Document ID: PHMSA-2017-0083-0004
Agency: phmsa
Document Type: Proposed Rule
Title: Hazardous Materials: Response to an Industry Petition To Reduce Regulatory Burden for Cylinder Requalification Requirements
Posted Date: 2019-08-06T04:00Z

[Federal Register Volume 84, Number 151 (Tuesday, August 6, 2019)]
[Proposed Rules]
[Pages 38180-38198]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-16677]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

49 CFR Part 180

[Docket No. PHMSA-2017-0083 (HM-219B)]
RIN 2137-AF30

Hazardous Materials: Response to an Industry Petition To Reduce 
Regulatory Burden for Cylinder Requalification Requirements

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), 
Department of Transportation (DOT).

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: PHMSA is proposing to revise requirements on the 
requalification period for certain DOT 4-series specification cylinders 
in non-corrosive gas service in response to a petition for rulemaking 
submitted by the National Propane Gas Association. This rulemaking 
proposes regulatory relief and a reduction in the requalification-
related costs for propane marketers, distributors, and others in non-
corrosive gas service.

DATES: Comments must be received by October 7, 2019. To the extent 
possible, PHMSA will consider late-filed comments as a final rule is 
developed.

ADDRESSES: You may submit comments identified by the Docket Number 
PHMSA-2017-0083 (HM-219B) by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Fax: 1-202-493-2251.
     Mail: Docket Management System; U.S. Department of 
Transportation, West Building, Ground Floor, Room W12-140, Routing 
Symbol M-30, 1200 New Jersey Avenue SE, Washington, DC 20590.
     Hand Delivery: To the Docket Management System; Room W12-
140 on the ground floor of the West Building, 1200 New Jersey Avenue 
SE, Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through 
Friday, except Federal holidays.
    Instructions: All submissions must include the agency name and 
Docket Number (PHMSA-2017-0083) or RIN (2137-AF30) for this rulemaking 
at the beginning of the comment. To avoid duplication, please use only 
one of these four methods. All comments received will be posted without 
change to the Federal Docket Management System (FDMS) and will include 
any personal information you provide.
    Docket: For access to the dockets to read background documents or 
comments received, go to http://www.regulations.gov or DOT's Docket 
Operations Office (see ADDRESSES).
    Privacy Act: In accordance with 5 U.S.C. 553(c), DOT solicits 
comments from the public to better inform its rulemaking process. DOT 
posts these comments, without edit, including any personal information 
the commenter provides, to http://www.regulations.gov, as described in 
the system of records notice (DOT/ALL-14 FDMS), which can be reviewed 
at http://www.dot.gov/privacy.

FOR FURTHER INFORMATION CONTACT: Shelby Geller, Standards and 
Rulemaking Division, (202) 366-8553, Pipeline and Hazardous Materials 
Safety Administration, U.S. Department of Transportation, 1200 New 
Jersey Avenue SE, Washington, DC 20590-0001.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Background
    A. History
    B. Petition P-1696
    C. Statement of Enforcement Discretion
II. Overview
III. Regulatory Analyses and Notices
    A. Statutory/Legal Authority for This Rulemaking

[[Page 38181]]

    B. Executive Order 12866 and DOT Regulatory Policies and 
Procedures
    C. Executive Order 13771
    D. Executive Order 13132
    E. Executive Order 13175
    F. Regulatory Flexibility Act, Executive Order 13272, and DOT 
Policies and Procedures
    G. Paperwork Reduction Act
    H. Regulation Identifier Number (RIN)
    I. Unfunded Mandates Reform Act
    J. Environmental Assessment
    K. Privacy Act
    L. Executive Order 13609 and International Trade Analysis
    M. National Technology Transfer and Advancement Act
    N. Executive Order 13211
    List of Subjects

I. Background

A. History

    On January 30, 2015, PHMSA published a notice of proposed 
rulemaking (NPRM) titled ``Hazardous Materials: Adoption of Special 
Permits (MAP-21) (RRR)'' [Docket No. PHMSA-2013-0042 (HM-233F); 80 FR 
5339]. The HM-233F NPRM proposed to adopt provisions contained in 98 
widely-used or longstanding special permits with an established safety 
record. Following a 60-day comment period, PHMSA published a final rule 
on January 21, 2016, that adopted the provisions of 96 of these special 
permits [81 FR 3635]. The HM-233F final rule became effective on 
February 22, 2016.
    The HM-233F final rule amended Sec.  180.209(e), which details 
conditions for allowing the requalification period to be longer for DOT 
4-series specification cylinders in certain hazardous material service. 
Prior to publication of the final rule, Sec.  180.209(e) authorized DOT 
4B, 4BW, 4BA, or 4E cylinders used exclusively for a specified list of 
hazardous materials (non-corrosive gases) to be requalified by 
volumetric expansion every 12 years, instead of every 5 years. 
Alternatively, these cylinders were authorized to be requalified by the 
proof pressure test method every 7 years after the first 12-year 
period. A proof pressure test is a pressurization test without the 
determination of a cylinder's expansion, and a volumetric expansion 
test determines the total and permanent expansion of a cylinder at a 
given pressure and is conducted by either water jacket or direct 
expansion test, both of which are conducted with water (see Sec.  
180.203).
    In the HM-233F NPRM, PHMSA proposed to adopt the provisions of 
special permit 12084, which was issued to Honeywell International, 
Inc.\1\ This special permit authorized the requalification of DOT 4B, 
4BA, or 4BW cylinders in accordance with Sec.  180.209(e) for 11 
additional non-corrosive gases. PHMSA identified this special permit as 
suitable for adoption into the regulations. In the HM-233F NPRM, PHMSA 
proposed to revise Sec.  180.209(e) by replacing the list of specific 
hazardous materials with broader applicability to non-corrosive gases 
commercially free from corroding components.
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    \1\ https://www.phmsa.dot.gov/approvals-and-permits/hazmat/file-serve/offer/SP12084.pdf/offerserver/SP12084.
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    PHMSA also proposed to amend the requalification periods of 
authorized cylinders for both the volumetric expansion and proof 
pressure tests in Sec.  180.209(e). Specifically, PHMSA proposed to 
standardize the requalification period to 10 years for both the 
volumetric expansion test (previously a 12-year period) and the proof 
pressure test (previously a 7-year period after an initial 12-year 
period). While this proposed change was not discussed in the preamble 
of the HM-233F NPRM, PHMSA did propose amended regulatory text. PHMSA 
received no adverse comments to any of the proposed changes to Sec.  
180.209(e)--the adoption of special permit 12084 and 10-year 
requalification period--and therefore adopted the language as proposed 
in the final rule. While the effective date of the final rule was 
February 22, 2016, PHMSA allowed for delayed compliance to begin on 
January 23, 2017.

