[Federal Register Volume 63, Number 91 (Tuesday, May 12, 1998)]
[Notices]
[Pages 26248-26249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12596]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration
[Docket No. NHTSA 98-3396; Notice 2]


Orion Bus Industries Inc.; Grant of Application for Temporary 
Exemption From Federal Motor Vehicle Safety Standard No. 121

    This notice grants the application by Orion Bus Industries Inc. of 
Oriskany, New York, for a five-month exemption from Motor Vehicle 
Safety Standard No. 121 Air Brake Systems. The basis of the application 
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 application was published on February 3, 
1998, and an opportunity afforded for comment (62 FR 5604).
    On June 7, 1995, Western Star Truck Holdings Ltd., Canada, 
purchased some of the assets of Bus Industries of America. Through its 
wholly-owned subsidiary, Orion Bus Industries Ltd. of Ontario, a 
manufacturer of city transit buses, Western Star established Orion Bus 
Industries Inc. (``Orion Bus'') as a wholly-owned subsidiary of Orion 
Bus Industries Ltd. Since 1995, ``Orion Bus has been striving to re-
organize the operation, update and replace obsolete facilities and turn 
an insolvent organization into a first class bus manufacturing facility 
employing over 1,000 employees.'' Orion Bus manufactured 699 buses in 
the 12-month period preceding the filing of its application.
    Paragraph S5.1.6.1(a) of Standard No. 121 requires each ``single 
unit vehicle,'' including transit buses, manufactured on and after 
March 1, 1998, to be equipped with an antilock brake system. The 
company will be able to comply as of that date with buses entering 
production. However, it sought relief from compliance for certain 
Transit VI buses whose assembly will not be completed until after March 
1, 1998. As it explained, these buses ``are part of bus contracts which 
have been delayed due to the insolvency of a major part supplier.'' 
This has disrupted Orion Bus's schedule for over 27 weeks ``while a new 
vendor could be found, new tooling produced and the new supply of parts 
tested and certified to meet current in-use Safety Standards.'' As the 
buses were not designed to be equipped with antilock braking systems, 
their fixed-cost contracts have no provisions for the purchaser bearing 
the cost of modifications, and Orion Bus would have to absorb the 
costs. Orion Bus increased its production schedule to minimize the 
number of buses needing an exemption. As of December 1, 1997, however, 
it appeared to Orion Bus that 148 Transit VI buses would be produced on 
or after March 1, 1998, and not later than August 1, 1998.
    Orion Bus had a net loss of $650,000 during its limited operations 
in 1995, a net income of $1,223,000 in 1996, and a net income of 
$4,696,000 in 1997. Further costs would be incurred were Orion Bus 
required to conform. At a minimum, the cost to convert stock axles sets 
and brake assemblies to become anti-lock compliant is estimated to be 
$636,740. Were Orion Bus to complete its orders with conforming buses, 
the purchasers might demand that the buses for which they had already 
taken delivery be retrofitted to conform. This contingent liability is 
estimated to be $7,000,000. Orion Bus believes that a mixed fleet would 
have a detrimental effect upon its purchasers ``by forcing them to 
carry different replacement parts, implementing different maintenance 
procedures and having to train maintenance personnel and drivers on how 
to handle the different vehicles.'' Because drivers sometimes change 
buses during their shifts, in an emergency a driver may not react 
appropriately as the situation demands. Thus, it is in the public 
interest to grant the application.
    Orion Bus submitted data indicating that a temporary exemption 
``will have little impact on the ability of a bus to come safely to a 
stop within the stopping distances specified in Table II of FMVSS 
121.'' These data ``indicate that the test vehicle [Orion VI Transit 
bus] met all stopping distance guidelines and stayed within a 12-foot 
lane width (without wheel lock).''
    One comment was received in response to the notice. Gillig 
Corporation, a manufacturer of ``heavy duty buses, primarily for 
transit operation,'' opposed the application. It believes that ``more 
than enough notice [was provided] to plan for a business like change 
over of an important safety standard improvement,'' commenting that the 
rest of the industry also had ``schedule changes and increased vehicle 
costs [which] we had to incorporate into our business plans.'' Gillig 
further commented that ``rationalizing the impact by citing best 
effort, dry road stopping is not the intent of anti-lock systems. Anti-
lock is designed to perform in adverse conditions and panic stops. 
Fleet mixing is destined to occur.'' Finally, Gillig said that it was 
``unaware of precedent that Federal Motor Vehicle Safety Standards can 
be postponed due to a manufacturer's economic difficulties.''
    In fact, there is a factual precedent for the application by Orion 
Bus, and it also involved compliance with Standard No. 121. Last year, 
the agency exempted one truck tractor model manufactured by Capacity of 
Texas, Inc., from compliance with the antilock brake requirements of 
Standard No. 121 for a period of three months (62 FR 10110). Capacity's 
contract with the U.S. Postal Service called for it to deliver 210 
vehicles between September 1996 and June 1997. In applying for relief, 
it estimated that it could not complete the final 60 truck tractors by 
March 1, 1997 without an uneconomic increase in

