Denial of Petition for Rulemaking; Federal Motor Vehicle Safety Standards

Background on Existing Requirements

NHTSA issued a final rule on August 18, 1995, amending Federal Motor Vehicle Safety Standard No. 201, Occupant Protection in Interior Impact, to require passenger cars, and trucks, buses and multipurpose passenger vehicles with a gross vehicle weight rating of 4,536 kilograms (10,000 pounds) or less, to provide head protection during a crash when an occupant's head strikes the upper interior, i.e., the pillars, side rails, headers, and the roof of the vehicle. (60 FR 43041) This final rule, which mandated compliance with the new requirements beginning on September 1, 1998, significantly expanded the scope of Standard 201. Previously, the standard applied to the instrument panel, seat backs, interior compartment doors, arm rests and sun visors. To determine compliance with the upper interior impact requirements, the final rule added procedures for a new in-vehicle component test in which a Free Motion Headform (FMH) is fired at certain target locations on the upper interior of a vehicle at an impact speed of 24 km/h (15 mph). Data collected from a FMH impact are translated into a value known as a Head Injury Criterion (HIC) score. The resultant HIC must not exceed 1000. The standard, as further amended on April 8, 1997 (62 FR 16718), provides manufacturers with four alternate phase-in schedules for complying with the upper interior impact requirements. First, as set forth in S6.1.1, manufacturers may comply by having the following percentages of their production meet the upper interior impact requirements: 10 percent of production on or after September 1, 1998 and before September 1, 1999; 25 percent of production on or after September 1, 1999 and before September 1, 2000, 40 percent of production on or after September 1, 2000 and before September 1, 2001, 70 percent of production on or after September 1, 2001 and before September 1, 2002, and 100 percent of production after September 1, 2002. Second, an alternative schedule set forth in S6.1.2 provides that manufacturers may comply by meeting the following phase-in schedule: 7 percent of the vehicles manufactured on or after September 1, 1998 and before September 1, 1999; 31 percent of vehicles manufactured on or after September 1, 1999 and before September 1, 2000; 40 percent of vehicles manufactured on or after September 1, 2000 and before September 1, 2001; 70 percent of vehicles manufactured on or after September 1, 2001 and before September 1, 2002; and 100 percent of all vehicles manufactured after September 1, 2002. Third, under the phase-in schedule set forth in S6.1.3, manufacturers need not produce any complying vehicles before September 1, 1999. However, all vehicles produced on or after that date must comply. Fourth, under the phase-in schedule set forth in S 6.1.4 that applies only to final stage manufacturers, no vehicle produced before September 1, 2002, need comply. However, all vehicles manufactured on or after that date must comply.

The August 14, 1996 Petition for Rulemaking

The Coalition of Small Volume Automobile Manufacturers (COSVAM) 1 submitted a petition for rulemaking on August 14, 1996 seeking to amend Standard 201 so that Small Volume Manufacturers (SVMs) would not be required to produce any cars meeting the upper interior head impact protection requirements between September 1, 1998 and September 1, 2004. Under the amendments requested by COSVAM in its petition, single stage SVMs would not have had to produce any vehicles meeting the upper interior impact requirements until September 1, 2004. On and after that date, all SVMs would have had to meet those requirements. ---------------------------------------------------------------------------

\1\ COSVAM consists of 19 manufacturers, each of which produces fewer than 5000 vehicles world wide each year. ---------------------------------------------------------------------------

