[Federal Register Volume 63, Number 92 (Wednesday, May 13, 1998)]
[Rules and Regulations]
[Pages 26508-26517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12598]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 553

[NHTSA-98-3815]
RIN 2127-AG62


Rulemaking Procedures

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

ACTION: Final rule.

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SUMMARY: This final rule reaffirms the agency's policy of focusing its 
international harmonization activities on identifying and adopting 
those foreign vehicle safety standards that clearly reflect best 
practices, i.e., that require significantly higher levels of safety 
performance than the counterpart U.S. standards. This final rule also 
announces the agency's policy regarding those instances in which the 
agency's comparison of standards indicates that the safety performance 
required by a foreign standard is not significantly higher, but is 
still better than or at least as good as that required by the 
counterpart U.S. standard.
    To aid in implementing these policies, this final rule amends the 
agency's regulation concerning rulemaking procedures to set forth the 
process that the agency will use in comparing U.S. and foreign vehicle 
safety standards and in determining what rulemaking response, if any, 
is appropriate. The agency will assess whether the safety performance 
of vehicles or equipment manufactured under the foreign standard is 
better than or at least functionally equivalent to that of vehicles or 
equipment manufactured under the U.S. standard, i.e., whether the 
vehicles or equipment manufactured under the foreign standard produce 
more or at least as many safety benefits

[[Page 26509]]

as those produced by the vehicles or equipment manufactured under the 
U.S. standard.
    This final rule also emphasizes that the agency's policy is to deny 
any rulemaking petition seeking to have a foreign standard added to its 
counterpart U.S. standard as a compliance alternative or to harmonize 
the U.S. standard with the foreign standard if the petition does not 
contain an analysis of the relative benefits of the two standards. This 
policy is necessary to minimize the impact that NHTSA's consideration 
of such rulemaking petitions might otherwise have on the agency's use 
of its resources to upgrade its safety standards.

DATES: Effective Date: The amendments become effective on May 13, 1998.
    Petitions for reconsideration: Petitions for reconsideration must 
be received by June 29, 1998.

ADDRESSES: Petitions should refer to the docket and notice number of 
this notice and be submitted to: The Administrator, National Highway 
Traffic Safety Administration, 400 Seventh Street, SW, Washington, DC 
20590.

FOR FURTHER INFORMATION CONTACT: For technical and policy issues: Ms. 
Julie Abraham, Office of International Harmonization, National Highway 
Traffic Safety Administration, 400 Seventh Street, SW, Washington, DC 
20590. Telephone: (202) 366-2114. Fax: (202) 366-2106.
    For legal issues: Rebecca MacPherson, Attorney Advisor, Office of 
Chief Counsel, NCC-20, National Highway Traffic Safety Administration, 
400 Seventh Street, SW, Washington, DC 20590. Telephone: (202) 366-
2992. Fax: (202) 366-3820.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Overview
II. Guiding principles for the harmonization of standards and the 
amendment of standards based on claims of functional equivalence
III. Policy statement concerning functional equivalence
    A. Background
    B. November 1996 request for comments
    C. Summary of oral and written comments on November 1996 notice
    D. Pending rulemaking petitions based on claims of functional 
equivalence
    E. Policy statement
    1. General description
    2. The process as it will be applied in the United States
IV. Draft UN/ECE agreement on global technical regulations; public 
participation
V. Rulemaking analyses and notices
    A. Executive Order 12866 and DOT regulatory policies and 
procedures
    B. Regulatory Flexibility Act
    C. National Environmental Policy Act
    D. Executive Order 12612 (Federalism)
Regulatory text

I. Overview

    This final rule reaffirms the agency's policy of focusing its 
international harmonization activities on identifying and adopting 
those foreign vehicle safety standards that clearly reflect best 
practices, i.e., that require significantly higher levels of safety 
performance than the counterpart U.S. standard. NHTSA's policy is to 
pick the best standard in those instances. This final rule also 
announces the agency's policy regarding instances in which the agency's 
comparison of standards indicates that the safety performance required 
by a foreign standard is not significantly higher, but is still better 
than or at least as good as that required by the counterpart U.S. 
standard. In those instances, the agency will consider the possibility 
of amending the U.S. standard to allow manufacturers to comply with 
either standard or to harmonize the U.S. standard with the foreign 
standard.
    To aid in implementing these policies, this final rule amends the 
agency's regulation concerning rulemaking procedures by adding an 
appendix that sets forth the process that the agency will use in 
comparing U.S. and foreign vehicle safety standards and in determining 
what rulemaking response, if any, is appropriate. In the first 
instance, NHTSA will follow this process in determining whether to 
commence a rulemaking proceeding on the basis that the mandatory 
requirements of a foreign motor vehicle safety standard appear to be 
better than or at least functionally equivalent to those of a Federal 
Motor Vehicle Safety Standard (FMVSS). If the agency commences a 
rulemaking proceeding, it will follow the same process in comparing the 
safety performance of vehicles or equipment produced under the two 
standards, and then in determining whether the foreign standard is, in 
fact, better than or at least functionally equivalent to the U.S. 
standard. This determination would be made by assessing whether the 
vehicles or equipment manufactured under the foreign standard produce 
more or at least as many safety benefits as the vehicles or equipment 
manufactured under the U.S. standard. This assessment would be made on 
the basis of real world data concerning benefits, or, if such data are 
unavailable, on the basis of either compliance test data or data 
generated by additional research and development.
    This final rule emphasizes that there will be appropriate 
opportunities for public participation. Any rulemaking notice that 
proposes to amend a safety standard and that is based on a tentative 
determination of functional equivalence will be subject to the notice 
and comment requirements of the Administrative Procedure Act and all 
applicable substantive statutory criteria, most notably the requirement 
that the standards meet the need for motor vehicle safety.
    This final rule also emphasizes that the agency's policy is to deny 
any rulemaking petition seeking to have a foreign standard added to its 
counterpart U.S. standard as a functionally equivalent compliance 
alternative or to harmonize the U.S. standard with the foreign standard 
if the petitioner does not provide an analysis, based to the extent 
practicable on crash data, comparing safety performance under the two 
standards and supporting the making of a determination that the foreign 
standard is, in fact, better or at least functionally equivalent. This 
policy is necessary to minimize the impact that NHTSA's consideration 
of rulemaking petitions involving such functional equivalence claims 
might otherwise have on the agency's use of its finite resources to 
upgrade its safety standards.
    Finally, since the agency's priority in international harmonization 
is to focus on those foreign safety standards that represent best 
practices, NHTSA will give priority to petitions requesting the 
upgrading of one of its standards to the level of a superior foreign 
standard over petitions simply asking the agency to add a compliance 
alternative, if resource limitations necessitate making a choice 
between competing petitions in granting or processing them.

