[Federal Register: February 2, 2007 (Volume 72, Number 22)]
[Notices]
[Page 5099-5103]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02fe07-104]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
[Docket No. NHTSA-2006-25592]
Morgan Motor Company Limited; Denial of Application for a
Temporary Exemption From Air Bag Provisions of Federal Motor Vehicle
Safety Standard No. 208
AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).
ACTION: Denial of application for a temporary exemption from air bag
provisions of Federal Motor Vehicle Safety Standard No. 208, Occupant
Crash Protection.
-----------------------------------------------------------------------
SUMMARY: This notice denies the petition of Morgan Motor Company,
Limited (Morgan) for a temporary exemption from the air bag
requirements of Federal Motor Vehicle Safety Standard (FMVSS) No. 208,
[[Page 5100]]
Occupant Crash Protection, for the Morgan ``traditional roadster'' from
September 2006 through September 2009. The basis of the application is
that compliance would cause substantial economic hardship to a
manufacturer that states it has tried in good faith to comply with the
standard. NHTSA notes that Morgan has known since 1997 that it could
not procure more air bags, but provided no evidence of attempts to
secure an alternate source of air bags.
In accordance with the requirements of 49 U.S.C. 30113(b)(2), we
published a Federal Register document on August 15, 2006 announcing
receipt of Morgan's application.
FOR FURTHER INFORMATION CONTACT: Ms. Dorothy Nakama in the Office of
Chief Counsel, NCC-112, (Phone: 202-366-2992; Fax 202-366-3820).
SUPPLEMENTARY INFORMATION:
I. Background
Founded in 1909, Morgan is a small, privately-owned vehicle
manufacturer producing approximately 600 specialty sports cars per
year.\1\ Morgan manufactures several models, but at present, only sells
the Aero 8 in the U.S. Morgan intended to produce a vehicle line
specific to the U.S. market, with Ford supplying the engine and
transmission. However, for technical reasons, the project did not come
to fruition, and Morgan temporarily stopped selling vehicles in the
U.S. in 2004. In May 2005, Morgan obtained a temporary exemption from
this agency's bumper standard and began selling the Aero 8 in the U.S.
---------------------------------------------------------------------------
\1\ A manufacturer is eligible to apply for a hardship exemption
if its total motor vehicle production in its most recent year of
production does not exceed 10,000, as determined by the NHTSA
Administrator (15 U.S.C. 1410(d)(1)).
---------------------------------------------------------------------------
On July 12, 2006 (71 FR 39386), NHTSA published a notice of receipt
of five applications for temporary exemptions from the advanced air bag
requirements \2\ of Federal Motor Vehicle Safety Standard (FMVSS) No.
208, Occupant Crash Protection. Among these petitions was an October 4,
2005 one from Morgan, for the Aero 8, which is discussed at pages
39390-39391. Morgan's petition is included in the docket for that
notice, i.e., Docket NHTSA-2006-25324.
---------------------------------------------------------------------------
\2\ In 2000, NHTSA upgraded the requirements for air bags in
passenger cars and light trucks, requiring what are commonly known
as ``advanced air bags.'' The upgrade was designed to meet the goals
of improving protection for occupants of all sizes, belted and
unbelted, in moderate to high speed crashes, and of minimizing the
risks posed by air bags to infants, children, and other occupants,
especially in low speed crashes. See 65 FR 30680 (May 12, 2000)
(Docket No. NHTSA-2000-7013).
---------------------------------------------------------------------------
That notice of receipt did not address a second request by Morgan.
In correspondence dated February 6, 2006, Morgan petitioned for an
exemption for a different vehicle, its ``traditional roadster,'' from
all air bag requirements in FMVSS No. 208 (i.e., the standard's
requirement that vehicles be equipped with air bags as well as the
advanced air bag requirements) from September 2006 through September
2009. That company titled this correspondence ``Supplement to Pending
Morgan Part 555 Temporary Exemption.'' Morgan explained that it did not
file a petition for the traditional roadster at the same time as it
petitioned for the Aero 8 because in October 2005 (when the Aero 8
petition was filed), Morgan planned to sell only the Aero 8 in the U.S.
from September 2006-September 2009. The company did not plan to sell
the traditional roadster during that period because the Rover engine
used in the U.S. version of the traditional roadster for 35 years was
no longer able to meet more stringent U.S. emissions standards.
