Beall Trailers of Washington, Inc.; Grant of Petition for Renewal of Temporary Exemption From Federal Motor Vehicle Safety Standard No. 224

This notice grants the petition by Beall Trailers of Washington, Inc., of Kent, Washington (“Beall”), a wholly-owned subsidiary of Beall Corporation, for a renewal of the temporary exemption we granted it in July 1998 from Federal Motor Vehicle Safety Standard No. 224 Rear Impact Protection. The basis of the petition is 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 January 20, 2000, and an opportunity afforded for comment (65 FR 3267).

On July 8, 1998, we granted Beall's initial exemption petition, assigning it NHTSA Temporary Exemption No. 98-5, expiring July 1, 1999 (63 FR 36989). On April 20, 1999, we received Beall's application for renewal , which was filed in time to stay the expiration date of the exemption, as provided by 49 CFR 555.8(e). Following our request, Beall provided more current financial and production information on October 28, 1999 to supplement its new petition.

Beall manufactures and sells dump body trailers. It (identified in the petition as “Truckweld”) produced a total of 311 trailers in 1997, of which 124 were dump body types. Truckweld trailer production in 1998 was down to 135 units but the number of dump body types was not stated.

Standard No. 224 requires, effective January 26, 1998, that all trailers with a GVWR of 4536 Kg or more, including dump body types, be fitted with a rear impact guard that conforms to Standard No. 223 Rear impact guards. Beall argued earlier that “alterations may have to be made to the trailer chassis or even raising the dump box to provide space for the retractable guard,” indicating that a guard that retracts when the dump body is in operation is the solution it is seeking in order to comply. During the time that its exemption has been in effect, Beall “has, in good faith, made attempts to design a compliant device.” It states that it has developed “a number of potential designs” including an articulating design, but “these devices * * * do not meet FMVSS 224, have interferences with paving equipment, or have severe maintenance issues.” The company is still testing hinged, retractable devices but three issues must be overcome. First, space for a retracted device is not readily available “due to the clearance issues in connecting to pavers.” Raising the box also raises the center of gravity and reduces the stability of the trailers “thereby endangering others.” Second, “asphalt service will, over a period of time, render such devices unusable.” Finally, “it would be possible to operate a trailer with these type (sic) of devices in the retracted position, therefore not in compliance.” It will continue its efforts to conform during the three-year exemption period it has requested.

If a renewal of the exemption is not granted, substantial economic hardship will result. First, it would lose a trailer that accounts for 40 percent of its overall production. In addition, “some percentage of the remaining 60% would be lost since our customers typically purchase matching truck mounted dump bodies which may also be lost.” It also believes that 31 of its 63 employees would have to be laid off if its application is denied. It argues that maintenance of full employment would be in the public interest . Beall's net income was $39,317 in fiscal year 1995, $72,213 in 1996, $697,040 before income taxes in 1997, and $326,255 in 1998.

One comment was received on the petition, from Pioneer Truck Equipment of Salem, Oregon, which opposed it. Pioneer, a manufacturer of “multi axle dump body trailers,” argues that Beall's exemption has given it a competitive advantage. It believes that Beall's petition should be denied, or, alternatively, that there be “a blanket exemption for all affected manufacturers.” In considering whether to grant a temporary exemption, however, the test we must apply is whether denying an exemption would cause substantial economic hardship to a manufacturer that has tried in good faith to comply.

Beall is a small volume manufacturer by any standard, producing only 135 units in the year preceding the filing of its application for renewal. Its net income at that point was $326,255. We note that this figure reflects Beall's financial situation during the first year that Standard No. 224 and its exemption was in effect. This new income was substantially lower than the previous year, before Standard No. 224's effective date, when it was $697,040 (which, however, was more than six times the combined net income for the two years prior to that). While the company is not showing net losses, its average net income over the four-year period 1995-98 is roughly $284,000. If we assume that Beall's net income is reduced 50% if an exemption is not granted, the possible result is a net income of only $142,000. In the meantime, it must continue to expend resources in searching for means to conform to Standard No. 224 within the strictures of reduced income. The company assures us that it has been testing hinged, retractable devices, but reports that it continues to experience difficulty. An exemption will be in the public interest because it will allow it to retain full employment. The effect upon safety will be minimal due to the low volume of production.

In consideration of the foregoing, we hereby find that the petitioner has met its burden of persuasion that compliance would cause substantial economic hardship to a manufacturer that has tried to meet the standard in good faith, and that a temporary exemption would be in the public interest and consistent with the objectives of motor vehicle safety. Given the facts that more than two years have passed between our receipt of Beall's petition and our decision to grant it, and that Beall has continued to manufacture its trailers as allowed by the tolled expiration date, we are providing an exemption until August 1, 2001, which, is in effect, slightly more than a two-year exemption. In view of the comment from Pioneer, we are not providing the three-year exemption Beall requested. If Beall has still not achieved compliance, this exemption period should be sufficient to allow the company to file a further exemption request in time to toll the new expiration date, and to provide us with updated compliance and financial information. Accordingly, NHTSA Temporary Exemption No. 98-5 from 49 CFR 571.224 Standard No. 224, Rear Impact Protection is hereby extended to, and will expire on, August 1, 2001.