Saleen, Inc.; Receipt of Application for Extension of Temporary Exemption From Federal Motor Vehicle Safety Standard No. 208

Saleen, Inc., of Irvine, California, has applied for an extension of its temporary exemption from the automatic restraint requirements of Federal Motor Vehicle Safety Standard No. 208 Occupant Crash Protection. The basis of the request is 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).

We are publishing this notice of receipt of an application in accordance with the requirements of 49 U.S.C. 30113(b)(2). This action does not represent any judgment of the agency on the merits of the application.

In June 2001, NHTSA granted Saleen a two-year hardship exemption from S4.1.5.3 of Standard No. 108 (66 FR 33298), expiring July 1, 2003. The reader is referred to that notice for background information on the company in support of its original petition. Because Saleen's application for renewal was received more than 60 days before the expiration of the extension, the exemption will remain in effect until the Administrator has made a decision on its request (49 CFR 555.8(e)).

Saleen's temporary exemption covers its model S7. It had anticipated shipping its initial production of cars in July 2001. However, it was not able to do so until March 2003, when it received Certificates of Conformity for the 2003 model year from the Environmental Protection Agency and the California Air Resources Board. Between then and June 11, 2003, it sold and shipped eight S7s. It hopes to be able to ship a total of 36 S7s by the end of the year. Saleen's other line of business is the alteration of Ford Mustangs. However, the company has “sustained a major slowdown” in sales of these vehicles which it attributes “to the downturn in the U.S. economy.” The company has produced only 79 Saleen Mustangs as of June 11, 2003, compared with 327 in the comparable period in 2002. Its cumulative net losses in the three years preceding its original petition were $9,716,334; this has been only slightly ameliorated in the most current three-year period, to a cumulative net loss of $8,832,999.

Saleen had originally assumed that it needed 20 months and $3,000,000 for the development of air bags, but in the absence of sales, did not generate these funds. According to its petition, “development delays almost completely exhausted all of our economic resources necessary to stay in business, let alone the development of air bags.” One of the economic consequences is the shrinking of its payroll from 122 employees to 96. The company has asked for a three-year extension of its original two-year exemption in order to generate funds that would allow it to comply with the Advanced Air Bag requirements, S14 of Standard No. 208, which were issued during the period of its exemption. According to its projection of sales, it believes that it will be financially able to begin development of advanced air bags by July 2004. It anticipates that the project will take 24 months and $3,800,000, and that it will be able to comply with S5.1.1(b)(1) on September 1, 2006.

If the petition is denied, the company would have to cease the production and sale of the S7, and estimates that its earnings before taxes would fall to $7,000.

The company argued that a temporary exemption is in the public interest because the S7 “is a unique supercar designed and produced in the United States utilizing many U.S. sourced components.” An exemption would also allow it to maintain its payroll of 96 full time employees and to continue its purchase of U.S.-sourced components for the Mustangs that it modifies. Its business “with U.S. suppliers indirectly provides employment for several hundred other Americans.” An exemption would be consistent with vehicle safety objectives because the S7 otherwise will conform to all applicable Federal motor vehicle safety standards.

Interested persons are invited to submit comments on the application described above. Comments should refer to the docket number and the notice number, and be submitted to: Docket Management, Room PL-401, 400 Seventh Street, SW., Washington, DC 20590. It is requested but not required that 10 copies be submitted.

All comments received before the close of business on the comment closing date indicated below will be considered, and will be available for examination in the docket at the above address both before and after that date. The Docket Room is open from 10 a.m. until 5 p.m. To the extent possible, comments filed after the closing date will also be considered.

Notice of final action on the application will be published in the Federal Register pursuant to the authority indicated below.

Comment closing date: August 25, 2003.

(49 U.S.C. 30113; delegations of authority at 49 CFR 1.50. and 501.8)