Document ID: NHTSA-2008-0107-0005
Agency: nhtsa
Document Type: Rule
Title: Temporary Exemptions:  Federal Motor Vehicle Safety Standard No. 208, Occupant Crash Protection; Spyker Automobielen B.V.,
Posted Date: 2009-03-25T04:00Z

[Federal Register: March 25, 2009 (Volume 74, Number 56)]
[Notices]               
[Page 12925-12929]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25mr09-198]                         

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2008-0107, Notice 2]

 
Spyker Automobielen B.V.; Grant of Application for Limited 
Extension of Temporary Exemption From Certain Requirements of FMVSS No. 
208

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

ACTION: Grant of petition for limited extension of a Temporary 
Exemption from certain provisions of Federal Motor Vehicle Safety 
Standard (FMVSS) No. 208, Occupant Crash Protection.

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SUMMARY: This notice grants the Spyker Automobielen B.V. (``Spyker'') 
application for a limited extension of a previously received temporary 
exemption from certain requirements of Federal Motor Vehicle Safety 
Standard (FMVSS) No. 208, Occupant Crash Protection, for the Spyker C 
vehicle line. In accordance with 49 CFR Part 555, the basis for the 
grant is that compliance would cause substantial economic hardship to a 
low-volume manufacturer that has tried in good faith to comply with the 
standard, and the exemption would have a negligible impact on motor 
vehicle safety. The exemption is effective through December 15, 2010.
    In accordance with the requirements of 49 U.S.C. 30113(b)(2), we 
published a notice of receipt of the application and asked for public 
comments.\1\
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    \1\ To view the application or public comments, please go to: 
http://www.regulations.gov (Docket No. NHTSA-2007-0107).

DATES: The exemption from the applicable Federal motor vehicle safety 
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standards is effective from March 25, 2009 through December 15, 2010.

FOR FURTHER INFORMATION CONTACT: Sarah Alves, Office of the Chief 
Counsel, NCC-112, National Highway Traffic Safety Administration, 1200 
New Jersey Avenue, SE., Washington, DC 20590. Phone: 202-366-2992; Fax: 
202-366-3820; e-Mail: sarah.alves@dot.gov.

SUPPLEMENTARY INFORMATION:

I. Advanced Air Bag Requirements and Small

[[Page 12926]]

Volume Manufacturers
II. Overview and Statutory Background of Petition for Economic 
Hardship Exemption
III. Petition of Spyker
IV. Federal Register Notice of May 27, 2008
V. NHTSA Analysis of Petition
VI. Agency Decision

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.'' \2\ The upgrade was designed to meet the goals of improving 
protection for occupants of all sizes, belted and unbelted, in 
moderate-to-high-speed crashes, and of minimizing the risks posed by 
air bags to infants, children, and other occupants, especially in low-
speed crashes.
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    \2\ See 65 FR 30680 (May 12, 2000).
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    The advanced air bag requirements were a culmination of a 
comprehensive plan that the agency announced in 1996 to address the 
adverse effects of air bags. This plan also included an extensive 
consumer education program to encourage the placement of children in 
rear seats. The new requirements were phased in beginning with the 2004 
model year.
    Small volume manufacturers were not subject to the advanced air bag 
requirements until September 1, 2006, but their efforts to bring their 
respective vehicles into compliance with these requirements began 
several years earlier. However, because the new requirements were 
challenging, major air bag suppliers concentrated their efforts on 
working with large volume manufacturers, and thus, until recently, 
small volume manufacturers had limited access to advanced air bag 
technology. Because of the nature of the requirements for protecting 
out-of-position occupants, ``off-the-shelf'' systems could not be 
readily adopted. Further complicating matters, because small volume 
manufacturers build so few vehicles, the costs of developing custom air 
bag systems compared to potential benefits 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 a petition submitted on August 17, 2007,\3\ Spyker Automobielen 
B.V. (``Spyker'') requested a limited extension of the temporary 
exemption that it previously received,\4\ i.e., a three-year hardship 
exemption from the ``basic'' air bag requirements and advanced air bag 
provisions of FMVSS No. 208, Occupant Crash Protection, as well as from 
49 CFR Part 581, Bumper Standard. The requested exemption would apply 
to the Spyker C vehicle line and would apply to certain advanced air 
bag requirements, specifically the requirements in S19, S21, S23, and 
S25 (the child and 5th percentile adult female driver out-of-position 
portions of the advanced air bag provisions of FMVSS No. 208). Spyker 
requested an extension for exemption from these requirements through 
December 15, 2010.
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    \3\ The petition is available at http://www.regulations.gov, 
Docket No. NHTSA-2007-0107.
    \4\ The original petition of Spyker is available at http://
www.regulations.gov, Docket No. NHTSA-2005-20455. The notice 
granting that petition, Spyker Automobielen B.V.; Grant of 
Application for a Temporary Exemption From Federal Motor Vehicle 
Safety Standards Nos. 201 and 208; and Part 581 Bumper Standard, was 
published at 70 FR 39007, July 6, 2005.
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II. Overview and Statutory Background of Petition for Economic Hardship 
Exemption

