Federal Register / Vol. 76, No. 151 / Friday, August 5, 2011 / Notices 47641

Further, Tesla believes that the lack of systems. Thus, Tesla did not focus SUMMARY: This notice denies the ESC systems on the Roadster will not development activities on meeting the petition of Pagani Automobili SpA unduly compromise safety based on the requirements of FMVSS No. 126. (Pagani)1 for exemption from certain intended use of the Roadster. The However, due to a shift in production advanced air bag requirements of Roadster is a low, two-seat sport coupe. priorities at Lotus, Tesla was informed FMVSS No. 208, for the Huayra model.2 Tesla believes that, while the Roadster that an additional quantity of Roadster The basis for the application is that the is capable of handling slippery roads gliders could be produced in 2011. petitioner avers compliance would due to ice and snow, most owners either Tesla also believes that the exemption cause substantial economic hardship do not use their Roadsters during winter is in the public interest. Tesla states and that it has tried in good faith to months or sharply limit their use. that, without the exemption, it may be comply with the standard.3 The agency Tesla also contends that the failure to required to lay off a significant number has determined that Pagani has failed to obtain the exemption would result in of employees. Further, Tesla notes that demonstrate that compliance would substantial economic hardship. Tesla denying this petition would result in cause substantial economic hardship. states that it has incurred cumulative fewer electric vehicles for sale in the Furthermore, the agency is unable to net losses of $464 million since United States. Finally, Tesla believes find that an exemption would be inception and nearly $50 million in the that continuing to sell a long range, consistent with the public interest or the first three months of 2011. Tesla states highway-capable, battery-powered objectives of the Safety Act. This action that the loss of the ability to sell the electric vehicle in the United States will follows our publication in the Federal Roadster in the United States could lead to more electric vehicles entering Register of a document announcing adversely impact its compliance with the fleet. receipt of Pagani’s petition and financial covenants with the U.S. soliciting public comments. IV. Completeness and Comment Period Department of Energy, potentially FOR FURTHER INFORMATION CONTACT: depriving it of a source of capital. Upon receiving a petition, NHTSA William H. Shakely, Office of the Chief Further, because the Roadster is the conducts an initial review of the Counsel, NCC–112, National Highway only vehicle Tesla offers for sale in the petition with respect to whether the Traffic Safety Administration, 1200 New United States, Tesla contends that the petition is complete and whether the Jersey Avenue, SE., West Building 4th cancellation of the program would petitioner appears to be eligible to apply Floor, Room W41–326, Washington, DC result in a significant loss of market for for the requested petition. The agency 20590. Telephone: (202) 366–2992; Fax: Tesla. has tentatively concluded that the (202) 366–3820. Tesla states that it spent between $2 petition from Tesla is complete and that SUPPLEMENTARY INFORMATION: million and $3 million developing an Tesla is eligible for a temporary ESC system for the Model S. Tesla does exemption. The agency has not made I. Advanced Air Bag Requirements and not have a precise cost to equip the any judgment on the merits of the Small Volume Manufacturers Roadster with an ESC system, but application, and is placing a non- In general, frontal air bags for drivers applying the per vehicle cost of its confidential copy of the petition in the and right front passengers have large net Model S to the Roadster, it would cost docket. benefits. NHTSA estimates that they as much as $30,000 per vehicle to equip We are providing a 30-day comment saved 30,232 lives from 1987 through ESC systems onto Roadsters planned to period. After considering public the end of 2009.4 Air bags reduce be sold under the exemption. comments and other available overall fatality risk in purely frontal Tesla notes that its chassis is based information, we will publish a notice of crashes by 29 percent. They reduce upon the Lotus Elise, which is equipped final action on the application in the overall fatality risk by 12 percent for with ABS, but not an ESC system. Federal Register. drivers of passenger cars, and by 14 Because Lotus is ending production of Issued on: August 2, 2011. percent for right front passengers of the Elise for the United States market by 5 Christopher J. Bonanti, passenger cars. August 2011, Lotus will not invest in In 2000, NHTSA published a final Associate Administrator for Rulemaking. redesigns or additions to existing rule that upgraded the requirements for vehicle systems, including changes to [FR Doc. 2011–19914 Filed 8–4–11; 8:45 am] air bags in passenger cars and light comply with the ESC system BILLING CODE 4910–59–P trucks, requiring what are commonly requirements. Tesla