Denial of Petition for Reconsideration; Temporary Exemption From Motor Vehicle Safety and Bumper Standards

Published date07 April 2020
Record Number2020-06403
SectionRules and Regulations
CourtNational Highway Traffic Safety Administration
Federal Register, Volume 85 Issue 67 (Tuesday, April 7, 2020)
[Federal Register Volume 85, Number 67 (Tuesday, April 7, 2020)]
                [Rules and Regulations]
                [Pages 19393-19396]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2020-06403]
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                DEPARTMENT OF TRANSPORTATION
                National Highway Traffic Safety Administration
                49 CFR Part 555
                [Docket No. NHTSA-2018-0103]
                Denial of Petition for Reconsideration; Temporary Exemption From
                Motor Vehicle Safety and Bumper Standards
                AGENCY: National Highway Traffic Safety Administration (NHTSA),
                Department of Transportation (DOT).
                ACTION: Denial of petition for reconsideration.
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                SUMMARY: This document denies a petition for reconsideration submitted
                by Advocates for Highway and Auto Safety, Center for Auto Safety,
                Consumer Reports, Consumer Federation of America, and Ms. Joan
                Claybrook (collectively, the ``Petitioners'') of a final rule amending
                NHTSA's regulation on temporary exemption from the Federal Motor
                Vehicle Safety Standards (FMVSS). The final rule eliminated the
                provision calling for the agency to determine that an application for a
                temporary exemption from any FMVSS or bumper standard or for a renewal
                of exemption is complete before the agency publishes a notification
                summarizing the application and soliciting public comments on it.
                DATES: April 7, 2020.
                FOR FURTHER INFORMATION CONTACT: Daniel Koblenz, Office of Chief
                Counsel, National Highway Traffic Safety Administration, 1200 New
                Jersey Avenue SE, Washington, DC 20590; Telephone: (202) 366-2992.
                SUPPLEMENTARY INFORMATION:
                Table of Contents
                I. Background
                II. Petition for Reconsideration and Agency Response
                 A. This Final Rule was Not Issued as a Direct Final Rule under
                49 CFR 553.14
                 B. Immediate Adoption of a Final Rule Under the APA
                 C. Advantages of Removing Completeness Requirement
                 D. NHTSA Provided a Reasoned Justification for the Amendment
                III. Conclusion
                 This document denies a petition for reconsideration submitted by
                the Petitioners requesting reconsideration of a December 26, 2018 final
                rule (83 FR 66158) amending NHTSA's regulation on temporary exemption
                from the FMVSS. The intended effect of the final rule was to solicit
                public comments on a petition more quickly than had been
                [[Page 19394]]
                the case under part 555 prior to the change in procedure.
                I. Background
                 The National Traffic and Motor Vehicle Safety Act (Safety Act), as
                amended, authorizes the Secretary of Transportation to exempt, on a
                temporary basis, under specified circumstances, and on terms the
                Secretary deems appropriate, motor vehicles from an FMVSS or bumper
                standard. This authority is set forth at 49 U.S.C. 30113. The Secretary
                has delegated the authority for implementing this section to NHTSA.\1\
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                 \1\ 49 CFR 1.94
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                 In exercising this authority, NHTSA must look comprehensively at
                the request for exemption and find that an exemption would be
                consistent with the public interest and with the objectives of the
                Safety Act.\2\ In addition, the Secretary must make at least one of the
                following more-focused findings, which NHTSA commonly refers to as the
                ``basis'' for the exemption:
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                 \2\ 49 U.S.C. 30113(b)(3)(A).
                 (i) compliance with the standard[s] [from which exemption is
                sought] would cause substantial economic hardship to a manufacturer
                that has tried to comply with the standard[s] in good faith;
                 (ii) the exemption would make easier the development or field
                evaluation of a new motor vehicle safety feature providing a safety
                level at least equal to the safety level of the standard;
                 (iii) the exemption would make the development or field
                evaluation of a low-emission motor vehicle easier and would not
                unreasonably lower the safety level of that vehicle; or
                 (iv) compliance with the standard would prevent the manufacturer
                from selling a motor vehicle with an overall safety level at least
                equal to the overall safety level of nonexempt vehicles.\3\
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                 \3\ 49 U.S.C. 30113(b)(3)(B).
                 Per the Safety Act, once NHTSA receives a petition for an
                exemption, the agency is required to publish a notice of receipt of the
                petition and provide the public the opportunity to comment. However,
                NHTSA does have a certain amount of discretion to set procedural rules
                regarding time and way in which a petition is filed, as well as the
                contents of the petition.\4\
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                 \4\ 49 U.S.C. 30113(b)(2).