    In accordance with 49 U.S.C. 30113 and the procedures in 49 CFR 
Part 555, Spyker has petitioned the agency for a limited extension of a 
temporary exemption from certain requirements of FMVSS No. 208. 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. 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(a)(5)) 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,'' the 
statute also expressly provides for renewal of an exemption on 
reapplication.\5\ Manufacturers are nevertheless cautioned that the 
agency's decision to grant an initial petition in no way predetermines 
that the agency will repeatedly grant renewal petitions, thereby 
imparting semi-permanent exemption from a safety standard. Exempted 
manufacturers seeking renewal must bear in mind that the agency is 
directed to consider financial hardship as but one factor, along with 
the manufacturer's on-going good faith efforts to comply with the 
regulation, the public interest, consistency with the Safety Act, 
generally, as well as other such matters provided in the statute.
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    \5\ 49 U.S.C. 30113(b)(1).
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III. Petition of Spyker

    Background. NHTSA notes that a manufacturer is eligible to apply 
for a hardship exemption if its total motor vehicle production in its 
most recent year of production does not exceed 10,000, as determined by 
the NHTSA Administrator (49 U.S.C. 30113(d)). In its petition, Spyker 
stated that it manufactured 94 automobiles in 2006 and estimated a 
total production of 106 automobiles in 2007. Spyker stated that 60 
automobiles were imported into the U.S. in 2006, and Spyker projected 
that U.S. imports would total 70 Spyker automobiles in 2007. 
Subsequently, Spyker advised NHTSA that it manufactured 22 automobiles 
in 2007 and 43 in 2008. Seven Spyker automobiles were imported into the 
U.S. in 2007 and 6 were imported in 2008.
    Spyker is a wholly owned subsidiary of Spyker Cars NV, a publicly 
traded Dutch company. Spyker stated that it is unaware of any other 
automobile manufacturer having an ownership interest in Spyker.\6\ 
Moreover, Spyker stated that Spyker Cars NV has no ownership interest 
in any other vehicle

[[Page 12927]]

