[Federal Register Volume 63, Number 62 (Wednesday, April 1, 1998)]
[Notices]
[Pages 15909-15910]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8514]



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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration
[Docket No. NHTSA-98-3355; Notice 2]


Red River Manufacturing, Inc.; Grant of Petition for Temporary 
Exemption From Federal Motor Vehicle Safety Standard No. 224

    This notice grants the petition by Red River Manufacturing, Inc., 
of West Fargo, North Dakota (``Red River''), for a temporary exemption 
from Motor Vehicle Safety Standard No. 224, Rear Impact Protection. The 
basis of the petition was that compliance would cause substantial 
economic hardship to a manufacturer that has tried in good faith to 
comply with the standard.
    Notice of receipt of the petition was published on February 2, 
1998, and an opportunity afforded for comment (63 FR 5416).
    Red River manufactures and sells several types of horizontal 
discharge trailers. One type is used in the road construction industry 
to deliver asphalt and other road building materials to the 
construction site. The other type is used to haul feed, seed, and 
agricultural products such as sugar beets and potatoes, from the fields 
to hoppers for storage or processing. Both the construction and 
agricultural trailers are known by the name ``Live Bottom.''
    Standard No. 224 requires, effective January 26, 1998, that all 
trailers with a gross vehicle weight rating (GVWR) of 4536 Kg or more, 
including Live Bottom trailers, be fitted with a rear impact guard that 
conforms to Standard No. 223, Rear impact guards. Red River, which 
manufactured 265 Live Bottom trailers in 1996, has asked for an 
exemption of three years in order to develop a rear impact guard that 
conforms to Standard No. 223 and can be installed in compliance with 
Standard No. 224, while retaining the functionality and price-
competitiveness of their trailers. In the absence of an exemption, it 
believes that approximately 50 percent of its work force would have to 
be laid off. Red River's gross revenues would decrease by an amount of 
between $4,000,000 to $5,000,000 (these revenues averaged $13,049,311 
over its 1994, 1995, and 1996 fiscal years).
    Present studies show that a retractable rear impact guard would 
likely catch excess asphalt and agricultural products as they were 
discharged into hoppers. Further, the increased cost of the Live 
Bottom, were it required to comply immediately, would likely cause 
contractors to choose the cheaper alternative of dump trailers. 
Finally, the increased weight of a retractable rear impact guard would 
significantly decrease the payload of the Live Bottom.
    In mid 1996, Red River's design staff began exploring options for 
compliance with Standard No. 224. Through a business partner in 
Denmark, the company reviewed the European rear impact protection 
systems. Because these designs must be manually operated by ground 
personnel, they would not be acceptable to the applicant's American 
customers. Later in 1996, Red River decided to investigate powered 
retractable rear impact guards. The initial design could not meet the 
energy absorption requirements of Standard No. 223. The company is now 
investigating another design for retractable rear impact guards, which 
``is being refined and analyzed.''
    Red River believes that an exemption would be in the public 
interest and consistent with traffic safety objectives because the Live 
Bottom ``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.'' These trailers are ``valuable to the 
agricultural sector'' because of the advantages they offer in the 
handling of relatively fragile cargo. An exemption ``would have no 
adverse effect on the safety of the general public'' because the Live 
Bottom spends very little of its operating life on the highway and the 
likelihood of its being involved in a rear-end collision is minimal. In 
addition, the design of the Live Bottom is such that the rear tires act 
as a buffer and reduce the likelihood of impact with the trailer.
    In response to the Federal Register notice, one comment was 
received. Robert J. Crail of Knoxville, Tennessee, supported the 
petition.
    Red River requested that the financial and production information 
that it provided with its petition be kept confidential because of the 
value it would afford competitors. NHTSA understands from Red River's 
attorney that the company's principal competitor in the manufacture of 
horizontal discharge trailers is Dan Hill & Associates, Inc. (``Dan 
Hill''). Dan Hill asked for and received a one-year exemption from 
Standard No. 224 on January 26, 1998 (63 FR 3784).
    The fact that another manufacturer of a horizontal discharge 
trailer believes that it can comply with Standard No. 224 at the end of 
a one-year exemption supports the opinion of NHTSA engineers that 
conformance is feasible within a limited time frame. NHTSA has 
therefore concluded that Red River can achieve compliance of its 
horizontal discharge trailers within the same one-year period that 
another manufacturer of such trailers believes is reasonable. It is 
important that the public be afforded the protection that underride 
guards offer with no undue delay.
    NHTSA is also mindful that a disparity in the duration of a 
temporary exemption could afford a competitive advantage to competing 
low volume manufacturers, causing hardship to one of them, and has 
therefore decided to consider that factor as well in its deliberations 
on Red River's petition. As noted above, Red River represented that, in 
the absence of an exemption, it might have to reduce its workforce by 
50 percent, and that its gross revenues would decrease by $4,000,000 to 
$5,000,000. Gross revenues had averaged slightly over $13,000,000 in 
its 1994, 1995, and 1996 fiscal years. The comparable figures for Dan 
Hill are a reduction of 60 percent in workforce, and a decrease in 
gross revenues of $6,000,000. Gross revenues had averaged approximately 
$13,885,000 in the same fiscal years. Both manufacturers argued that 
immediate compliance would require such a rise in the price of their 
trailers that contractors would likely choose the cheaper alternative 
of dump trailers. Both manufacturers also explored the possibility of 
implementing systems designed in Europe. The principal difference 
between Red River and Dan Hill discernable to NHTSA is the number of 
horizontal discharge trailers that each manufactured in the year 
preceding the filing of their petitions, 265 by Red River and 86 by Dan 
Hill. These trailers represented 85 percent of Dan Hill's total 
production, and a somewhat lesser percent of Red River's (although 
NHTSA granted Red River confidential treatment to the total number of 
trailers it produces as well as a breakdown of the 265 trailers into 
construction and agricultural components, the data show that Red River 
manufactures substantially more horizontal discharge construction 
trailers than its direct competitor, Dan Hill). Granting Red River an 
exemption that would last two years longer than the exemption granted 
to Dan Hill might have the effect of providing Red River with an undue 
advantage, given the substantial similarity of their trailers, the 
modifications necessary to achieve compliance, and the financial 
condition of both companies. Thus, the facts, the equities, and motor 
vehicle safety all weigh towards granting Red River an exemption that 
does not last longer than the one granted to Dan Hill.

