[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]
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