manufacturer, and is not under any common control with another 
automobile manufacturer.
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    \6\ Only parties with an interest of more than 5% are known and 
need to register with the Dutch authority for financial markets.
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    In July 2005, NHTSA granted Spyker a three-year hardship exemption 
from the ``basic'' air bag requirements and advanced air bag provisions 
of FMVSS No. 208 (S4.1.5.3; S14), and Part 581, expiring on June 15, 
2008 (70 FR 39007; July 6, 2005). In this same grant, NHTSA also 
exempted Spyker from S7 of FMVSS No. 108, Lamps, Reflective Devices, 
and Associated Equipment, for the first 10 Spyker C8 vehicles imported 
into the United States.
    Requested exemption. Spyker is requesting a limited extension of 
that temporary exemption. Spyker is requesting an exemption from the 
child and 5th percentile adult female driver out-of-position portions 
of the advanced air bag provisions of FMVSS No. 208 (S19, S21, S23, and 
S25).\7\ Spyker's previous exemption extended until June 15, 2008,\8\ 
and Spyker requested a two-and-a-half year extension that would exempt 
Spyker's C8 vehicle line from the listed advanced air bag requirements 
through December 15, 2010. Spyker submitted a supplement to their 
petition on April 7, 2008, which is posted in this docket, and which 
included updated financial information from 2007. See Docket No. NHTSA-
2008-0107-0003.
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    \7\ The previous exemption covered these provisions by including 
S14.
    \8\ We note that under 49 CFR 555.8(e), ``if an application for 
renewal of temporary exemption that meets the requirements of Sec.  
555.5 has been filed not later than 60 days before the termination 
date of an exemption, the exemption does not terminate until the 
Administrator grants or denies the application for renewal.''
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    Economic hardship. Spyker stated that its previously established 
financial hardship \9\ continues, in part due to the start-up nature of 
the company. Specifically, Spyker's financial information submission 
showed a net operating loss of 13,000,000 Euros ($16,900,000) from 2004 
to 2006.\10\ Spyker originally projected a further loss in 2007 of 
6,500,000 Euros ($8,450,000). Moreover, based on 2008-2010 projections, 
Spyker estimated that if the limited extension is denied, Spyker will 
bear a loss of over 2,000,000 Euros ($2,600,000) during that time. 
Spyker also stated that the loss of sales in the U.S. that would result 
if the limited extension is denied could not be made up in the rest of 
the world because the U.S. is the largest and most important market for 
the vehicle. Spyker argued that such consequences demonstrate 
``substantial economic hardship'' within the meaning of 49 U.S.C. 
30113(b)(3)(B)(i).
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    \9\ See 70 FR 39007 (July 6, 2005).
    \10\ All dollar values are based on an exchange rate of 1 Euro = 
$1.30.
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    On April 7, 2008, Spyker submitted to NHTSA a supplement to their 
petition because Spyker had recently updated its accounts for 2007.\11\ 
Spyker stated in its supplement to its petition that 2007 losses now 
total 16,000,000 Euros ($20,800,000), and stated that this higher 
number was due to their parent company having sold its interest in its 
Formula 1 (``F1'') racing team, and extraordinary financing and 
consulting costs. This new financial statement information is in 
further support of the substantial economic hardship criterion.
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    \11\ See Supplement to Petition of Spyker Cars for Limited 
Extension of Temporary Exemption (April 7, 2008), Docket No. NHTSA-
2008-0107-0003.
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    Good faith efforts to comply. Spyker stated that when it filed for 
the original exemption, the C vehicle line had no air bag system at 
all, and that the windshield design does not permit a top-mounted air 
bag on the passenger side, thereby precluding the use of a low risk 
deployment system. Spyker indicated that it has spent over 3,500,000 
Euros bringing the C vehicle line into compliance with all of the high-
speed belted and unbelted crash test requirements of the Advanced Air 
Bag rule by developing an ``interim'' driver air bag system for the C 
vehicle line. However, it stated that it has not been able to bring the 
vehicle into compliance with the child out-of-position requirements 
(S19, S21, and S23), and the 5th percentile adult female out-of-
position requirements for the driver seat (S25). Despite efforts to 
involve numerous potential suppliers, Spyker has not identified any 
that are willing to work with the company to develop an automatic 
suppression system for compliance with S19, S21, and S23. Spyker has 
budgeted an additional 3,500,000 Euros for 2008-2010 to develop, test 
and build a fully-compliant advanced air bag system for the new C line 
vehicle. Spyker also indicated that by the time its new D vehicle line 
is launched, Spyker will have spent 5,500,000 Euros developing for this 
new line an advanced air bag system fully compliant with FMVSS No. 208.
    Spyker further indicated that it plans to re-engineer the C vehicle 
line for model year 2011, at which time the D line advanced air bag 
system will be incorporated into the new C line, making the redesigned 
C line fully compliant with all advanced air bag requirements. Spyker 
stated that it will use the extension period, if granted, to develop, 
test, tool and implement the redesigned model.
    Spyker argues that an exemption would be in the 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:
    1. Spyker stated that the exempted vehicles will comply with all 
FMVSSs other than the provisions that are the subject of this extension 
request.
    2. The petitioner stated that an exemption will benefit U.S. 
employment and U.S. companies because Spyker vehicles are distributed 
by a U.S. company, Spyker of North America, and are sold and serviced 
in the U.S. through a network of 17 dealers. Spyker argued that denial 
of an extension will negatively impact these companies.
    3. Spyker argued that if the exemption is not granted, U.S. 
consumer choice would be harmed and that the agency has long maintained 
that the National Traffic and Motor Vehicle Safety Act seeks, if 
possible, to avoid limiting consumer choice.
    4. The petitioner argued that given its exotic design and high-
performance nature, the C vehicle line is not expected to be used 
extensively, nor is it expected to carry children with any frequency.
    5. Spyker stated that as of the submission date of its application 
for extension, approximately 60 exempted C line Spykers have been 
imported into the U.S. and there have been no reports of any air bag-
related injuries.
    6. Spyker stated that an important safety feature on the C line 
offers enhanced occupant protection. The petitioner stated that 
occupants are positioned in a protective ``cell'' because the main 
chassis structure is built around them.

