next generation of
decided in late 2005 to seek entry to the percentile adult female test dummy the CCX, which would be compliant
U.S. market for reasons related to (S17), the requirements to provide with all U.S. air bag and headlamp
ongoing financial viability. The retail protection for infants and children (S19, requirements. In essence, Koenigsegg
price for the CCX is reported to be over S21, and S23) and the requirement argued that the exemption is necessary
$700,000 per vehicle. using an out-of-position 5th percentile to allow the company to ‘‘bridge the
As discussed in further detail below, adult female test dummy at the driver gap’’ until fully compliant vehicles can
the petitioner argued that it tried in position (S25). be funded, developed, tooled, and
good faith, but could not bring the Koenigsegg further requested introduced.
vehicle into compliance with the exemption from the headlamp If the exemption is denied,
headlamp and advanced air bag requirements set forth in S7 of FMVSS Koenigsegg projects a net loss of over
requirements, and would incur No. 108. $10.5 million over the period from
substantial economic hardship if it Koenigsegg stated its intention to 2006–2009. However, if the petition is
cannot sell vehicles in the U.S. after produce a second generation of the CCX granted, the company anticipates a
January 1, 2007. model by late 2009, which would be profit of nearly $3.5 million during that
Eligibility. Koenigsegg is a small, certified as complying with all same period. The petitioner argued that
privately-owned company with 30 full- applicable U.S. standards, including a denial of this petition could preclude
time staff members and several part- ones for head lamps (FMVSS No. 108, entry into the U.S. market until 2010 or
time employees. The company is a small S7) and advanced air bags (FMVSS No. later, a development which would have
volume manufacturer whose total 208, S14). Accordingly, the company is a highly adverse impact on the
production is less than 50 cars per year, requesting exemption from the company. According to the petitioner, if
having produced between four and eight enumerated requirements for the period
vehicles per year for the past four years. from January 1, 2007 through December discrepancies were discovered between the
According to the company, its sales 31, 2009. company’s Part 555 application and its supporting
revenues have averaged approximately Economic hardship. Publicly financial statements. These discrepancies were
$3.7 million per year. Koenigsegg is not available information and also the ultimately determined to be the result of the
affiliated with any other automobile company’s inadvertent error in failing to convert
financial documents submitted to Swedish kronas to U.S. dollars. Koenigsegg
manufacturer. NHTSA by the petitioner indicate that subsequently submitted two errata sheets to correct
According to its current forecasts,
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the CCX project will result in financial these errors (see Docket No. NHTSA–2006–25546–
Koenigsegg anticipates the following losses unless Koenigsegg obtains a 3); we note that these corrections did not
number of CCX vehicles would be substantively change the company’s underlying
temporary exemption.9 financial position as would affect the agency’s
imported into the United States, if its determination of economic hardship under 49 CFR
9 During the course of the agency’s consideration Part 555. This document utilizes the company’s
8 49 U.S.C 30113(b)(1). of Koenigsegg’s petition, certain minor updated figures denominated in U.S. dollars.

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the exemption request is not granted, 108-compliant headlamp for the CCX efforts must await the second generation
the company would face a ‘‘virtually have been unavailing, presumably due of the U.S. CCX.
insurmountable problem’’ in terms of to the ultra-low quantity of vehicles In short, Koenigsegg argued that,
funding and introducing a vehicle that involved.10 despite good faith efforts, limited
meets all applicable U.S. requirements, Instead, Koenigsegg decided to resources prevent it from bringing the
and it might ultimately drive the produce a headlamp for the CCX in- vehicle into compliance with all
company out of business because the house (homologated to European Union applicable requirements, and it is
rest of the world export market would requirements), utilizing a lighting beyond the company’s current
be inadequate to ensure profitability. source from a major lighting capabilities to bring the vehicle into full
Good faith efforts to comply. As stated manufacturer (Hella). The petitioner compliance until such time as
above, Koenigsegg initially planned to stated that the plexiglass lens of the additional resources become available
produce vehicles for the European, Mid- headlamp box is an integral part of the as a result of U.S. sales. With funding
East, and Far-East markets, but once it vehicle body and design. The company from sale of the current generation of
was determined in 2005 that entry into explained that despite its good faith U.S. CCX, the company expects that
the U.S. market was a necessary part of efforts, the headlamps for the CCX as yet additional development efforts could
its business plan, the company invested do not fully comply with the headlamp start in 2007, thereby allowing
over $3.2 million in research and requirements of FMVSS No. 108. production of a fully compliant vehicle
development and tooling for its U.S. Specifically, while the CCX headlamps in late 2009.