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    NHTSA notes that Red River's exemption request also covers a 
horizontal discharge agricultural trailer, a type that is not 
manufactured by Dan Hill. However, it does not appear that this type of 
trailer warrants a separate consideration or a longer exemption, given 
that Red River's petition states that ``the modifications required for 
agricultural Live Bottoms will be similar to those * * * [for] 
construction Live Bottoms.''
    NHTSA has concluded that Red River has not made a convincing 
argument for an exemption of longer than one year. The petitioner 
describes its primary competition in terms of vehicle type as the 
``steel end dump trailer'' which retails for about $7,000 less than the 
Live Bottom trailer. Red River has presented an estimated price 
increase range if compliance is to be achieved within one to two years, 
but has requested confidential treatment for it. While NHTSA cannot 
quote dollar figures for the estimated range of price increases, it can 
characterize the low end estimate as exceeding 10 percent of the retail 
price differential between steel end dump trailers and Live Bottoms. 
Such an increase would result ``in a projected loss of sales of 
approximately 10 percent.'' Given the 1996 base of 265 Live Bottoms, 
the estimated price increase were compliance to be required ``within 
one to two years'' could result, then, in a loss of 27 sales per year. 
NHTSA has concluded that this potential loss of sales does not 
constitute ``substantial economic hardship'' which would justify an 
exemption period that is longer than one year. The statute affords any 
manufacturer granted an exemption the right to apply for a renewal. If 
either Red River or Dan Hill discover that it requires further time for 
compliance, it may apply for an extension near the end of the exemption 
period.
    NHTSA is in accord with Red River's public interest and safety 
arguments, that Live Bottoms possess advantages in certain uses over 
end dump trailers, and that much of its useful life is spent off the 
highway.
    In consideration of the foregoing, it is hereby found that to 
require Red River Manufacturing, Inc., to comply immediately with 49 
CFR 571.224, Standard No. 224 would cause substantial economic hardship 
to a manufacturer that has tried in good faith to comply with the 
standard, and that a one-year exemption would be in the public interest 
and consistent with the objectives of motor vehicle safety. 
Accordingly, Red River Manufacturing, Inc. is hereby granted NHTSA 
Temporary Exemption No. 98-3 from Federal Motor Vehicle Safety Standard 
No. 224, Rear Impact Protection, expiring April 1, 1999, applicable to 
Live Bottom horizontal discharge construction and agricultural 
trailers.

    Authority: 49 U.S.C. 30113; delegation of authority at 49 CFR 
1.50.

    Issued: March 27, 1998.
Ricardo Martinez,
Administrator.
[FR Doc. 98-8514 Filed 3-31-98; 8:45 am]
BILLING CODE 4910-59-P