B. Petition P-1696

    On January 13, 2017, the National Propane Gas Association (NPGA) 
submitted a petition to PHMSA and the Office of the Secretary of 
Transportation (OST) titled ``Petition for Rulemaking and Emergency 
Stay Cylinder Requalification Requirements'' [PHMSA-2017-0019 (P-1696) 
\2\]. NPGA requested that PHMSA revise the initial timeframe before 
requalification, revise the requalification period for both the 
volumetric expansion and proof pressure tests in Sec.  180.209(e) to 
those authorized prior to the HM-233F final rule, and update the table 
in Sec.  180.209(a) accordingly. NPGA also requested a Statement of 
Enforcement Discretion while the rulemaking action was pending.
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    \2\ See P-1696: https://www.regulations.gov/docket?D=PHMSA-2017-0019.
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    In the petition, NPGA advised PHMSA and OST that the HM-233F 
rulemaking created potential impacts and unanticipated costs. 
Specifically, NPGA asserted that the regulatory change to the 
requalification period created confusion in the propane industry 
because it was unclear whether those cylinders manufactured or 
requalified by the volumetric expansion test within the last 10 to 12 
years had to be immediately requalified, since prior to the final rule 
they would not have required requalification until the 12-year date. 
Furthermore, NPGA stated that the requirement to test cylinders 
following manufacture or volumetric expansion testing more frequently 
(i.e., every 10 years instead of every 12 years) would increase 
qualification and training costs. NPGA explained that current industry 
practice \3\ is to mark newly manufactured cylinders, eligible for 
requalification in accordance with Sec.  180.209(e), with a 12-year 
requalification mark. Even though this marking is not required by the 
Hazardous Materials Regulations (HMR; 49 CFR parts 171-180), industry 
would have to train employees to ignore those markings. Additional 
training would be required on the revised requalification periods for 
both volumetric expansion and proof pressure testing.
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    \3\ This is voluntary industry practice and not required by the 
HMR.
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    On March 2, 2017, PHMSA met with NPGA representatives to: (1) 
Better understand NPGA's concerns; (2) identify existing industry 
practice and request data to assess the impact of the revised cylinder 
requalification periods; and (3) evaluate the merits of a rulemaking 
and Statement of Enforcement Discretion. During this meeting, NPGA 
reiterated their petition, in that the change in requalification 
intervals would impose unanticipated industry costs. Furthermore, NPGA 
conveyed that a majority of their associate members requalify certain 
DOT 4-series specification cylinders by volumetric expansion testing. 
Following these discussions, PHMSA accepted NPGA's petition for 
rulemaking.

C. Statement of Enforcement Discretion

    On March 17, 2017, PHMSA issued a Statement of Enforcement 
Discretion stating that it will not take enforcement action against a 
person who requalifies DOT 4-series specification cylinders using 
volumetric expansion testing pursuant to a 12-year requalification 
period while it reviews NPGA's petition for rulemaking.\4\ This 
Statement of

[[Page 38182]]

Enforcement Discretion specified that until further action, DOT 4-
series specification cylinders requalified by volumetric expansion in 
accordance with Sec.  180.209(e) may have a 10- or 12-year 
requalification period without any enforcement action taken.
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    \4\ Pipeline and Hazardous Materials Safety Administration's 
Notice Regarding the Requalification Period for Department of 
Transportation (DOT) Specification Cylinders, issued May 17, 2017, 
available at: https://www.regulations.gov/document?D=PHMSA-2017-0083-0001.
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II. Overview

