Temporary Exemption From Motor Vehicle Safety Standards

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 555

[Docket No. 98-NHTSA-4285]

RIN 2127-AH44

Temporary Exemption From Motor Vehicle Safety Standards

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

ACTION: Technical amendments; final rule.

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SUMMARY: This document amends Part 555 to clarify procedures for

submitting confidential business information to accompany applications

for temporary exemption from one or more of the Federal motor vehicle

safety standards. The intent of the rule is to simplify the process for

manufacturers who may wish to claim confidentiality for information in

their applications.

The agency is also amending the temporary exemption procedures to

give examples of factors that may be relevant in preparing hardship

applications, and in demonstrating that good faith efforts have been

made to comply with standards for which an exemption may be sought.

Finally, the agency is updating statutory references and the

location of the docket room where public comments are available for

inspection.

DATES: The final rule is effective August 18, 1998.

FOR FURTHER INFORMATION CONTACT: Taylor Vinson, Office of Chief

Counsel, NHTSA (202-366-5263).

SUPPLEMENTARY INFORMATION: The primary purpose of this document is to

clarify the agency's confidential business information procedures so

that applicants for temporary exemption from the Federal motor vehicle

safety standards may comply with NHTSA's procedural requirements

without unnecessary delay.

Manufacturers who apply for temporary exemptions from Federal motor

vehicle safety standards are afforded an opportunity to ``specify any

part of the information and data submitted which petitioner requests be

withheld from public disclosure in accordance with part 512'' of

Chapter V, Title 49, Code of Federal Regulations. Part 512,

Confidential Business Information, is the agency's regulation setting

forth the procedures under which NHTSA will consider claims that

information submitted to the agency is confidential business

information as described in 5 U.S.C. 552(b)(4).

The agency has found that, when some manufacturers file their

exemption applications, they assert a claim for confidentiality without

submitting the documentation required by part 512, or otherwise

substantiating their request. The absence of substantiation causes

unnecessary delay while the Office of Chief Counsel contacts the

applicant and explains the necessity of either submitting

substantiation or withdrawing its request.

NHTSA has also found that when some small manufacturers apply for

the first time for a temporary exemption based on a claim that

compliance would cause them substantial economic hardship, they do not

request confidential information for the financial information they

submit in support of their claim of hardship. They do not realize they

must make a specific request for confidentiality to prevent the

information from becoming a matter of public record. This omission by

applicants had limited consequences when their applications were

available only through inspection in NHTSA's docket room. However, the

applications and their supporting information are now placed ``on

line'' and may be

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accessed through the internet, making possible a much wider exposure.

This problem is readily avoidable through making the necessary request

for withholding information from public disclosure. It has been NHTSA's

practice to grant confidentiality, when requested, to such information,

and to deny it only with respect to the information absolutely required

to explain or justify a hardship decision, which must be shared with

the public as the basis for NHTSA's decision. For example, the agency

must make public the company's net losses in the three years

immediately preceding the filing of its application.

NHTSA is therefore amending Sec. 555.5(b)(6) to add subparagraphs

(i) and (ii). Under Sec. 555.5(b)(6)(i), a manufacturer's specification

of withholding must be submitted in accordance with 49 CFR 512.4,

Asserting a claim for confidential information. Under

Sec. 555.5(b)(6)(ii), the manufacturer's request for withholding must

be accompanied by a certification in support as set forth in Appendix A

to 49 CFR Part 512. NHTSA believes that these reminders will ensure

timely compliance with the confidential business information, to the

advantage of both the applicant and NHTSA.

In a related issue, in 1996, the agency received a petition for

rulemaking from the Coalition of Small Vehicle Manufacturers (COSVAM)

to amend Parts 555 and Part 571. Although no formal action has been

taken on this petition, the agency is amenable to two of the requests

relating to Sec. 555.6(a), the provisions under which the Administrator

may temporarily relieve a manufacturer from compliance upon finding

that ``compliance would cause substantial economic hardship to a

manufacturer that has tried to comply with the standard in good

faith.'' 49 U.S.C. 30113(b)(3)(B)(I).

Under Sec. 555.6(a)(1)(vi), an applicant is invited to discuss

``any other hardships (e.g., loss of market) that the petitioner

desires the agency to consider.'' COSVAM asked that the agency consider

``factors such as the difficulty in obtaining suppliers * * *.'' It is

a common refrain of small volume manufacturers that it is difficult for

them to interest outside suppliers in engineering air bags or antilock

brake systems for limited production vehicles. NHTSA has taken this

claim into account when the issue has been raised, and considered it in

formulating a decision. Accordingly, NHTSA is codifying this practice

by adding ``difficulty in obtaining suppliers'' to loss of market as an

example of a hardship whose existence may be argued when it is relevant

to do so.

COSVAM also argued that the agency should be specific about factors

it takes into consideration in determining whether an applicant has

tried in good faith to comply. Two of these factors cited as relevant

by COSVAM are the resources available to the applicant, and its

inability to procure goods and services necessary for compliance

following a timely request. The agency has also considered these

factors in its deliberations without necessarily discussing them in

each relevant case. NHTSA is also amenable to codifying this practice

by expressly citing these factors in part 555 as relevant to the

hardship argument. Accordingly, it is adding a new

Sec. 555.6(a)(2)(iii) to implement COSVAM's request.

Finally, NHTSA is adopting several technical amendments. The

National Traffic and Motor Vehicle Safety Act (15 U.S.C. 1381 et seq.)

was repealed on July 5, 1994, and reenacted without substantive change

as 49 U.S.C. Chapter 301-Motor Vehicle Safety. References to the former

statute have been changed to reflect the new references in Sec. 555.1

and Sec. 555.10(b). Since the location of the NHTSA Docket Room was

changed in 1997, Sec. 555.10(a) has been revised to substitute the new

location.