II. Guiding Principles for the Harmonization of Standards and the 
Amendment of Standards Based on Functional Equivalence

    At the April 1996 Transatlantic Automotive Industry Conference on 
International Regulatory Harmonization \1\ in Washington, DC,

[[Page 26510]]

NHTSA emphasized that three goals must remain of primary importance as 
the agency explores the possibility of harmonizing its standards \2\ 
with those of other countries and regions in appropriate circumstances. 
First, the agency must ensure that there is no degradation of the 
safety provided by a regulation as a result of achieving harmonization. 
Second, the agency must preserve the quality and transparency of its 
regulatory process by inviting all interested parties to be heard and 
duly considered, including the general public. Third, the agency must 
preserve its ability to respond, through future rulemaking, to changing 
safety technology and problems and make appropriate improvements in its 
safety standards. NHTSA noted that the same goals must be met by the 
agency in considering whether a foreign motor vehicle safety standard 
is better than or at least functionally equivalent to its counterpart 
FMVSS.
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    \1\ At that conference, the United States-European Union 
automotive industry met and developed recommendations to the United 
States and European Union on international harmonization and the 
intergovernmental regulatory process needed to achieve such 
harmonization. One of the recommendations was to develop a process 
for agreeing upon ``functional equivalence'' of dissimilar existing 
standards addressing the same aspect of performance. Martin 
Bangemann, the European Industry Commissioner on the European 
Commission, said at the conference that a first step toward 
achieving common standards between the United States and the 
European Union could be an intermediate one of mutual recognition of 
another country's standards, provided that they were determined to 
be at least functionally equivalent.
    \2\ As used in this notice, the term ``standard'' refers to 
mandatory requirements and thus has the same meaning given the term 
``technical regulation'' in Annex 1 to the World Trade Organization 
Technical Barriers to Trade Agreement.
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    This notice reaffirms those goals and emphasizes the agency's top 
priority in its vehicle safety rulemaking activities will remain the 
development and adoption of more effective and beneficial safety 
standards.

III. Policy Statement Concerning Functional Equivalence

A. Background

    The harmonization of product standards has become a matter of 
increasing importance in the last several decades. The manufacturing 
and marketing of products have become increasingly globalized. In 
response to that trend, countries and regions have moved to adjust and 
coordinate their regulatory practices to the extent consistent with 
consumer protection policies. Efforts to coordinate regulatory 
practices on a global scale have resulted in several international 
agreements that seek to promote and guide the process of harmonization, 
while taking care to preserve the right of countries and regions to 
adopt and maintain standards they believe necessary to address safety, 
environmental and other needs within their respective jurisdictions.
    The GATT Agreement on Technical Barriers to Trade (TBT), known as 
the Standards Code, was negotiated during the Tokyo Round of General 
Agreement on Tariffs and Trade Multinational Trade Negotiations, and 
implemented in this country by the Trade Agreements Act of 1979 (Pub. 
L. 103-465; 19 U.S.C. 2531-2582). A new TBT agreement was reached as a 
result of the General Agreement on Tariffs and Trade Uruguay Round of 
Multinational Trade Negotiations. The Uruguay Round Agreements, which 
were concluded in early 1994, established the World Trade Organization. 
Article 2.7 of the new TBT Agreement provides that members of the World 
Trade Organization:

    Shall give positive consideration to accepting as equivalent 
technical regulations of other Members, even if these regulations 
differ from their own, provided they are satisfied that these 
regulations adequately fulfill the objectives of their own 
regulations.

(Emphasis added.)