    PHMSA has reviewed NPGA's petition for rulemaking and agrees that 
it merits a rulemaking to consider revising the Sec.  180.209(e) 
requalification period, as accepting the petition is expected to reduce 
regulatory burden and industry cost. PHMSA does not anticipate that 
this revision poses any increased safety risk, as historically these 
cylinders were authorized to be requalified on a 12-year cycle for 
volumetric expansion testing and on a 7-year cycle (after an initial 
12-year period) for proof pressure testing with no known incidents 
attributable to the requalification timeframe. It should be noted that 
in accordance with Sec.  180.205(c), even if a cylinder is due for 
requalification, it may be used until emptied, as long as it was filled 
prior to the requalification due date. Once emptied and placed into 
transportation, it must be requalified in accordance with the 
appropriate test method before being refilled.
    In this NPRM, PHMSA is proposing to return the initial and 
subsequent requalification periods to 12 years for volumetric expansion 
tests, as proposed in the NPGA petition and authorized prior to HM-
233F. PHMSA is proposing to also return the initial requalification 
period for proof pressure testing to 12 years, but maintain the 10-year 
period for subsequent proof pressure requalification testing as adopted 
in HM-233F final rule. The proof pressure test requalification period 
of 10 years was not proposed in NPGA's petition for rulemaking 
(proposed as 7 years). We acknowledge that the proposed 10-year 
requalification period will likely result in one-time industry training 
costs; however, the allowance to requalify a cylinder by proof pressure 
test every 10-years, instead of every 7 years, after the initial 12-
year requalification period, may outweigh the costs of training because 
of less frequent cylinder requalification. Thus, PHMSA believes that 
this could allow for the greatest regulatory relief. PHMSA invites 
comments on the potential for costs or savings that may result from 
maintaining a 10-year requalification period following the initial 12-
year requalification period for proof pressure testing instead of 
returning to the 7-year cycle, after the initial 12-year period (as 
proposed by the NPGA in its petition and reflective of the 
requalification period prior to publication of the HM-233F final rule).
    Additionally, PHMSA is proposing to revise the title of Sec.  
180.209(e) to more appropriately reflect the regulatory provisions in 
this paragraph. PHMSA is also proposing to revise the table in Sec.  
180.209(a) to properly reflect the baseline requalification period and 
the alternate requalification period allowances for various DOT 
specification cylinders. The baseline for DOT 4B, 4BA, 4BW, and 4E 
cylinder requalification is 5-years, but in accordance with the 
proposed language of Sec.  180.209(e), these cylinders may be 
requalified every 10 or 12 years, under the specified conditions and 
dependent on the type of pressure test performed. In addition, PHMSA 
proposes to add a ``7'' to the Sec.  180.209(a) table for DOT 4B, 4BA, 
or 4BW cylinders, as they are authorized for requalification every 7 or 
12 years, instead of 5 years, when used as a fire extinguisher in 
accordance with Sec.  180.209(j). There is no substantive change in 
adding ``7'' to the table as this is a conforming amendment for 
consistency between the table in paragraph (a) and the provisions in 
paragraph (j), which was inadvertently deleted in the HM-233F final 
rule.
    PHMSA is also proposing to amend the table in Sec.  180.209(a) to 
remove any reference to paragraph (e) for DOT 3A, 3AA, 3AL, 3AX, 3AAX, 
3B, 3BN, and 4AA480 cylinders. Section 180.209(e) does not authorize 
requalification of these cylinder types. Therefore, this NPRM adjusts 
for any requalification period that is not currently authorized.
    Further, PHMSA is proposing to make editorial corrections to the 
table for consistency. We propose to: Delete ``DOT'' preceding 3, 3A, 
3AA, 3AL, 3AX, 3AAX, and 4E cylinders because the other entries do not 
have a similar qualifier; specify ``service pressure'' in the ``Minimum 
test pressure (psig)'' column for DOT 4D, 4DA, and 4DS cylinders to 
match other entries; and remove a duplicative citation of Sec.  180.209 
for DOT 3AL cylinders to be consistent with the other requalification 
period references.

III. Regulatory Analyses and Notices

A. Statutory/Legal Authority for This Rulemaking

    This rulemaking is published under the authority of Federal 
Hazardous Materials Transportation Law (Federal hazmat law; 49 U.S.C. 
5101 et seq.), which authorizes the Secretary of Transportation to 
``prescribe regulations for the safe transportation, including 
security, of hazardous materials in intrastate, interstate, and foreign 
commerce.'' The Secretary's authority is delegated to PHMSA at 49 CFR 
1.97. This rulemaking proposes to amend the requalification periods for 
certain DOT 4-series specification cylinders under relief provided in 
Sec.  180.209(e) and to revise the requalification table in Sec.  
180.209(a) accordingly.

B. Executive Order 12866 and DOT Regulatory Policies and Procedures

    This rulemaking is considered a nonsignificant regulatory action 
under section 3(f) of Executive Order 12866 (``Regulatory Planning and 
Review'') and was not reviewed by the Office of Management and Budget 
(OMB). This rulemaking is also considered a nonsignificant rulemaking 
under the DOT's Policies and Procedures for Rulemakings [DOT Order 
2100.6; December 20, 2018].
    Executive Order 12866 (``Regulatory Planning and Review'') \5\ 
requires agencies to regulate in the ``most cost-effective manner,'' to 
make a ``reasoned determination that the benefits of the intended 
regulation justify its costs,'' and to develop regulations that 
``impose the least burden on society.''
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    \5\ See 58 FR 51735, October 4, 1993 for Executive Order 12866
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    Additionally, Executive Order 12866 requires agencies to provide a 
meaningful opportunity for public participation, which also reinforces 
requirements for notice and comment under the Administrative Procedure 
Act (APA).\6\ Therefore, PHMSA solicits comment on the revised 
requalification periods for DOT 4-series specification cylinders as 
proposed in Sec.  180.209(e). PHMSA also seeks comment on the 
preliminary cost and cost savings analyses, including industry costs or 
cost savings due to the revised requalification periods for volumetric 
expansion and proof pressure testing.
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    \6\ See 5 U.S.C. 553.
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    Overall, this rulemaking maintains the continued safe 
transportation of hazardous materials while producing a net cost 
savings. PHMSA's findings are summarized here and described in further 
detail in the following 13 sections, which together comprise our 
preliminary analysis for this NPRM:

1. Summary of preliminary findings
2. Description of the need for the regulatory action
3. Definition of the baseline and rulemaking scenarios
4. The time horizon of analysis
5. Description of the type and number of affected cylinders
6. Description of the type and number of affected entities

[[Page 38183]]