CCX program. In 18 months, the Koenigsegg argues that an exemption
have been designed to pass the geometry
company was able to bring the vehicle would be in the public interest. The
requirements of FMVSS No. 108, the
into compliance with all applicable petitioner put forth several arguments in
required aerodynamic lens will not pass
NHTSA regulations other than those favor of a finding that the requested
environmental testing and must be re-
which are the subject of the present exemption is consistent with the public
exemption petition, as well as the interest. Specifically, Koenigsegg argued
emissions regulations administered by According to Koenigsegg, the that the vehicle would be equipped with
the Environmental Protection Agency company did explore the possibility of a fully-compliant standard U.S. air bag
(EPA). developing an ‘‘interim U.S. headlamp’’ system. As to headlamps, Koenigsegg
In light of limited resources, the without a polycarbonate cover. stated that the CCX’s current headlamps
petitioner stated that it was necessary to However, that alternative was (designed to European specifications)
first develop the vehicle with a standard determined to be unworkable for the are very close to meeting the
U.S. air bag system (i.e., one meeting the following reasons. First, there were photometric requirements of FMVSS
requirements of FMVSS No. 208, other concerns that the absence of the No. 108, and consequently, they do not
than the advanced air bag polycarbonate lens ‘‘ruins the design of pose a safety risk. In all other areas,
requirements). The company the body,’’ a result which customers Koenigsegg emphasized that the CCX
reengineered the CCX with an Audi TT were deemed unlikely to accept and will comply with applicable FMVSSs.
driver air bag system and developed a which was expected to result in As additional bases for showing that
new passenger air bag system, a decreased sales.11 Second, the petitioner its requested exemption would be in the
$641,000 project. determined that an interim headlamp public interest, Koenigsegg offered the
According to its petition, Koenigsegg without a polycarbonate lens would following. The company asserted that
anticipates that two years will be have unacceptable aerodynamic effects there is consumer demand in the U.S.
needed to install an advanced air bag which would negatively impact vehicle for the CCX, and granting this
system on the CCX. Modifications performance. Third, there were application will allow the demand to be
would involve development of new concerns that by engineering an interim met, thereby expanding consumer
components, such as changes to the headlamp exclusively for the U.S. choice. The company also suggested
instrument panel design and market, the company would lose the another reason why granting the
incorporation of advanced air bag advantages associated with producing a exemption would not be expected to
installation components such as ‘‘world car’’ which can be introduced have a significant impact on safety,
mountings and brackets. Vehicle testing into any market, something of great specifically because the vehicle is
would also be conducted during that importance for an ultra-low-volume unlikely to be used extensively by
time. manufacturer. In addition, Koenigsegg owners, due to its ‘‘sporty (second car)
Furthermore, because the vehicle was determined that the cost of developing nature.’’ Koenigsegg reasoned that given
not originally designed for the U.S. the interim headlamp could not be its very low production volume and
market, it likewise did not have justified when amortized over the small customer base, the possibility of any
headlamps that comply with U.S. number of units involved. child being in the vehicle is extremely
requirements. According to Koenigsegg, In light of the above, the company small. Finally, Koenigsegg indicated
achieving compliance with those again stated that because of the cost and that the CCX incorporates advanced
requirements will necessitate a redesign length of this project, such headlighting engineering and certain advanced safety
of the headlamps. Koenigsegg explained features that are not required by the
that it has undertaken significant efforts 10 In an August 10, 2006 supplement to its FMVSSs, including racing brakes with
in pursuit of CCX compliance with the application (included in this docket, following the anti-lock capability and traction control.
