[Federal Register Volume 62, Number 43 (Wednesday, March 5, 1997)]
[Notices]
[Pages 10110-10111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5427]
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
[Docket No. 96-116, Notice 2]
Capacity of Texas, Inc.; Grant of Application for Temporary
Exemption From Federal Motor Vehicle Safety Standard No. 121
Collins Industries of Hutchinson, Kansas, on behalf of its
subsidiary, Capacity of Texas, Inc., of Longview, Texas, applied for a
temporary exemption from paragraph S5.1.6 of Federal Motor Vehicle
Safety Standard No. 121 Air Brake Systems. The basis of the application
was that compliance will cause substantial economic hardship to a
manufacturer that has tried to comply with the standard in good faith.
Notice of receipt of the application was published on November 15,
1996, and an opportunity afforded for comment (61 FR 58604).
Paragraph S5.1.6 (which includes S5.1.6.1-S5.1.6.3) of Standard No.
121 requires in pertinent part that each truck tractor manufactured on
and after March 1, 1997, be equipped with an antilock brake system.
Capacity of Texas (``Capacity'') asked that one of its truck tractor
models be exempted for three months from the provisions of S5.1.6 that
will apply to it effective March 1, 1997. Capacity manufactures the
Trailer Jockey ``Model TJ-5000 (Off Highway)'' truck tractor. Terming
it a ``yard tractor'', Capacity stated that ``this type of truck is
designed to operate in a freight yard moving trailers from one terminal
entrance to another * * * geared to limited speed [45 mph maximum] and
to provide start-up torque for repeated stopping and starting.'' The
tractors generally operate at 25 mph.
Because these terminal tractors do not appear manufactured
primarily for use on the public roads, ordinarily NHTSA would not
consider them to be ``motor vehicles'' to which Standard No. 121
applies. However, Capacity is currently working to fill its third
contract with the U.S. Postal Service. Unlike the other two contracts,
the present Postal Service contract specifies that the truck tractors
be certified to comply with all Federal motor vehicle safety standards
applicable to on-road truck tractors, even though Capacity estimates
that the tractors will spend ``approximately 5% or less of their life
in operation on the public highways.'' Capacity's contract is for 210
vehicles, to be produced between September 1996 and June 1997, and it
estimated that the final 60 under the order will be completed by the
end of May 1997. It thus seeks an exemption from March 1, 1997, to June
1, 1997, from the antilock brake requirements for the 60 tractors.
One option that it examined is acceleration of its production
schedule so that manufacture of all vehicles could be completed by
March 1, 1997. However, this would require an increase in production
rates ``by at least 33% two months prior to the March 1, 1997 date.''
The work in part would have to be performed by newly hired and trained
employes, increasing its overtime costs by 100%. It estimates that
total costs would be greater by far than its net income for the fiscal
year ending October 31, 1996. In addition, it would have to lessen its
efforts to fill other orders, with a consequent loss of business. This
means that, at the completion of the order as of March 1, 1997, it
would have to lay off 50% of its work force until more orders were
received and an orderly production schedule established. For these
reasons, acceleration of the production schedule would cause it
substantial economic hardship.
A further option is to delay production of the 60 vehicles until
compliance with Standard No. 121 is achieved. Capacity stated that ``it
will be possible to delay delivery of other customer trucks until
testing of ABS truck systems is complete.'' However, according to
Capacity, delay for conformance is not acceptable to the Postal Service
because it would result in a fleet of dissimilar vehicles requiring
different spare parts. As Capacity further argued, identical vehicles
are desired by the Postal Service because ``all drivers in the fleet
can be trained to the same operating procedures'' and ``Fleet
maintenance people will be working on these trucks and will be able to
maintain all 270 using the same procedures.'' Even if a delay were
acceptable to the Postal Service, Capacity would have to absorb the
increase in costs since ``the price is fixed by contract and no upward
price relief is available.''
In the year preceding the filing of its petition, Capacity produced
and certified 47 vehicles for on-road use other than those produced
under the postal contract. It also produced less than 500 off-road
vehicles. In the same period, its parent corporation, Collins, Inc.,
manufactured less than 2,000 school buses and less than 2,000 ambulance
conversions. Capacity's net income has declined over the past three
fiscal years and, in its fiscal year ending October 31, 1996, is far
less than $1,000,000.