    At the Transatlantic Business Dialogue Conference (TABD), held in 
Seville, Spain in late 1995, participants made a series of joint 
recommendations aimed at building a stronger framework for trade 
between the United States and the European Union. Later that year, at 
the Madrid Summit, President Clinton signed a joint United States-
European Union ``New Transatlantic Agenda,'' which was based in part on 
the TABD recommendations. The Agenda called for strengthening 
regulatory cooperation and addressing technical and non-tariff barriers 
to trade resulting from divergent regulatory processes. Within the 
framework of action established by the Agenda, a Joint United States-
European Union Action Plan was issued. Among its goals are facilitating 
international regulatory harmonization, taking into account the 
respective policies of the United States and European Union concerning 
safety and environmental protection. The April 1996 Transatlantic 
Automotive Industry Conference on International Regulatory 
Harmonization, mentioned above in part I, built on the TABD 
recommendations and Action Plan by generating specific recommendations 
regarding harmonization and regulatory coordination in the automotive 
sector.
    At the 15th International Technical Conference on Enhanced Safety 
of Vehicles (ESV), held in May 1996 in Melbourne, Australia, 
participating countries adopted the International Harmonized Research 
Agenda (IHRA). One of the six research priorities was developing the 
technical and scientific aspects of an acceptable model for assessing 
relative benefits and determining the functional equivalence of 
existing regulatory requirements. The United States and Australia were 
designated as the lead countries for this developmental activity. The 
other research priorities seek improvements in such areas of vehicle 
safety as biomechanics, advanced offset frontal crash protection, 
vehicle compatibility, Intelligent Transportation Systems (ITS), and 
pedestrian safety.
    In response to these events, NHTSA published a notice requesting 
comments on the recommendations made by the United States/European 
Union automotive industry at the April 1996 Transatlantic Automotive 
Industry Conference on International Regulatory Harmonization in 
Washington, D.C. (61 FR 30657; June 17, 1996). The agency stated that 
the comments would assist it in determining how to respond to those 
recommendations as well as ensuring that harmonization does not result 
in any degradation of safety or environmental protection in the United 
States. One of the specific requests was for comments on issues 
relating to the development of a process for determining the functional 
equivalence of the vehicle safety standards of different countries and 
regions.
    Written comments on the June 1996 notice were submitted by the 
American Automobile Manufacturers Association (AAMA), Association of 
International Automobile Manufacturers, Inc., (AIAM), Truck 
Manufacturers Association (TMA), Coalition of Small Volume Automobile 
Manufacturers (COSVAM), Coalition for Vehicle Choice (CVC), Consumers 
Union (CU), Center for Auto Safety, American Insurance Association 
(AIA), Insurance Institute for Highway Safety (IIHS), Congressman Tom 
Sawyer, and Advocates for Highway Safety (Advocates).
    The commenters focused their comments on the general issue and 
consequences of standards harmonization. Many emphasized that the 
agency should not permit any reduction in safety to occur as a result 
of any rulemaking based on a determination of functional equivalence or 
any other rulemaking seeking to harmonize standards. Both 
manufacturers' associations and public interest groups stated that a 
foreign standard should be determined to be at least functionally 
equivalent to a counterpart U.S. standard only if the foreign standard 
provides at least the same level of protection. In no event, IIHS and 
several consumers groups said, should harmonization result in the 
adoption of lowest common denominator standards. These groups urged 
that the agency focus its harmonization efforts on raising the level of 
U.S. standards to the level of the best practices worldwide. AIAM urged 
the agency not to adopt a rigid

[[Page 26511]]

definition of functional equivalence and made several suggestions for 
promoting the future evolution of the concept of functional 
equivalence.

B. November 1996 Request for Comments

    On November 14, 1996, NHTSA published in the Federal Register a 
generic flowchart describing a process for use by the regulatory 
agencies of the United States and other countries in making 
determinations of functional equivalence of vehicle safety standards 
(61 FR 58362). The agency developed the flowchart based on the comments 
on the June notice and other available information. The November notice 
announced plans for a January 1997 public workshop to discuss the 
flowchart and solicited the submission of written comments following 
the workshop. The agency said that the public input would assist the 
agency in deciding its future course of action regarding international 
harmonization, specifically the determination of functional equivalence 
as outlined in the International Harmonized Research Agenda (IHRA). The 
IHRA was established in meetings held in conjunction with the May 1996 
International Technical Conference on the Enhanced Safety of Vehicles 
(ESV) in Australia. The notice also announced that NHTSA would be 
developing requirements and procedures regarding petitions for 
rulemaking based on a claim of functional equivalency.

C. Summary of Oral and Written Comments on November 1996 Notice

    The January 1997 workshop was attended by representatives of U.S. 
and Canadian governmental agencies, motor vehicle manufacturers, 
equipment manufacturers, insurance groups and consumer interest groups. 
The attendees included the U.S. Environmental Protection Agency, U.S. 
Department of Commerce, Transport Canada, Industry Canada, AAMA, AIAM, 
Association des Constructeurs Europeens d'Automobiles (ACEA), Ford, 
General Motors, Chrysler, Toyota, Land Rover, Volkswagen, Mitsubishi, 
BMW, Motor Vehicle Equipment Manufacturers Association, Lear, Jetro, 
Sierra Products, Truck-Lite, Auto Occupant Restraint Council, Rubber 
Manufacturers Association, Transportation Safety Equipment Institute, 
IIHS, Advocates, and American Insurance Association (AIA).
    After the workshop, the agency received six written comments on the 
November 1996 notice. The commenters were American Suzuki Motor 
Corporation (Suzuki), CU, Advocates, Sierra Products, Inc., Sekurit 
Saint-Gobain, and Nissan North America, Inc. (Nissan).
    The highlights of the oral and written comments are set forth 
below.
    Nissan expressed concern that the proposed process may rely too 
much on estimates of real world safety benefits and compliance test 
data as bases for determining functional equivalence:

    In most cases, such data would have to developed specially to 
enable a comparison, and it would be rather difficult for most of 
the countries to develop them through research, because of cost, 
limited resources, etc. The approach of relying primarily on a 
comparison of safety benefits would not be a realistic means of 
demonstrating functional equivalence* * * .

    Suzuki expressed a similar concern. In a related comment, Chrysler 
stated that quantification of real world safety benefits may be 
impossible in the case of the crash avoidance standards. The relative 
merits of two different crash avoidance standards addressing the same 
safety need would be much easier to assess in terms of their impact on 
vehicle or equipment performance (an input measure) instead of their 
impact on the number of crashes or of deaths and injuries (an output 
measure).
    AIAM stated that the proposed process fails to include 
consideration of what it termed the ``same design approach.'' AIAM 
noted that the AAMA functional equivalence process includes that 
concept. That organization argued that, given difficulty of measuring 
output, i.e., benefits, NHTSA should consider input, as represented by 
similarity of design approaches.
    Advocates said that the process should include a statement of 
NHTSA's commitment to upgrading the FMVSSs when the agency determines 
that the benefits of a foreign standard are greater than those of the 
counterpart FMVSS:

    * * *if the FE process is to provide any significant safety 
benefit to the public, upgrading safety standards must be treated as 
a mandatory requirement, not as a secondary or optional activity.