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                 NHTSA's procedural regulations implementing these statutory
                requirements are codified at 49 CFR part 555, ``Temporary Exemption
                from Motor Vehicle Safety and Bumper Standards.'' Per the requirements
                in 49 CFR 555.5, a petition for a temporary exemption must, among other
                things, provide supporting documentation that would enable NHTSA to
                make the findings required to grant the exemption under one of the four
                exemption bases. In addition, the petition must also explain why the
                exemption would be in the public interest and consistent with the
                objectives of the Safety Act. NHTSA's procedures for processing
                exemption petitions once they are received are described in 49 CFR
                555.7.
                 The final rule made no changes to the ability of the public to
                comment on a published petition for exemption, nor to the substantive
                requirements for a petition. The opportunity for the public to comment
                on a petition remains the same today as it has always been: The agency
                publishes a notification in the Federal Register summarizing the
                application and inviting public comment on whether the application
                should be granted or denied. Before NHTSA issued its December 26, 2018,
                final rule (83 FR 66158), however, this Federal Register notification
                would only be published after the agency determined that the
                application was complete (i.e., that the application included all the
                information required under 49 U.S.C. 30113 and 49 CFR part 555).
                However, if NHTSA found that the application was incomplete, NHTSA
                informed the applicant, pointed out the areas of insufficiency, and
                stated that the application would not receive further consideration
                until the required information was submitted. Prior to the final rule,
                the agency would not make the application available to the public and
                request public comment at this stage in the process unless the
                additional required information was submitted. Only then would the
                agency publish the notification requesting public comment.
                 Importantly, the final rule did not amend 49 CFR 555.7(d) or (e),
                which describe what steps NHTSA must take after the agency determines
                whether an exemption petition contains ``adequate justification'' to
                grant the petition. 49 CFR 555.7(d) states that, if NHTSA determines
                that the application does not contain adequate justification to grant
                an exemption after considering the application and the public comments,
                the Administrator denies the petition and notifies the petitioner in
                writing. 49 CFR 555.7(e) states that, if the Administrator determines
                that the application does contain adequate justification to grant the
                petition, the Administrator grants the petition and notifies the
                applicant in writing. Under both cases, the Administrator also
                publishes a notification in the Federal Register stating the decision
                to grant or deny the petition, and the reasons for the decision.
                 The December 26, 2018 final rule amended 49 CFR 555.7 by
                eliminating the provision stating that the agency will not publish a
                notice of receipt of an exemption petition to solicit public comments
                prior to making a determination that the petition is ``complete.'' \5\
                As was noted in the final rule, the reason for this was NHTSA's
                difficulty in differentiating between incomplete petitions (for which,
                prior to the final rule, a notice of receipt would not be published)
                and petitions which were complete, but which failed to provide adequate
                justification to grant (for which, prior to the final rule, a notice of
                receipt would be published). This was especially the case in the
                context of complex petitions involving new or innovative vehicle
                designs, which has in the past led to delays in processing these
                petitions.\6\ This final rule did not change the substantive
                requirements that exemption petitions must meet; the amended regulation
                continues to provide that the agency will determine whether an
                application for exemption contains adequate justification in deciding
                whether to grant or deny the application.\7\
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                 \5\ 83 FR 66158 (Dec. 26, 2018).
                 \6\ Id.
                 \7\ Id.
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                II. Petition for Reconsideration and Agency Response
                 The Petitioners submitted a petition for reconsideration requesting
                that NHTSA stay the effective date of the December 26, 2018 final rule,
                and to proceed with a new notice of proposed rulemaking along with a
                notice and comment period.
                 First, the Petitioners argue that by issuing the final rule, NHTSA
                did not follow its direct final rulemaking procedures for amendments
                that involve complex or controversial issues because, pursuant to 49
                CFR 553.14, direct final rules may not be issued when they are likely
                to result in ``adverse public comment.'' The Petitioners argue that the
                final rule would have resulted in adverse public comments because the
                new procedure is controversial among the Petitioners. (Under NHTSA's
                direct final rulemaking procedures, if NHTSA receives an adverse
                comment after issuing a direct final rule, the agency must withdraw the
                rule and issue an NPRM proposing the amendment.)
                 Second, the Petitioners argue that, if the agency did not intend
                for the final rule to be a direct final rule, the agency violated the
                Administrative Procedure Act's (APA) notice and comment requirement
                because the agency did not issue an NPRM proposing the change.
                [[Page 19395]]
                 Third, the Petitioners argue that the final rule is not in the
                public interest because it deprives the public of the opportunity to
                ``review issues of great importance to safety'' and permits the agency
                to publish incomplete applications. The Petitioners believe that the
                regulatory change would impose additional burdens on the public because
                to fully evaluate an incomplete application and its implications on
                safety, the public would be required to conduct independent research
                and investigation to obtain missing information not contained in an
                incomplete application.
