[Federal Register Volume 60, Number 43 (Monday, March 6, 1995)]
[Notices]
[Pages 12281-12282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5322]



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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
[Docket No. 94-100; Notice 2]


Excalibur Automobile Corporation; Grant of Application for 
Temporary Exemption From Motor Vehicle Safety Standard No. 208

    Excalibur Automobile Corporation of West Allis, Wisconsin, applied 
for a temporary exemption of its JAC 427 Cobra passenger car for three 
years from compliance with paragraph S4.1.4 of Federal Motor Vehicle 
Safety Standard No. 208 Occupant Crash Protection. The basis of the 
application was that compliance would cause substantial economic 
hardship to a manufacturer that has tried to comply with the standard 
in good faith.
    Notice of receipt of the application was published on December 28, 
1994, and an opportunity afforded for comment (59 FR 66999). This 
notice grants the application.
    The applicant sought an exemption for its JAC 427 Cobra passenger 
car, of which it produced 59 between January 1993 and September 1994. 
Thirty-six of these ``are presently in the control of Excalibur's 
dealers'', and the applicant asked that the exemption cover these 
vehicles so that they may be offered for sale and sold in compliance 
with the law. It plans increased production in 1995, of which 60 to 108 
would be sold in the United States.
    Excalibur is a small company with 37 employees and net assets of 
$3,000,000. The company has had cumulative net losses of $4,493,000 
from January 1, 1992 to September 30, 1994. If it were required to 
comply immediately with the automatic restraint requirements of 
Standard No. 208, it would have to raise the retail price by more than 
300 per cent which ``is likely to deemed (sic) to be prohibitive by 
potential purchasers (and dealers), thereby significantly reducing the 
line's desirability, if not ending the demand entirely * * *.'' Denial 
of the petition would result in a reduction of the work force to 8 
employees.
    Excalibur has been owned since 1991 by German residents, who 
changed the company's management in August 1994. The new management has 
not been able [[Page 12282]] to trace the company's efforts to comply 
beyond December 1993 when the then Vice President of Production 
informed the then President that he had ``just located a potential 
source for a retrofit driver's as well as passenger air bag system.'' 
Compliance was anticipated ``within weeks.'' NHTSA was likewise 
informed of this possibility in December 1993. On May 31, 1994, in an 
incomplete petition for exemption from Standard No. 208, Excalibur 
informed the agency that its efforts to work with companies in Arizona 
and Florida had ended in frustration and failure and that it was 
currently unable to find a source for an adequate, workable airbag 
system.
    According to its application, Excalibur will use the exemption 
period ``to accommodate a fully-complying airbag system.'' It is 
investigating the possibility of installing Ford Mustang steering 
columns and airbag systems, as well as whether its existing column 
could accept an airbag produced by Breed Technologies. Exempted 
vehicles would be provided with a three-point restraint system as well 
as with a ``clearly visible warning label reminding the vehicle's 
occupants of the importance of wearing their safety belts.
    The company argued that an exemption would be in the public 
interest and consistent with the objectives of motor vehicle safety 
because it presently has 17 dealers in 12 states, and ``a thriving 
manufacturing business and dealer network not only provides employment, 
but will generate federal and state tax revenues.'' The small number of 
vehicles that the exemption will cover and the limited mileage they 
will be driven ensure that an exemption ``will not materially affect 
overall motor vehicle safety in the U.S.''
    No comments were received on the application. That the applicant is 
experiencing ``substantial economic hardship'' within the meaning of 
the phrase, as interpreted by NHTSA, over the years, is demonstrated by 
its continuing and cumulative losses of approximately $4.5 million over 
the 2 3/4 year period previous to filing its application. The applicant 
has recently informed NHTSA that at least two of its dealers are 
seeking to terminate their dealership agreements and to require 
Excalibur to repurchase vehicles in stock because of their failure to 
meet the automatic restraint requirements of Standard No. 208.
    The efforts of the applicant to make a good faith effort to comply 
with Standard No. 208 appear to have originated with the company's new 
ownership in 1991. NHTSA is aware that small manufacturers of open 
cars, such as Excalibur, have found it difficult to engineer an airbag 
system into their existing steering columns, let alone to find a 
supplier interested in providing only a low volume of airbags.
    The public interest is served, of course, as the applicant argues, 
by providing continuing employment to those who manufacture, sell, and 
repair Excalibur vehicles, as well as the benefits derived from the 
generation of Federal and state tax revenues. It is also in the public 
interest to avoid litigation where possible and an exemption may 
forestall actions against the applicant by its dealers, which would 
contribute further to its hardship. The overall effect upon motor 
vehicle safety will be negligible due to the small number of cars that 
will be manufactured and sold under it, which will be equipped with a 
three-point restraint system and a label reminding the two passengers 
of the need to use their safety belts.
    The company has also asked that the exemption cover the vehicles 
currently in the hands of its dealers. This is an unusual request. Only 
once before has the agency been petitioned to grant an exemption to 
motor vehicles already in existence. In 1989, Chrysler Corporation 
manufactured several electric vans for research purposes which, three 
years later, in 1992, it wished to sell or lease to a public utility in 
California. As the purpose of a temporary exemption is to allow a 
company for a limited time to engage in activities that would otherwise 
be in violation of the statute, the agency granted Chrysler's petition. 
NHTSA noted that an exemption would permit Chrysler to offer for sale, 
sell, introduce and deliver for introduction into interstate commerce 
noncomplying motor vehicles, acts otherwise prohibited (See 57 FR 
27506). The fact situation is somewhat different here in that 
noncomplying vehicles have already been manufactured for sale and 
delivered for introduction into interstate commerce, in violation of 49 
U.S.C. 30112(a). The agency has no authority to excuse retroactively 
statutory violations, and these are acts for which NHTSA has the right 
to seek recovery of civil penalties. However, an exemption will allow 
the company to generate income and its dealers to offer for sale, sell, 
and introduce into interstate commerce the vehicles that are currently 
in their possession.
    The applicant requested an exemption for the maximum permissible 
under statute, three years. Given the fact that the company began its 
compliance efforts in 1993 if not earlier, the agency believes that 
full compliance with Standard No. 208 should be the company's 
regulatory priority, and is providing an exemption of two years. This, 
of course, does not affect the right of the applicant to petition for a 
renewal if compliance remains elusive.
    In consideration of the foregoing, it is hereby found that 
compliance with the automatic restraint requirements of Standard No. 
208 would cause substantial economic hardship to a company that has 
tried to comply with the standard in good faith, and that an exemption 
would be consistent with the public interest and motor vehicle safety. 
Accordingly, Excalibur Automobile Corporation is hereby granted NHTSA 
Temporary Exemption No. 95-1 from paragraph S4.1.4 of 49 CFR 571.208 
Motor Vehicle Safety Standard No. 208 Occupant Crash Protection, 
expiring March 1, 1997.

    Authority: 49 U.S.C. 30113; delegation of authority at 49 CFR 
1.50.

    Issued on: February 28, 1995.
Ricardo Martinez,
Administrator.
[FR Doc. 95-5322 Filed 3-3-95; 8:45 am]
BILLING CODE 4910-59-P