    CU supported the concept of a functional equivalence determination 
process that would result in both increased safety and increased 
efficiency and stated that the proposed process could be an appropriate 
procedure toward that end. IIHS and AIA agreed that the ultimate goal 
should be higher standards.
    Commenters differed as to whether the issues of determining 
functional equivalence and possibly increasing the stringency of a 
FMVSS should be considered in the same rulemaking proceeding. Advocates 
said that if the agency determines that a foreign standard offers 
greater benefits, the agency should conduct a single rulemaking 
proceeding that results in upgrading the counterpart FMVSS. NHTSA 
should not, according to that group, conduct two separate, sequential 
rulemaking proceedings: the first one adding the foreign standard as a 
compliance alternative and a subsequent one upgrading that FMVSS. 
However, AAMA and Land Rover argued that there should be two separate 
rulemaking proceedings.
    Advocates implicitly recognized that the upgrading of a FMVSS might 
not be appropriate in every instance in which the agency concludes that 
the counterpart foreign standard yields greater benefits. That 
organization noted that the upgrading of a FMVSS would be subject to 
public comment and other aspects of the typical rulemaking proceeding. 
Among other things, the agency would need to conduct a cost-benefit 
analysis to determine whether an upgrade would be worthwhile. Land 
Rover and Sierra Products agreed. Further, Advocates said that if NHTSA 
decides not to propose to upgrade a FMVSS found by the agency to yield 
fewer benefits than a counterpart foreign standard, the agency should 
explain why upgrading is not warranted.
    AIAM, Ford and Advocates expressed support for the making of 
``qualified functional equivalence determinations.'' As described by 
Advocates, such a determination would be made when NHTSA finds:

    That a particular foreign standard would be equivalent to the 
FMVSS counterpart if an additional requirement contained in the 
FMVSS is also required. This qualified acceptance is appropriate 
where the two standards are functionally equivalent in terms of the 
estimated safety benefits, but the FMVSS standard contains a 
specific provision or practice that is not required under the 
foreign standard.

    Advocates expressed concern that, by focusing on the level of 
safety benefits of counterpart standards, the process might lead the 
agency to overlook important differences between standards:

    Advocates is concerned that distinctly different standards with 
important safety differences will be treated as equivalent simply 
because the overall estimate of benefits is comparable (or one is 
greater than the other). A process that is focused only on a single 
performance measure, i.e., total quantitative safety benefit, will 
overlook important qualitative differences in approach that benefit 
different vehicle occupants, benefit occupants in different ways, or 
accrue to non-occupants, i.e., pedestrians.

    Finally, Advocates urged that the agency adopt a policy ensuring 
that

[[Page 26512]]

rulemaking petitions based on a claim of functional equivalence will be 
granted only when it will not interfere with other agency activities 
and not delay other pending rulemakings. To that end, that organization 
urged that petitioners be required to submit sufficient data and 
analysis to support their petitions. Transport Canada and IIHS 
expressed similar concerns.

D. Pending Rulemaking Petitions Based on a Claim of Functional 
Equivalence

    NHTSA notes that it has already received several petitions based on 
claims of functional equivalence. The AAMA has already petitioned the 
agency to amend several of the FMVSSs, on the basis that their European 
counterparts are functionally equivalent, to provide the alternative of 
complying with those European standards. The FMVSSs include FMVSS 103, 
Windshield Defrosting and Defogging Systems; FMVSS 104, Windshield 
Wiping and Washing Systems; the headlamp concealment device 
requirements in FMVSS 108, Lamps, Reflective Devices, and Associated 
Equipment; FMVSS 202, Head Restraints; and FMVSS 209, Seat Belt 
Assemblies. Noting that the petitions were not accompanied by 
sufficient data and analysis, the agency informed the petitioner that 
additional materials were needed in order to assess the merits of the 
petition.
    Additionally, the AAMA, AIAM and IIHS have jointly petitioned the 
agency to amend FMVSS 214, Side Impact Protection, to give vehicle 
manufacturers the option of complying with either current FMVSS 214 or 
the counterpart European standard during a 7-year period. The petition 
also requested that, at the end of the 7-year period, compliance with 
the European standard become mandatory.

