Reliance Trailer Co., LLC.; Grant of Application for Renewal of Temporary Exemption From Federal Motor Vehicle Safety Standard No. 224

This notice grants the application by Reliance Trailer Co., LLC, of Spokane, Washington (Reliance), for a renewal of a temporary exemption for its dump body trailer from the Federal Motor Vehicle Safety Standard No. 224, Rear Impact Protection (FMVSS No. 224). In accordance with 49 U.S.C. 30113(b)(3)(B)(i), the basis for the grant is that compliance would cause substantial economic hardship to a manufacturer that has made a good faith effort to comply with the standard.

The National Highway Traffic Safety Administration (NHTSA) published a notice of receipt of the application on January 16, 2004, and afforded an opportunity for comment.

I. Background

Reliance is a small volume manufacturer of dump body trailers built to work specifically with asphalt paving equipment. On October 16, 2001, Reliance was issued a two-year hardship exemption from the requirements of FMVSS No. 224. Despite their efforts since 2001, Reliance had been unable to bring their dump body trailers in compliance with FMVSS No. 224. Accordingly, Reliance petitioned for renewal on September 24, 2003. We note that because Reliance did not apply for a renewal more than 60 days prior to expiration of the original exemption, their exemption lapsed on October 1, 2003. This exemption is effective as of the day of this notice, and will remain in effect until June 1, 2006.

II. Why Reliance Needs a Renewal of a Temporary Exemption

FMVSS No. 224 requires, effective January 26, 1998, that all trailers with a GVWR of 4536 kg or more, including Reliance's dump body trailers, be fitted with a rear impact guard that conforms to Standard No. 223, Rear Impact Guards.

In the original petition, Reliance argued that a rear impact guard would prevent its trailers from properly connecting with, and discharging asphalt into paving equipment. According to petitioners, compliance with FMVSS No. 224 would render their dump body trailers useless for performing their intended function. During the two-year temporary exemption period, Reliance anticipated acquiring the revenue necessary to design a complex retractable rear impact guard that would allow for proper interaction with paving equipment. However, petitioners now state that they have not been able to arrive at a practical, and economic solution for complying with the requirements of FMVSS No. 224. Accordingly, Reliance has asked for an additional two year time period in which they can derive financial resources necessary for further attempts to bring their dump body trailers into compliance with FMVSS No. 224 without negating their intended function.

III. Why Compliance Would Cause Substantial Economic Hardship and How Reliance Has Tried in Good Faith To Comply With the Requirements of Standard No. 224

In addition to their inability to design a practicable rear impact guard, Reliance experienced a significant economic downturn in the past three years. Specifically, petitioner's financial statements show a profit of $69,284 for the fiscal year 2000; an operating loss of $1,181,900 for the fiscal year 2001; and an operating loss of $2,477,700 for the 2002 fiscal year. This represents a cumulative loss over a 3 year period of $3,590,316. These economic losses forced Reliance to shut down one of their manufacturing facilities in Lynnwood, Washington, and the company is in the midst of further restructuring and consolidation. In 2003, Reliance produced only 12 dump body trailers, which is significantly less than the output in the previous two years. In short, Reliance has not been able to generate profits necessary to continue their efforts to develop a dump body trailer that can effectively interact with paving equipment. According to Reliance, denial of this petition would cause further economic harm to the company because their product would become useless to their only customer—the paving industry.

With respect to petitioner's efforts to comply with FMVSS No. 224, Reliance explored the possibility of implementing moveable, retractable, or removable rear impact guards. However, it was decided that moveable and retractable guards would interfere with paving machines to which a Reliance trailer attaches. This is because the hopper for the paving equipment occupies the space directly behind the rear axle. Reliance anticipates that removable guards would not be reinstalled because they would need to be removed every time the trailer was used.

IV. Why a Renewal of an Exemption Would Be in the Public Interest and Consistent With the Objectives of Motor Vehicle Safety

Petitioners contend that the renewal of their exemption would be in the public interest for the following reasons. First, Reliance argues that denial of this petition request would reduce their payroll by 15 to 18 employees. Second, Reliance argues that an exemption would allow the company to continue providing paving equipment needed by road building industry.

According to Reliance, this exemption will facilitate their efforts to continue seeking a practicable and financially viable solution that would allow dump body trailers with rear impact guards to functionally interact with paving equipment.

V. Comments Received on the Reliance Petition

The agency received no comments on the petition for renewal of the exemption.

VI. The Agency's Findings

The agency is granting the Reliance petition for the following reasons:

1. The Reliance petition clearly demonstrates the financial difficulties experienced by the company, with cumulative losses in the past three years exceeding $3,500,000.

2. The application indicates that Reliance has made a good faith effort to bring their dump body trailers into compliance with Federal safety standards.

3. Traditionally, the agency has found that the public interest is served in affording continued employment to a small volume manufacturer's work force. In this instance, denial of the petition would likely decrease Reliance payroll by 15 to 18 employees.

4. Because these trailers will be manufactured in limited quantities and because typical hauls are short with a minimal amount of time spent traveling on highways, the agency finds that this exemption will likely have a negligible impact on the overall safety of U.S. highways. At the same time, the public interest is served because these special-purpose, road construction trailers perform an important function by facilitating road construction and maintenance.

5. The agency notes that there is no substantial difference between Reliance petition and other hardship applications that we have granted in the past. For example, we recently granted an exemption to another manufacturer of similar dump body trailers. On February 13, 2003, Columbia Body Manufacturing Co. received a three-year exemption from the requirements of FMVSS No. 224.

6. The term of this exemption will be limited to two years and the agency anticipates that this time period will enable Reliance to derive revenues necessary to continue their efforts to bring their dump body trailers in compliance with FMVSS No. 224.

In consideration of the foregoing, it is hereby found that compliance with the requirements of Standard No. 224 would cause substantial economic hardship to a manufacturer that has tried in good faith to comply with the standard. It is further found that the granting of an exemption would be in the public interest and consistent with the objectives of traffic safety.

In accordance with 49 U.S.C. 30113(b)(3)(B)(i), Reliance is granted NHTSA Temporary Exemption No. EX 04-1, from the requirements of 49 CFR 571.224; Standard No. 224, Rear Impact Protection. The exemption shall remain in effect until June 1, 2006.

FOR FURTHER INFORMATION CONTACT:

George Feygin in the Office of Chief Counsel, NCC-112, (Phone: (202) 366-2992; Fax (202) 366-3820; e-mail: George.Feygin@nhtsa.dot.gov). (49 U.S.C. 30113; delegations of authority at 49 CFR 1.50. and 501.8)