IV. Federal Register Notice of May 27, 2008

    In the Federal Register of May 27, 2008 (73 FR 30443), we published 
a notice announcing receipt of an application from Spyker for a limited 
extension of a previously received temporary exemption from the 
advanced air bag requirements of FMVSS No. 208 for the Spyker C vehicle 
line. We invited public comment on Spyker's application. We received 
one comment in response to this publication from Spyker in support of 
its petition. See Docket No. NHTSA-2008-0107-0004. The comment was 
brief and provided an update on Spyker's air bag development work, 
confirming that the driver air bag was incorporated into Spyker vehicle 
production as of the start

[[Page 12928]]

of the second quarter of 2008. It stated that the passenger air bag 
development has been proceeding with testing and would be incorporated 
into all vehicle production prior to the expiration of the current 
exemption.

V. NHTSA Analysis of Petition

    The following discussion provides our decision regarding Spyker's 
temporary exemption request pertaining to the advanced air bag 
requirement of FMVSS No. 208.
    In July 2005 Spyker was granted a temporary exemption from the 
bumper standard and from the ``basic'' air bag requirements. Despite 
significant expenditures of capital and labor in pursuit of 
compliance,\12\ Spyker was unable to bring its Spyker C vehicle line 
into compliance with all of the advanced air bag requirements 
(although, we note, it was able to comply with sections S14.5, S15, and 
S17 of Standard No. 208, as well as 49 CFR Part 581, Bumper Standard).
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    \12\ The precise figures are provided in the confidential 
version of the petition.
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    Spyker stated that the U.S. sales losses that would occur as the 
result of an exemption extension denial could not be made up in the 
rest of the world because the U.S. is by far the largest market for 
Spyker vehicles, representing approximately 70 percent of Spyker sales. 
At the time of the petition, Spyker estimated that the difference 
between granting and denying the extension would amount to 35,000,000 
Euros ($45,500,000). Spyker stated that such consequences demonstrate 
``substantial economic hardship'' within the meaning of 49 U.S.C. 
30113(b)(3)(B)(i).
    Spyker has requested that additional specific details regarding its 
finances and financial forecasts be afforded confidential treatment 
under 49 CFR 512.4, asserting a claim for confidential information. 
NHTSA has granted the request and determined that this information is 
to be afforded confidential treatment.
    While it complies with a significant portion of the requirements of 
FMVSS No. 208, the petitioner has not been able to achieve full 
compliance despite considerable effort put forth to that end. When 
Spyker applied for and was granted its original exemption, the C8 
vehicle line had no air bag system at all because the original vehicle 
was designed in 2000 without the U.S. market and air bags in mind. 
Spyker indicated that it has spent over 3,500,000 Euros bringing the C 
vehicle line into compliance with all of the high-speed belted and 
unbelted crash test requirements of the advanced air bag requirements 
by developing an ``interim'' driver air bag system for the C vehicle 
line. However, it stated that it has not been able to bring the vehicle 
into compliance with the child out-of-position requirements (S19, S21, 
and S23), and the 5th percentile adult female out-of-position 
requirements for the driver seat (S25). Despite recent efforts to 
involve numerous potential suppliers, Spyker has not identified any 
that are willing to work with the company to develop an automatic 
suppression system for compliance with S19, S21, and S23. Spyker has 
budgeted an additional 3,500,000 Euros for 2008-2010 to develop, test 
