Federal Register / Vol. 72, No. 98 / Tuesday, May 22, 2007 / Notices 28759 

LIST OF APA MEMBERS COVERED BY EXEMPTION FROM 14 HOUR RULE IN HOURS OF SERVICE FOR DRIVERS

REGULATION—Continued 

Company name Address Address 2 DOT # 

Wolverine Fireworks Display, Inc ..................................... 205 W Seidlers ................................ Kawkawlin, MI .................................. 376857 

Young Explosives Corp .................................................... P.O. Box 18653 ............................... Rochester, NY ................................. 450304 

Zambelli Fireworks MFG, Co., Inc .................................... P.O. Box 1463 ................................. New Castle, PA 16103 .................... 033167 

[FR Doc. E7–9841 Filed 5–21–07; 8:45 am] 

BILLING CODE 4910–EX–P 

DEPARTMENT OF TRANSPORTATION 

National Highway Traffic Safety 

Administration 

[Docket No. NHTSA–2006–26424; Notice 2] 

Maxon Industry, Inc. DBA Maxonlift 

Corp.; Ruling on Petition for 

Determination of Inconsequential 

Noncompliance 

Maxon Industry Inc. DBA Maxonlift 

Corp. (Maxonlift) has determined that 

certain wheelchair lifts that it produced 

in 2005 and 2006 do not comply with 

paragraph S6.4.7.3 of 49 CFR 571.403, 

Federal Motor Vehicle Safety Standard 

(FMVSS) No. 403, Platform Lift Systems 

for Motor Vehicles. Pursuant to 49 

U.S.C. 30118(d) and 30120(h), Maxonlift 

has petitioned for a determination that 

this noncompliance is inconsequential 

to motor vehicle safety and has filed an 

appropriate report pursuant to 49 CFR 

Part 573, ‘‘Defect and Noncompliance 

Responsibility and Reports.’’ Notice of 

receipt of the petition was published, 

with a 30 day public comment period, 

on December 13, 2006 in the Federal 

Register (71 FR 74996). The National 

Highway Traffic Safety Administration 

(NHTSA) received no comments. To 

view the petition and all supporting 

documents, go to: http://dms.dot.gov/ 

search/searchFormSimple.cfm and enter 

Docket No. NHTSA–2006–26424. 

Affected are a total of approximately 

197 Model WL–7 and WL–7A 

wheelchair lifts produced by Maxon 

between April 1, 2005 and May 30, 

2006. Specifically, paragraph S6.4.7.3 of 

FMVSS No. 403 requires: 

The deployed wheelchair retention 

device(s) must be capable of sustaining 7,117 

N (1,600 lb force) when tested in accordance 

with S7.13. No separation, fracture, or 

breakage of the wheelchair retention device 

may occur as a result of conducting the test 

in S7.13. 

On the subject wheelchair lifts, the 

outer barrier wheelchair retention 

device does not comply. In NHTSA’s 

compliance test on the Maxon lift, the 

outer barrier sustained 5,502 N (1,237 

lb. force). Bending occurs on the locking 

bracket attachments and in the ramp 

extrusion, and potentially the outer 

barrier can unfold or break. Maxonlift 

has corrected the problem that caused 

these errors so that they will not be 

repeated in future production. 

Maxonlift believes that the 

noncompliance is inconsequential to 

motor vehicle safety and that no 

corrective action is warranted. 

Maxonlift states: 

For the units built with seat belts [all 

except for 63] we have an electronic feature 

that does not allow the unit to travel up and 

down without the seat belts fastened. The 

seat belt is an added restraint that takes force 

off of the outboard roll stop. If an electric 

wheelchair is accidentally moved forward it 

will hit the seat belt first keeping the person 

in place. We have had zero failure reports or 

warranty claims relating to an outboard roll 

stop failure. 

With respect to the lifts that were 

provided with seat belts and an 

associated electronic feature that 

prevents lift platform up and down 

travel unless the seat belt is fastened, 

NHTSA agrees with Maxonlift that the 

noncompliance of the outer barrier is 

inconsequential to motor vehicle safety. 

NHTSA does not agree with Maxonlift 

with regard to the remainder of the lifts 

that do not have seat belts (secondary 

wheelchair retention devices). Lifts 

without seatbelts would rely solely on 

the inadequate noncompliant outer 

barrier to prevent a wheelchair from 

rolling off the lift platform. A failure of 

the outer barrier would therefore 

present a potential for severe injury to 

both the wheelchair occupant and 

attendants. 

On the basis of the foregoing, NHTSA 

has determined that Maxonlift has 

adequately demonstrated that, under the 

specific facts and circumstances 

presented here, the noncompliance with 

FMVSS No. 403 in the lifts with seat 

belts is inconsequential to motor vehicle 

safety and no further action is 

warranted. Conversely, the 

noncompliance in the lifts without seat 

belts is not inconsequential. 

Accordingly, Maxonlift’s petition for 

an exemption from the duty to recall 

these noncompliant lifts equipped with 

seat belts is granted in part. However, 

the case of the noncompliant lifts 

without seat belts, the petition is denied 

and Maxonlift must notify according to 

49 U.S.C. 30118 and remedy according 

to 49 U.S.C. 30120. 

Authority: 49 U.S.C. 30118, 30120; 

delegations of authority at 49 CFR 1.50 and 

501.8. 

Issued on: May 16, 2007. 

Daniel C. Smith, 

Associate Administrator for Enforcement. 

[FR Doc. E7–9858 Filed 5–21–07; 8:45 am] 

BILLING CODE 4910–59–P 

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. 

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. 


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1See 65 FR 30680 (May 12, 2000). 2 49 U.S.C. 30113(b)(1). 

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 lowspeed crashes. 

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-ofposition 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. 

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. 


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3Panoz did not specify whether it meant the 

advanced air bag or requirements or other FMVSS 

No. 208 air bag requirements. 

4Panoz did not provide actual sales figures 

orproduction figures for the Esperante for any of 

these years. 

5Panoz did not explain what it means by the term 

‘‘package.’’

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: 

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

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 threeyear 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; 

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 


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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 manhours 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-BoardDiagnostic 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 


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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 § 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. llll.’’ This label 

notifies prospective purchasers about 

the exemption and its subject. Under 

§ 555.9(c), this information must also be 

included on the vehicle’s certification 

label. 

We note that the text of § 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 

§ 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 


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