Rulemaking Procedures

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

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.

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:

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.

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.3 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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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.

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.4 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.

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\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).

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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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