headlamp requirements of FMVSS No. Koenigsegg petition), Koenigsegg stated that it may In addition, the company argued that
108, but problems have stemmed from have now identified a large lighting manufacturer
interested in developing a FMVSS No. 108- the CCX has enhanced fuel efficiency
the company’s inability to find a compliant headlighting system for the CCX, but it due to its highly aerodynamic design.
supplier. The petitioner stated that
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would be ‘‘at a price higher than the $500,000 thus

given the unique shape of the CCX, far estimated.’’ IV. Agency Decision on Koenigsegg
there is no available ‘‘off-the-shelf’’ 11 The petitioner asserted that such Petition
considerations were a factor in the agency’s earlier
headlamp system available, and efforts decision to grant a ‘‘waiver’’ for the headlamp of the
The following discussion provides
to find a supplier willing to undertake Lotus Elise (see 69 FR 5658 (Feb. 5, 2005)(Docket our decision regarding Koenigsegg’s
the project to produce a FMVSS No. No. NHTSA–2003–16341–5)). temporary exemption requests

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pertaining to the advanced air bag company must undertake redesign work with the relevant safety standard(s), as
requirement of FMVSS No. 208 and the to the vehicle’s instrument panel and well as the good faith efforts made by
headlamp requirements of FMVSS No. must incorporate a number of advanced the manufacturer to meet those
108. These exemption requests will be air bag installation components. requirements.
discussed separately, in order to Furthermore, the petitioner stated that it In the present case, we agree that it
examine the engineering challenges and would need an additional two years may be desirable for Koenigsegg to
the good faith efforts that the time to work with an advanced air bag incorporate a specialized headlamp for
manufacturer has made to meet the supplier (because very low volume a variety of reasons, including aesthetics
applicable requirements. However, manufacturers have had to wait for and aerodynamics. While we
because the agency’s analyses related to technology to ‘‘trickle down’’ from acknowledge that the company
economic hardship and the public larger manufacturers and suppliers), to undertook good faith effort to comply
interest are essentially the same for make the necessary changes, and to with the headlamp requirements of
these requested exemptions, a single conduct testing. Koenigsegg has made FMVSS No. 108 and that current
discussion of those matters is provided clear that such a prospect would pose a financial and production limitations
at the end of our decision. unique challenge to the company, due would make compliance impractical in
Advanced Air Bag Requirements. We to the high cost of development and its the near term, we expect that it would
are granting the Koenigsegg petition to extremely small sales volumes. be possible to achieve compliance with
be exempted from portions of the Based upon the information provided all applicable headlamp requirements
advanced air bag regulation required by by the petitioner, we understand that by the conclusion of the exemption
S14.2 (specifically S14.5.2, S15, S17, Koenigsegg made good faith efforts to period requested by Koenigsegg. We do
S19, S21, S23, and S25). The exemption bring the CCX into compliance with the not believe that the required
does not extend to the provision applicable requirements until such time modifications would be as complex as
requiring a belted 50th percentile male as it became apparent that there was no those associated with advanced air bags.
barrier impact test (S14.5.1(a)). In practicable way to do so. As a small Our reasoning is explained in further
addition to certifying compliance with specialty manufacturer, the company detail below.
