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

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

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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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