evidence, including dealer communications;

(d) Inspect vehicles and equipment already in use or new vehicles and equipment at any stage of the manufacturing, distribution and sales chain; (e) Conduct selective compliance tests; and

(f) Utilize other means necessary to conduct investigations.

§ 554.5 Office of Defects Investigation.

The Office of Defects Investigation conducts investigations to implement the provisions of the Act concerning the identification and correction of safety-related defects in motor vehicles and motor vehicle equipment. It elicits from every available source and evaluates on a continuing basis any information suggesting the existence of a safety-related defect.

§ 554.6 Opening an investigation.

(a) A compliance or defect investigation is opened either on the motion of the Administrator or his delegate or on the granting of a petition of an interested party under Part 552 of this chapter.

(b) A manufacturer is notified immediately by telephone of any compliance test failure in order to enable the manufacturer to begin his own investigation. Notification is sent by mail at the beginning of any defect or noncompliance investigation.

§ 554.7 Investigation priorities.

(a) Compliance investigation priorities are reviewed annually and are set according to the following criteria: (1) Prior compliance test data; (2) Accident data;

(3) Engineering analysis of vehicle and equipment designs;

(4) Consumer complaints; and (5) Market share.

(b) Defects inputs are reviewed periodically by an appropriate panel of engineers in consultation with the Office of Chief Counsel to determine whether a formal investigation should be opened by the Office of Defects Investigation.

§ 554.8 Monthly reports.

(a) Compliance. A monthly compliance report is issued which lists inves

tigations opened, closed, and pending during that month, identifies compliance test reports accepted, and indicates how individual reports may be obtained.

(b) Defects. A monthly defects report is issued which lists investigations opened, closed, pending, and suspended during that month. An investigation may be designated "suspended" where the information available is insufficient to warrant further investigation. Suspended cases are automatically closed 60 days after appearing in a monthly report unless new information is received which justifies a different disposition.

§ 554.9 Availability of files.

All files of closed or suspended investigations are available for public inspection in the NHTSA Technical Reference Library. Communications between the agency and a manufacturer with respect to ongoing investigations are also available. Such files and communications may contain material which is considered confidential but has been determined to be necessary to the subject proceeding. Material which is considered confidential but has not been determined to be necessary to the subject proceeding will not be disclosed. Reproduction of entire public files or of individual documents can be arranged.

§ 554.10 Initial determinations and public meetings.

(a) An initial determination of failure to comply with safety standards or of a safety-related defect is made by the Administrator or his delegate based on the completed investigative file compiled by the appropriate office.

(b) The determination is communiIcated to the manufacturer in a letter which makes available all information on which the decision is based. The letter advises the manufacturer of his right to present data, views and arguments to establish that there is no defect or failure to comply or that the alleged defect does not affect motor vehicle safety. The letter also specifies the time and place of a public meeting for the presentation of arguments or

(3) Gives the location of all information available for public examination; and

(4) States the time and place of a public meeting or the deadline for written submissions in which the manufacturer and interested persons may present data, views, and arguments respecting the determination.

(d) A transcript of the public meeting is kept and exhibits may be offered. There is no cross-examination of witnesses.

(e) If the Administrator makes a determination that a failure to comply or a safety-related defect does not exist he may, at his discretion in a particular case, within 60 days of the determination, invite interested persons to submit their views on the NHTSA investigation in a public meeting. Notice and procedures for such a meeting are as specified in paragraphs (c) and (d) of this section.

§ 555.2 Purpose.

The purpose of this part is to provide a means by which manufacturers of motor vehicles may obtain temporary exemptions from Federal motor vehicle safety standards on the basis of substantial economic hardship, facilitation of the development of new motor vehicle safety or low-emission engine features, or existence of an equivalent overall level of motor vehicle safety.

§ 555.3 Application.

This part applies to manufacturers of motor vehicles.

§ 555.4 Definitions.

"Administrator" means the National Highway Traffic Safety Administrator or his delegate.

"United States" means the several States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, the Canal Zone, and American Samoa.

§ 555.5 Petition for exemption.

(a) A manufacturer of motor vehicles may petition the NHTSA for a temporary exemption from any Federal motor vehicle safety standard or for a renewal of any exemption on the bases of substantial economic hardship, facilitation of the development of new motor vehicle safety or lowemission engine features, or the existence of an equivalent overall level of motor vehicle safety.

