01-9581. Dan Hill & Associates, Inc.; Red River Manufacturing, Inc.; Grant of Applications for Temporary Exemption From Federal Motor Vehicle Safety Standard No. 224

This notice grants the applications by Dan Hill & Associates, Inc. (“Dan Hill”) of Norman, Oklahoma, and by Red River Manufacturing (“Red River”) of West Fargo, North Dakota, for a temporary exemption from Motor Vehicle Safety Standard No. 224, Rear Impact Protection. Both petitioners assert that compliance would cause substantial economic hardship to manufacturers that have tried in good faith to comply with the standard.

Notice of receipt of Dan Hill's petition was published in the Federal Register on February 13, 2001, and an opportunity afforded for comment (66 FR 10050). Twenty-two comments were received, 21 of which supported the petition. As we explain more fully below, we view the issues and arguments by Red River as equivalent to those of Dan Hill and the comments as equally pertinent, and we are proceeding to a decision on Red River without issuing a separate comment notice.

Dan Hill and Red River have been the beneficiaries of temporary exemptions from Standard No. 224, and renewals of exemptions, from January 26, 1998 to February 1, 2001. (For Federal Register notices granting the petitions by Dan Hill, see 63 FR 3784 and 64 FR 49047; by Red River, see 63 FR 15909 and 64 FR 49049). The information below is based on material from the petitioners' original and renewal applications of 1998 and 1999, and their most recent applications.

Why the Petitioners Say That They Continue To Need an Exemption.

Dan Hill and Red River manufacture and sell horizontal discharge trailers that are used in the road construction industry to deliver asphalt and other road building materials to construction sites (“the trailers”). The trailers are designed to connect with and latch onto various paving machines (“pavers”). With their hydraulically controlled horizontal discharge systems, the trailers discharge hot mix asphalt at a controlled rate into pavers which overlay the road surface with asphalt material.

Standard No. 224 requires, effective January 26, 1998, that all trailers with a GVWR of 4536 Kg or more, including the trailers, be fitted with a rear impact guard that conforms to Standard No. 223, Rear impact guards. Both petitioners have argued that installation of a fixed rear impact guard will prevent the trailers from connecting to the paver. Thus, the trailers will no longer be functional. Paving contractors will be forced to use standard dump body trucks or trailers which, according to Dan Hill, have inherent limitations and safety risks. In spite of exemptions totaling three years, each petitioner avers that it has been unable to develop a movable rear guard that will enable its trailers to conform and needs more time in which to do so. Dan Hill has asked for a one-year exemption and Red River, a two-year exemption. We discuss below their efforts to conform in greater detail.

The Petitioners' Reasons Why They Believe That Compliance Would Cause Them Substantial Economic Hardship and That They Have Tried in Good Faith To Comply With Standard No. 224.

Dan Hill. Dan Hill is a small volume manufacturer. Its total production in the 12-month period preceding its latest petition was 151 units. In the absence of a further exemption, Dan Hill asserts that approximately 70 percent of its work force would have to be laid off. If the exemption were not granted, Dan Hill's gross sales would decrease by $8,313,337 in 2001. Its cumulative net income after taxes for the fiscal years 1998, 1999, and 2000 was $454,556, but net income has declined in 2000 and 1999 from the year before. It projects a net loss of $291,947 for fiscal year 2001.

The Federal Register notices cited above contain Dan Hill's arguments of its previous good faith efforts to conform with Standard No. 224 and form the basis of our previous grants of Dan Hill's petitions. Dan Hill originally asked for a year's exemption in order to explore the feasibility of a rear impact guard that would allow the Flow Boy trailer to connect to a conventional paver. It concentrated its efforts between 1998 and 1999 in investigating the feasibility of a retractable rear impact guard, which would enable Flow Boys to continue to connect to pavers. The company has examined the various alternatives: installation of a fixed rear impact guard, redesign of pavers, installation of a removable rear impact guard, installation of a retractable rear impact guard, and installation of a “swing-up” style tailgate with an attached bumper. Its latest efforts to conform, from September 1999 until December 2000, involve the design of a swing-in retractable rear impact guard. A review of its design, by Tech, Inc., shows that this, too, is not feasible. Among other things, Tech, Inc., is concerned that “the tailgate, hinges, and air cylinders will not meet the criteria of the Standard 224-plasticity requirement,” and that “the bumper is a potential safety hazard” because if the gate were raised and “a flagman or a trailer stager is in between the paver and the bumper while the gate and bumper is rising, the bumper could cause serious injury or death.” A copy of Tech Inc.”s report has been filed in the docket as part of Dan Hill's petition. The report also indicates that the costs associated with this design may be cost prohibitive “when trying to win business in a highly competitive, yet narrow marketplace.”