7. Analysis of requalification cost savings
8. Analysis of training costs and cost savings
9. Analysis of total net cost savings
10. Evaluation of non-quantified and non-monetized impacts
11. Characterization of additional uncertainty in impacts, including 
estimated costs, cost savings, and net cost savings
12. Supplemental analysis regarding the number of affected cylinders
13. Supplemental analysis regarding possible effects on proof pressure-
tested cylinders
Summary of Preliminary Findings
    PHMSA's preliminary analysis finds that the proposed changes would 
result in total net cost savings of approximately $142.4 million over 
10 years, or $20.3 million annualized, when discounted at 7 percent.
    These cost savings are almost entirely based on two effects. The 
first effect is avoiding the immediate, accelerated requalification of 
approximately 5 million DOT 4-series specification cylinders that would 
otherwise be required if the proposed changes of this rulemaking are 
not adopted. The second effect is an anticipated reduction in the 
number of cylinders in need of requalification in any given year. The 
avoidance of accelerated requalification occurs in year one, and the 
``enduring'' effect of reducing the number of cylinders in need of 
requalification occurs in subsequent years (years 2-10). Our primary 
analysis focuses on cost savings to entities that requalify cylinders 
by volumetric expansion testing. However, this NPRM also proposes to 
retain the 10-year requalification period for the proof pressure test 
adopted under the HM-233F final rule, so we assume cylinder marketers 
require some training to ensure knowledge of the revised 
requalification timeframes for proof pressure testing. This NPRM would 
also relieve cylinder manufacturers of training to ensure that 
voluntary stamping practices align with the initial requalification 
timeframe, resulting in training-related cost savings for cylinder 
manufacturers. On net, we estimate training cost savings at 
approximately $0.2 million. We add the two types of requalification 
cost savings to the net cost savings related to training to determine 
the total net cost savings. See Exhibit 1.
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    \7\ Due to rounding, these estimates and findings may differ 
slightly from those expressed elsewhere in this analysis. Net cost 
savings is defined as cost savings minus costs, but in Exhibit 1, it 
is presented equivalently as the sum of (net) cost savings. Year-one 
effects are undiscounted. Effects related to years two through ten 
are discounted at 7%. Total effects, covering the 10-year time 
period of analysis, include an undiscounted, year-one value, which 
is added to values discounted at 7% for years two through ten.

            Exhibit 1--Summary of Estimates and Findings \7\
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of Cylinders Affected in Year 1.....  5 million.
Annual Number of Cylinders Affected in       500,000.
 Years 2-10.
Requalification Cost Savings in Year 1.....  $86.1 million.
Requalification Cost Savings per Cylinder    $17.22.
 (weighted average).
Training Net Cost Savings in Year 1........  $0.2 million.
Requalification Cost Savings in Years 2-10   $56.1 million.
 (7%).
Total Net Cost Savings (7%)................  $142.4 million.
------------------------------------------------------------------------

    Exhibit 1 shows ``year one,'' monetized cost savings as well as 
``enduring'' cost savings in years 2-10 based on a reduction in the 
number of cylinders in need of requalification. Please see the section, 
``Analysis of total net cost savings,'' for additional tabulation of 
the total net cost savings of the rule, discounted over 10 years.
    If one were to present these cost savings on an indefinite or 
perpetual time horizon, their net present value would be approximately 
$209.3 million at a 7% discount rate, and their annualized value would 
be $14.7 million, also at a 7% discount rate.\8\ Please note, to arrive 
at this calculation, year-one impacts are undiscounted because these 
impacts are expected to begin occurring soon after the rulemaking is 
made effective, if it is made effective. On a perpetual horizon, the 
year-one savings is $86,338,066 and subsequently, all other years 
repeat a savings of $8,610,338.
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    \8\ The perpetual, annualized cost savings were calculated by 
discounting the net present value of cost savings ($209,342,894.57) 
by one year using a 7% discount rate. This is equivalent to 
multiplying the net present value of cost savings by 0.07. 
$209,342,894.57 * 0.07 = $14,654,002.62.
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Description of the Need for Regulatory Action
    NPGA petitioned \9\ PHMSA to amend Sec.  180.209(e) because the HM-
233F final rule was expected to impose a substantial cost burden on 
industry. Specifically, NPGA reasoned that, due to confusion about the 
applicability of the HMR, the requirements in the HM-233F final rule 
would accelerate the requalification of certain DOT 4-series 
specification cylinders by 2 years, even though the HMR allows a 
cylinder filled before the end of the requalification period to remain 
in service until emptied, as long as it is requalified prior to being 
refilled and offered back into transportation (see Sec.  180.205(c)). 
For example, a cylinder tested by volumetric expansion would need to be 
requalified every 10 years, rather than every 12 years. This 2-year 
acceleration would effectively force 3 years of cylinder vintages to be 
requalified in a single year, and thus would have a potential one-time 
impact on thousands of propane marketers and millions of cylinders. To 
avoid this substantial cost burden, PHMSA issued a Statement of 
Enforcement Discretion on March 17, 2017, and initiated this 
rulemaking, which proposes to allow affected cylinders to be initially 
and subsequently requalified over a 12-year period when tested by 
volumetric expansion.
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    \9\ See P-1696: https://www.regulations.gov/docket?D=PHMSA-2017-0019.
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    NPGA also cited confusion stemming from the industry practice of 
stamping a propane cylinder at the time of manufacture with an 
indication that the cylinder must be requalified 12 years after the 
manufacture date. The HMR do not require this stamp. However, this 
practice means that under current requirements, retraining would be 
necessary to educate employees on the 10-year requalification period 
and to ignore the stamp marking.
    Further, PHMSA proposes to retain the 10-year period for proof 
pressure testing requalification, after the initial requalification 
test at 12 years. Prior to publication of the HM-233F final rule, the 
HMR required a 7-year timeframe for subsequent requalification by proof 
pressure. In its petition, NPGA asked that PHMSA return the proof 
pressure

[[Page 38184]]