The December 18, 1997 Petition for Rulemaking

On November 5, 1997, COSVAM withdrew its August 14, 1996 petition and submitted a new petition on December 18, 1997. This second petition asked that the agency consider three possibilities: • revising an existing phase-in schedule generally available to all manufacturers, • adopting an additional alternative phase-in that might either be generally available to all manufacturers or available to SVMs only, or • adopting an additional alternative phase-in available to SVMs only. More specifically, COSVAM suggested first that the agency revise an existing schedule found in S6.1.3 of the Standard (known as phase-in schedule #3). This schedule specifies that manufacturers need not produce any vehicles that comply with the head impact protection provisions of Standard 201 in the period after August 31, 1998 and before September 1, 1999 if all the vehicles they produce on or after September 1, 1999 comply with the head impact protection requirements. COSVAM suggested that this schedule be modified so that manufacturers need not produce any complying vehicles before September 1, 2000 if all the vehicles they produce after September 1, 2000 comply. Second, COSVAM suggested that the agency consider creating an additional phase-in schedule, which COSVAM suggested might only apply to SVMs. Under this schedule, five percent of a manufacturer's production for the time period between September 1, 1998 and August 31, 1999 must comply with the head impact requirements, fifteen percent of production between September 1, 1999 and August 31, 2000 must comply, fifty percent of production between September 1, 2000 and August 31, 2001 must comply, seventy percent of production between September 1, 2001 and August 31, 2002 must comply and all production after September 1, 2002 must comply. Third, COSVAM asked that NHTSA consider creating a phase-in expressly for single stage SVMs. Such a phase-in would delay compliance for these manufacturers until on or after September 1, 2004. For the purposes of determining which companies are SVMs and thus eligible to elect to comply with this alternative phase-in, COSVAM suggested that NHTSA define an SVM as ``any automobile producer that either manufactures 10,000 or fewer vehicles in the United States or imports fewer than 10,000 vehicles into the U.S.'' In suggesting this definition, COSVAM contended that setting a limit of 10,000 vehicles produced in, or imported into, the U.S. is consistent with existing statutory provisions relating to exemption from fuel economy and safety standards. COSVAM offered several arguments in support of its requests. First, because

of their limited resources, SVMs do not have the ability to fund substantial redesigns of vehicles or their components. In addition, the financial burden associated with redesign is exacerbated by the limited production of SVMs, whose low volume makes it harder to recoup costs. COSVAM also contended that the impact of a phase-in, regardless of the percentages involved, is greater on SVMs. This is because such manufacturers frequently produce only one or two different models and these models are often produced over many model years. As a result, lead times are often very long. Design changes and improvements cannot be integrated into a new or redesigned model, but must be integrated into existing products. As an example, COSVAM provided information relating to the Lotus Esprit, whose basic body style has remained unchanged for 20 years, and the severe difficulties that the manufacturer would face in attempting to bring this design into compliance with the head protection requirements. Lotus estimated that complying with upper interior impact requirements would require an expenditure of 348,000 (approximately $585,197 US Dollars), due in large part to the necessity of redesigning the vehicle pillars and roof. Based on these costs, and the fact that the company was planning to replace the Esprit platform sometime after 2000, Lotus indicated that it would not be cost-effective for the company to produce an Esprit model that would meet those requirements. Therefore, according to COSVAM, if a substantial redesign were required, an SVM might have to produce an entirely new model. The low production volume of these manufacturers also results in disproportionately high costs. These costs, according to COSVAM, not only relate to production, but also to development and testing. This results from an SVM's need to perform compliance testing with fewer vehicles produced and fewer opportunities to distribute such testing costs through increased prices. COSVAM also stated that in creating a separate phase-in schedule for final stage manufacturers, NHTSA recognized that such manufacturers have little control over the year of the phase-in in which a particular vehicle will be certified as meeting the new requirements. SVMs, in COSVAM's view, suffer from similar lack of control over their ability to produce vehicles with interiors that will meet Standard 201. COSVAM submitted that just as final stage manufacturers have no control over when their suppliers will provide them with compliant interiors in incomplete vehicles, SVMs have no control over when suppliers of safety systems will be willing to meet the needs of the SVM market. This problem is particularly acute, according to COSVAM, because safety system suppliers will only meet the needs of SVMs after they have addressed those of their larger customers. The COSVAM petition also indicated that, as evidenced by requests for interpretation filed with NHTSA by the Association of International Automobile Manufacturers (AIAM) and a petition for reconsideration filed by the American Automobile Manufacturers Association (AAMA), a number of technical issues relating to compliance with Standard 201 remained unresolved. According to COSVAM, the existence of these unresolved technical issues illustrates the difficulties inherent in complying with Standard 201. The petitioner argued that the difficulties are more acute for small manufacturers because of their limited resources. COSVAM also suggested that the requested phase-in would be consistent with regulatory reform and recent legislative initiatives seeking to ease regulatory burdens on small businesses. COSVAM contended that many of its members are small businesses and that the requested SVM phase-in would help to minimize regulatory burdens on these small businesses. Finally, COSVAM indicated that providing a special phase-in for SVMs would be consistent with other agency actions. In particular, COSVAM cited a recent change in the requirements for compliance with Standard 208's seat belt comfort and fit provisions for trucks with a gross vehicle weight rating (GVWR) between 3,402 and 4,536 kilograms (7,500 and 10,000 lbs.). In that instance, NHTSA granted a petition for rulemaking to changing a compliance date from September 1, 1997, to January 1, 1998, in response to a petition filed by a manufacturer indicating that a new product line incorporating the required feature would not be in production until January 1, 1998. Based on the relatively small impact on safety that would result from a four month change in the compliance date, NHTSA granted the petition. COSVAM argues that its request for a change in the Standard 201 phase-in requirements is similar in that the existing phase-in would impose a severe burden on its members and that the safety impact would be minimal, due to the low U.S. sales of vehicles manufactured by SVMs.