Red River. Red River is also a small volume manufacturer. It produced a total of 376 trailers of in the 12-month period before February 2001 including 163 Live Bottoms. In the absence of a further exemption, Red River asserts that approximately 35 percent of its work force would have to be laid off. If the exemption is not granted, Red River's projected loss of sales would be $6,000,000 to $7,000,000 per year. Its cumulative net income for fiscal years 1998-2000 was $1,099,024. It projects a net income of $238,706 for 2001.

The Federal Register notices cited above contain Red River's arguments of its previous good faith efforts to conform with Standard No. 224 and form the basis of our previous grants of Red River's petitions. Its exemptions originally covered horizontal agriculture-discharge trailers as well, but the company has been able to develop a wheels-back configuration which removes the agriculture trailer from the applicability of the standard. Such a reconfiguration, however, is not feasible for the asphalt trailer “because of variability in the clearances required by the many different kinds of pavers used in the road construction industry.”

Since its last exemption on September 9, 1999, Red River has tested a “third generation” prototype retractable underride guard on two Live Bottoms. Several shortcomings have become apparent. The most serious of these is asphalt buildup on the sliding members which affected maintenance. If the mechanism was not thoroughly cleaned on a regular basis, “resistance to motion quickly overcame the available semi-tractor air pressure to retract the bumper. The driver would then be required to move to the rear of the trailer and agitate the bumper (usually by kicking it) to enable it to retract.” As a result, the bumper was often left in the retracted position. The most serious shortcoming of the prototype “was attributable to the nature of the ‘flexible yet strong’ bumper support structure.” The bumpers are subject to contacts or collisions with unyielding structures, such as occurs when trailers are backed into pavers without their bumpers retracted. Contacts and collisions such as these, even though at low speeds, were damaging because space limitations forced Red River to design a system in which the bumper support structure would absorb the energy required by Standard No. 223. In a single season's use, such repeated instances of deflection rendered one of the bumpers virtually unusable. Efforts to strengthen the bumper continued during the winter of 2000-01. These efforts resulted in designs which failed the energy absorption requirements of Standard No. 223. Although Red River intends to continue its efforts to comply during the next two years, it informs us that it will also file a petition for rulemaking to amend Standard No. 224 to exclude horizontal asphalt-discharge trailers such as the Live Bottom and the Flow Boy.

The Petitioners' Reasons Why They Believe That a Temporary Exemption Would Be in the Public Interest and Consistent With Objectives of Motor Vehicle Safety

Dan Hill. Dan Hill believes that an exemption would be in the public interest and consistent with traffic safety objectives because, without an exemption, “within a short time, production of the trailer will cease entirely. Jobs will be lost and a major employer in McClain County will be lost. This would mean a significant loss to many people in the state, including shareholders, lenders, employees, families, and other stakeholders.” Dan Hill's production represents less than .05% of trailers manufactured. The amount of time actually spent on the road is limited because of the need to move the asphalt to the job site before it hardens. Nevertheless, Dan Hill has taken recent efforts to enhance the conspicuity of Flow Boy trailers by: 1. adding “High intensity flashing safety lights; 2. Doubling the legally required amount of conspicuity taping at the rear of the trailer; 3. [adding] Safety signage; 4. [adding] Red clearance lights that normally emit light in twilight or night-time conditions; and 5. Installation of a rear under-ride protection assembly 28” above the ground and 60” in width.” Finally, the location of the rear tires is such that the tires act as a buffer “and reduce the likelihood of impact with the semi-trailer and the vehicle's windshield or interior of the vehicle significantly.”

Red River. Red River argues that an exemption will be in the public interest because its horizontal asphalt-discharge trailer is “more commercially versatile” than its chief rival, “the steel end dump trailer, which is not generally subject to FMVSS Nos. 223 and 224.” Its sloped trailer wall design “prevents segregation of material in transport,” and “can be used safely where it would be hazardous or impractical to use end dump trailers, such as on uneven terrain or in places with low overhead clearances.”

The exemption is consistent with considerations of safety as well. The trailers spend a large portion of its operating time off the public roads. Further, “typical hauls are short and have a minimal amount of highway time when compared with other trailers.” Red River knows of no rear end collisions involving this type of trailer that has resulted in injuries.