In late 2005, Morgan found a U.S.-certified Ford V6 engine for the
U.S. traditional roadster and built a limited production run of 80
vehicles. The traditional roadster ``immediately sold out.'' In order
to maintain U.S. sales and to produce revenue, Morgan then decided to
continue to sell the U.S. traditional roadster. However, while the
traditional roadster had had a mechanical Breed standard air bag system
(i.e., non-advanced air bag system) since 1996, those air bags are now
out of production and are no longer available. Morgan indicated that
the final limited production run of 80 vehicles using the Ford V6
engine used the last of these air bag systems. In addition, Morgan
stated that the Aero 8 standard air bag system cannot be fitted to the
traditional roadster because the interiors and chassis are completely
different.
We note that in its February 2006 correspondence, Morgan asked that
its exemption requests for the traditional roadster and Aero 8 be
considered independently. On September 7, 2006 (71 FR 52851), NHTSA
issued its determinations of five manufacturers petitioning for
temporary exemptions from the advanced air bag requirements of Standard
No. 208. Morgan's Aero 8 petition was addressed at pages 52862-52865.
As noted above, NHTSA upgraded the requirements for air bags in
2000 to require advanced air bags in passenger cars and light trucks.
The advanced air bag requirements were a culmination of a comprehensive
plan that the agency announced in 1996 to address the adverse effects
of air bags. This plan also included an extensive consumer education
program to encourage the placement of children in rear seats. The new
requirements were phased in beginning with the 2004 model year.
Small volume manufacturers (i.e., original vehicle manufacturers
producing or assembling fewer than 5,000 vehicles annually for sale in
the United States) were not subject to the advanced air bag
requirements until September 1, 2006, but their efforts to bring their
respective vehicles into compliance with these requirements began
several years ago. However, because the new requirements were
challenging, major air bag suppliers concentrated their efforts on
working with large volume manufacturers and thus, until recently, small
volume manufacturers had limited access to advanced air bag technology.
Because of the complex nature of the requirements for protecting out-
of-position occupants, ``off-the-shelf'' systems could not be readily
adopted. Further complicating matters, because small volume
manufacturers build so few vehicles, the costs of developing custom
advanced air bag systems, compared to potential profits, discouraged
some air bag suppliers from working with small volume manufacturers.
The agency has carefully tracked occupant fatalities resulting from
air bag deployment. Our data indicate that the agency's efforts in the
area of consumer education and manufacturers' providing depowered air
bags were successful in reducing air bag fatalities even before
advanced air bag requirements were implemented.
As indicated above, for its traditional roadster, Morgan is
requesting an exemption not only from the advanced air bag
requirements, but also from the standard's requirements for air bags
altogether. As always, we are concerned about the potential safety
implications of any temporary exemptions granted by this agency.
II. Morgan's Statement of Economic Hardship
In accordance with 49 U.S.C. 30113 and the procedures in 49 CFR
Part 555, Morgan petitioned NHTSA for a temporary exemption from
standard and advanced air bag requirements of FMVSS No. 208. The basis
for its application is that compliance would cause substantial economic
hardship to a manufacturer that has tried in good faith to comply with
the standard. The agency closely examines and considers the information
provided by
[[Page 5101]]
manufacturers in support of these factors and in addition, pursuant to
49 U.S.C. 30113(b)(3)(A), determines whether an exemption is in the
public interest and consistent with 49 U.S.C. Chapter 301.
Morgan stated that without the sales of the U.S. traditional
roadster from September 2006-September 2009, it would lose an
additional $315,000 on top of the losses estimated in the October 2005
petition for the Aero.\3\ It further stated that if it were able to
sell the traditional roadster in the U.S. during that period, ``the
resulting revenues would also be critical to funding the development of
the new advanced air bag for use in all Morgan vehicles destined for
the U.S. after September 2009.'' Morgan's previous financial submission
indicates that the company's losses over the last 5 years have totaled
more than $3,600,000. In 2004, Morgan made a small profit for the first
time in three years. Morgan predicted a net loss for fiscal year 2005.