[[Page 26249]]

production rates which would entail the hiring and training of new 
personnel, and without diverting attention from other orders in 
process. In support of its application, it cited its customer's desire 
to have 210 identical vehicles so that all drivers in the fleet could 
be trained in the same operating procedure and maintenance employees in 
the same maintenance procedures. The Postal Service also did not wish 
to have a fleet of dissimilar vehicles requiring different spare parts. 
It had not proven feasible to complete the order before the antilock 
effective date.
    Orion Bus's inability to complete its contract on schedule was due 
to ``bus contracts which have been delayed due to the insolvency of a 
major part supplier.'' This disrupted its schedule for over 27 weeks 
while a new vendor could be found. As Orion Bus has asked for a 20-week 
exemption, it appears that the applicant would otherwise have completed 
the order for 210 buses almost two months before the effective date of 
the antilock provisions of Standard No. 121. NHTSA deems the 
``insolvency of a major part supplier'' as something more than a 
``schedule change,'' with which other bus manufacturers had to contend, 
as submitted by Gillig. Orion Bus's other buses will be manufactured to 
conform to the new requirements of the standard effective March 1, 
1998. In NHTSA's view, Orion Bus has demonstrated sufficiently that it 
has tried in good faith to comply with the antilock requirements of the 
standard.
    Orion Bus has also made a sustainable hardship argument. Although 
its cumulative net income for the three fiscal years of its existence 
is somewhat more than $5,000,000, a denial would force it to suspend 
production of the buses until it could bring them into conformity, and 
would present the possibility that its customers might demand that the 
buses already delivered to them be retrofitted to conform, a contingent 
liability estimated to be $7,000,000. Orion Bus advances the same 
arguments relating to the inadvisability of mixed fleets as were 
presented by Capacity and which NHTSA found compelling in granting 
Capacity's application.
    With respect to the necessary finding that an exemption is 
consistent with considerations of motor vehicle safety, Orion Bus has 
stated that its Transit VI buses will comply with the stopping 
distances required by S5.3.1 for buses equipped with antilock. Gillig 
emphasizes that this argument neglects the purpose of antilock, ``to 
perform in adverse conditions and panic stops.'' The safety of buses is 
of great concern to NHTSA because these vehicles are operated on a 
daily basis, carrying hundreds of passengers. But transit buses, unlike 
intercity buses, are operated on city streets where speed is limited 
and where they may not even reach these limits in the start-and-halt 
driving between stops. The likelihood of the need for antilock is less 
likely to arise in urban environments under these operating conditions. 
The continued availability of mass transit is in the public interest as 
is the preservation of the orderly flow of commerce.
    In consideration of the foregoing, it is hereby found that to 
require Orion Bus to comply immediately with Federal Motor Vehicle 
Safety Standard No. 121 would cause substantial economic hardship to a 
manufacturer that has attempted in good faith to comply with the 
standard, and that an exemption would be in the public interest and 
consistent with the objectives of motor vehicle safety. Accordingly, 
Orion Bus Industries, Inc., is hereby granted NHTSA Temporary Exemption 
No. 98-4, expiring September 1, 1998, for the production of not more 
than 150 Orion VI Transit buses to be exempt from S5.1.6 of 49 CFR 
571.121 Standard No. 121 Air Brake Systems.

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

    Issued: May 6, 1998.
Ricardo Martinez,
Administrator.
[FR Doc. 98-12596 Filed 5-11-98; 8:45 am]
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