and build a fully-compliant advanced air bag system for the new C line 
vehicle. Spyker also indicated that by the time its new D vehicle line 
is launched, Spyker will have spent 5,500,000 Euros developing for this 
new line an advanced air bag system fully compliant with FMVSS No. 208. 
Additionally, Spyker stated in its petition that it plans to re-
engineer the C line for MY 2011 (including new tooling), at which time 
the D line advanced air bag system will be incorporated into the C 
line, making the redesigned C line fully compliant with FMVSS No. 208. 
Spyker explains that it would use the exemption extension period to 
develop, test, tool, and implement the redesigned model.
    Given the above discussion, we conclude that Spyker has 
demonstrated good faith effort to bring its vehicles into compliance 
with the relevant advanced air bag requirements of FMVSS No. 208 and 
has also demonstrated the requisite financial hardship.
    We believe there are public interest considerations served by 
granting this petition. These include the general consideration of 
affording consumers a wider variety of motor vehicle choices and the 
economic benefits of affording continued employment to the Spyker's 
U.S. work force and distribution network. Moreover, we believe this 
exemption will have a minimal impact on safety given the limited number 
of vehicles, the relatively low-use nature of the vehicle, and the rare 
use of the vehicle by young children.
    After considering all of the relevant information, including 
Spyker's commitment to meet the advanced air bag requirements for the 
redesigned vehicle, we believe Spyker has presented a persuasive case 
for extending, in a limited way, the current exemption until December 
15, 2010. The agency notes that the vehicle subject to this petition 
must comply with the other portions of FMVSS No. 208 and all other 
applicable Federal motor vehicle safety standards.

VI. Agency Decision

    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 small-volume 
manufacturer that has tried in good faith to comply with the standard. 
We further conclude that granting of an exemption would be in the 
public interest and consistent with the objectives of traffic safety.
    We note that, as explained below, prospective purchasers will be 
notified that the vehicle is exempted from the specified advanced air 
bag requirements of FMVSS No. 208. Under 49 CFR Sec.  555.9(b), a 
manufacturer of an exempted passenger car must affix securely to the 
windshield or side window of each exempted vehicle a label containing a 
statement that the vehicle conforms to all applicable Federal motor 
vehicle safety standards in effect on the date of manufacture ``except 
for Standards Nos. [listing the standards by number and title for which 
an exemption has been granted] exempted pursuant to NHTSA Exemption 
No.----------.'' This label notifies prospective purchasers about the 
exemption and its subject. Under 49 CFR 555.9(c), this information must 
also be included on the vehicle's certification label.
    We note that the text of 49 CFR 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 FMVSS 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 FMVSS 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 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

[[Page 12929]]

Requirements'' is an abbreviated form of the title of S14 of FMVSS No. 
208.
    In accordance with 49 U.S.C. 30113(b)(3)(B)(i), Spyker is granted 
NHTSA Temporary Exemption No. EX 08-03, from S19, S21, S23 and S25 of 
FMVSS No. 208. The exemption shall remain in effect until December 15, 
2010.
    (49 U.S.C. 30113; delegations of authority at 49 CFR 1.50. and 
501.8)

    Issued on: March 19, 2009.
Ronald L. Medford,
Acting Deputy Administrator.
[FR Doc. E9-6576 Filed 3-24-09; 8:45 am]

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