                 Finally, the Petitioners argue that NHTSA has not put forth data or
                evidence to show that the requirement of waiting until an application
                is complete before publication has caused an undue delay or hardship on
                any applicant, the agency, or the public.
                A. This Final Rule was Not Issued as a Direct Final Rule Under 49 CFR
                553.14
                 The Petitioners' assumption that NHTSA intended for this rulemaking
                to be considered a direct final rule, subject to 49 CFR 553.14, is
                incorrect. The APA includes two circumstances when notice and comment
                rulemaking procedures do not apply: (1) ``to interpretative rules,
                general statements of policy, or rules of agency organization,
                procedure, or practice; or'' (2) ``when the agency for good cause finds
                (and incorporates the finding and a brief statement of reasons therefor
                in the rules issued) that notice and public procedure thereon are
                impracticable, unnecessary, or contrary to the public interest.'' 5
                U.S.C. 553(b). As described below, this rule falls into the first
                exception, as a rule of agency procedure. NHTSA's direct final
                rulemaking regulation is primarily directed at the second exception, as
                it requires a threshold ``good cause'' finding. See 49 CFR 553.14.
                 In any event, the procedures in 49 CFR 553.14 are not mandatory. 49
                CFR 553.14 states that if the Administrator makes a ``good cause''
                finding, ``a direct final rule may [emphasis added] be issued''
                according to the direct final rulemaking procedures. Likewise, it
                provides that: ``[r]ules that the Administrator judges to be non-
                controversial and unlikely to result in adverse public comment may
                [emphasis added] be published as direct final rules,'' \8\ thereby
                giving NHTSA discretion to publish a rule according to the specified
                ``direct final rule'' procedures. NHTSA did not purport to issue the
                final rule that is the subject of this petition according to those
                procedures. The petitioned final rule did not refer to 49 CFR 553.14
                and instead expressly indicated that it was issued without notice and
                comment pursuant to the APA exception for procedural rules in 5 U.S.C.
                553(b)(3)(A).\9\ Petitioners do not support their claim that NHTSA
                somehow acted ``in violation of'' its discretionary direct final
                rulemaking procedures in 49 CFR 553.14, when the agency instead applied
                a statutory exception in the APA.
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                 \8\ 49 CFR 553.14(a).
                 \9\ 83 FR 66158, 66159.
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                B. Immediate Adoption of a Rule Under the APA
                 NHTSA fully complied with the APA when it issued a final rule for
                immediate adoption without a notice and comment period. Section
                553(b)(3)(A) of the APA (U.S.C., Title 5) provides that notice and
                comment procedures do not apply to rules of agency organization,
                procedure, or practice, except when notice or hearing is required by
                statute. Under this section, an agency may issue a final rule without
                seeking comment prior to the rulemaking. Procedural rules are agency
                provisions that are primarily directed toward improving the efficient
                and effective operations of an agency, not toward the determination of
                the rights or interests of affected parties.\10\ A rule that simply
                prescribes the manner in which the parties present themselves or their
                viewpoints to the agency does not alter the underlying rights or
                interests of the parties.\11\
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                 \10\ Clarian Health West, LLC v. Burwell, 206 F. Supp. 3d 393,
                414 (D.D.C. 2016), rev'd on other grounds, Clarian Health West, LLC
                v. Hargan, 878 F.3d 346 (DC Cir. 2017).
                 \11\ Inova Alexandria Hospital v. Shalala, 244 F.3d 342, 349
                (2001).
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                 The purpose of the petitioned final rule is to expedite the
                publishing of documents soliciting public comment on exemption
                applications,\12\ which is directly related to improving the efficient
                and effective operations of the agency. It amended a provision of
                NHTSA's regulations concerning the agency's ``[p]rocessing of
                applications.'' \13\ The final rule simply eliminated the provision
                calling for the agency to determine that an application for exemption
                is complete before publishing a notification summarizing an application
                and soliciting public comments on it, which is a prescription of the
                manner in which applicants present themselves to the agency. Therefore,
                this procedural final rule is not directed toward the determination of
                the rights or interests of the Petitioners as the Petitioners' public
                interest argument seems to suggest; it does not alter the underlying
                rights or interest of interested parties.
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                 \12\ 83 FR 66158 (Dec. 26, 2018).
                 \13\ See revised heading of 49 CFR 555.7.