Capacity argued that a temporary exemption would be in the public
interest because the vehicles are produced for the U.S. Postal Service.
It submitted that an exemption is also consistent with motor vehicle
safety because ``NHTSA is using a staggered effectivity date for
addition of antilock brakes to tractors, trucks, and buses.'' It
pointed out that ``[t]here will be many vehicles built during the 3
months of this petition that are built under the old standard * * *.
The only reason tractors are involved is because they got the first
effectivity date instead of buses.''
One comment was received. Carter Hart of Corsicana, Texas, does not
like anti-lock brakes and commented that ``[t]he company requesting the
exemption from this regulation should not need one because it is the
regulation which is flawed.'' NHTSA considers this comment irrelevant
to the merits of the application.
Capacity's application presents a situation that differs from the
usual hardship case where a small manufacturer's resources may be
insufficient to achieve compliance by the effective date of a standard
or to test for compliance, or where the small volume manufacturer is
experiencing difficulties in obtaining conforming parts in a timely
fashion. Capacity and its parent do not have net and cumulative losses
in the three years before the application was filed; however, its net
income has declined
[[Page 10111]]
over these years. Further, Capacity can achieve compliance with
Standard No. 121 after some delay, but presents arguments why it may
not be in the public interest to do so.
NHTSA has great flexibility in its interpretation of the phrase
``substantial economic hardship.'' Ordinarily it may consider
cumulative net losses a per se demonstration of hardship, but it
specifically invites applicants to submit ``[a] discussion of any other
hardships (e.g., loss of market) that the petitioner desires the agency
to consider.'' (49 CFR 555.7(a)(1)(D)(vi)). In this situation, Capacity
will not have a problem if it accelerates its manufacturing schedule to
complete the order before the effective date of the new provisions of
Standard No. 121. But this can be achieved only at the cost of hiring
and training additional manufacturing personnel, and requiring its work
force to work exclusively and overtime on filling the order of the
Postal Service to the detriment of other customers whose orders will
then be delayed. These costs cannot be recovered under Capacity's fixed
cost contract with the Postal Service. NHTSA also notes that the
quality of the vehicles may suffer when vehicles are rushed to
completion by a newly-trained work force. All these are hardship
factors that NHTSA deems relevant to its determination.
The facts also indicate that the Administrator's findings that a
manufacturer has made a good faith effort to conform and that an
exemption is in the public interest and consistent with traffic safety
objectives stem from the following scenario. Capacity can achieve
compliance no later than 3 months after the effective date of the
amendments to Standard No. 121. While it is willing to defer completion
of its order until then, this is not acceptable to its customer who has
already taken delivery of the initial vehicles for which it has
contracted. Delayed delivery will not only deprive the Postal Service
of vehicles it needs, but also require it to train drivers and
maintenance personnel in two differing procedures. NHTSA believes that
this may complicate replacement parts inventories as well. All in all,
this would appear to increase the costs to the Postal Service which
will contribute to the on-going economic pressure for increases in
postal rates. The effect on safety of providing an exemption for 60
truck tractors which will spend only an estimated 5% of their lives on
the public roads would appear to be de minimis.
On the basis of the foregoing, it is hereby found for good cause
shown, that compliance with Standard No. 121 would cause substantial
economic hardship to a manufacturer that has tried in good faith to
comply with the standard. It is further found that a temporary
exemption is in the public interest and consistent with the objectives
of traffic safety. Accordingly, Capacity of Texas, Inc., is hereby
granted NHTSA Temporary Exemption No. 96-1 from paragraph S5.1.6 of 49
CFR 571.121 Motor Vehicle Safety Standard No. 121 ``Air Brake Systems''
expiring June 1, 1997.
(49 U.S.C. 30113; delegation of authority at 49 CFR 1.50.)
Issued on: February 28, 1997.
Ricardo Martinez,
Administrator.
[FR Doc. 97-5427 Filed 3-4-97; 8:45 am]
BILLING CODE 4910-59-P