E. Policy Statement

1. General Description
    NHTSA is amending Part 553, Rulemaking Procedures, by adding a new 
Appendix B setting forth the process it intends to follow in 
considering whether to commence a rulemaking proceeding based on a 
claim that a foreign motor vehicle safety standard is better than or at 
least functionally equivalent to its counterpart among the FMVSSs and 
in making determinations about relative benefits and functional 
equivalence. The process is set forth in the form of a flowchart and 
accompanying explanation.
    The agency believes that the process in Appendix B meets the 
concerns expressed at the public workshop and in the written public 
comments. The process is essentially the same as the generic process 
published by the agency in November 1996 for public comment, except for 
several clarifying or simplifying changes.
    The generic process, which refers to ``Country A'' and ``Country 
B,'' has been modified for the purpose of its application by this 
country. The reference to ``Country A'' has been replaced by a 
reference to ``NHTSA,'' so that the process as adopted in this final 
rule refers to ``NHTSA'' and ``Country B.'' The rulemaking box, 
formerly located in the upper left corner of the chart, has been 
combined with a similar box located in the upper center of the chart. 
The agency has eliminated the references to three notes formerly 
included in the explanation. Those notes became unnecessary after the 
agency expanded the discussion within the rulemaking box and the 
discussion elsewhere in the explanation of the chart. As recognized at 
the public workshop, any rulemaking to upgrade a FMVSS would have to 
satisfy statutory criteria for establishing a FMVSS and would be 
subject to the provisions of Executive Order 12866 regarding the 
analysis of costs and benefits. This has been reflected in discussion 
in the rulemaking box in the upper center of the chart. Per a request 
by AAMA, descriptive titles have been added to some of the key decision 
points in the chart.
    Neither the chart nor its explanation has been modified to include 
a reference to the ``design approach'' of determining functional 
equivalence, as suggested by AIAM. As agency personnel noted at the 
workshop, consideration of compliance test data would be necessary to 
determine objectively whether various design approaches are really the 
same. The chart already provides for consideration of compliance test 
data as a method of determining relative benefits and functional 
equivalence.
    The explanation that accompanies the chart in Figure 1 has been 
expanded to describe how the functional equivalence process would 
affect each stage of a rulemaking proceeding. In response to concerns 
expressed about the suitability of the process for comparing crash 
avoidance standards, the explanation has been revised to note that the 
types of benefits examined in comparing two standards might differ 
depending on whether the standards are crash avoidance standards or 
crashworthiness standards. Translating differences in performance (an 
input measure) into numbers of crashes or numbers of deaths and 
injuries (output measures) is more difficult in the case of crash 
avoidance standards. Thus, while the relative benefits of two 
crashworthiness standards would typically be assessed in terms of their 
impacts on deaths and injuries in crashes, the relative merits of two 
different crash avoidance standards might well be assessed in terms of 
their impact on measured vehicle or equipment performance.
    The explanation accompanying the flowchart also emphasizes the 
flexibility of the process that will be employed by this agency. For 
example, if one type of data specified in the flowchart were 
unavailable, a petitioner's request for a functional equivalency 
determination will not automatically be rejected. Instead, the 
petitioner should submit analyses based on the types of specified data 
which either are available or can be produced by means of additional 
testing or research that can be performed within a reasonable time and 
at a reasonable cost.
2. The Process as it Will Be Applied in the United States
    <bullet> Determining whether to grant the petition. NHTSA is 
announcing in this notice that it will not grant any rulemaking 
petition seeking to have a foreign standard added to its counterpart 
U.S. standard as a compliance alternative on the basis that the foreign 
standard is better than or at least functionally equivalent to the U.S. 
standard or to harmonize the U.S. standard with the foreign standard, 
if the petition is not accompanied by an analysis of the relative 
benefits of the two standards. The analysis must be based, to the 
extent practicable, on crash data, compare safety performance under the 
two standards, and support the making of a determination, in accordance 
with the process described in the flowchart in Figure 1 of Appendix B 
to Part 553 of Title 49 CFR, that the foreign standard is better or at 
least functionally equivalent to the U.S. standard. This policy is 
necessary to preserve the agency's ability to focus its resources on 
its priorities. Part 552 of Title 49 CFR, Petitions for rulemaking, 
defect and noncompliance orders, expressly provides that, in making a 
decision whether to grant a petition for rulemaking, the agency may 
consider a variety of factors, include agency priorities and allocation 
of agency resources. See Section 552.8.
    Upon receiving a sufficiently supported rulemaking petition asking 
NHTSA to amend a FMVSS based on a claim that a foreign standard is 
better than or at least functionally equivalent to that FMVSS, the 
agency will consider the merits of the petition in accordance

[[Page 26513]]

with Part 552 and with the functional equivalence process set forth in 
the flowchart. If it appears that there is reason to believe that the 
foreign standard provides greater or at least equivalent safety 
benefits than the FMVSS, and if adding an alternative compliance 
alternative does not appear likely to create an unacceptable 
enforcement burden, the agency will likely grant the petition and 
commence a rulemaking proceeding.
    However, the agency emphasizes that its priority with respect to 
international harmonization is identifying and adopting those foreign 
safety standards that represent best practices. Accordingly, if 
resource limitations make it necessary to chose between competing 
petitions, the agency would give priority to granting a petition asking 
the agency to upgrade one of its standards to the level of a superior 
foreign standard over granting another petition simply asking the 
agency to add a compliance alternative. The agency would follow the 
same priorities in processing the petitions it grants. Finally, NHTSA 
notes that the granting of a petition does not signify that the rule in 
question will be issued, but rather that the petition appears to merit 
a fuller comparison of performance under the two standards and, if 
appropriate, the development of a proposal for public comment.
    <bullet> Development of proposal. If NHTSA grants the petition, it 
will proceed, as in any other rulemaking regarding the FMVSSs, to 
determine whether amending a FMVSS would be appropriate under the 
applicable statutory criteria in chapter 301 of title 49, U.S.C. 
Following the process set forth in the flowchart, the agency will use 
the analysis and data submitted by the petitioner, supplemented by data 
from other sources, to compare performance and tentatively determine 
whether the foreign standard specified in the petition is better than 
or at least functionally equivalent to the FMVSS specified in the 
petition.
    The comparison could have a variety of possible outcomes:
    <bullet> The comparison may indicate that the foreign standard's 
safety benefits are less than those of the counterpart FMVSS. If the 
comparison indicates that the foreign standard results in fewer safety 
benefits than the counterpart FMVSS, NHTSA will terminate the 
rulemaking proceeding.
    <bullet> The comparison may indicate that the foreign standard's 
safety benefits are approximately equal to those of the counterpart 
FMVSS. If the comparison indicates that the safety benefits of a 
foreign standard are approximately equal to those of a FMVSS, NHTSA 
will tentatively determine that the foreign standard is at least 
functionally equivalent to the FMVSS and take one of two possible steps 
in most instances. One possibility is that it will develop a notice of 
proposed rulemaking (NPRM) proposing to amend the FMVSS by adding the 
foreign standard as an alternative to the existing requirements of the 
FMVSS.<SUP>3</SUP> The other possibility is that the agency will 
develop an NPRM proposing to harmonize the FMVSS with the foreign 
standard. The second approach would enable NHTSA to maintain a single 
set of requirements and test procedures in its standard, thereby 
minimizing any drain on its enforcement resources. An additional 
possibility that might be considered in some instances would be 
``qualified functional equivalence.'' Under this third approach, the 
agency would regard Country B's standard to be functionally equivalent 
if it is supplemented by a specified requirement in the counterpart 
FMVSS.
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    \3\ NHTSA might have to modify or supplement the test procedures 
in the foreign standard to comply with the requirements in NHTSA's 
authorizing statute that FMVSSs be practicable and be stated in 
objective terms.
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    <bullet> The comparison may indicate that the foreign standard's 
safety benefits are greater than those of the counterpart FMVSS. If the 
comparison indicates that the foreign standard results in greater 
safety benefits than the counterpart FMVSS, and if upgrading the FMVSS 
is appropriate, based on the incremental benefits and costs and 
applicable statutory criteria, NHTSA will tentatively determine that 
the foreign standard has greater benefits and develop an NPRM proposing 
to upgrade the requirements of the FMVSS to the level of those in the 
foreign standard. The upgrading could be accomplished in a number of 
ways, such as by increasing the stringency of the requirements 
presently in the FMVSS or by replacing the provisions of the FMVSS with 
those of the foreign standard. If upgrading is not appropriate, NHTSA 
may propose to add the foreign standard to the FMVSS as an alternative 
compliance option to the existing requirements of the FMVSS. The 
proposal of such an option would include a statement of the basis for 
the agency's conclusion that upgrading the FMVSS is inappropriate.
    If NHTSA issues an NPRM, it will request comment on the tentative 
determination and the proposed amendment.
    <bullet> Final Rule Amending FMVSS. Any final decision to make a 
determination regarding relative benefits and functional equivalency 
and to amend the FMVSS will be made in accordance with the process in 
the flowchart and applicable law and only after careful consideration 
and analysis of the public comments.