test requalification periods of paragraph (e) to 7 years. However, 
PHMSA is proposing to maintain the 10-year requirement on the basis 
that it may add regulatory relief. PHMSA solicits comments regarding 
this proposal, especially as it differs from the NPGA petition (P-
1696). To address possible cost-saving effects on proof pressure-tested 
cylinders, PHMSA offers a supplemental analysis in the last section of 
this analysis. Due to data uncertainties, this supplemental cost 
savings analysis is separate from and secondary to our primary analysis 
methods and estimates. PHMSA solicits comments to address these data 
uncertainties, specifically comments regarding the extent of proof 
pressure testing.
Definition of the Baseline and Rulemaking Scenarios
    This rulemaking is expected to have a variety of effects or 
impacts, some of which result in cost savings, others in costs. We do 
not estimate benefits in this analysis because PHMSA anticipates that 
the proposed changes maintain an equivalent level of safety. This 
section describes the baseline and rulemaking scenarios, which are the 
basis for determining whether the proposed rule may result in costs or 
cost savings.
    Absent rulemaking action, the existing Statement of Enforcement 
Discretion relieves cylinder marketers of the HM-233F requirement to 
requalify cylinders every 10 years. However, the Statement of 
Enforcement Discretion does not provide regulatory certainty. 
Therefore, PHMSA uses the HM-233F or current HMR standards as the 
baseline, and uses this rulemaking action (HM-219B) as the rulemaking 
scenario and basis for incremental change.
    Thus, in the baseline, requalifications are accelerated by 2 years, 
resulting in costs; in the rulemaking scenario, these accelerated 
requalifications are avoided, resulting in cost savings. This effect 
would occur in year one of impacts. In addition, in subsequent years, 
the pool of cylinders requiring requalification would be larger in the 
baseline than in the rulemaking scenario. Thus, if this rulemaking 
becomes effective, PHMSA is also providing ``enduring'' cost savings 
due to fewer cylinders being in need of requalification in the 
rulemaking versus the baseline scenario. These cost saving effects are 
the main effects of this proposed rulemaking.
    Please note that this analysis focuses on the cost and cost-savings 
impacts of the 2-year acceleration of requalification by volumetric 
expansion because there is substantial uncertainty regarding the 
proportion and number of cylinders that are requalified by proof 
pressure testing. However, in the last section of this cost-savings 
analysis, we attempt to address this uncertainty by providing a 
supplemental analysis illustrating possible cost-savings effects on 
proof pressure-tested cylinders. In the baseline, proof pressure-tested 
cylinders must be requalified every 7 years after the initial 12-year 
period; in the rulemaking scenario, these cylinders can be requalified 
every 10 years after the initial 12-year period. This may enhance 
regulatory flexibility, and is a possible mechanism for cost savings. 
To better address these uncertainties in future analyses, PHMSA 
solicits comment on the proportion and number of cylinders that are 
proof pressure-tested versus cylinders tested using other methods. Due 
to data uncertainties, we limit our discussion of these proof-pressure 
cost savings to the supplemental analysis--they do not factor into our 
primary estimates for cost savings.
    PHMSA also anticipates another, relatively smaller effect: Cost 
savings that result from relieving manufacturers of the need to mark 
cylinders with a revised requalification timeframe. This marking is not 
an HMR requirement. However, in the baseline scenario, this marking 
would need to be revised to indicate a 10-year initial requalification 
timeframe, resulting in costs; in the rulemaking scenario, this marking 
could continue to indicate a 12-year initial requalification timeframe, 
resulting in avoided costs or cost savings.
    In addition to cost savings, the HM-219B proposal to retain a 
revised timeframe for subsequent proof pressure requalifications may 
result in training costs to cylinder marketers. In the baseline, 
current HMR requirements would necessitate this training and imposition 
of costs on cylinder marketers. Additionally, the rulemaking scenario 
will still necessitate this training and imposition of costs, since 
proof pressure requirements differ from pre-HM-233F conditions.
    In summation, this rulemaking may have a variety of cost and cost-
savings effects, but the main effects are due to the baseline and 
rulemaking scenarios for cylinders requalified by volumetric expansion. 
In the baseline scenario, cylinders must be initially requalified every 
10 years. This is the current HMR requirement, as codified in HM-233F. 
Conversely, in the rulemaking scenario, cylinders tested by volumetric 
expansion must be requalified every 12 years. This is the change 
proposed in this rulemaking (HM-219B), which effectively revises the 
requalification timeframe for volumetric expansion testing back to the 
standards in place before HM-233F was published. See Exhibit 2.

    Exhibit 2--Impacts of HM-219B Provisions for Volumetric Expansion
                                 Testing
------------------------------------------------------------------------
                                     Baseline (no
      Rulemaking provision              action)       HM-219B amendments
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Revise Sec.   180.209(e)........  HMR remains as      PHMSA reverts text
                                   made effective in   in Sec.
                                   January 2017, and   180.209(e) to its
                                   regulatory text     earlier iteration
                                   remains the same    before HM-233F.
                                   as in HM-233F.
                                  DOT cylinders must  DOT cylinders must
                                   be requalified      be requalified
                                   every 10 years.     every 12 years.
------------------------------------------------------------------------

The Time Horizon of Analysis
    This analysis assumes that this rulemaking will result in a ``one-
time'' impact occurring in the first year the rulemaking is effective 
due to accelerated requalifications. After this first year, the 
rulemaking will also result in a reduction in the number of cylinders 
requiring requalification in any one year.
    With respect to year-one impacts, we can elaborate further with an 
example using the baseline and rulemaking scenarios. In the baseline 
scenario, cylinder marketers need to requalify three different vintages 
of cylinders in 2019, specifically those cylinders manufactured or 
requalified in 2007, 2008, and 2009. This is the direct result of the 
requirement that these cylinders be requalified on a 10-year timeframe 
instead of a 12-year timeframe. As such, the HM-233F final rule imposed 
an accelerated requalification for cylinders manufactured or 
requalified in 2008 and 2009, whereas the cylinders

[[Page 38185]]

manufactured or requalified in 2007 would need to be requalified in 
2019 under either the baseline or rulemaking scenario. In the baseline 
scenario, 3 years' worth of cylinders need to be requalified in a 
single year, with the 2008 and 2009 cylinders needing requalification 
earlier than anticipated. Conversely, in the rulemaking scenario, the 
2008 and 2009 cylinders can be requalified in 2020 and 2021, 
respectively, and the requalification costs that the HM-233F final rule 
imposed are avoided. To the extent that cylinders are requalified using 
volumetric expansion, this NPRM proposes a requalification timeframe 
that would have occurred were the HM-233F final rule never published.
    PHMSA's analysis sees this effect as a ``one-time'' or ``year one'' 
impact. In the baseline, it is a one-time cost imposition; in the 
rulemaking scenario, it is a one-time avoidance of these costs (cost 
savings). See Exhibit 3.
BILLING CODE 4910-60-P
[GRAPHIC] [TIFF OMITTED] TP06AU19.047