states that, given known as ‘‘advanced air bags.’’ 6 The the small number of Roadsters planned upgrade was designed to meet the twin DEPARTMENT OF TRANSPORTATION for production during the exemption goals of improving protection for period and the short time frame National Highway Traffic Safety occupants of all sizes, belted and available to Tesla, it is technologically Administration and economically infeasible to develop 1 Pagani was formerly known by Modena Design, an ESC system for the Roadster. [Docket No. NHTSA–2008–0181, Notice 2] the name reflected in the notice of receipt of the Tesla contends that it has exerted petition. good faith efforts to achieve compliance Pagani Automobili SpA; Denial of 2 In the original petition, this model was referred Application for Temporary Exemption to as the C9 model. In subsequent submissions, the with FMVSS No. 126. Tesla has company indicated that the model is now known developed an ESC system for the From Advanced Air Bag Requirements as the Huayra. upcoming Model S, which is scheduled of FMVSS No. 208 3 To view the application, go to http:// www.regulations.gov and enter the docket number to be introduced in the United States in AGENCY: National Highway Traffic 2012. Tesla also states that it has set forth in the heading of this document. Safety Administration (NHTSA), 4 Traffic Safety Facts—2009 Data—Occupant included a number of features not Department of Transportation (DOT). Protection, NHTSA Report No. DOT HS 811 390, mandated by the FMVSSs, including the Washington, DC, 2010. ACTION: Notice of denial of petition for TCS system discussed earlier. Tesla 5 Kahane, C.J., Lives Saved by the Federal Motor temporary exemption from certain notes that it had intended on ending Vehicle Safety Standards and Other Vehicle Safety provisions of Federal Motor Vehicle Technologies, 1960–2002, NHTSA Technical Report Roadster production prior to September Safety Standard (FMVSS) No. 208, No. DOT HS 809 833, Washington, 2004, pp. 108– 1, 2011 and, thus, would not have been Occupant Crash Protection. 115. required to equip its vehicles with ESC 6 See 65 FR 30680 (May 12, 2000).

VerDate Mar<15>2010 15:16 Aug 04, 2011 Jkt 223001 PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 E:\FR\FM\05AUN1.SGM 05AUN1 erowe on DSKG8SOYB1PROD with NOTICES 47642 Federal Register / Vol. 76, No. 151 / Friday, August 5, 2011 / Notices

unbelted, in moderate-to-high-speed Notwithstanding those previous The costs of compliance with the crashes, and of minimizing the risks grants of exemption, NHTSA has advanced air bag requirements of posed by air bags to infants, children, considered two key issues— FMVSS No. 208 are costs that all and other occupants, especially in low- (1) Whether it is in the public interest entrants to the U.S. automobile speed crashes. The agency estimated to continue to grant such petitions, marketplace should expect to bear. that the upgraded requirements had the particularly in the same manner as in Furthermore, NHTSA understands that, potential to reduce fatalities and the past, given the number of years in contrast to the initial years after the nonfatal injuries from crashes, as well as these requirements have now been in advanced air bag requirements went protect more than 95 percent of the at- effect and the benefits of advanced air into effect, low volume manufacturers risk population (out-of-position infants, bags, and now have access to advanced air bag children, and small-statured adults) (2) to the extent such petitions are technology.9 Accordingly, NHTSA from the risks presented by air bag granted, what plans and concludes that the expense of advanced deployment. countermeasures to protect child and air bag technology is not now sufficient, infant occupants, short of compliance The issuance of the advanced air bag in and of itself, to justify the grant of a with the advanced air bag requirements, petition for a hardship exemption from requirements was a culmination of a 8 should be expected. the advanced air bag requirements. comprehensive plan that the agency While the exemption authority was announced in 1996 to address the created to address the problems of small II. Statutory Basis for Requested Part adverse effects of some air bag designs. manufacturers and the agency wishes to 555 Exemption This plan also included an extensive be appropriately attentive to those The National Traffic and Motor consumer education program to problems, it was not anticipated by the Vehicle Safety Act (Safety Act), codified encourage the placement of children in agency that use of this authority would as 49 U.S.C. Chapter 301, provides the rear seats. result in small manufacturers being Secretary of Transportation authority to The new requirements were phased- given much more than relatively short exempt, on a temporary basis and under in, beginning with the 2004 model year. term exemptions from recently specified circumstances, motor vehicles Small volume manufacturers were not implemented safety standards, from a motor vehicle safety standard or subject to the advanced air bag especially those addressing particularly