S14.5.1(a), Koenigsegg must continue to had a difficult time in gaining access to
To start, we would note that
certify to the unbelted 50th percentile advanced air bag systems and
passenger vehicles generally are not
barrier impact test in force prior to components (which presumably reflects
designed to accommodate ‘‘off the
September 1, 2006 (S5.1.2(a)). We note restraint system suppliers’ initial focus
shelf’’ headlamp systems, but instead
that the unbelted sled test in S13 is an on meeting the needs of large volume
incorporate specialized headlamp
acceptable option for that requirement. manufacturers), so alternative means of
designs dedicated to the specific
The agency’s rationale for this decision compliance were not available as a
vehicle. Thus, developing a specialized
is as follows. practical matter. Small manufacturers
The advanced air bag requirements headlamp for the CCX may be
such as Koenigsegg are dependent upon
present a unique challenge because they necessary, but it is not an unusual
air bag suppliers for the engineering
would require Koenigsegg to undertake expertise and technology transfer event. Furthermore, as discussed below,
a major redesign of its vehicles, in order necessary for compliance with FMVSS we believe that it would be possible to
to overcome the engineering limitations No. 208. This further reduced the lead make modifications to the headlamp
of the CCX. Specifically, Koenigsegg time available for development. independent of changes to the bumper
would be required to undertake Furthermore, because Koenigsegg is system.
significant interior redesign in order to an independent automobile As noted above, there are several
upgrade the vehicle’s standard air bag manufacturer, there was no possibility reasons why we believe that Koenigsegg
system to an advanced air bag system. of technology transfer from a larger should install FMVSS No. 108-
While the petitioner was aware of the parent company that also manufactures compliant headlamps on the CCX as
new requirements for some time, its motor vehicles. Consequently, no viable rapidly as possible, even for the small
business plans did not initially involve alternatives remain. The petitioner is numbers involved here. First, one
sales in the U.S. However, Koenigsegg unable to redesign its vehicle in time to should not lose sight of the fact that
subsequently determined that it would meet the new advanced air bag headlamps are safety devices intended
be necessary to introduce the CCX into requirements that became effective on to illuminate the roadway and overhead
the U.S., thereby raising the problem of September 1, 2006 for small volume signs for the driver and to also make the
compliance with the advanced air bag manufacturers. vehicle visible to other drivers and
requirements. Once the determination Headlamp Requirements. We are pedestrians. Accordingly, styling
was made to seek entry into the U.S. granting the Koenigsegg petition to be characteristics of the headlamp are a
market in late 2005, Koenigsegg exempted from the headlamp secondary consideration. We further
undertook significant homologation requirements of FMVSS No. 108 (S7). note that the petitioner did not provide
efforts in order to meet applicable U.S. We understand that vehicle design any basis for its speculative arguments
requirements, but compliance with the involves numerous complex design, regarding decreased sales that would be
advanced air bag provisions of FMVSS engineering, and production challenges. expected to result from installation of an
No. 208 are beyond the company’s To some extent, small volume interim headlamp without a
capabilities at the present time. manufacturers may face difficulties in polycarbonate lens, but which would
Koenigsegg plans to utilize proceeds situations where they must wait for comply with FMVSS No. 108. The
from sales of the current generation of advanced technologies to ‘‘trickle- petitioner also provided no details as to
CCX vehicles to finance the down’’ from major suppliers (e.g., the negative impact on vehicle
development of a fully compliant advanced air bag systems), but we do performance that would be expected
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successor vehicle. not expect that every vehicle component from incorporation of an FMVSS No.
Koenigsegg explained the main or system would fall in that category. 108-compliant interim headlamp design
engineering challenges precluding Accordingly, the agency will carefully or support for its contention that such
incorporation of advanced air bag into consider the modifications to the a headlamp would ‘‘ruin the design of
the CCX at this time, as follows. The vehicle necessary to achieve compliance the body.’’

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Likewise, we disagree with the points) could negatively impact the economic feasibility, the petitioner’s
petitioner’s contention that construction vehicle’s forward illumination and financial submissions demonstrated that
of an FMVSS No. 108-compliant increase glare for oncoming drivers. if its requested temporary exemptions
headlamp would deprive the Choosing to grant Koenigsegg’s are granted, it anticipates profits of
manufacturer of the advantages requested exemption from FMVSS No. nearly $3.5 million over the period from
associated with building a ‘‘world car.’’ 108’s headlamp requirement required 2006–2009, so a portion of the profits
On the contrary, developing a headlamp considerable deliberation within the expected to be generated during the first
for the CCX that meets the requirements agency, and it was only after careful year of the exemption period (nearly
of the Economic Commission for Europe balancing of the manufacturer’s good $2.5 million in 2007) could be
(ECE) regulations, as well as FMVSS No. faith efforts, the small number of channeled into headlamp development.