BILLING CODE 4910-60-C
    As evident in Exhibit 3, the baseline scenario (HM 233F; current 
HMR requirements) primarily affects cylinder requalification in the 
first year of the rule's effect. Before this first year, there is no 
difference between the baseline and rulemaking scenario. After this 
first year of effect (e.g., 2019 onward), the requalification cycle 
returns to a ``normal state,'' where only one vintage of cylinders are 
requalified per year, although the number of cylinders in need of 
requalification in any given year would be smaller in the rulemaking 
than in the baseline scenario.
    Note that we do not have data on the manufacturing and 
requalification dates for the affected cylinders--this affects how we 
chose to model the timing of requalification in Exhibit 3 and the 
impacts of the baseline and rulemaking scenarios. As evident in Exhibit 
3, we assume that each cylinder has a specific manufacturing or 
requalification year and do not distinguish between the cylinders on a 
more granular level (e.g., month-to-month). For instance, we do not 
distinguish between a cylinder from January 2007 and one from June 
2007. All 2007 cylinders are assumed to be requalified in 2019, as well 
as all 2008 and 2009 cylinders in the baseline. We make no further 
distinction about the timing of the manufacture and requalification of 
affected cylinders. Further, our analysis does not have a discounting 
component for avoiding accelerated requalifications because it is 
assumed to occur in the first year of the rulemaking's implementation, 
without distinctions between an expenditure made in January 2019 and 
one in December 2019, for example. For these reasons, the costs of 
accelerated requalification (or the avoidance of these costs) are 
undiscounted, one-time or ``year one'' impacts.
    In addition to ``year one'' impacts, there is potential for 
``enduring'' effects occurring in subsequent years. In subsequent 
years, the pool of DOT 4-series specification cylinders that need 
requalification in a given year may be smaller in the rulemaking 
scenario than in the baseline scenario. In the baseline scenario, this 
requalification pool represents effectively 1/10th of cylinders in 
service since these cylinders would need requalification once every 10 
years. In the rulemaking scenario, this requalification pool would 
represent 1/12th of cylinders in service

[[Page 38186]]

since these cylinders would need requalification once every 12 years. 
This rulemaking scenario reduction in requalification may result in 
cost savings. We attempt to quantify and monetize this effect as a cost 
savings, which in tandem with the avoided accelerated requalification 
costs, may be substantial. PHMSA solicits comment on the ``one-time'' 
and ``enduring'' effects, and on this analysis in general. We also 
solicit comment on whether there are additional economic effects that 
were not foreseen that could be represented in a future, revised 
analysis.
Description of the Type and Number of Affected Cylinders
    According to information provided by NPGA in P-1696, the revisions 
made in the HM-233F final rule affect nearly 5 million DOT 4-series 
specification cylinders (e.g., 4B, 4BA, 4BW, and 4E). Furthermore, NPGA 
estimates that 75 percent of cylinders are 20-lb. cylinders (used 
primarily for BBQ grills, patio heaters, construction heat, temporary 
heat, etc.), and the remaining 25 percent comprise a variety of sizes, 
e.g., 33.5 lb. (forklift cylinders), 100 lb. (exchange cylinders), and 
the largest size, 420 lb. propane cylinders (residential/commercial 
heat). Absent any other data describing the population of affected 
cylinders, PHMSA uses NPGA's assumptions for this analysis.\10\ See 
Exhibit 4.
---------------------------------------------------------------------------

    \10\ NPGA does not provide any supporting documentation or other 
information describing the basis for these estimates.

                                       Exhibit 4--Affected Cylinders \11\
----------------------------------------------------------------------------------------------------------------
                                                                                           Number of cylinders
       Cylinder service sector              Cylinder size          Distribution  (%)      requiring accelerated
                                              categories                                     requalification
----------------------------------------------------------------------------------------------------------------
Residential..........................  20 lbs.................                       75                3,750,000
Commercial...........................  33-420 lbs.............                       25                1,250,000
                                      --------------------------------------------------------------------------
    Total............................  .......................                      100                5,000,000
----------------------------------------------------------------------------------------------------------------

     
---------------------------------------------------------------------------

    \11\ National Propane Gas Association, ``RE: Supplement to 
January 13, 2017 NPGA Petition for Rulemaking and Emergency Stay,'' 
February 13, 2017 [hereinafter NPGA Supplement]: https://www.regulations.gov/document?D=PHMSA-2017-0083-0003.
---------------------------------------------------------------------------