bumper standard. This authority is set requirements until the end of the phase- significant safety problems. forth at 49 U.S.C. 30113. The Secretary in period, i.e., September 1, 2006. Over time, the number of petitions for has delegated the authority for exemption from the advanced air bag implementing this section to NHTSA. In recent years, NHTSA has addressed requirements has decreased, and several a number of petitions for exemption The Act authorizes the Secretary to small manufacturers that previously grant a temporary exemption to a from the advanced air bag requirements received exemptions now produce of FMVSS No. 208. The majority of manufacturer of not more than 10,000 vehicles that comply with the advanced motor vehicles annually, on such terms these requests have come from small air bag requirements. The majority of manufacturers, each of which has as the Secretary deems appropriate, if current petitions before the agency are the Secretary finds that the exemption petitioned on the basis that compliance petitions for limited extension of would cause it substantial economic would be consistent with the public previously granted exemptions. interest and also finds that compliance hardship and that it has tried in good Given the passage of time since the with the standard would cause faith to comply with the standard. In advanced air bag requirements were substantial economic hardship to the recognition of the more limited established and implemented, and in manufacturer and that the manufacturer resources and capabilities of small light of the benefits of advanced air has tried to comply with the standard in motor vehicle manufacturers, authority bags, NHTSA has determined that it is to grant exemptions based on good faith. not in the public interest to continue to NHTSA established Part 555, substantial economic hardship and good grant exemptions from these Temporary Exemption from Motor faith efforts was added to the Vehicle requirements in the same circumstances Vehicle Safety and Bumper Standards, Safety Act in 1972 to enable the agency and under the same terms as in the past. to implement the statutory provisions to give those manufacturers additional concerning temporary exemptions. time to comply with the Federal safety 8 The agency requested comments on these issues Under Part 555, a petitioner must standards. in recent notices of receipt. See, e.g., Notice of Receipt of Application of Spyker Automobielen, provide specified information in NHTSA has granted a number of these B.V., 76 FR 19179 (Apr. 6, 2011); Notice of Receipt submitting a petition for exemption. petitions, usually in situations in which of Applications of Koenigsegg AB and Morgan These requirements are specified in 49 the manufacturer is supplying standard Motor Company Limited, 76 FR 20082 (Apr. 11, CFR 555.5, and include a number of 7 2011). Advocates for Highway and Auto Safety air bags in lieu of advanced air bags. In (Advocates) concurred with NHTSA’s concerns addressing these petitions, NHTSA regarding the continuation of such exemptions and 9 The recent petitions for exemption support recognized that small manufacturers the agency’s conclusions regarding the availability NHTSA’s belief that advanced air bag technology faced particular difficulties in acquiring of advanced air bag technology. Docket Nos. has become more accessible to small volume NHTSA–2011–0030–0006, NHTSA–2011–0006– manufacturers in recent years. In addition to the or developing advanced air bag systems. 0004. Vision Motor Cars, Inc. (VMCI), agreed with fact that several manufacturers who received Specifically, the agency noted that NHTSA’s concerns about advanced air bag exemptions in the past have been able to produce major air bag suppliers initially exemptions but recommended that a distinction be fully-compliant vehicles, many of the concentrated their efforts on working made between initial exemptions and extensions, manufacturers who have petitions pending before with extensions receiving more scrutiny. Docket the agency have been developing advanced air bag with large volume manufacturers and No. NHTSA–2011–0030–0003. Koenigsegg systems in-house or are working with suppliers to small volume manufacturers had Automotive AB (Koenigsegg) commented that a develop such systems. See, e.g., Notice of Receipt limited access to advanced air bag change to NHTSA policy regarding advanced air of Application of Spyker Automobielen, B.V., 76 FR technology. bag exemptions would be justified if there were 19179 (Apr. 6, 2011) (manufacturer is working with evidence of a safety problem with the existing a supplier to develop advanced air bag system); policy, but that, in the absence of such evidence, Notice of Receipt of Petition of Lotus Cars Ltd., 76 7 See, e.g., Grant of petition of Panoz, 72 FR 28759 such exemptions should be considered in FR 33406 (June 8, 2011) (manufacturer has another (May 22, 2007); Grant of petition of Koenigsegg accordance with past policy. Docket No. NHTSA– model that fully complies with the advanced air bag Automotive AB, 72 FR 17608 (April 9, 2007). 2011–0006–0005. requirements).