108, provides the opportunity to build vehicles involved, and the potential Economic Hardship. We now turn to
the CCX as a world car. As the safety consequences that we decided to our analysis more broadly to the issues
Koenigsegg petition suggests, these two do so. Because we are hesitant to set a of the economic hardship facing the
sets of regulations are quite similar, precedent in terms of granting petitioner and the impact on motor
with a primary difference being the temporary exemptions for vehicles vehicle safety surrounding the requested
requirement in FMVSS No. 108 for whose headlamps do not meet the temporary exemptions from the
photometric test points intended to environmental requirements of the advanced air bag and headlamp
ensure illumination of overhead signs. standard, we would state that the requirements discussed above. After
However, it is possible to manipulate agency will carefully examine and review of the income statements
the headlamp’s beam pattern to achieve decide such petitions on a case-by-case provided by the petitioner, the agency
compliance with the photometric basis. notes that the company has faced
requirements for both sets of In further support of expediently ongoing financial difficulties,
regulations. achieving compliance with the experiencing net operating losses of
In support of its request for a headlamp requirements of FMVSS No. about $1.6 million over the past three
temporary exemption from the 108, we understand from the petition years (2003–2005). The company did
headlamp requirements of FMVSS No. that Koenigsegg now has identified a turn a small profit in 2003 (about
108, Koenigsegg argued that the agency large lighting manufacturer willing to $58,000) and a larger profit in 2004
granted a similar exemption to Group develop a FMVSS No. 108-compliant (about $722,000), but these were
Lotus Plc (Lotus) (see 69 FR 5658 (Feb. headlighting system for the CCX. Having overwhelmed by an over $2.4 million
5, 2004) (Docket No. NHTSA–2003– identified such a supplier, we would loss in 2005. These figures suggest that
16341–5)). As discussed in that notice, expect this arrangement to accelerate the company’s current profitability
Lotus made many of the same Koenigsegg’s efforts to develop a situation is somewhat precarious. If the
arguments that Koenigsegg is currently FMVSS No. 108-compliant headlamp. petitioner’s request for a temporary
making regarding engineering In sum, the information supplied by exemption is denied, the company will
challenges, aesthetic concerns, loss of the petitioner demonstrates that the be precluded from selling any vehicles
performance, and decreased sales. company to date has made good faith in the U.S. market at this time. The
However, as compared to the efforts to achieve compliance with the resulting loss of sales would cause
Koenigsegg headlamp, there were headlamp requirements of FMVSS No. substantial economic hardship within
significant differences in the headlamp 108 and that it would not be the meaning of the statute, potentially
for the Lotus Elise, which supported the economically or technically feasible to amounting to the difference between a
agency’s decision to grant a temporary meet these requirements until late 2009. profit of nearly $3.5 million (if an
exemption for nearly three years. We are also cognizant of the very small exemption is granted) and a loss of over
Specifically, Lotus stated that not only number of vehicles at issue here, many $10.5 million (if an exemption is
were its headlamp’s photometrics very of which will probably have limited denied) over the period from 2006–
close to the requirements of FMVSS No. road use. For these reasons, we have 2009. Ultimately, denial of the
108, but the lamp also had been decided to grant Koenigsegg a temporary exemption request could preclude
subjected to relevant environmental exemption from the headlamp development of a U.S.-compliant
testing and exhibited a strong warranty requirements of FMVSS No. 108 vehicle and jeopardize the continued
record for this aspect of the vehicle. through December 31, 2009. However, existence of Koenigsegg.