---------------------------------------------------------------------------
\3\ Estimated to be between $3,196,179 and $5,066,938. When
costs for interior redesign, crash cars, and tooling are included,
the estimate rises to between $5,648,679 and $7,519,438. (See 71 FR
at 39391.)
---------------------------------------------------------------------------
Morgan stated that even adding the projected sales of the
traditional roadster, the total U.S. ``exempted-car sales'' forecast
for September 2006-September 2009 remain about the same: for 2006, 50
vehicles; for 2007, 250 vehicles; for 2008, 250 vehicles; and for 2009,
250 vehicles. Morgan also provided information on the sales of the 80
model year 2005 traditional roadsters (with the Ford V6 engine).
We note that in commenting on the agency's July 2006 notice
concerning its request for a temporary exemption for the Aero 8, Morgan
indicated that the temporary exemptions it was seeking would involve
400 Aero 8s over three years, and 400 traditional roadsters over three
years.
III. Morgan's Statement of Good Faith Efforts to Comply
In its October 2005 submission, Morgan stated that it has been
working with the air bag supplier Siemens to develop an advanced air
bag system for the Aero 8. However, a lack of funds and technical
problems precluded the implementation of an advanced air bag system for
the Aero 8. It said that the minimum time needed to develop an advanced
air bag system (provided that there is a source of revenue) is 2 years.
Specific technical challenges include the following matters. Morgan
does not have access to the necessary sensor technology to pursue the
``full suppression'' passenger air bag option. Due to the design of the
Aero 8 platform dashboard, an entirely new interior solution and design
must be developed. Chassis modifications are anticipated due to the
originally stiff chassis design.
In its February 2006 petition, Morgan stated that it cannot install
air bags in the U.S. traditional roadsters expected to be built between
September 2006 and September 2009, even though the Aero 8 vehicles
built during that period will have standard air bags. Morgan provided
two reasons why the traditional roadster ``cannot have air bags'' even
though the Aero 8 can. First, since 1996, the traditional roadsters
have had a mechanical Breed standard air bag system. In 1997, Breed
stopped production of the air bags fitted to the traditional roadsters.
Thus, these bags are no longer available. Morgan states that it cannot
obtain any more components. The final run of the 80 traditional
roadsters with the Ford V6 engine used the last of the air bag systems.
Second, the Aero 8 standard air bag system cannot be fitted into
the traditional roadster because the interiors and chassis are
completely different. Morgan asserts that it would not be possible to
integrate the Aero 8 air bag components into the traditional roadster's
design because of both physical and operational differences. The Aero 8
air bag steering wheel will not fit in the traditional roadster's
design, and the Aero 8 passenger air bag will not fit into the
traditional roadster's instrument panel. In terms of air bag operation,
to use the Aero 8 system in the traditional roadster, there would have
to be a new deployment control/trigger system developed due to the
significantly different crash pulses between the Aero 8 aluminum tub
and the traditional roadster steel chassis.
Morgan stated that the traditional roadster will have an advanced
air bag system at the same time that the Aero 8 will. At present, the
traditional roadster uses the same design as it has had since 1936, a
steel chassis with a wooden frame for the body panels. As part of the
development of the advanced air bag system, Morgan plans to switch the
traditional roadster onto the aluminum tub chassis used by the Aero 8.
In this way, the advanced air bag program (through Siemens) that Morgan
outlined in its Part 555 exemption petition for the Aero 8 will also be
applicable to the traditional roadster. Morgan believes that when its
advanced air bag system is ready in 2009, the air bag system will
simultaneously be installed in both the Aero and traditional roadster
models. Morgan asserts that it ``obviously cannot expend the resources
to develop an air bag system--advanced or standard'' for the
traditional roadster that is separate from the air bag system being
developed for the Aero 8. Morgan cites this inability as the reason why
there cannot be an interim standard air bag system for the traditional
roadster during the period September 2006-September 2009.