(b) Each petition filed under this part for an exemption or its renewal must

(1) Be written in the English language;

(2) Be submitted in three copies to: Administrator, National Highway Traffic Safety Administration, Washington, D.C. 20590;

(3) State the full name and address of the applicant, the nature of its organization (individual, partnership, corporation, etc.) and the name of the State or country under the laws of which it is organized;

(4) State the number and title, and the text or substance of the standard or portion thereof from which the temporary exemption is sought, and the length of time desired for such exemption;

(5) Set forth the basis for the petition and the information required by § 555.6(a), (b), (c), or (d) as appropriate.

(6) Specify any part of the information and data submitted which petitioner requests be withheld from public disclosure in accordance with Part 512 of this chapter.

(7) Set forth the reasons why the granting of the exemption would be in the public interest and consistent with the objectives of the National Traffic and Motor Vehicle Safety Act.

(c) The knowing and willful submission of false, fictitious or fraudulent

information will subject the petitioner to the civil and criminal penalties of 18 U.S.C. 1001.

[38 FR 2694, Jan. 29, 1973, as amended at 39 FR 5489, Feb. 13, 1974; 46 FR 2063, Jan. 8, 1981]

EFFECTIVE DATE NOTE: At 46 FR 2063, Jan. 8, 1981, paragraph (b)(6) of § 555.5 was revised. At 46 FR 40513, Aug. 10, 1981, the effective date of paragraph (b)(6) was deferred to Nov. 6, 1981. For the convenience of the user the superseded text appears below.

§ 555.5 Petition for exemption.

(b) •

(6) Specify any part of the information and data submitted which petitioner requests be withheld from public disclosure and the reason for the request; and

§ 555.6 Basis for petition.

(a) If the basis of the petition is substantial economic hardship the petitioner shall provide the following in-· formation.

(1) Engineering and financial information demonstrating in detail how compliance or failure to obtain an exemption would cause substantial economic hardship, including

(i) A list or description of each item of motor vehicle equipment that would have to be modified in order to achieve compliance;

(ii) The itemized estimated cost to modify each such item of motor vehicle equipment if compliance were to be achieved

(a) As soon as possible,

(b) At the end of a 1-year exemption period (if the petition is for 1 year or more),

(c) At the end of a 2-year exemption period (if the petition is for 2 years or more),

(d) At the end of a 3-year exemption period (if the petition is for 3 years),

(iii) The estimated price increase per vehicle to balance the total costs incurred pursuant to paragraph (a)(1)(ii) of this section and a statement of the anticipated effect of each such price increase;

(iv) Corporate balance sheets and income statements for the three fiscal years immediately preceding the filing of the application;

(v) Projected balance sheet and income statement for the fiscal year following a denial of the petition; and

(vi) A discussion of any other hardships (e.g., loss of market) that the petitioner desires the agency to consider.

(2) A description of its efforts to comply with the standards, including

(i) A chronological analysis of such efforts showing its relationship to the rule making history of the standard from which exemption is sought;

(ii) A discussion of alternate means of compliance considered and the reasons for rejection of each;

(iii) A description of the steps to be taken, while the exemption is in effect, and the estimated date by which full compliance will be achieved either by design changes or termination of production of nonconforming vehicles; and

(iv) The total number of motor vehicles produced by or on behalf of the petitioner in the 12-month period prior to filing the petition, and the inclusive dates of the period. (Section 123 of the Act limits eligibility for exemption on the basis of economic hardship to manufacturers whose total motor vehicle production does not exceed 10,000.)

(b) If the basis of the petition is the development or field evaluation of new motor vehicle safety features, the petitioner shall provide the following information:

(1) A description of the safety features, and research, development, and testing documentation establishing the innovational nature of such features.

(2) An analysis establishing that the level of safety of the features is equivalent to or exceeds the level of safety established in the standard from which exemption is sought, including

(i) A detailed description of how a motor vehicle equipped with the safety features differs from one that complies with the standard;

(ii) If applicant is presently manufacturing a vehicle conforming to the

standard, the results of tests conducted to substantiate certification to the standard; and

(iii) The results of tests conducted on the safety features that demonstrate performance which meets or exceeds the requirements of the standard.

(3) Substantiation that a temporary exemption would facilitate the development or field evaluation of the vehicle.

(4) A statement whether, at the end of the exemption period, the manufacturer intends to conform to the standard, apply for a further exemption, or petition for rulemaking to amend the standard to incorporate the safety features.