In contrast, Koenigsegg stated that the we urge the company to achieve full According to Koenigsegg, absent the
CCX’s current headlamps are designed compliance with FMVSS No. 108 exemption, the company anticipates
to pass the geometry requirements of earlier, to the maximum extent possible. being unable to enter the U.S. market
FMVSS No. 108, but they would not For the reasons discussed above, we until 2010 or later. However,
pass the environmental requirements of believe that this period should provide Koenigsegg’s problems would be
the standard.12 Thus, even if the CCX sufficient time to engage with the compounded without its requested
headlamps were to meet all the identified lighting manufacturer and to temporary exemption, because it needs
photometric requirements of the conduct any necessary retooling of the revenue from sales of the CCX over
standard at the time of vehicle components related to the headlamps. the next two years to finance
certification, performance could We also believe that it would be development of a fully compliant
possible to modify the CCX’s headlamps vehicle for delivery to the U.S. market.
deteriorate if the lenses on those
in a manner that would not change the Granting the exemption will allow
headlamps could not meet the
shape of the outer lens; accordingly, it Koenigsegg to earn the resources
applicable weathering, vibration, or
should be possible to undertake necessary to bridge the gap in terms of
abrasion requirements. Such degraded
headlamp and bumper modifications development of a successor vehicle for
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performance (resulting from the lamp’s

independently. In addition, we note that the current generation of the CCX that
failure to meet relevant photometric test
achieving compliance with FMVSS No. meets all U.S. requirements.
12 It is unclear from the petition whether the CCX 108 would benefit the company by While some of the information
headlamps would meet all applicable geometric and allowing the CCX to attain ‘‘world car’’ submitted by Koenigsegg has been
photometric requirements in Standard No. 108. status sooner. Finally, in terms of granted confidential treatment and is

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17614 Federal Register / Vol. 72, No. 67 / Monday, April 9, 2007 / Notices

not detailed in this document, the label containing a statement that the requirements of FMVSS No. 108,
petitioner made a comprehensive vehicle conforms to all applicable Lamps, Reflective Devices, and
showing of its good faith efforts to Federal motor vehicle safety standards Associated Equipment, would cause
comply with the requirements of S14.2 in effect on the date of manufacture substantial economic hardship to a
of FMVSS No. 208 and S7 of FMVSS ‘‘except for Standard Nos. [listing the manufacturer that has tried in good faith
No. 108 and detailed engineering and standards by number and title for which to comply with the standard. We further
financial information demonstrating an exemption has been granted] conclude that granting of an exemption
that failure to obtain the exemption exempted pursuant to NHTSA from these provisions would be in the
would cause substantial economic Exemption No. ____.’’ This label notifies public interest and consistent with the
hardship. Specifically, the petitioner prospective purchasers about the objectives of traffic safety.
provided the following: exemption and its subject. Under In accordance with 49 U.S.C.
1. Chronological analysis of § 555.9(c), this information must also be 30113(b)(3)(B)(i), the Koenigsegg CCX is
Koenigsegg’s efforts to comply, showing included on the vehicle’s certification granted NHTSA Temporary Exemption
the relationship to the rulemaking label. No. EX 06–10, from S14.5.2, S15, S17,
history of the advanced air bag We note that the text of § 555.9 does S19, S21, S23, and S25 of 49 CFR
requirements. not expressly indicate how the required 571.208 and from S7 of 49 CFR 571.108.
2. Itemized costs of each component statement on the two labels should read The exemption is effective immediately
that would have to be modified in order in situations where an exemption covers and continues in effect through
to achieve compliance. part but not all of a Federal motor December 31, 2009.