VerDate Mar<15>2010 15:16 Aug 04, 2011 Jkt 223001 PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 E:\FR\FM\05AUN1.SGM 05AUN1 erowe on DSKG8SOYB1PROD with NOTICES Federal Register / Vol. 76, No. 151 / Friday, August 5, 2011 / Notices 47643

items. Foremost among them are that Protection, which establishes the the petition for exemption is denied and the petitioner must set forth the basis of advanced air bag requirements. In no vehicles are sold in the United the application under § 555.6, and the supplemental submissions, the States, the company would make an reasons why the exemption would be in company stated that it plans on estimated Ö5,398,000 in net income the public interest and consistent with beginning the production of the Huayra during the period of 2011 through 2014, the objectives of 49 U.S.C. Chapter 301. at the end of 2011 and clarified its plans compared to Ö8,613,000 in net income A manufacturer is eligible to apply for with respect to S14 of FMVSS No. 208, during the same period if an exemption a hardship exemption if its total motor stating that it will certify its vehicles to were granted. The company asserted vehicle production in its most recent comply with the 30 mph belted 50th that the difference in gross revenue year of production did not exceed percentile male barrier impact test between granting and denying the 10,000 vehicles, as determined by the (S14.5.1(a)). Pagani has also since stated exemption is approximately NHTSA Administrator (49 U.S.C. that it plans to certify to the unbelted Ö34,000,000, and the financial records 30113). 50th percentile male barrier impact test indicate a difference in projected net In determining whether a in force prior to September 1, 2006 income of approximately Ö3,215,000. manufacturer of a vehicle meets that (S5.1.2(a)) (with the unbelted sled test Although Pagani has realized profits criterion, NHTSA considers whether a in S13 being an acceptable option for in recent years, the company asserted second vehicle manufacturer also might that requirement). Finally, Pagani that immediate compliance with the be deemed the manufacturer of that indicated that it has accelerated its advanced air bag requirements will vehicle. The statutory provisions compliance testing and would only cause substantial economic hardship. governing motor vehicle safety (49 need a two-year exemption. Specifically, Pagani stated that the U.S.C. Chapter 301) do not state that a Eligibility—Pagani asserted that it company only operates on the cash on manufacturer has substantial produces, on average, no more than 25 hand without lines of credit or debt responsibility as manufacturer of a vehicles per year. The company financing, and its small profit margin is vehicle simply because it owns or estimated that if the requested necessary to guard it from market controls a second manufacturer that exemption were granted, it would sell fluctuations. assembled that vehicle. However, the 35 to 45 vehicles per year, 6 to 12 Pagani stated that without an agency considers the statutory vehicles of which would be sold in the exemption, it will not be able to fund definition of ‘‘manufacturer’’ (49 U.S.C. United States. The original petition the advanced air bag program, which is 30102) to be sufficiently broad to stated that Pagani contracts out some estimated as costing Ö4,000,000, from its include sponsors, depending on the aspects of vehicle development, but non-U.S. sales and will not be able to circumstances. Thus, NHTSA has stated asserted that these are arms-length enter the U.S. market until at least 2015. that a manufacturer may be deemed to transactions. Finally, Pagani stated that its be a sponsor and thus a manufacturer of Economic Hardship—The agency production capacity is currently limited a vehicle assembled by a second notes that the material submitted by to approximately 25 units per year manufacturer if the first manufacturer Pagani consists of its original 2007 worldwide. The company indicated that had a substantial role in the petition, as well as updated financial its plan is to expand its production development and manufacturing information the company provided in capacity to 50 to 60 units per year process of that vehicle. 2008, 2010, and 2011. In determining worldwide by building a new factory. the existence of substantial economic However, the company stated that the III. Pagani’s Petition hardship, we rely primarily on the most new factory represents a significant Background—Pagani, an Italian recent financial information. The investment for the company and could corporation, was formed in 1991 and original petition was based on estimated not be justified without the revenue has been producing a small number of compliance costs at the time and from U.S. sales. Accordingly, luxury sports cars since 1999. Pagani financial projections for 2009 through construction of this new facility cannot currently produces one vehicle, the C8 2011. Given the passage of time and the begin unless an exemption is granted. Zonda, which is not sold in the United updated financial information, these Compliance Efforts—Pagani asserted States, but the company has been projections are no longer