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                 Petitioners' assertion that the final rule ``contravenes NHTSA's
                notice-and-comment obligations under the Administrative Procedure Act''
                is unpersuasive. NHTSA expressly found that the final rule met the
                exception in APA section 553(b)(3)(A) because ``[t]he sole purpose of
                this rule is to eliminate the provision calling for the agency to
                determine that a petition is complete before the agency publishes a
                notification summarizing the petition and soliciting public comments on
                it. This rule does not impose any additional requirements on exemption
                applicants or the public. Therefore, NHTSA has determined that notice
                and public comment are unnecessary.'' \14\ Petitioners provided no
                explanation for why they believe notice-and-comment procedures apply
                notwithstanding the APA exception cited by the agency in the final
                rule.
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                 \14\ 83 FR 66158, 66159--60.
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                C. Advantages of Removing Completeness Determination Requirement
                 Contrary to the assertion by Petitioners, the subject final rule is
                in the public's interest for several reasons. First, the final rule
                increases transparency by giving the public the opportunity to
                thoroughly review exemption applications that otherwise may not have
                been disclosed to the public or subject to public input. Under the
                prior rule, NHTSA first had to make a threshold finding before opening
                a public docket on the petition. If NHTSA found that the application
                was incomplete, NHTSA informed the applicant, pointed out the areas of
                insufficiency, and stated that the application would not receive
                further consideration until the required information was submitted. The
                public did not have the opportunity to review the incomplete
                application. Under the amended rule, the public can review incomplete
                exemption applications.
                 Second, under the final rule, both the agency and the public can
                comprehensively evaluate applications for exemption. Prior to the final
                rule, only the agency would make a completeness determination, without
                input on that issue from the public. The final rule increases the
                public's opportunity to evaluate the application and provide input
                because the agency will decide whether to grant an exemption
                application, complete or not,
                [[Page 19396]]
                based on the application and the public comments. Among its comments,
                the public can submit opinions as to whether the application is
                complete. The public gets to see an application sooner as opposed to
                not seeing it until NHTSA makes a threshold completeness determination.
                The public can point out what it sees as insufficiencies to the agency;
                and if the agency agrees, the application will be denied unless it is
                later supplemented. If an application is supplemented, the public will
                have access to any supplemental information to the same extent as if
                the supplement happened before the application became public under the
                old rule. In addition, the public can, if it so chooses, comment on
                completeness, or on any other supplemental information submitted
                through the public comment process.
                 Finally, the final rule does not impose additional requirements on
                the public to perform research, as the Petitioners claimed without
                support. Although published exemption applications may be incomplete,
                NHTSA is still required to make an ``adequate justification''
                determination based on the information provided by the applicant. An
                application that lacks merit or critical information will be denied,
                based on public input and the agency's analysis, regardless of whether
                there is a threshold completeness determination. A determination that
                an application is complete is not a determination that the application
                should be granted. If NHTSA determines that the application does not
                contain ``adequate justification,'' the Administrator denies it and
                notifies the applicant in writing, pointing out the areas of
                insufficiency.\15\ It is not the public's duty to perform research to
                determine areas of insufficiency. The Administrator also publishes in
                the Federal Register a notification of the denial and the reasons for
                it, which is available to the public. Further, if a member of the
                public believes the agency's explanation for granting an application
                lacks sufficient supporting arguments and facts, he or she may seek to
                have the agency reconsider the grant.
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                 \15\ 49 CFR 555.7(d).
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                D. NHTSA Provided a Reasoned Justification for the Amendment
                 NHTSA articulated the purpose behind changing this procedural rule
                in the preamble to the rule. Specifically, NHTSA changed its procedure
                ``to expedite the publishing of documents soliciting public comment on
                exemption petitions.'' \16\ Petitioners' argument that ``NHTSA has put
                forth no data or evidence in the Final Rule that the current
                requirement of waiting until the application is complete before
                publishing it in the Federal Register has caused undue delay or
                hardship on any applicant, the agency, or the public'' lacks merit.
                NHTSA provided a reasoned explanation of its change in procedure. See
                F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009).
                NHTSA explained how the prior procedure led to delays.\17\ The agency
                also explained that the prior procedure was unnecessary under the
                statute, particularly in light of the substantive determination it will
                continue to make regarding whether a petition contains an adequate
                justification.\18\ Petitioners' assertions regarding the public
                interest have not convinced the agency that it should return to its
                prior procedure, which would reduce transparency and delay the ability
                of the public to obtain and comment on exemption applications.
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                 \16\ 83 FR 66158, 66159.
                 \17\ Id.
                 \18\ Id.
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                III. Conclusion
                 For the reasons discussed above, the agency is denying the
                Petitioners' petition for reconsideration of the December 26, 2018
                final rule (83 FR 66158).
                 Issued in Washington, DC, under authority delegated in 49 CFR
                1.95 and 501.4.
                James Clayton Owens,
                Acting Administrator.
                [FR Doc. 2020-06403 Filed 4-6-20; 8:45 am]
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