The Comments Received Supported Dan Hill's Petition. We View Them as Equally Applicable to Red River's Petition

Twenty-two trade associations, companies, and individuals submitted comments by April 2, 2001, on Dan Hill's petition. Twenty-one of them supported granting the company another exemption from Standard No. 224. E. D. Etnyre & Co. of Oregon, Illinois, opposed it. The company states that it has

built horizontal discharge trailers with a combination of retractable guards, retractable chutes, and wheels back configuration to meet the regulations. We have tested our guard to prove that it meets the energy absorption requirements. As Dan Hill asserts, the hydraulic, pneumatic mechanisms, with their controls and valving are certainly costly and heavy. The extra cost and weight have placed us at a competitive disadvantage. We have shown that it can be done. Whether it can be done at a reasonable cost is questionable.

E.D. Etnyre made a similar comment in opposition to Red River's 1999 application of renewal (64 FR 48049). Dan Hill supported Red River's application, and commented that E.D. Etnyre was a far larger company than it and Red River with “considerably more resources to allocate to research and development.”

We have carefully reviewed this comment. NHTSA has no information on how Etnyre designed its retractable rear impact guard, nor the costs involved. However, we have found no indication in NHTSA's statutory hardship exemption authority that an application by one manufacturer for an exemption from a standard should be denied because a competitor is complying with that standard. In granting a hardship application, the statute requires only that we find that “compliance with the standard 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)). Such a finding is necessarily dependent upon a weighing of the resources of an individual applicant against the efforts it has made to conform. As discussed below, we have concluded that each manufacturer has made a good faith attempt to conform to Standard No. 224.

Although 49 U.S.C. 30113(b)(2) requires NHTSA “to publish notice of the application and provide an opportunity to comment,” we are proceeding to a decision without publishing notice of the application. We believe that we have met the statutory requirement to provide an opportunity to comment in publishing the Dan Hill notice. Given that Red River's petition covers the same type of trailer as Dan Hill, that the company has had similar difficulties in achieving compliance with Standard No. 224, and that 22 members of the public commented on these issues in the past two months, we have concluded that no further arguments or relevant information would be forthcoming were we to publish a notice requesting comments on Red River's petition. We note, furthermore, that a timely decision on Red River's petition will reduce the hardship on a small volume manufacturer by allowing it to resume production several months earlier than if we had followed the process of a comment notice, comment period, and decision notice.

Our Findings and Decision

As the exemption petitions by Dan Hill and by Red River Manufacturing, Inc. demonstrate, small manufacturers of horizontal asphalt-discharge trailers continue to find it difficult to develop a retractable rear impact guard that complies with Standard No. 223, and to fit it to its trailers to comply with Standard No. 224. Dan Hill's yearly net income is substantially less than half a million dollars under the best of circumstances. Were the exemption denied, its estimated loss of gross sales exceeding $8,273,117 would appear to create a net loss of some magnitude. Red River's yearly net income is, on the average, also less than half a million dollars and its estimated loss of sales of up to $7,000,000, lacking an exemption, would be almost of the same magnitude. During the period that the final extensions of the previous exemptions were in effect, we believe that each applicant demonstrated a continuing good faith effort to meet Standard No. 224. Dan Hill has submitted a consultant's report detailing the problems involved in developing a compliant and acceptable retractable or swinging rear guard. Red River developed and field-tested a design that fell short of expectations and acceptability.

Given the fact that Dan Hill and Red River dominate the horizontal asphalt-discharge trailer market, and that both are experiencing the same difficulties in achieving compliance, it is in the public interest to maintain the existing level of competition between the two companies by affording equal treatment to both companies and granting them temporary exemptions of identical duration. We note, also, that the risk to safety is minimized to the extent that road construction trailers spend comparatively little of their operating life traveling on the highways.

Accordingly, for the reasons set forth above, we hereby find that compliance with Standard No. 224 would cause substantial economic hardship to Dan Hill and Red River, who have tried in good faith to comply with Standard No. 224, and that an exemption would be in the public interest and consistent with the objectives of traffic safety. We accordingly grant NHTSA Temporary Exemptions No. 2001-3 and NHTSA Temporary Exemption No. 2001-4 to, respectively, Dan Hill Associates for its Flow Boy horizontal asphalt-discharge trailers, and Red River Manufacturing for its Live Bottom horizontal asphalt-discharge trailers. The temporary exemptions are from Federal Motor Vehicle Safety Standard No. 224, Rear Impact Protection, and expire on April 1, 2003.

Authority: 49 U.S.C. 30113; delegations of authority at 49 CFR 1.50 and 501.4.

Issued on April 13, 2001.

L. Robert Shelton,

Executive Director.