relevant. The that small volume manufacturers have developing a new vehicle, the Huayra, most recent financial records provide delayed access to ‘‘off-the-shelf’’ a two-seat sports car, which it plans on updated estimated compliance costs for systems and must wait for technology to selling in the United States and for the advanced air bag program as well as ‘‘trickle down’’ from larger which it seeks an exemption. The financial projections for 2011 through manufacturers and suppliers. The Huayra Pagani submitted its original 2014, one set in the event an exemption company further noted that because petition in 2007 and a notice of receipt is granted and one set in the event the small volume manufacturers build so was published on November 25, 2008. exemption is denied. The most recent few vehicles, the costs of developing Pagani subsequently requested that the records, as well as Pagani’s custom advanced air bag systems, as agency delay a decision on its petition accompanying descriptions, reflect the compared to potential profits, because of changes in the company’s company’s current financial condition discourages some air bag suppliers from production plans. In 2008, 2010, and and the company’s estimates of the working with these manufacturers. In a 2011, the company submitted projected effect of a grant or denial of supplemental submission, the company supplementary information regarding its the exemption petition. These records, stated that 65 percent of its costs have financial situation and its compliance and the relevant factual information been focused on developing a U.S. efforts. This information is included in from past submissions, are summarized version of the Huayra. the summary below and the below. Pagani indicated that it has partnered submissions have been posted to the Pagani submitted financial records with Applus+ IDIADA, a Spanish docket. from 2004 to 2010 showing net incomes engineering services company that has Requested Exemption—Pagani ranging from Ö13,327 to Ö832,000, with previously provided advanced air bag originally requested a three-year a total net income of approximately development solutions and testing for exemption from paragraph S14 of Ö1,947,846. The company also small volume manufacturers, and Bosch FMVSS No. 208, Occupant Crash submitted projections estimating that if Engineering GmbH to develop its

VerDate Mar<15>2010 15:16 Aug 04, 2011 Jkt 223001 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 E:\FR\FM\05AUN1.SGM 05AUN1 erowe on DSKG8SOYB1PROD with NOTICES 47644 Federal Register / Vol. 76, No. 151 / Friday, August 5, 2011 / Notices

advanced air bag systems. Pagani rarely ride in the vehicle.10 Finally, stated that without an exemption, it will estimated that the cost of developing an Pagani argued that if an exemption is not be able to fund the advanced air bag advanced air bag system is Ö4,000,000. not granted, U.S. consumer choice program, which is estimated as costing The project began in 2009 and was would be adversely affected. approximately Ö4,000,000, from its non- initially scheduled to be completed at IV. Notice of Receipt U.S. sales. The company further stated the beginning of 2014, at which time that, in the event of a denial, the Pagani would begin production of fully- On November 25, 2008, we published company will not be able to enter the compliant Huayra vehicles. As in the Federal Register (73 FR 71725) a U.S. market until at least 2015. discussed above, Pagani indicated that it notice of receipt of Pagani’s petition for Additionally, denial would postpone has accelerated its testing schedule and temporary exemption, and provided an construction of a new factory needed to opportunity for public comment. We is requesting a two year, rather than, increase the company’s production received one comment, which was from three year, exemption from the capacity.11 Pagani, containing additional advanced air bag requirements. information regarding the company’s The touchstone that NHTSA uses in According to Pagani, the vehicles financial situation and compliance determining the existence of substantial produced during the exemption period efforts as well as a request to delay a economic hardship is an applicant’s will be equipped with a standard air bag decision on the petition because of financial health, as indicated by its system for both the driver and passenger changes to the Huayra’s production income statements. NHTSA has tended seating positions and will comply with schedule. to consider a continuing and a the pre-S14 provisions of FMVSS No. cumulative net loss position as strong V. Agency Analysis and Decision 208. Additionally, Pagani stated that it evidence of hardship.12 The theory will certify its vehicles to comply with In this section, we provide our behind NHTSA’s rationale is that, if a the belted 50th percentile male barrier analysis and decision regarding Pagani’s company with a continuing net loss is impact test (S14.5.1(a)) and to the temporary exemption request required to divert its limited resources unbelted 50th percentile male barrier concerning advanced air bag to resolve a compliance problem on an impact test in force prior to September