[Federal Register Volume 72, Number 98 (Tuesday, May 22, 2007)]
[Notices]
[Pages 28759-28763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-9850]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2006-26109]


Panoz Auto-Development Company; Grant of Application for a 
Temporary Exemption From the Advanced Air Bag Requirements of FMVSS No. 
208

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

ACTION: Grant of application for temporary exemption from certain 
provisions of Federal Motor Vehicle Safety Standard (FMVSS) No. 208, 
Occupant Crash Protection.

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SUMMARY: This document grants the application of Panoz Auto-Development 
Company for a temporary exemption from certain advanced air bag 
requirements of FMVSS No. 208. The exemption applies to the Panoz 
Esperante. The basis for the grant is that compliance would cause 
substantial economic hardship to a manufacturer that has tried in good 
faith to comply with the standard, and the exemption would have a 
negligible effect on motor vehicle safety.
    The notice of receipt of an application for temporary exemption 
from Panoz was published in the Federal Register on October 20, 2006. 
We received no comments in response to the publication.

DATES: The exemption for the Panoz Esperante from the specified 
provisions of FMVSS No. 208 is effective immediately and remains in 
effect through August 31, 2009.

[[Page 28760]]


FOR FURTHER INFORMATION CONTACT: Ms. Dorothy Nakama, Office of the 
Chief Counsel, NCC-112, National Highway Traffic Safety Administration, 
400 Seventh Street, SW., Room 5219, Washington, DC 20590. Telephone: 
(202) 366-2992; Fax: (202) 366-3820.

SUPPLEMENTARY INFORMATION:

I. Advanced Air Bag Requirements and Small Volume Manufacturers

    In 2000, NHTSA upgraded the requirements for air bags in passenger 
cars and light trucks, requiring what are commonly known as ``advanced 
air bags.'' \1\ The upgrade was designed to meet the 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.
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    \1\ See 65 FR 30680 (May 12, 2000).
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    The advanced air bag requirements were a culmination of a 
comprehensive plan that the agency announced in 1996 to address the 
adverse effects of air bags. This plan also included an extensive 
consumer education program to encourage the placement of children in 
rear seats. The new requirements were phased in beginning with the 2004 
model year.
    Small volume manufacturers were not subject to the advanced air bag 
requirements until September 1, 2006, but their efforts to bring their 
respective vehicles into compliance with these requirements began 
several years 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 nature of the requirements for protecting 
out-of-position occupants, ``off-the-shelf'' systems could not be 
readily adopted. Further complicating matters, because small volume 
manufacturers build so few vehicles, the costs of developing custom 
advanced air bag systems compared to potential profits discouraged some 
air bag suppliers from working with small volume manufacturers.
    The agency has carefully tracked occupant fatalities resulting from 
air bag deployment. Our data indicate that the agency's efforts in the 
area of consumer education and manufacturers' providing depowered air 
bags were successful in reducing air bag fatalities even before 
advanced air bag requirements were implemented.
    As always, we are concerned about the potential safety implication 
of any temporary exemptions granted by this agency. In the present 
case, we are addressing a petition for a temporary exemption from the 
advanced air bag requirements submitted by a manufacturer of a low 
volume, exotic sports car.

II. Overview of Petition for Economic Hardship Exemption

    In accordance with 49 U.S.C. 30113 and the procedures in 49 CFR 
part 555, Panoz Auto-Development Company (Panoz) has petitioned the 
agency for a temporary exemption from certain advanced air bag 
requirements of FMVSS No. 208 Occupant Crash Protection for the Panoz 
Esperante only. The basis for the application was that compliance would 
cause substantial economic hardship to a manufacturer that has tried in 
good faith to comply with the standard.