Agency Analysis

NHTSA is well aware that compliance with safety standards may involve different burdens on manufacturers, depending on their size, technical sophistication and resources. The agency acknowledges that conforming with and adapting to increased requirements may be more difficult for manufacturers that have limited product lines and produce a relatively small number of vehicles in any given model year. However, the agency believes it has given due consideration to the difficulties faced by smaller manufacturers. In promulgating the August 1995 final rule, NHTSA created an alternative phase-in schedule for manufacturers with few vehicle lines. That phase-in allows these manufacturers to delay compliance during the first year of the phase-in, which begins on September 1, 1998. Manufacturers selecting this option, however, must certify all vehicles manufactured on or after September 1, 1999 as meeting the new requirements. Those manufacturers that chose this option had four years of lead time to meet the new requirements. This four-year lead time is, in the agency's view, sufficient to meet the needs of smaller manufacturers. The agency notes that one purpose of a phase-in is to enable vehicle manufacturers the opportunity to decide which models to redesign first. As a practical matter, full-line manufacturers were required to redesign at least one model to meet the new requirements by September 1, 1998. The alternative phase-in designed for limited line manufacturers provided a full additional year to meet the new requirements. In seeking an alternative phase-in, COSVAM contends that such schedules would be appropriate because SVMs face the same challenges as final stage manufacturers. The agency has given specific consideration to final stage manufacturers 2 in Standard 201 and other standards for which phase-ins have been employed. In the vast majority of cases, final stage manufacturers are provided with an incomplete vehicle that has been certified by its manufacturer as meeting applicable standards. Moreover, a final stage manufacturer may need to use one

particular model for its purposes. Final stage manufacturers must, therefore, rely on incomplete vehicle manufacturers to provide a complying product. If this model is one that the incomplete vehicle manufacturer chooses to redesign last, final stage manufacturers and alterers may be forced to reduce or even suspend production and wait until the end of a phase-in to obtain a complying incomplete vehicle that they can use. ---------------------------------------------------------------------------

\2\ The term ``final stage manufacturer'' is defined at 49 CFR 568.3 as ``a person who performs such manufacturing operations on an incomplete vehicle that it becomes a completed vehicle.'' An ``incomplete vehicle'' is defined in that section as ``an assemblage consisting, at a minimum, of frame and chassis structure, power train, steering system, suspension system, and braking system * * * that requires further manufacturing operations * * * to become a completed vehicle.'' ---------------------------------------------------------------------------