requirements of FMVSS No. 208. As immediate basis, it may be unable to use 1, 2006 (S5.1.2(a)) (with the unbelted discussed below, we are denying those resources to solve other problems sled test in S13 being an acceptable Pagani’s petition because Pagani has that may affect its viability. In this case, failed to demonstrate that compliance option for that requirement). Pagani has made profits in recent years, would cause substantial economic and based on its projections, would Public Interest—Pagani stated that the hardship and because we are unable to Huayra comes equipped with numerous continue to do so even if its petition is conclude that an exemption would be in denied and the company is limited to features that enhance safety, and that the public interest and consistent with the granting of this exemption would be selling vehicles outside of the United the objectives of the Safety Act. States. consistent with the public interest and Eligibility—As discussed above, a the objectives of the Safety Act (see 49 manufacturer is eligible to apply for an As noted by Pagani in its petition, the U.S.C. chapter 301). The petitioner economic hardship exemption if its total existence of recent net income does not asserted that the vehicles incorporate motor vehicle production in its most necessarily preclude a finding of design features that have significant recent year of production did not exceed substantial economic hardship. In safety benefits. These include the use of 10,000 vehicles, as determined by the situations where a petitioner’s financial carbon-fiber technology, which provides NHTSA Administrator (49 U.S.C. records show recent net income, the great strength at a low weight. The fuel 30113). Pagani asserted that it produces, agency balances the net income against tank is incorporated into the carbon on average, no more than 25 vehicles the costs of compliance and the effect of chassis for maximum protection, and per year. The company estimated that if a denial on the company. In past the chassis also incorporates the the requested exemption were granted, petitions, we have noted that even monocoque protective ‘‘cell’’ design. it would sell 35 to 45 vehicles per year, where a small enterprise manages a net Enhanced by a metal roll cage and alloy 6 to 12 vehicles of which would be sold front and rear chassis subframes, the in the United States. The original 11 In its original petition, Pagani also asserted vehicle provides a significant safety petition stated that Pagani contracts out that, without an exemption, it would be unable to some aspects of vehicle development, fund the Ö13,000,000 in investment costs it would benefit in the event of a crash or have to make in the Huayra from 2009 to 2011. In rollover. The monocoque design can but asserted that these are arms-length a July 9, 2010 e-mail to the agency, Pagani briefly stay rigid during repeated impacts, transactions. noted that investment in the Huayra had risen to Accordingly, we have determined that Ö20,000,000 and that this would be funded by its providing an additional source of net income from 2008 through 2010 as well as U.S. protection in the event of a potentially Pagani is eligible to apply for an economic hardship exemption. sales from 2011 to 2013 under an exemption. penetrating impact. Pagani indicated However, no further discussion of these investment Substantial Economic Hardship— that these features serve, in part, to costs was made in the company’s most recent Pagani asserted that the difference financial records or its February 22, 2011, increase the crashworthiness of the between granting and denying the description of its financial situation and the effect vehicle. Additionally, the company exemption is an approximately of a denial of the exemption on the company. In any indicated that all exempted cars will event, the company did not explain in its original Ö34,000,000 reduction in gross revenue have standard air bags which comply petition, or in any of its subsequent submissions, from 2011 to 2014. Additionally, the why all of the investment costs for the Huayra have with the pre-S14 provisions of FMVSS financial records show a reduction in to be recouped immediately during the exemption No. 208. projected net income of approximately period, particularly in light of the long model life of the vehicle. See Denial of petition of Ferrari Pagani stated that the risk to the Ö3,215,000 from 2011 to 2014. Pagani S.p.A, 55 FR 3785 (Feb. 5, 1990) (the agency found public will be minimal given that only unpersuasive the manufacturer’s bare assertion that 6 to 12 vehicles will be sold per year in 10 In the original petition, the company also an exemption was necessary to recoup its the United States, each vehicle is only indicated that the vehicle would be equipped with investment without further explanation as to why expected to be driven approximately an on-off air bag switch. In a supplemental this recovery had to begin immediately). submission to the agency, the company indicated 12 See Grant of petition of Bugatti Automobili, 2,500 miles annually, and children will that no on-off switch would be installed. S.p.A., 59 FR 11649, 11650 (Mar. 11, 1994).