IV. Morgan's Statement of Public Interest
In its original petition, which concerned the Aero 8, Morgan made
several arguments supporting its view that the requested exemption is
consistent with the public interest. According to Morgan, if the
exemption were denied and Morgan stopped U.S. sales, Morgan's U.S.
dealers would unavoidably have numerous lay-offs, resulting in some
loss of jobs in the U.S. Denial of an exemption would reduce consumer
choice in the specialty sports car market sector in which Morgan cars
compete. That company argued further that the Morgan vehicles would not
be used extensively by owners, and would be unlikely to carry small
children. Finally, according to Morgan, granting an exemption would
assure the continued availability of proper parts and service support
for existing Morgan owners. Without an exemption, Morgan would be
forced out of the U.S. market, making it difficult for Morgan dealers
to support existing customers.
We note that in its February 2006 correspondence requesting an
exemption for the traditional roadster, Morgan generally did not
discuss whether or how these arguments would apply to its request
concerning the traditional roadster. We invited Morgan to address this
issue. As indicated above, Morgan did argue that revenues from selling
the traditional roadster would be critical to funding the development
of the new advanced air bag for use in all Morgan vehicles destined for
the U.S. after September 2009.
V. Notice of Receipt of Petition and Public Comments
On August 15, 2006 (71 FR 46974) (Docket No. NHTSA-2006-25592),
NHTSA published a Notice of Receipt of Application for a Temporary
Exemption from Air Bag Provisions of Federal Motor Vehicle Safety
Standard No. 208, and asked for public comment. In response, NHTSA
received two sets of comments, both from Morgan and both undated.
In the first set of comments, Morgan compared its petition with the
grant of a Part 555 advanced air bag exemption to Ferrari (see 71 FR
29389, May 22,
[[Page 5102]]
2006). Morgan stated that, like Ferrari, its product cycles must last
longer than those typical in the industry. Morgan also stated that, as
did Ferrari, it made a good faith effort, but could not find a
practicable way to meet the air bag requirements. Morgan stated that
its air bag supplier went out of business, which resulted in a lack of
components. Morgan concluded that it needed the exemption in order to
implement a new advanced air bag system on a new chassis. Morgan also
commented on the safety implications of granting the petition and
provided additional points on why granting Morgan's petitions would be
``in the public interest.''
Finally, Morgan updated its 2004 and 2005 financial statements as
follows. Morgan's original submission indicated that in 2004, Morgan
made a ``profit of 372,504 pounds.'' It was subsequently determined
that Morgan showed a loss of 11,207 pounds (approximately $21,000).
Morgan explained that the difference resulted from ``certain vehicle
sales that in fact did not materialize.'' Morgan further stated that
although it earlier stated that ``the results predicted * * * for 2005
were a small loss of [pound]3,248'' (approximately $6,000), the final
accounts showed a larger loss of [pound]386,140 (approximately
$723,000). Morgan explained that the difference arises out of the
amortization of additional R & D costs.
In the second set of comments, Morgan compared its petition to that
of Saleen, which recently received a one-year extension of a complete
air bag exemption, which was a partial grant of Saleen's petition for
extension for three more years. Morgan stated that its petition
differed from that of Saleen, which already had five years under a
complete air bag exemption when it asked for an initial exemption.
Morgan stressed that it was petitioning for an initial exemption, not
an extension, and for a period of time that is ``half the total number
of exemption years that Saleen has now received.'' Morgan also once
again emphasized that it made good faith efforts to meet the air bag
requirements, citing again that it used an air bag system that was in
production for eight years, which can no longer be used because the
supplier went out of business. Morgan also stated that the fact that it
can no longer source components for its already existing air bag system
further distinguishes Morgan from Saleen.
VI. Agency Decision
NHTSA denies Morgan's petition for the ``traditional roadster.''
Morgan has informed NHTSA that the traditional roadster will have the
same advanced air bag system as the Aero 8 in 2009, when the
traditional roadster's chassis will be modified to accommodate the
advanced air bag system. In the following discussion, NHTSA focuses on
Morgan's attempts to secure a standard air bag for its traditional
roadsters for September 2006-September 2009. In the background
information regarding Morgan's attempts to secure both the standard and
advanced air bags, Morgan states that its last source of standard air
bags was in 1997 from Breed. Since Breed no longer manufactures the
standard air bags, they are no longer available. In late 2005, after it
found a U.S.-certified Ford V6 engine for the U.S. traditional
roadster, Morgan built a limited production run of 80 traditional
roadsters, installing in them the last of the Breed standard air bags.