Unlike final stage manufacturers, who are dependent upon the incomplete vehicle manufacturers providing them with a particular complying incomplete vehicle, single stage SVMs need not wait for another manufacturer to produce a particular model that meets Standard 201. Further, SVMs have greater control over the configuration and design of the vehicles they produce. COSVAM's argument implies that such control is irrelevant; it submits that its members cannot obtain the components or materials needed to bring vehicles into compliance. While alleging that its members cannot procure the required materials or components, COSVAM has not submitted any evidence indicating that this is so. One means of compliance is the addition of padding to interior surfaces. In developing the August 18, 1995 final rule (60 F.R. 43041) adding requirements for upper interior impact protection requirements to Standard No. 201, NHTSA performed an analysis of the effect of different padding thicknesses on existing passenger cars and LTVs (i.e., light trucks, vans and sport utility vehicles) and determined that all of the sampled passenger cars and LTVs could meet the 19 km/h (12 mph) impact speed with one-half inch of additional padding on the A-pillars, side rails and B-pillars. Since the vehicles examined by the agency and designed prior to the August 1995 amendments to Standard 201 would require additional padding of a half inch or less to provide adequate protection in a 19 km/h (12 mph) FMH impact, NHTSA believes that the use of additional padding may provide a means for meeting the 24 km/h (15 mph) impact requirement set forth in the August 1995 final rule. The procurement and application of such padding, is not, in NHTSA's view, a task which would necessitate the additional lead time requested by COSVAM. Moreover, there are other means of compliance. Manufacturers may choose whatever means they wish to meet the upper interior head protection requirements of Standard 201. NHTSA observes that many manufacturers are meeting those requirements by applying energy absorbing ribs and other structures on the under or rear side of plastic trim components. This adaptation of existing designs has allowed manufacturers to comply without abandoning basic trim concepts and materials that have been in use for many years. The petitioner also contends that its member companies would face financial hardship in complying with the existing phase-in. While the per vehicle cost of any required redesign will be higher for SVMs, many of these manufacturers are in a position to pass these costs on to the purchasers of these vehicles. At the time of filing the petition at issue, COSVAM represented 19 vehicle manufacturers and suppliers. Many COSVAM member companies are specialty or luxury car manufacturers such as AM General, Rolls-Royce, Maserati, Lamborghini, Ferrari, and Aston Martin. While it is true that many of these manufacturers sell a small number of cars in the United States each year, many of these vehicles are quite sophisticated, particularly those in the high performance market segment. Given the existing prices of these vehicles, which indicates that their target markets are not particularly price sensitive, NHTSA believes that additional costs associated with compliance may be addressed by price increases. Several luxury and higher priced performance cars have been, or will soon be, equipped with advanced dynamic head protection systems such as side air bags to cover the A/B-pillars and front side rails. It is anticipated that a number of large automobile manufacturers, especially several European companies, will introduce advanced dynamic systems to certain vehicle models. It appears that some advanced dynamic systems are already available, well before the deadline of one of the optional phase-in schedules already available to single stage SVMs--September 1, 1999. NHTSA believes, and COSVAM has not submitted any evidence to the contrary, that single stage manufacturing SVMs could have adopted one of the advanced dynamic systems being shown by suppliers of large vehicle manufacturers. COSVAM sought to invoke as precedent a prior instance in which a manufacturer successfully petitioned the agency to amend the phase-in requirements for Standard 208 for a certain class of trucks. In that particular case, the petitioner alleged that it would be introducing a new model designed to meet new safety belt comfort and fit requirements on January 1, instead of September 1 of the preceding year. In its analysis of that earlier petition, NHTSA noted that the class of vehicle involved, trucks with a gross vehicle weight rating of 8,500 to 10,000 pounds, was less likely to be driven or used by occupants who would benefit from improvements in safety belt comfort and fit. In changing the phase-in requirements for this class of vehicle, the agency's action resulted in a four month delay in the implementation of the comfort and fit requirements. In that case, both the delay and the safety consequences of that delay were minimal. The vehicles involved were still required to have safety belts that provided the same degree of protection in a frontal impact as belts used in other vehicles. Any reduction in safety was limited solely to the number of occupants who may have been deterred from using safety belts because they were in a vehicle produced during that four month period which did not meet the comfort and fit requirements. In contrast, one alternative compliance schedule sought by COSVAM would exclude all SVMs from any requirement to produce vehicles complying with the upper interior head impact protection requirements of Standard 201 until September 1, 2004. Under that suggested compliance schedule, single stage SVMs would not be required to meet the upper interior head protection requirements until nine years after promulgation of the final rule and six years after any other manufacturers, except final stage manufacturers, began producing conforming vehicles. This additional length of time presents an additional risk to safety, particularly in light of the fact that, unlike the comfort and fit requirements which mandated refinement of an existing safety measure, the upper interior head impact protection requirements require manufacturers to introduce completely new safety features. Another alternative compliance schedule suggested by COSVAM would also have a more significant impact on safety than the modification of the comfort and fit compliance schedule it cites in support of its petition. In one proposal offered by COSVAM, existing phase-in schedule #3, found at S6.1.3 of Standard 201, would be modified to provide all manufacturers with an additional year during which they would not have to produce vehicles meeting the requirements. Phase-in #3 currently provides that manufacturers do not have to produce any vehicles meeting the requirements during the period from September 1, 1998 to August 31, 1999, provided that all vehicles produced on or after September