III. Statutory Background for Economic Hardship Exemptions

    A manufacturer is eligible to apply for a hardship exemption if its 
total motor vehicle production in its most recent year of production 
did not exceed 10,000 vehicles, as determined by the NHTSA 
Administrator (49 U.S.C. 30113).
    In determining whether a manufacturer of a vehicle meets that 
criterion, NHTSA considers whether a second vehicle manufacturer also 
might be deemed the manufacturer of that vehicle. The statutory 
provisions governing motor vehicle safety (49 U.S.C. Chapter 301) do 
not include any provision indicating that a manufacturer might have 
substantial responsibility as manufacturer of a vehicle simply because 
it owns or controls a second manufacturer that assembled that vehicle. 
However, the agency considers the statutory definition of 
``manufacturer'' (49 U.S.C. 30102) to be sufficiently broad to include 
sponsors, depending on the circumstances. Thus, NHTSA has stated that a 
manufacturer may be deemed to be a sponsor and thus a manufacturer of a 
vehicle assembled by a second manufacturer if the first manufacturer 
had a substantial role in the development and manufacturing process of 
that vehicle.
    Finally, while 49 U.S.C. 30113(b) states that exemptions from a 
Safety Act standard are to be granted on a ``temporary basis,''\2\ the 
statute also expressly provides for renewal of an exemption on 
reapplication. Manufacturers are nevertheless cautioned that the 
agency's decision to grant an initial petition in no way predetermines 
that the agency will repeatedly grant renewal petitions, thereby 
imparting semi-permanent exemption from a safety standard. Exempted 
manufacturers seeking renewal must bear in mind that the agency is 
directed to consider financial hardship as but one factor, along with 
the manufacturer's on-going good faith efforts to comply with the 
regulation, the public interest, consistency with the Safety Act, 
generally, as well as other such matters provided in the statute.
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    \2\ 49 U.S.C. 30113(b)(1).
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IV. Petition of Panoz Auto-Development Company

    Panoz stated that it seeks a temporary exemption from the advanced 
air bag requirements of FMVSS No. 208 only for the Panoz Esperante, a 
two-seat convertible sports car. Panoz stated that ``[t]he Esperante is 
the only passenger car currently being produced by Panoz, a small 
volume manufacturer.'' Panoz stated that it is an independent company 
with no affiliation with other automobile manufacturers.
    Panoz began to sell the Esperante in 2001. The Esperante is 
equipped with a driver and passenger side air bag. The driver side air 
bag is supplied by Breed and the passenger side air bag is supplied by 
Ford. Panoz stated that it spent a ``significant'' amount of money in 
order to comply with the ``inflatable restraint requirements'' of FMVSS 
No. 208. Panoz was able to achieve compliance with ``extensive 
technical support'' from Visteon, which performed all the calibration 
work on the air bag restraint module necessary for compliance.
    Panoz stated that as a small volume manufacturer with limited 
financial and technical resources, Panoz must use components produced 
by large volume manufacturers in order to meet safety and emissions 
requirements. Panoz stated that it uses components developed by Ford 
for the Ford Mustang ``in order to meet the stringent regulations.'' 
Panoz's center tub and chassis design is based on the previous 
generation Ford Mustang which Panoz referred to as the ``SN95 
platform.'' The front chassis structure is engineered to closely 
simulate the Ford Mustang crash pulse, so that the same air bag 
restraint module could be used in the Esperante, with some calibration 
changes, as was used in the Mustang. The interior space in the 
Esperante was designed to be similar to the Mustang so that the 
Mustang's relationship of the air bags to the occupants was simulated 
in the Esperante.

[[Page 28761]]

    Panoz cited the following issues as contributing to its inability 
to meet the advanced air bag requirements of FMVSS No. 208 by September 
1, 2006:
    1. Actual sales of the Esperante have been below projected sales;
    2. In Model Year 2005, a complete change was made to the Mustang 
platform, resulting in a new Ford S197 Mustang platform;
    3. A delay in Panoz's receiving the necessary information from Ford 
regarding the new chassis delayed Panoz's design and development of an 
Esperante that can meet the advanced air bag requirements;
    4. Visteon declared bankruptcy and eliminated their air bag system 
division; and
    5. Advanced air bag systems components and technology are not 
readily available to small volume manufacturers. Most vendors continue 
to concentrate on large volume manufacturers.
    How these issues have affected Panoz's inability to manufacture the 
Esperante to meet the advanced air bag requirements are discussed in 
the following sections on Panoz's statements of economic hardship and 
good faith efforts to comply.
    Panoz stated that while its petition is under consideration, it 
will continue the design and development of the advanced air bag 
system. Panoz has assigned engineering personnel and test vehicles to 
this project and Panoz will continue to pursue full compliance with the 
requirements of FMVSS No. 208.
    Panoz estimated that full compliance with FMVSS No. 208 
requirements will be achieved before July 2009.