IV. Draft UN/ECE Agreement on Global Technical Regulations; Public 
Participation

    To provide for the development of global technical regulations for 
motor vehicles and motor vehicle equipment, the United States, the 
European Union, and Japan reached accord in March of this year on a 
text of an Agreement on Global Technical Regulations to supplement the 
existing revised 1958 United Nations/Economic Commission for Europe 
Agreement providing for uniform technical prescriptions for wheeled 
vehicles, equipment, and parts, as well as the conditions for 
reciprocal recognition of type approvals.<SUP>4</SUP> The draft text is 
subject to a final round of comment by governments participating in the 
UN/ECE Working Party on the Construction of Vehicles (known as Working 
Party 29) and other interested governments. The draft Agreement 
contains procedures for establishing global regulations by harmonizing 
existing regulations or by developing a new regulation. The new 
regulation might be one that yields more benefits than existing 
regulations addressing a particular problem or it might be an entirely 
new regulation, i.e., a regulation addressing a problem not addressed 
by any existing regulations.
---------------------------------------------------------------------------

    \4\ Public notice that NHTSA and the Environmental Protection 
Agency would participate in negotiations regarding an international 
agreement was published March 8, 1994 (59 FR 10846).
---------------------------------------------------------------------------

    In anticipation of the successful conclusion of efforts regarding 
the draft Agreement, NHTSA wishes to reaffirm its prior public 
statements about its commitment to transparency and public 
participation in connection with international harmonization 
activities. That commitment has guided the agency's work on the draft 
Agreement. The agency is cognizant of the 1991 recommendation by the 
Administrative Conference of the United States regarding ``Federal 
Agency Cooperation with Foreign Government Regulators'' (Recommendation 
91-1). The Conference recommended that:

    (w)here appropriate, agencies should, so far as considerations 
of time and international relations permit, afford affected private 
and public interests timely notice of any formal system of 
collaboration with foreign regulatory bodies that exists and an 
opportunity where reasonable to participate

[[Page 26514]]

and comment on decisionmaking under such system.

    Because of its commitment to transparency, NHTSA has met throughout 
the past eighteen months with representatives of consumer interest 
groups and the motor vehicle industry to keep them apprised of 
developments in the negotiations regarding the draft Agreement. With 
respect to the implementation of the agreement, the agency emphasizes 
that it would not only keep the public advised of the key activities 
and make available key documents relating to the development of vehicle 
safety standards under the agreement, but also provide appropriate, and 
timely, opportunities for obtaining public input regarding the merits 
of these matters. The agency plans to elaborate more fully on its 
procedures regarding transparency and public participation in the near 
future.

V. Rulemaking Analyses and Notices

A. Executive Order 12866 and DOT Regulatory Policies and Procedures

    NHTSA has considered the impact of this rulemaking action under 
Executive Order 12866 and the Department of Transportation's regulatory 
policies and procedures. This final rule was not reviewed by the Office 
of Management and Budget under E.O. 12866, ``Regulatory Planning and 
Review.'' This action is not ``significant'' under the Department of 
Transportation's regulatory policies and procedures.
    This rule will not mandate compliance with any new requirements or 
the expenditure of any resources. NHTSA also notes that the cost of 
passenger cars and light trucks will not be directly affected by the 
rule. However, one result of adding a foreign standard to a FMVSS as an 
alternative compliance option or of harmonizing the FMVSS with the 
foreign standard could be to reduce overall manufacturing costs, and 
thus costs to consumers. Thus, the act of granting a petition for such 
a rulemaking could lead to actions that would affect the cost of new 
passenger cars or light trucks.

B. Regulatory Flexibility Act

    NHTSA has considered the effects of this rule under the Regulatory 
Flexibility Act. I hereby certify that it will not have a significant 
economic impact on a substantial number of small entities. The rule 
will primarily affect manufacturers of motor vehicle and/or motor 
vehicle equipment, since the majority of rulemaking petitions are 
submitted by manufacturers. Few motor vehicle manufacturers qualify as 
small businesses.
    The Small Business Administration's regulations define a small 
business, in part, as a business entity ``which operates primarily 
within the United States.'' (13 CFR Part 121.105(a)) SBA's size 
standards are organized according to Standard Industrial Classification 
Codes (SIC). SIC Code 3711 ``Motor Vehicles and Passenger Car Bodies'' 
has a small business size standard of 1,000 employees or fewer. SIC 
Code 3714 ``Motor Vehicle Parts and Accessories'' has a small business 
size standard of 750 employees or fewer.
    There were approximately twelve large manufacturers and four small 
manufacturers producing passenger cars and light trucks in the United 
States. Total United States manufacturing production is approximately 
15 to 15.5 million passenger cars and light trucks per year.
    Petitioners who are not vehicle manufacturers will also be subject 
to the rule. However, NHTSA does not believe that small entities will 
be burdened since the rule does not require the expenditure of funds. 
Like any petitioner for rulemaking, a petitioner that does not or 
cannot generate supporting data and analyses will run the risk that the 
agency may not grant its petition for rulemaking. Petitioners will not, 
however, be subject to any regulatory requirements beyond those already 
required by NHTSA in the Code of Federal Regulations.