3. Discussion of alternative means of vehicle safety standard. Specifically in
Issued on: March 29, 2007.
compliance and reasons for rejecting the case of FMVSS No. 208, we believe
Nicole R. Nason,
these alternatives. that a statement that the vehicle has
4. A detailed OEM price-volume been exempted from Standard No. 208 Administrator.
quotation from an advanced air bag generally, without an indication that the [FR Doc. E7–6549 Filed 4–6–07; 8:45 am]
supplier, including detailed costs for the exemption is limited to the specified BILLING CODE 4910–59–P
necessary components for each stage of advanced air bag provisions, could be
the development program. misleading. A consumer might
5. Explanations as to why components incorrectly believe that the vehicle has DEPARTMENT OF TRANSPORTATION
from newer, compliant vehicle lines been exempted from all of Standard No.
could not be borrowed. National Highway Traffic Safety
208’s requirements. Moreover, we
6. Corporate income statements and Administration
believe that the addition of a reference
balance sheets for the period from 2002– to such provisions by number without Petition to Modify an Exemption of a
2005, and projected income statements an indication of its subject matter would Previously Approved Antitheft Device;
for the period from 2006–2009 be of little use to consumers, since they General Motors Corporation
(analyzing alternative scenarios in would not know the subject of those
which the petition is granted and specific provisions. For these reasons, AGENCY: National Highway Traffic
denied). we believe the two labels should read in Safety Administration, Department of
We believe that this exemption will relevant part, ‘‘except for S14.5.2, S15, Transportation (DOT).
have negligible impact on motor vehicle S17, S19, S21, S23, and S25 (Advanced ACTION: Grant of a petition to modify an
safety because of the limited number of Air Bag Requirements) of Standard No. exemption from the Parts Marking
vehicles affected (approximately 85 to 208, Occupant Crash Protection, Requirements of a previously approved
be imported for the duration of the exempted pursuant to * * *’’. We note antitheft device.
requested three-year exemption). that the phrase ‘‘Advanced Air Bag
Furthermore, as discussed in previous Requirements’’ is an abbreviated form of SUMMARY: On August 15, 1989, the
decisions on temporary exemption the title of S14 of Standard No. 208. National Highway Traffic Safety
applications, the agency believes that Similarly, regarding the temporary Administration (NHTSA) granted in part
the public interest is served by affording exemption for the CCX’s headlamps, we General Motors Corporation’s (GM)
consumers a wider variety of motor believe that the two labels should read petition for an exemption in accordance
vehicle choices. in relevant part, ‘‘except for S7 of with § 543.9(c)(2) of 49 CFR Part 543,
We also note that the CCX features Standard No. 108, Lamps, Reflective Exemption from the Theft Prevention
several advanced ‘‘active’’ safety Devices, and Associated Equipment, Standard for the Chevrolet Camaro
features. These features are listed in the exempted pursuant to * * *.’’ We vehicle line. The exemption was granted
petitioner’s application.13 While the believe it is reasonable to interpret because the agency determined that the
availability of these features is not § 555.9 as requiring this language. antitheft device proposed to be placed
critical to our decision, it is a factor in In sum, the agency concludes that on the line as standard equipment was
considering whether the exemption is in Koenigsegg has demonstrated good faith likely to be as effective in reducing and
the public interest. effort to bring the CCX into compliance deterring motor vehicle theft as
We note that, as explained below, with the advanced air bag requirements compliance with the parts-marking
prospective purchasers will be notified of FMVSS No. 208 and the headlamp requirements of the Theft Prevention
that the vehicle is exempted from the requirements of FMVSS No. 108 and has Standard. On November 10, 2006, GM
specified advanced air bag requirements also demonstrated the requisite petitioned the agency to amend the
of Standard No. 208 and the headlamp financial hardship. Further, we find exemption previously granted for the
requirements of Standard No. 108. these exemptions to be in the public Chevrolet Camaro vehicle line. NHTSA
Under § 555.9(b), a manufacturer of an interest. is granting in full GM’s petition to
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exempted passenger car must affix In consideration of the foregoing, we modify the exemption because it has
securely to the windshield or side conclude that compliance with the determined that the modified antitheft
window of each exempted vehicle a advanced air bag requirements of device to be placed on the Chevrolet
FMVSS No. 208, Occupant Crash Camaro line as standard equipment will
13 See page 16 of Koenigsegg’s petition. Protection, and the headlamp also likely be as effective in reducing

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