Morgan informs us that the standard air bag system on its Aero 8 cannot
be fitted to the traditional roadster because the interiors and chassis
are completely different.
In its petition, Morgan simply states that it ``obviously cannot
expend the resources to develop an air bag system--advanced or
standard'' for the traditional roadster that is separate from the air
bag system being developed for the Aero 8. It appears that Morgan had
no plans to sell the traditional roadster in the U.S. after 1997. It
appears that it was only in late 2005, when Morgan equipped U.S.-
certified engine vehicles with the last of the standard air bags and
had better than expected sales that it decided to attempt to
reintroduce the traditional roadster into the U.S. market. However, the
agency has no information indicating that Morgan attempted to find a
new source for the standard air bag. Although Morgan may not have been
able to develop its own standard air bag system for the traditional
roadster, it did not describe any contacts it made with potential
suppliers of standard air bags, or provide quotations (even on a
confidential basis) from possible sources that would be qualified to
develop standard air bags for the traditional roadster. Without this
information, NHTSA is unable to determine the extent of the economic
hardship it would cause Morgan to procure standard air bags in the Aero
8.
In its comments, Morgan compared its petition with those of Ferrari
and Saleen (which received a one year temporary exemption out of the
three years for which it petitioned). The major difference between
Morgan's petition and those of Ferrari and Saleen is that Morgan's
petition lacks the detail provided by Ferrari and Saleen describing how
each company attempted to secure alternate sources of air bags, and how
much it would cost each company, if a source were available.
In its petition, Ferrari provided the following:
1. Chronological analysis of Ferrari's efforts to comply,
showing the relationship to the rulemaking history of the advanced
air bag requirements.
2. Itemized costs of each component that would have to be
modified in order to achieve compliance.
3. Discussion of alternative means of compliance and reasons for
rejecting these alternatives.
4. List of air bag suppliers that were approached in hopes of
procuring necessary components.
* * *
6. Corporate balance sheets for the past 3 years, and projected
balance sheets if the petition is denied.\4\
\4\ See Ferrari S.p.A. and Ferrari North America, Inc. Grant of
Application for a Temporary Exemption from S14.2. of Federal Motor
Vehicle Safety Standard No. 208 (71 FR 29389, May 22, 2006) (Docket
No. NHTSA-2005-23093), at page 29390.
---------------------------------------------------------------------------
In its petition dated January 24, 2006, Saleen cited by name the
air bag developers and suppliers it approached about assisting Saleen
in developing an advanced air bag system (see page 3 of the petition).
Saleen also provided pursuant to 49 CFR Part 555.6(a)(1), ``Engineering
and financial information demonstrating in detail how compliance or
failure to obtain an exemption would cause substantial economic
hardship,'' and included information such as the vehicle components
that would have to be modified to accommodate an air bag system (pages
3-4), and the itemized costs to modify each component (page 4).
Because Morgan did not provide a similar level of detail about the
efforts it undertook to find alternative sources of a standard air bag
and costs that would be entailed in modifying the traditional roadster
to accommodate a standard air bag, NHTSA was unable to conclude that
meeting the air bag requirements for Morgan would ``cause substantial
economic hardship to a manufacturer that has tried to comply with the
standard in good faith.''
Finally, NHTSA notes that in the August 15, 2006 notice of receipt
of Morgan's application for a temporary exemption for the traditional
roadster, we invited Morgan to address the issue of how granting
Morgan's petition for exemption for the traditional roadster would be
in the public interest. We noted that all the public interest arguments
raised in the August 2006 notice were taken from Morgan's petition for
the Aero 8. Morgan did not respond to NHTSA's request on this
[[Page 5103]]
issue, and did not provide an independent basis for the agency's
determining how granting Morgan's petition for the traditional roadster
would be in the public interest.
Authority: 49 U.S.C. 30113; delegations of authority at 49 CFR
1.50. and 501.8.
Issued on: January 30, 2007.
Nicole R. Nason,
Administrator.
[FR Doc. E7-1735 Filed 2-1-07; 8:45 am]
BILLING CODE 4910-59-P