C. National Environmental Policy Act

    NHTSA has analyzed this rule for the purposes of the National 
Environmental Policy Act and determined that it will not have any 
significant impact on the quality of the human environment.

D. Executive Order 12612 (Federalism)

    The agency has analyzed this rule in accordance with the principles 
and criteria set forth in Executive Order 12612. NHTSA has determined 
that the amendment will not have sufficient federalism implications to 
warrant the preparation of a Federalism Assessment.

List of Subjects in 49 CFR Part 553

    Imports, Incorporation by reference, Motor vehicle safety, Motor 
vehicles, Rubber and rubber products, Tires.

    In consideration of the foregoing, 49 CFR Part 553 is amended as 
follows:

PART 553--RULEMAKING PROCEDURES

    1. The authority citation for Part 553 continues to read as 
follows:

    Authority: 49 U.S.C. 322, 1657, 30103, 30122, 30124, 30125, 
30127, 30146, 30162, 32303, 32502, 32504, 32505, 32705, 32901, 
32902, 33102, 33103 and 33107; delegation of authority at 49 CFR 
1.50.

    2. The title of the existing Appendix to Part 553 is revised to 
read as follows:

Appendix A To Part 553--Statement of Policy: Action on Petitions 
For Reconsideration

    3. Part 553 is amended by adding the following new Appendix:

Appendix B To Part 553--Statement of Policy: Rulemakings Involving 
The Assessment of The Functional Equivalence of Safety Standards

    (a) Based on a comparison of the performance of vehicles or 
equipment, the National Highway Traffic Safety Administration 
(NHTSA) may tentatively determine that a foreign motor vehicle 
safety standard is better than or at least functionally equivalent 
to a Federal Motor Vehicle Safety Standard (FMVSS), either on its 
own motion or in connection with a petition for rulemaking by any 
interested party under 49 CFR Part 552. Such determinations will be 
made in accordance with the process described in the flowchart in 
Figure 1 of this Appendix.
    (b) Under the process, if NHTSA decides that there is reason to 
believe that a foreign standard is better than or at least 
functionally equivalent to a FMVSS in accordance with the process, 
it will commence a rulemaking proceeding that may lead to the 
issuance of a proposal to add the foreign standard as an alternative 
compliance option to the FMVSS, to harmonize the FMVSS with the 
foreign standard or to upgrade the FMVSS to the level of the foreign 
standard, as appropriate. Such a proposal will request comment on 
the agency's tentative determination regarding relative benefits and 
functional equivalence as well as the proposed amendment. Final 
determinations regarding these matters will also be made in 
accordance with the analytical criteria in the flowchart.
    (c) As used in this appendix, the term ``standard'' refers to 
mandatory requirements and thus has the same meaning given the term 
``technical regulation'' in Annex 1 to the World Trade Organization 
Technical Barriers to Trade Agreement.

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EXPLANATION OF FLOWCHART

A. ULTIMATE GOAL

    The ultimate goal in comparing standards is to assess the real 
world safety performance of the covered vehicles or equipment. 
Particularly in the case of crashworthiness standards, the most 
reliable basis for making that assessment is fatality and injury 
data directly drawn from actual crashes. Accordingly, NHTSA will 
make appropriate efforts to ensure the availability of such data 
regarding crashes in the U.S.

B. GUIDING PRINCIPLES

Best Practices

    NHTSA pursues a ``best practices'' policy in comparing U.S. and 
foreign safety standards, i.e., NHTSA will propose to upgrade its 
standards if it tentatively concludes that a Country B standard 
offers greater benefits than the counterpart FMVSS, and if upgrading 
appears appropriate, considering the incremental costs and benefits 
and applicable statutory criteria. (For a discussion of another type 
of rulemaking proposal that may be considered in these 
circumstances, see the paragraph below on comparisons that indicate 
that a foreign standard's safety benefits are greater than those of 
the counterpart FMVSS.)

Conservatism

    1. NHTSA places priority on preserving the safety benefits of 
the FMVSSs.
    2. NHTSA can best preserve those benefits by being conservative 
in reaching any conclusion that a Country B standard is better than 
or at least functionally equivalent to the counterpart FMVSS. One 
reason for conservatism is that differences from vehicle model to 
vehicle model and manufacturer to manufacturer in margins of 
compliance may confound efforts to assess the relative benefits of 
two standards. Further, there may be circumstantial differences, 
such as special environmental conditions, driver demographics, 
driver behavior, occupant behavior (e.g., level of safety belt use), 
road conditions, size distribution of vehicle fleet (e.g., 
proportion of big versus small vehicles and disparity between 
extremes), that could influence real world safety benefits. These 
differences may result in a particular standard having a safety 
record in a foreign country that would not necessarily be repeated 
in the United States.

Best Available Evidence

    1. NHTSA will base its comparison of standards on the best 
available evidence. If available, estimates of real world safety 
benefits based on fatality and injury data directly drawn from 
actual crashes are the best evidence. If such data are not 
available, then estimates based on other information, such as 
compliance test data, may be used, although increased caution needs 
to be exercised in making judgment based on those estimates. If 
sufficient crash data regarding real world safety benefits are 
available, and a comparison of those benefits shows that the Country 
B standard is less beneficial than the counterpart Federal Motor 
Vehicle Safety Standard (FMVSS), NHTSA would avoid wasting resources 
making comparisons on the basis of less probative types of evidence.
    2. The types of benefits examined in comparing two standards 
might differ depending on whether the standards are crash avoidance 
standards or crashworthiness standards. Translating differences in 
performance (an input measure) into numbers of crashes or numbers of 
deaths and injuries (output measures) is more difficult in the case 
of crash avoidance standards. As a result, while the relative 
benefits of two crashworthiness standards would typically be 
assessed in terms of their impacts on deaths and injuries in 
crashes, the relative merits of two different crash avoidance 
standards might well be assessed in terms of their impact on vehicle 
or equipment performance.