VerDate Mar<15>2010 15:16 Aug 04, 2011 Jkt 223001 PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 E:\FR\FM\05AUN1.SGM 05AUN1 erowe on DSKG8SOYB1PROD with NOTICES Federal Register / Vol. 76, No. 151 / Friday, August 5, 2011 / Notices 47645

profit, the agency may find that Accordingly, the agency concludes vehicle occupants.16 Accordingly, the hardship exists.13 that a measure of economic hardship agency is unable to find that an In this case, Pagani earned profits of may result from the denial, but it cannot exemption would be consistent with the approximately Ö1,947,846 from 2004 to be characterized as ‘‘substantial’’ given public interest and the objectives of the 2010. This amount is less than the Pagani’s current financial condition, its Safety Act. Ö4,000,000 it will cost to complete the financial projections, and the Decision—Based on the foregoing, the advanced air bag program. Accordingly, continuing demand for its vehicles agency is unable to make a finding of immediate compliance would result in outside of the United States. substantial economic hardship or that net losses. However, considering the Public Interest—We have also an exemption would be consistent with effect of a denial on the company, we the public interest and the objectives of examined whether an exemption in this believe that the fact that immediate the Safety Act. Accordingly, Pagani’s case would be consistent with the compliance would cause Pagani to petition for temporary exemption is public interest and the objectives of the suffer short-term losses is insufficient to denied. demonstrate substantial economic Safety Act, as is required by the Act and the implementing regulations (49 CFR (49 U.S.C. 30113; delegations of authority at hardship. 49 CFR 1.50. and 501.8) Examining Pagani’s petition and 555.5(b)(7)). Pagani has requested an supplemental submissions, it appears exemption from all of the advanced air Issued on: July 29 2011. that the hardship from denying the bag requirements except for the 30 mph David L. Strickland, petition consists of decreased belted 50th percentile male barrier Administrator. anticipated profits and the inability to impact test, compliance with which the [FR Doc. 2011–19934 Filed 8–4–11; 8:45 am] enter the U.S. market until it fields a agency has conditioned previous BILLING CODE 4910–59–P fully compliant vehicle. With an advanced air bag exemptions. Pagani exemption, Pagani projects earning stated that (1) the Huayra has several Ö8,613,000 in net income from 2011 to features that increase the DEPARTMENT OF TRANSPORTATION 2014. Without an exemption, Pagani crashworthiness of the vehicle, (2) a projects earning Ö5,398,000 in net limited number of vehicles will be sold Surface Transportation Board income during the same period. Based in the U.S. and each vehicle is expected [Docket No. FD 35538] on these projections, Pagani would to be driven approximately 2,500 miles continue to earn increasing net income annually, (3) the vehicle is expected to CSX Transportation, Inc.—Trackage each year without an exemption. rarely carry children, and (4) a denial of Rights Exemption—Norfolk Southern Additionally, the amount of net income the exemption would adversely affect Railway Company projected over the next several years if consumer choice. Pursuant to a written trackage rights the petition is denied would appear to Although the agency supports agreement, Norfolk Southern Railway cover the costs of the Ö4,000,000 additional crashworthiness features Company (NSR) has agreed to grant advanced air bag program. designed to increase the safety of In contrast to most of the approximately 3,290 feet of overhead occupants in the vehicle, we note that trackage rights to CSX Transportation, manufacturers that have been granted most of the requirements from which 1 exemptions, Pagani has historically Inc. (CSXT), between the point of Pagani seeks exemption were switch at Track Station 55 + 65 and the made profits and projects increasing implemented to minimize the risks profits even in the event