    Exhibit 4 reiterates that, absent this rulemaking, approximately 5 
million cylinders would need to be requalified on an accelerated basis. 
If this rulemaking is adopted, these 5 million cylinders can be 
requalified on a 12-year timeframe. As explained previously, this would 
revert volumetric expansion test requalification back to the timing in 
place before publication of the HM-233F final rule.
    This estimate of the number of affected cylinders is also important 
to the estimation of ``enduring'' cost savings. After year one, the 
difference between the annual number of cylinders in need of 
requalification in the baseline and rulemaking scenarios is an input to 
our method for the enduring cost savings. Specifically, NPGA's estimate 
of 5 million represents 2 cylinder vintages that would undergo 
accelerated requalification. This means an estimated 2.5 million 
cylinders may need requalification in any one year. As such, over 12 
years, 30 million cylinders would need requalification (2.5 * 12). If 
this same number of cylinders were to be requalified instead over 10 
years, as the baseline holds, this would mean 3 million cylinders per 
year, or an increase of 500,000 cylinders per year. In other words, the 
baseline scenario would require that 20% more cylinders be requalified 
each year; in the rulemaking scenario, 20% fewer. This differential is 
an input to our cost savings method for ``enduring'' cost savings, 
which occur after year one.
    Based on the accelerated requalifications in year one and the 
enduring effects thereafter, PHMSA chooses a time period of analysis of 
10 years. A different time period of analysis may result in different 
findings and PHMSA may revise this analysis in the future to reflect 
different time periods of analysis.
    Because PHMSA relies on NPGA assumptions and data, this cost 
savings analysis includes a supplemental analysis addressing the number 
of affected cylinders. This is provided in the section, ``Supplemental 
analysis regarding the number of affected cylinders.''
Description of the Type and Number of Affected Entities
    This rulemaking affects various entities, specifically cylinder 
marketers and manufacturers. If this rulemaking is not adopted, 
cylinder marketers bear the costs of accelerated cylinder 
requalification; however, if this rulemaking is adopted, cylinder 
marketers achieve a cost savings because they are relieved of the need 
to requalify cylinders on an accelerated basis. Moreover, cylinder 
marketer employees would require training if this rulemaking is adopted 
as proposed, since proof pressure requirements would be different. 
Lastly, if adopted, the rulemaking would relieve cylinder manufacturers 
of changes to voluntary stamping/marking practices, resulting in cost 
savings (avoided training costs). These training costs and cost savings 
are detailed in the section, ``Analysis of training costs and cost 
savings.''
    To describe the type and number of affected cylinder marketers, 
PHMSA relies on the North American Industrial Classification System 
(NAICS),\12\ specifically sector code 454310 Fuel Dealers.\13\ This 
sector is comprised of fuel dealers primarily engaged in retailing 
heating oil, liquefied petroleum (LP) gas, and other fuels via direct 
selling to customers. For the purposes of this analysis, we call 
entities in this sector, ``cylinder marketers'' or ``marketers,'' which 
is used synonymously with ``fuel dealers.'' There are approximately 
8,700 establishments in this sector.\14\ The employment estimate for 
this NAICS sector is approximately 74,000, according to U.S. Census 
data. This estimate of the number of cylinder marketer employees is 
used as an input in our estimation of this rulemaking's training costs. 
We detail cost and cost-

[[Page 38187]]

savings methods and calculations in the sections, ``Analysis of 
requalification cost savings'' and ``Analysis of training costs and 
cost savings.''
---------------------------------------------------------------------------

    \12\ The North American Industry Classification System (NAICS) 
is the standard used by Federal statistical agencies in classifying 
business establishments for the purpose of collecting, analyzing, 
and publishing statistical data related to the U.S. business 
economy. The classification framework is updated periodically, and 
most Federal statistical agencies currently report data using the 
2012 version of the NAICS. The NAICS version--2012--is not related 
to the year for which statistical data are being published.
    \13\ https://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=454310&search=2012%20NAICS%20Search.
    \14\ Ibid.
---------------------------------------------------------------------------

    In addition to cylinder marketers, the rulemaking is likely to have 
an impact on NAICS sector 332420 Metal Tank Manufacturing,\15\ which is 
the sector primarily engaged in cutting, forming, and joining heavy 
gauge metal to manufacture tanks, vessels, and other containers. For 
the purposes of this analysis, we call entities in this sector, 
``cylinder manufacturers,'' or ``manufacturers'' for short. During 
2014, this sector included 739 establishments and 36,869 employees.\16\ 
It is industry practice--albeit not required by the HMR--that DOT 4-
series specification cylinder manufacturers currently place a stamp 
during manufacture indicating that the cylinder must be requalified 12 
years after the manufacture date.\17\ If this rulemaking is not adopted 
(baseline), cylinder manufacturers may need to adjust this stamp to 
reflect the 10-year requirement, and implement any necessary training 
or manufacturing process changes to do so. This estimate of the number 
of cylinder manufacturing employees is used as an input in our 
estimation of this rule's training-related cost savings.
---------------------------------------------------------------------------

    \15\ https://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=332420&search=2012%20NAICS%20Search.
    \16\ U.S. Census Bureau. ``2014 County Business Patterns.'' 
American Fact Finder, April 21, 2016. https://factfinder.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t.
    \17\ See P-1696, pg. 7: https://www.regulations.gov/docket?D=PHMSA-2017-0019.
---------------------------------------------------------------------------

    See Exhibit 5 for the estimates of the number of establishments and 
employees on payroll for the NAICS sectors, 454310 Fuel Dealers and 
332420 Metal Tank Manufacturing.

                                  Exhibit 5--Potentially Affected Entities \18\
----------------------------------------------------------------------------------------------------------------
                                                                            Number of           Employees  on
               NAICS code                      NAICS code sector         establishments            payroll
----------------------------------------------------------------------------------------------------------------
Primarily Affected Industry:
    454310..............................  Direct Sales Fuel Dealers.                 8,677                73,555
Other Relevant Industry Stakeholders:
    332420..............................  Metal Tank Manufacturing..                   739                36,869
----------------------------------------------------------------------------------------------------------------

Analysis of Requalification Cost Savings
---------------------------------------------------------------------------

    \18\ U.S. Census Bureau. ``2014 County Business Patterns.'' 
American Fact Finder, April 21, 2016. https://factfinder.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t.
---------------------------------------------------------------------------

    Assuming the rulemaking takes effect in 2019, adoption of this 
rulemaking would relieve cylinder marketers of the cost to accelerate 
the requalification of cylinders manufactured in 2008 and 2009. PHMSA 
believes it would also provide a reduction in the number of cylinders 
in need of requalification after year one, on an enduring, year-over-
year basis. In this section, we estimate the value of these potentially 
avoided costs.
    In the baseline or HM-233F scenario, changes to Sec.  180.209(e) 
require cylinder marketers to requalify some cylinders on an 
accelerated basis. Based upon assumptions provided by NPGA, a typical 
safety inspector can requalify three residential cylinders per hour and 
two commercial cylinders per hour.\19\ We estimate the avoided 
requalification cost by multiplying the number of residential and 
commercial cylinders requiring requalification, from Exhibit 4, by the 
amount of time needed to requalify a single cylinder, differentiated by 
type, and the mean hourly labor rate \20\ for a safety inspector in the 
454310 Fuel Dealers sector.\21\ This approach results in estimated 
costs of $15.26-$23.12 to requalify each residential and commercial 
cylinder, respectively. Total potentially avoided requalification costs 
for these cylinders are estimated to be approximately $86 million 
dollars. See Exhibit 6-1.
---------------------------------------------------------------------------