Sufficiency of Evidence

    1. Many types of data are available for a comparison of two 
standards. Often there is an abundance of one type of data and 
little or no data from other sources. If insufficient data are 
available, and such data either cannot be generated through 
engineering analysis (e.g., real world safety benefits estimates), 
or conducting additional research and development is not cost 
effective, then NHTSA will stop consideration of such data and 
consider the other available data instead.
    2. The essentially horizontal, left-to-right path through the 
flowchart is intended to illustrate the sources of data that will be 
considered and provide a rough idea of the priority they will 
receive. Each step branches independently to the tentative 
determination of relative benefits and functional equivalency by its 
``yes'' path. This may seem to preclude later steps once any ``yes'' 
path is encountered. In practice, however, all data sources will be 
considered to the extent that they are available before a final 
determination regarding these matters is made.

Reciprocity

    1. NHTSA will take steps to encourage reciprocity by other 
countries in the making of functional equivalence determinations.
    2. When NHTSA's comparison of standards indicates that one of 
the FMVSSs has benefits equal to or greater than the counterpart 
Country B standard, NHTSA may forward the results of that comparison 
to Country B and request that consideration be given by Country B to 
determining that the FMVSS is better than or at least functionally 
equivalent to the counterpart Country B standard, and to 
subsequently amending its standard accordingly.

C. AGENCY DECISIONS IN WHICH FLOWCHART IS USED

    This flowchart guides agency decisions in connection with a 
rulemaking proceeding that involves the issue of relative benefits 
and functional equivalence.
    1. Decision whether to grant a rulemaking petition. If the 
agency receives a petition for rulemaking based on a claim that one 
of Country B's standards is better than or at least functionally 
equivalent to one of the Federal Motor Vehicle Safety Standards 
(FMVSSs), the agency will consider the merits of the petition in 
accordance with 49 CFR Part 552, Petitions for rulemaking, defect, 
and noncompliance orders, and with the functional equivalence 
process set forth in the flowchart. If it appears that there is 
reason to believe that Country B's standard provides safety benefits 
are greater than or at least equal to those of the FMVSS, the agency 
will likely grant the petition and commence a rulemaking proceeding.
    The agency emphasizes that its priority with respect to 
international harmonization is identifying and adopting those 
foreign safety standards that represent best practices. Accordingly, 
if resource limitations make it necessary to choose between 
competing petitions in granting or processing them, the agency would 
give priority to petitions asking the agency to upgrade one of its 
standards to the level of a superior foreign standard over petitions 
simply asking the agency to add a compliance alternative.
    2. Decision whether to issue a notice of proposed rulemaking. If 
NHTSA grants the petition, it will proceed, as in any other 
rulemaking regarding the FMVSSs, to determine whether amending an 
FMVSS would be appropriate under the applicable statutory criteria 
in chapter 301 of title 49, U.S.C. Following the process set forth 
in the flowchart, the agency will use data submitted by the 
petitioner, supplemented by data from other sources, to compare 
performance and tentatively determine whether Country B's standard 
specified in the petition is better than or at least functionally 
equivalent to the FMVSS specified in the petition.
    This comparison could have a variety of possible outcomes:

    a. The comparison may indicate that the foreign standard's 
safety benefits are less than those of the counterpart FMVSS. If 
NHTSA determines that the foreign standard results in fewer safety 
benefits than the counterpart FMVSS, it will terminate the 
rulemaking proceeding.
    b. The comparison may indicate that the foreign standard's 
safety benefits are approximately equal to those of the counterpart 
FMVSS. If the agency tentatively determines that the safety benefits 
of a foreign standard are approximately equal to those of a FMVSS, 
it will take one of two steps in most instances. One possibility is 
that it will develop a notice of proposed rulemaking (NPRM) 
proposing to amend the FMVSS by adding the foreign standard as an 
alternative to the existing requirements of the FMVSS. The other 
possibility is that the agency will develop an NPRM proposing to 
harmonize the FMVSS with the foreign standard. This second approach 
would enable NHTSA to maintain a single set of requirements and test 
procedures in its standard, thereby minimizing any drain on its 
enforcement resources. An additional possibility that might be 
considered in some instances would be ``qualified functional 
equivalence.'' Under this third approach, the agency would regard 
Country B's standard to be functionally equivalent if it is 
supplemented by a specified requirement in the counterpart FMVSS.
    c. The comparison may indicate that the foreign standard's 
safety benefits are greater than those of the counterpart FMVSS. If 
NHTSA tentatively determines that the foreign standard results in 
greater safety benefits than the counterpart FMVSS, and if

[[Page 26517]]

upgrading is appropriate, based on the incremental benefits and 
costs and applicable statutory criteria, the agency issues an NPRM 
proposing to upgrade the FMVSS to the level of Country B's std. If 
upgrading is not appropriate, NHTSA considers issuing an NPRM 
proposing to add the requirements of Country B's std to the FMVSS as 
an alternative compliance option. The proposal to add the compliance 
option would set forth the basis for the agency's conclusion that 
upgrading the FMVSS is inappropriate.
If NHTSA issues an NPRM, it would request comment on the tentative 
determination and the proposed amendment.
    3. Decision whether to issue a final rule. Any final decision to 
make a determination regarding relative benefits and functional 
equivalency and to amend the FMVSS will be made in accordance with 
the process in the flowchart and applicable law and only after 
careful consideration and analysis of the public comments.

    Issued on May 6, 1998.
Ricardo Martinez,
Administrator.
[FR Doc. 98-12598 Filed 5-12-98; 8:45 am]
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