1, 1999 comply. The COSVAM petition requests that NHTSA modify this schedule so that manufacturers need not produce vehicles meeting the requirements during the period from September 1, 1998 to August 31, 2000, provided that all production after September 1, 2000 complies. The agency observes that COSVAM's proposed extension of the compliance schedule under Phase-in #3 by one year, thereby delaying implementation of measures to reduce head injuries in crashes, would have a significant impact on safety. COSVAM's December 1997 submission also requested that the agency add a new phase-in schedule to Standard 201. This new phase-in would specify that five percent of a manufacturer's production for the time period between September 1, 1998 and August 31, 1999 must comply with the upper interior head impact requirements, 15 percent of production between September 1, 1999 and August 31, 2000 must comply, 50 percent of production between September 1, 2000 and August 31, 2001 must comply, 70 percent of production between September 1, 2001 and August 31, 2002 must comply, and all production after September 1, 2002 must comply. NHTSA notes that this suggested phase-in schedule seems ill suited to provide COSVAM with the relief that it argues that its members must have. COSVAM's principal arguments are that SVMs face difficulties in redesigning vehicles, lack flexibility because they have limited numbers of vehicle lines and are unable to procure materials and technology needed for compliance because suppliers will meet the needs of larger manufacturers first, before attending to small manufacturers. The alternative offered here differs from existing phase-in schedules #1 and #2 by requiring that smaller percentages of production comply in the first two years with a larger percentage complying in the third year. In the fourth year and beyond, the proposed phase-in is identical to existing alternatives #1 and #2. Such a phase-in, while offering relaxed requirements for the first two years, seems ill suited to accommodate manufacturers that allegedly cannot obtain the parts or technology required for compliance at the same time that larger manufacturers can. It is also not clear how such a schedule would better meet the needs of producers with few vehicle lines than the existing schedules do. The most specific information supplied by the petitioner, relating to the Lotus Esprit, indicates that the alternative suggested in this instance would offer no relief whatsoever. COSVAM has not offered any data or arguments directly or indirectly supporting this particular option. It is therefore difficult for the agency to consider it, particularly when the relaxed requirements would entail additional safety risks in the first two years and an overall net loss in safety. In support of the phase-in alternatives suggested in its petition, COSVAM also argued that the existence of certain testing and compliance questions, evidenced by inquiries by the AAMA and AIAM, illustrate the technical difficulties involved in complying with the upper interior head protection requirements. According to COSVAM, problems posed by these issues, and similar technical questions, place a disproportionate burden on small manufacturers because of their limited resources. NHTSA begins by noting that it is not uncommon for new FMVSS requirements to produce technical questions. While the agency notes that the upper interior head impact requirements have produced, and will undoubtedly continue to produce, technical questions relating to testing and compliance that must be resolved by manufacturers or the agency, NHTSA notes that some of the issues have already been resolved. Further, the questions raised by those groups, and others, have generally related to interpretation of the upper interior head impact requirements and the associated test procedures. These issue are, in NHTSA's view, not issues that a larger manufacturer can more readily resolve than a small one could. NHTSA also observes that if an SVM encounters special difficulties in developing and/or adopting a safety countermeasure, it may choose to file a petition for exemption in accordance with the criteria and procedures outlined in Part 555--Temporary Exemption From Motor Vehicle Safety Standards. NHTSA is authorized by 49 U.S.C. 30113 to exempt, on a temporary basis, a manufacturer whose total yearly production does not exceed 10,000 motor vehicles, from any FMVSS that would cause the manufacturer substantial economic hardship should it be required to meet it immediately. The application procedures for such an exemption are contained in 49 CFR 555.5 and 555.6(a). The applicant must not only show hardship, but also that it has tried in good faith to meet the standard from which it requests relief. If, as COSVAM asserts, compliance with Standard 201 would create substantial financial hardship for its member companies, those companies would have the option of applying for an exemption. NHTSA also notes that if an SVM is unable to procure safety equipment from suppliers, as COSVAM alleged its members will, because such suppliers give priority to addressing the needs of larger customers, the efforts of a manufacturer to secure this safety equipment may well be considered as evidence of a good faith effort to meet a standard from which the manufacturer seeks exemption.

Conclusion

In accordance with 49 CFR part 552, this completes the agency's review of the petition. The agency has concluded both that there is no reasonable possibility that the actions requested by the petitioner would be taken at the conclusion of a rulemaking proceeding and that the concerns alleged by COSVAM do not warrant the expenditure of agency resources to conduct a rulemaking proceeding. Accordingly, NHTSA denies COSVAM's petition.

Authority: 49 U.S.C. 30103, 30162; delegation of authority at 49 CFR 1.50 and 501.8.

Issued: February 5, 1999. Stephen R. Kratzke, Acting Associate Administrator for Safety Performance Standards. [FR Doc. 99-3294 Filed 2-9-99; 8:45 am] BILLING CODE 4910-59-P