V. Panoz's Statement of Economic Hardship

    Panoz has estimated that the addition of an advanced air bag system 
adds approximately $6,129 to the cost of each vehicle. The impact of 
the cost increase could reduce vehicle sales by approximately 8 
percent. Panoz stated that as a result of development efforts necessary 
to comply with the ``airbag mandate'' \3\ and with Environmental 
Protection Agency and California Air Resources Board requirements, the 
manufacturers' suggested retail price (MSRP) of the Esperante was 
increased to $121,326. As a result of the price increase and 
``prevailing market conditions,'' Panoz stated that:
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    \3\ Panoz did not specify whether it meant the advanced air bag 
or requirements or other FMVSS No. 208 air bag requirements.

    Actual sales were 35 units below projections in 2001, 30 units 
below projections in 2002, 72 units below projections in 2003, 77 
units below projections in 2004, 73 units below projections in 2005, 
and 43 units below projections in 2006.\4\
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    \4\ Panoz did not provide actual sales figures or production 
figures for the Esperante for any of these years.

    Panoz also stated: ``The total production of Panoz Esperante 
vehicles during the past 12 months was 12 units. The 2006 calendar-year 
production to date is 10 vehicles.''
    Panoz stated that the reduced sales revenue forced it to slow the 
advanced air bag system and other programs and decrease staff by 
approximately 30 percent.
    Panoz cited the following development work and modifications 
related to the installation of an advanced air bag system in the 
Esperante. Panoz estimated the total cost to adapt an advanced driver 
and passenger-side air bag system within one or two years to be 
$1,928,000:
    1. Develop a new chassis that would generate the same crash pulse 
as the S197 Mustang ($380,000);
    2. Chassis tooling ($300,000);
    3. Design a new firewall and surrounding structure in order to 
install the passenger side air bag from the Mustang ($187,000);
    4. Interior tooling ($150,000);
    5. Installation of the Mustang steering column and driver side air 
bag ($85,000);
    6. Installation of a new passenger side seat with built-in sensors 
($49,000);
    7. Modifications to the vehicle wiring harness ($65,000);
    8. Low (8 mph), medium (14 mph) and high (30 and 35 mph) speed 
barrier crash testing, including the cost of test vehicles and 
engineering support (estimated at $235,000);
    9. Undercarriage snag, pole snag, rough-road testing, and 
engineering support, including the cost of test vehicles (estimated at 
$98,000);
    10. Barrier crash tests with 3 and 6 year old dummies, including 
the cost of test vehicles ($228,000);
    11. Testing for out-of-position occupant sensing ($46,000);
    12. ``Compliance-level'' frontal barrier crash tests at 30 mph, 
including the cost of vehicles (estimated at $68,000); and
    12. Continued evaluation of production vehicles under varying 
ambient and road conditions (estimated at $37,000).
    Panoz stated that this $1,928,000 expenditure represents a 
``significant sum.'' Panoz stated it must continue the sale of the 
existing Esperante in order to generate the revenue necessary to fund 
this project. The three year extension will provide Panoz the time 
necessary to properly develop the advanced air bag system.
    If the exemption is not granted by NHTSA, Panoz stated that it will 
lose:

    Approximately $4,226,120.00 in sales revenues in 2006 based on 
the projected annual sales of 53 units, $6,339,180.00 in 2007 based 
on the projected sales of 60 units, $10,565,300.00 in 2008 based on 
the projected sale of 100 units, and $15,847,950.00 in 2009 based on 
the projected sale of 150 units.

    Panoz further stated that denial of the petition would cause 
substantial economic hardship and would keep it from meeting the 
advanced air bag requirements of FMVSS No. 208, removing the Esperante 
from the U.S. market and jeopardizing the existence of the company. 
Panoz stated that a three-year exemption would spread the necessary 
expenditures to approximately $1,928,000 divided by thirty-six months 
or $53,556 per month, which would be sustained through the sales of 
Esperante vehicles.