Effective Date

Since the amendment relates to internal procedures, prior notice

and comment on it are not required under the Administrative Procedure

Act. Since the rule imposes no additional burden upon any party, the

agency hereby finds that an effective date earlier than 180 days after

issuance is in the public interest, and the final rule is effective

upon its publication in the Federal Register.

Rulemaking Analyses

A. Executive Order 12866 (Federal Regulation) and DOT Regulatory

Policies and Procedures

This notice has not been reviewed under E.O. 12866. After

considering the impacts of this rulemaking action, NHTSA has determined

that the action is not significant within the meaning of the Department

of Transportation regulatory policies and procedures. The final rule

makes no substantive changes. The impacts are so minimal as not to

warrant the preparation of a full regulatory evaluation.

B. Regulatory Flexibility Act

The agency has also considered the effects of this action in

relation to the Regulatory Flexibility Act. For the reasons discussed

above, I certify that this action would not have a significant economic

impact upon ``a substantial number of small entities.'' The amendment

is intended to assist potential applicants for temporary exemptions,

including small businesses, to understand agency procedures so that, if

a request for confidentiality is made, the documentation will be

complete at the time the request is made. It is also designed to

provide guidance as to arguments the agency considers relevant in

making decisions upon exemption applications. Governmental

jurisdictions will not be affected at all since they are generally

neither importers nor purchasers of nonconforming imported motor

vehicles.

C. Executive Order 12612 (Federalism)

The agency has analyzed this action in accordance with the

principles and criteria contained in Executive Order 12612

``Federalism'' and determined that the action does not have sufficient

federalism implications to warrant the preparation of a Federalism

Assessment.

D. National Environmental Policy Act

NHTSA has analyzed this action for purposes of the National

Environmental Policy Act and concludes that the action will not have a

significant effect upon the environment because it is anticipated that

the annual volume of motor vehicles produced or imported will not vary

from that existing before promulgation of the rule.

E. Civil Justice Reform

This final rule will not have any retroactive effect. Under 49

U.S.C. 30103), whenever a Federal motor vehicle safety standard is in

effect, a state may not adopt or maintain a safety standard applicable

to the same aspect of performance which is not identical to the Federal

standard. A procedure is set forth in 49 U.S.C. 30161 for judicial

review of final rules establishing, amending or revoking Federal motor

vehicle safety standards. That section does not require submission of a

petition for reconsideration or other administrative proceedings before

parties may file suit in court.

F. Unfunded Mandates Reform Act of 1995

The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires

agencies to prepare a written assessment of the cost, benefits and

other effects of proposed or final rules that include a Federal mandate

likely to result in the expenditure by State, local, or tribal

governments, in the aggregate, or by the

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private sector, of more than $100 million annually. Since this final

rule will not have a $100 million effect, no Unfunded Mandates

assessment has been prepared.

List of Subjects in 49 CFR Part 555

Imports, Motor vehicle safety, Motor vehicles.

In consideration of the foregoing, 49 CFR part 555 is amended as

follows:

PART 555--TEMPORARY EXEMPTION FROM MOTOR VEHICLE SAFETY STANDARDS

1. The authority citation for part 555 continues to read as

follows:

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

1.50.

Sec. 555.1 [Amended]

2. Section 555.1 is amended by removing ``section 123 of the

National Traffic and Motor Vehicle Safety Act of 1966, 15 U.S.C. 1410''

and adding in its place ``49 U.S.C. 30113.''

3. New Sec. 555.5(b)(6)(i) and (ii) are added to read as follows:

Sec. 555.5 Petition for exemption.

* * * * *

(b) * * *

(6) * * *

(i) The information and data which petitioner requests be withheld

from public disclosure must be submitted in accordance with Sec. 512.4

Asserting a claim for confidential information of this chapter.

(ii) The petitioner's request for withholding from public

disclosure must be accompanied by a certification in support as set

forth in appendix A to part 512 of this chapter.

* * * * *

4. a. Section 555.6(a)(1)(vi) is revised to read as follows;

b. Section 555.6(a)(2)(iii) and (iv) are redesignated as (a)(2)(iv)

and (v) respectively; and

c. New Sec. 555.6(a)(2)(iii) is added to read as follows:

Sec. 555.6 Basis for petition.

(a) * * *

(1) * * *

(vi) A discussion of any other hardships (e.g., loss of market,

difficulty of obtaining goods and services for compliance) that the

petitioner desires the agency to consider.

(2) * * *

(iii) A discussion of any other factors (e.g., the resources

available to the petitioner, inability to procure goods and services

necessary for compliance following a timely request) that the

petitioner desires the NHTSA to consider in deciding whether the

petitioner tried in good faith to comply with the standard;

* * * * *

Sec. 555.10 [Amended]

5. The first sentence of Sec. 555.10(a) is amended by removing

``Docket Section, Room 5109, National Highway Traffic Safety

Administration,'' and by adding in its place ``Docket Management, Room

PL-401.''

6. Section 555.10(b) is amended by removing ``sections 112, 113,

and 158 of the Act (15 U.S.C. 1401, 1402, and 1418)'' and adding in its

place ``49 U.S.C. 30166 and 30167.''

Issued on: August 11, 1998.

L. Robert Shelton,

Associate Administrator for Safety Performance Standards.

[FR Doc. 98-21956 Filed 8-17-98; 8:45 am]

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