that an point of switch at Track Station 30 + 70, posed by air bags to infants, children, and the portion of NSR’s track parallel exemption is denied.14 Additionally, and small-statured adults, especially in to CSXT’s track between the point of unlike several profitable manufacturers low-speed crashes. In the 2000 final switch at Track Station 30 + 55 and that have been granted exemptions in rule, the agency estimated that these Track Station 22 + 75, in Hamilton the past, Pagani currently only sells requirements had the potential to County, Tenn. vehicles outside of the U.S., and the protect more than 95 percent of the at- The transaction is scheduled to be company expects to maintain and risk population (out-of-position infants, consummated on or after August 21, exceed its current sales levels in the children, and small-statured adults) 2011, the effective date of the exemption event that an exemption is denied.15 from the risks presented by air bag (30 days after the exemption was filed). deployment. The Huayra’s CSXT states that it and NSR both own 13 See, e.g., Grant of petition of Panther Motor Car crashworthiness features do not mitigate Co. Ltd., 54 FR 12731 (Mar. 28, 1989). tracks between Craven’s Yard and the 14 Compare Denial of petition of Ferrari S.p.A, 55 these risks, and although Pagani riverfront in the vicinity of 19th Street FR 3785 (Feb. 5, 1990) (manufacturer had a history asserted that children will rarely ride in in Chattanooga, Tenn. According to of earning profits and would continue to do so if the Huayra, the company has not CSXT, NSR’s single spur track crosses the petition were denied), with Grant of petition of proposed any measures or warnings to Koenigsegg Automotive AB, 72 FR 17608 (Apr. 9, CSXT’s single spur track at Chestnut 2007) (manufacturer had recently experienced reduce the chance that a child or small- Street, just north of Craven’s Yard under losses and would experience further losses if its statured adult would ride in the vehicle provisions of an agreement dated petition were denied); Grant of petition of YES! nor has the company described any January 30, 1907, as supplemented (the Sportscars, 71 FR 68888 (manufacturer had vehicle features designed to mitigate the continuing and cumulative net loss position and Lewis Street Crossing Agreement). To would experience further losses if the petition were safety risks of standard air bags to denied); Grant of petition of Morgan Motor 16 In the original petition, the company indicated Company Limited, 71 FR 52851 (manufacturer had 2006) (denial of the petition would reduce the that the vehicle would be equipped with an on-off continuing and cumulative net loss position and manufacturer’s U.S. sales by 85 percent); Grant of air bag switch. In a supplemental submission to the would experience further losses if the petition were petition of Panther Motor Car Co. Ltd., 54 FR 12731 agency, the company indicated that no on-off denied); Grant of petition of Spyker Automobielen (Mar 28, 1989) (denial of petition would result in switch would be installed. B.V., 70 FR 39007 (July 6, 2005) (manufacturer had temporary suspension of manufacturer’s sales in the 1 A redacted, executed trackage rights agreement continuing and cumulative net loss position and U.S. market); Grant of petition of Aston Martin between CSXT and NSR was filed with the notice would experience further losses if the petition were Lagonda Limited, 52 FR 26760 (July 16, 1987) of exemption. The unredacted version was denied). (denial of petition would delay further sales of concurrently filed under seal along with a motion 15 See, e.g., Grant of petition of Ferrari S.p.A and vehicles in the U.S., which represented over one- for protective order, which will be addressed in a Ferrari North America, Inc., 71 FR 29389 (May 22, third of the manufacturer’s total sales). separate decision.

VerDate Mar<15>2010 15:16 Aug 04, 2011 Jkt 223001 PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 E:\FR\FM\05AUN1.SGM 05AUN1 erowe on DSKG8SOYB1PROD with NOTICES