VI. Panoz's Statement of Good Faith Efforts to Comply

    Panoz states that the delay in the implementation of the advanced 
air bag system has mostly been due to ``circumstances beyond the 
control of Panoz.'' Panoz states its intent is to ``provide the safest 
vehicles possible to the public.'' The three year exemption from the 
advanced air bag requirements is necessary to develop and test the 
``most up-to-date airbag technology available.'' Panoz states that the 
Esperante will ``remain fully compliant with all FMVSS standards during 
the extended exemption periods with the sole exception of the advanced 
air bag requirements of standard 208.'' Panoz cited the following 
changes that must be made to the Esperante in order to meet the 
advanced air bag requirements:
    1. Modify the chassis in order to simulate the S197 Mustang crash 
pulse;
    2. Modify the interior in order to simulate the interior space of 
the S197 Mustang and the relationship between the occupants and air bag 
system;
    3. ``Package'' \5\ the new Mustang seats which are equipped with 
sensors;
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    \5\ Panoz did not explain what it means by the term ``package.''
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    4. ``Package'' the air bag system sensors, restraint control module 
and wiring harness;
    5. Modify the dashboard and support structure to install the new 
passenger side air bag;
    6. Install new driver side air bag;
    7. Perform crash tests to determine compliance with the Federal 
motor vehicle safety standards; and

[[Page 28762]]

    8. Validate the advanced air bag system.
    Panoz cited the following as a factor in ``significantly'' delaying 
its ability to develop an Esperante model that meets the advanced air 
bag requirements. Ford introduced the new Mustang in Model Year 2005. 
Panoz was scheduled to receive a preproduction Mustang for development 
purposes in 2004. However, Panoz did not receive an S197 Mustang until 
March 2005, a delay of approximately a year.
    Panoz stated that between October 2003 and July 2006, it spent 
6,292 man-hours and $630,000 to develop an advanced air bag system for 
the Esperante. A large portion of these resources went into designing a 
new ``compliant'' chassis, with assistance from Multimatic Corporation. 
The new chassis project began before Panoz received a new Mustang from 
Ford. Development of this chassis is ongoing.
    Panoz stated that in addition to expenditures relating to the 
installation of an advanced air bag system, ``during this period'' 
Panoz spent approximately $1,910,000 towards compliance with other 
Federal motor vehicle safety standards and with Environmental 
Protection Agency and California Air Resources Board emissions 
standards.
    Panoz noted that Visteon developed and calibrated the restraint 
control module installed in the Esperante. Panoz intended to enter into 
a contract with Visteon to develop the advanced air bag system and 
recalibrate the air bag restraint module for use with the advanced air 
bag system. Panoz was unable to use this option when Visteon eliminated 
its air bag development group.
    Panoz stated that it began the process of complying with advanced 
air bag requirements in October 2003 by entering into a contract with 
Multimatic Corporation to develop a chassis that simulates the crash 
pulse and duplicates the interior packaging of the ``S197 Mustang.'' 
Panoz stated that a large portion of the work has been accomplished, 
but because of financial constraints and inability to obtain the 
necessary S197 crash pulse information, the work has not been 
completed. Panoz stated that the new chassis design dictates that it 
must develop a proprietary fuel tank that is able to work properly with 
the Ford On-Board-Diagnostic system, since the new Mustang fuel tank 
will not fit in the Esperante. The new chassis also required redesign 
of the suspension system.

VII. Panoz's Statement of Public Interest

    The petitioner put forth several arguments in favor of a finding 
that the requested exemption is consistent with the public interest and 
would not have a significant adverse impact on safety. Specifically, 
Panoz stated that the Esperante is a ``unique'' car produced in the 
U.S. using ``100 percent U.S. components.'' The powertrain, climate 
control system, wiper/washer system, and other major components are 
purchased from Ford Motor Company. Other parts are purchased from 
approximately 469 different companies. Panoz currently provides direct 
employment to ``35 full time employees and one part time employee.'' 
The Panoz Esperante is currently being sold through 20 dealers in the 
U.S. Panoz stated that in addition to providing direct employment to 36 
employees, ``at least 500 employees from over 469 different companies 
remain involved in the Panoz project.''
    Panoz stated that the Esperante remains as the only vehicle 
developed and sold in the U.S. which uses extensive aluminum 
technology. Panoz stated that the Esperante is the only vehicle to 
currently use molded aluminum body panels for the entire car. 
Application of aluminum technology continues to gain strength in the 
U.S. automotive industry. Several new manufacturers have introduced new 
models equipped with a large number of aluminum components. Panoz 
asserted that ``[w]ith the probable mandate for greater fuel 
efficiency, the use of aluminum technology should continue to 
escalate.'' Panoz stated that the Esperante is a ``showcase'' for 
aluminum technology. Several companies have used some of the Esperante 
technology in their products. Panoz stated that it is an innovator in 
vehicle technology. Panoz further stated that it continues to provide 
the public with ``a classic alternative'' to current production 
vehicles.