(5) A statement that not more than 2,500 exempted vehicles will be sold in the United States in any 12-month period for which an exemption may be granted pursuant to this paragraph. A petition for renewal of such an exemption shall also include the total number of exempted vehicles sold in the United States under the existing exemption.

(c) If the basis of the petition is the development or field evaluation of a low-emission motor vehicle, the petitioner shall provide

(1) Substantiation that the motor vehicle is a low-emission vehicle as defined by section 123(g) of the Act.

(2) Research, development, and testing documentation establishing that a temporary exemption would not unreasonably degrade the safety of the vehicle, including

(i) A detailed description of how the motor vehicle equipped with the lowemission engine would, if exempted, differ from one that complies with the standard;

(ii) If applicant is presently manufacturing a vehicle conforming to the standard, the results of tests conducted to substantiate certification to the standard;

(iii) The results of any tests conducted on the vehicle that demonstrate its failure to meet the standard, expressed as comparative performance levels; and

(iv) Reasons why the failure to meet the standard does not unreasonably degrade the safety of the vehicle.

(3) Substantiation that a temporary exemption would facilitate the development or field evaluation of the vehicle.

(4) A statement whether, at the end of the exemption period, the manufacturer intends to conform with the standard.

(5) A statement that not more than 2,500 exempted vehicles will be sold in the United States in any 12-month period for which an exemption may be granted pursuant to this paragraph. A petition for renewal of an exemption shall also include the total number of exempted vehicles sold in the United States under the existing exemption.

(d) If the basis of the petition is that the petitioner is otherwise unable to sell a motor vehicle whose overall level of safety is equivalent to or exceeds the overall level of safety of nonexempted motor vehicles, the petitioner shall provide

(1) A detailed analysis of how the vehicle provides an overall level of safety equivalent to or exceeding the overall safety of nonexempted vehicles, including

(i) A detailed description of how the motor vehicle, if exempted, differs from one that conforms to the standard;

(ii) A detailed description of any safety features that the motor vehicle offers as standard equipment that are not required by the Federal motor vehicle safety standards;

(iii) The results of any tests conducted on the vehicle demonstrating that it fails to meet the standard, expressed as comparative performance levels;

(iv) The results of any tests conducted on the vehicle demonstrating that its overall level of safety exceeds that which is achieved by conformity to the standards.

(v) Other arguments that the overall level of safety of the vehicle equals or exceeds the level of safety of nonexempted vehicles.

(2) Substantiation that compliance would prevent the sale of the vehicle.

(3) A statement whether, at the end of the exemption period, the manufacturer intends to comply with the standard.

(4) A statement that not more than 2,500 exempted vehicles will be sold in

the United States in any 12-month period for which an exemption may be granted pursuant to this paragraph. A petition for renewal of any exemption shall also include the total number of exempted vehicles sold in the United States under the existing exemption.

[38 FR 2694, Jan. 29, 1973, as amended at 39 FR 5489, Feb. 13, 1974]

§ 555.7 Processing of petitions.

(a) The NHTSA publishes in the FEDERAL REGISTER, affording opportunity for comment, a notice of each petition containing the information required by this part. However, if the NHTSA finds that a petition does not contain the information required by this part, it so informs the petitioner, pointing out the areas of insufficiency and stating that the petition will not receive further consideration until the required information is submitted.

(b) No public hearing, argument, or other formal proceeding is held directly on a petition filed under this part before its disposition under this section.

(c) Any interested person may, upon written request, appear informally before an appropriate official of the NHTSA to discuss a petition for exemption or the action taken in response to a petition.

(d) If the Administrator determines that the petition does not contain adequate justification, he denies it and notifies the petitioner in writing. He also publishes in the FEDERAL REGISTER a notice of the denial and the reasons for it.

(e) If the Administrator determines that the petition contains adequate justification, he grants it, and notifies the petitioner in writing. He also publishes in the FEDERAL REGISTER notice of the grant and the reasons for it.

a

(f) Unless a later effective date is specified in the notice of the grant, a temporary exemption is effective upon publication of the notice in the FEDERAL REGISTER and exempts vehicles manufactured on and after the effective date.

[38 FR 2694, Jan. 29, 1973, as amended at 39 FR 5489, Feb. 13, 1974; 39 FR 37988, Oct. 25, 1974]