VIII. Federal Register Notice of October 20, 2006

    In the Federal Register of October 20, 2006 (71 FR 62038), we 
published a notice announcing receipt of an application from Panoz for 
a temporary exemption from the advanced air bag requirements of FMVSS 
No. 208 for the Esperante. We invited public comment on Panoz's 
application. We received no comments in response to this publication.

IX. Final Decision

    The following discussion provides our decision regarding Panoz's 
temporary exemption request pertaining to the advanced air bag 
requirement of FMVSS No. 208.
    We are granting Panoz's petition to be exempted from portions of 
the advanced air bag regulation required by S14.2 (specifically 
S14.5.2, S15, S17, S19, S21, S23, and S25). The exemption does not 
extend to the provision requiring a belted 50th percentile male barrier 
impact test (S14.5.1(a)). In addition to certifying compliance with 
S14.5.1(a), Panoz must continue to certify to the unbelted 50th 
percentile barrier impact test in force prior to September 1, 2006 
(S5.1.2(a)). We note that the unbelted sled test in S13 is an 
acceptable option for that requirement. The agency's rationale for this 
decision is as follows.
    The advanced air bag requirements present a unique challenge 
because they would require Panoz to undertake a major redesign of the 
Esperante, in order to overcome its engineering limitations. While the 
petitioner was aware of the new requirements for some time, its 
business plans to introduce a fully compliant vehicle did not 
materialize due to the fact that it has to rely on components produced 
by large volume manufacturers in order to meet safety and emissions 
standards. Consequently, Panoz had to accommodate the delivery schedule 
of these large manufacturers.
    Panoz explained the main engineering challenges precluding 
incorporation of advanced air bag into the Esperante at this time, as 
follows. The company does not have access to necessary sensor 
technology to pursue the ``full suppression'' passenger air bag option. 
In addition, due to the redesign of the Mustang platform, resulting in 
a new S197 Ford platform, chassis modifications are anticipated. The 
petitioner stated that it would take approximately two years to resolve 
these technical issues surrounding advanced air bags, given adequate 
funding. Panoz estimated that the total cost to adapt an advanced 
driver and passenger-side air bag system within one or two years to be 
$1,928,000. Panoz has made clear that such a prospect would pose a 
unique challenge to the company, due to the high cost of development 
and its extremely small sales volumes.
    Based upon the information provided by the petitioner, we 
understand that Panoz made good faith efforts to bring the Esperante 
into compliance with the applicable requirements. The company had a 
difficult time in gaining access to advanced air bag technology (which

[[Page 28763]]

presumably reflects suppliers' initial focus on meeting the needs of 
large volume manufacturers), and this further reduced the lead time 
available for development. Furthermore, because Panoz is a fully 
independent company, there was no possibility of technology transfer 
from a larger parent company. Consequently, no viable alternatives 
remain. The petitioner was unable to redesign its vehicle by the time 
the new advanced air bag requirements went into effect on September 1, 
2006.
    After review of the income statements provided by the petitioner, 
the agency notes that the company has faced ongoing financial 
difficulties. Panoz has estimated that adding the advanced air bag 
system adds approximately $6,129 to the cost of each vehicle, and could 
reduce vehicle sales by approximately 8 percent. Panoz stated that as a 
result of development costs necessary to meet the ``airbag mandate'' 
and to meet Federal and State emissions control requirements, the 
manufacturer's suggested retail price of the Esperante was increased to 
$121,326. If the exemption is not granted by NHTSA, Panoz stated that 
it will lose $6,339,180 in 2007 based on the projected sales of 60 
units, $10,565,300 in 2008 based on the projected sale of 100 units, 
and $15,847,950 in 2009 based on the projected sale of 150 units. Panoz 
stated that the reduced sales revenue forced it to slow the advanced 
air bag system and other programs and decrease staff by approximately 
30 percent.
    According to Panoz, its problems would be compounded without its 
requested temporary exemption, because it needs the revenue from sales 
of the Esperante over the next three years to finance development of a 
fully compliant vehicle for sale. Granting the exemption will allow 
Panoz to earn the resources necessary to bridge the gap in terms of 
development of a vehicle that meets all U.S. requirements.
    The petitioner made a comprehensive showing of its good faith 
efforts to comply with the requirements of S14.2 of FMVSS No. 208, and 
detailed engineering and financial information demonstrating that 
failure to obtain the exemption would cause substantial economic 
hardship. Specifically, the petitioner provided the following:
    1. Chronological analysis of Panoz'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. Cost of tooling needed to make the vehicle meet advanced air bag 
requirements.
    4. Costs of testing to ensure the redesigned vehicle meets the 
advanced air bag requirements.
    5. Corporate income statements and balance sheets for the past 
three years, and projected income statements and balance sheets if the 
petition is denied.
    We note that reduction of sales revenue resulting from a denial of 
the company's requested temporary exemption would have a negative 
impact not only on Panoz's financial circumstances, but it would also 
negatively affect U.S. employment. Specifically, reduction in sales 
would also affect Panoz dealers and repair specialists, negatively 
impacting their ability to provide parts and services to current Panoz 
owners. Traditionally, the agency has concluded that the public 
interest is served in affording continued employment to the 
petitioner's U.S. work force. Furthermore, as discussed in previous 
decisions on temporary exemption applications, the agency believes that 
the public interest is served by affording consumers a wider variety of 
motor vehicle choices.
    We believe that this exemption will have negligible impact on motor 
vehicle safety because of the limited number of vehicles affected 
(approximately 300 for the duration of the exemption), and because 
Panoz vehicles are not typically used for daily transportation. Their 
annual usage is substantially lower compared to vehicles used for 
everyday transportation.
    We note that, as explained below, prospective purchasers will be 
notified that the vehicle is exempted from the specified advanced air 
bag requirements of Standard No. 208. Under Sec.  555.9(b), a 
manufacturer of an exempted passenger car must affix securely to the 
windshield or side window of each exempted vehicle a label containing a 
statement that the vehicle conforms to all applicable Federal motor 
vehicle safety standards in effect on the date of manufacture ``except 
for Standard Nos. [listing the standards by number and title for which 
an exemption has been granted] exempted pursuant to NHTSA Exemption No. 
--------.'' This label notifies prospective purchasers about the 
exemption and its subject. Under Sec.  555.9(c), this information must 
also be included on the vehicle's certification label.
    We note that the text of Sec.  555.9 does not expressly indicate 
how the required statement on the two labels should read in situations 
where an exemption covers part but not all of a Federal motor vehicle 
safety standard. Specifically in the case of FMVSS No. 208, we believe 
that a statement that the vehicle has been exempted from Standard No. 
208 generally, without an indication that the exemption is limited to 
the specified advanced air bag provisions, could be misleading. A 
consumer might incorrectly believe that the vehicle has been exempted 
from all of Standard No. 208's requirements. Moreover, we believe that 
the addition of a reference to such provisions by number without an 
indication of its subject matter would be of little use to consumers, 
since they would not know the subject of those specific provisions. For 
these reasons, we believe the two labels should read in relevant part, 
``except for S14.5.2, S15, S17, S19, S21, S23, and S25 (Advanced Air 
Bag Requirements) of Standard No. 208, Occupant Crash Protection, 
exempted pursuant to * * *.'' We note that the phrase ``Advanced Air 
Bag Requirements'' is an abbreviated form of the title of S14 of 
Standard No. 208. We believe it is reasonable to interpret Sec.  555.9 
as requiring this language.
    In sum, the agency concludes that Panoz has demonstrated good faith 
effort to bring the Esperante into compliance with the advanced air bag 
requirements of FMVSS No. 208 and has also demonstrated the requisite 
financial hardship. Further, we find this exemption to be in the public 
interest.
    In consideration of the foregoing, we conclude that compliance with 
the advanced air bag requirements of FMVSS No. 208, Occupant Crash 
Protection, would cause substantial economic hardship to a manufacturer 
that has tried in good faith to comply with the standard. We further 
conclude that granting of an exemption from these provisions would be 
in the public interest and consistent with the objectives of traffic 
safety.
    In accordance with 49 U.S.C. 30113(b)(3)(B)(i), the Panoz Esperante 
is granted NHTSA Temporary Exemption No. EX 07-01, from S14.5.2, S15, 
S17, S19, S21, S23, and S25 of 49 CFR 571.208. The exemption is 
effective immediately and continues in effect through August 31, 2009.

    Issued on: May 15, 2007.
Nicole R. Nason,
Administrator.
[FR Doc. E7-9850 Filed 5-21-07; 8:45 am]
BILLING CODE 4910-59-P