    \19\ See NPGA Supplement, Appendix A, for estimates of labor-
hours to requalify residential and commercial cylinders: https://www.regulations.gov/document?D=PHMSA-2017-0083-0003.
    \20\ May 2015 National Industry-Specific Occupational Employment 
and Wage Estimates NAICS 454300--Direct Selling Establishments; 
available at: https://www.bls.gov/oes/current/naics4_454300.htm.
    \21\ There may be additional costs, aside from labor, 
particularly to the extent that the temporary increased volume of 
testing increases wear-and-tear of hydrostatic test equipment and 
associated maintenance costs.

                   Exhibit 6-1--One-Time Avoided Requalification Testing Costs During Year One
----------------------------------------------------------------------------------------------------------------
                                                                               Labor rate for        Avoided
              Cylinder type                   Number of         Hours to         fuel dealer     requalification
                                           cylinders \22\    requalify \23\    inspectors \24\        cost
----------------------------------------------------------------------------------------------------------------
Residential.............................         3,750,000              0.33            $46.23       $57,209,625
Commercial..............................         1,250,000              0.50             46.23        28,893,750
                                         -----------------------------------------------------------------------
    Total...............................  ................  ................  ................       $86,103,375
----------------------------------------------------------------------------------------------------------------

    PHMSA interprets this impact as a ``one-time'' cost savings that is 
assumed to occur over a one-year period during 2019. We do not 
distinguish these cost savings on a month-to-month basis because we do 
not have data relaying the specific manufacturing dates of the affected 
cylinders. Further, this may not be relevant if requalification dates 
are uniformly distributed across different months of the year.
---------------------------------------------------------------------------

    \22\ See Exhibit 4: Affected Cylinders.
    \23\ See NPGA Supplement: https://www.regulations.gov/document?D=PHMSA-2017-0083-0003.
    \24\ U.S. BLS wage rate is based on 2015 Occupational and 
Employment Statistics Survey (OES) for NAICS 454310 (https://www.bls.gov/oes/current/naics4_454300.htm). Total labor rate also 
includes other costs of employee compensation (i.e., benefits) based 
on BLS' Employer Costs for Employee Compensation Summary, which 
indicates that private industry labor rates are, overall, comprised 
of wages/salaries (68.6%) and benefits (30.2%), https://www.bls.gov/news.release/ecec.nr0.htm.
---------------------------------------------------------------------------

    There is also cost savings due to enduring, year-over-year effects 
in which the number of cylinders in need of requalification is expected 
to be fewer in the rulemaking scenario. With a longer requalification 
timeframe (12

[[Page 38188]]

years vs. 10 years), there are fewer cylinders in need of 
requalification in a given year. In a previous section regarding the 
affected number of cylinders, PHMSA estimated that 20% fewer cylinders 
would be in need of requalification in the rulemaking scenario. 
Combining this 20% estimate with the cost findings related to year one 
impacts, we can estimate enduring, year-over-year cost savings. This 
assumes that input values (e.g., labor rates, time to requalify, 
breakdown of cylinder types) remain constant over the time period of 
analysis. For example, labor rates are assumed to be constant; if they 
were adjusted to reflect inflation, our cost savings estimate would be 
higher.
    Thus, Exhibit 6-1 above provides that the accelerated 
requalification of 2 cylinder vintages would result in approximately 
$86 million. We divide that figure in half to represent annual 
requalification costs and then take 20% of the resulting figure to 
estimate enduring, year-over-year cost savings.\25\ This gives 
approximately $8.6 million in undiscounted, yearly cost savings. 
Equivalently, if 500,000 extra cylinders need requalification on an on-
going basis in the baseline, this amounts to 1/10th of the ``glut'' 
created by the accelerated requalification in year one and hence 10% of 
the estimated costs.\26\ Exhibit 6-2 below presents these cost savings 
in years 2-10, as well as the year-one cost savings based on avoidance 
of accelerated requalification. We present undiscounted (0%) and 3% and 
7% discount rates.
---------------------------------------------------------------------------

    \25\ $86,103,375/2 = $43,051,688. $43,051,688 * 0.2 = 
$8,610,337.60.
    \26\ $86,103,375 * 0.10 = $8,610,337.5

 Exhibit 6-2--Cost Savings Due to Avoidance of Accelerated Requalification in Year 1 and Reduction in Number of
    Needed Requalifications in Years 2-10; Net Present Value and Annualized at 0%, 3%, and 7% Discount Rates
----------------------------------------------------------------------------------------------------------------
                  Year                        Undiscounted  (0%)               3%                    7%
----------------------------------------------------------------------------------------------------------------
1.......................................  $86,103,375...............           $86,103,375           $86,103,375
2.......................................  8,610,338.................             8,359,551             8,047,044
3.......................................  8,610,338.................             8,116,069             7,520,602
4.......................................  8,610,338.................             7,879,679             7,028,600
5.......................................  8,610,338.................             7,650,173             6,568,785
6.......................................  8,610,338.................             7,427,353             6,139,052
7.......................................  8,610,338.................             7,211,022             5,737,431
8.......................................  8,610,338.................             7,000,992             5,362,085
9.......................................  8,610,338.................             6,797,080             5,011,295
10......................................  8,610,338.................             6,599,107             4,683,453
----------------------------------------------------------------------------------------------------------------
    Net Present Value (Total).......................................           153,144,405           142,201,727
                                         -----------------------------------------------------------------------
    Annualized......................................................            17,953,196            20,246,327
----------------------------------------------------------------------------------------------------------------

    Therefore, if this proposed rule is adopted, cylinder marketers in 
the 454310 Fuel Dealers NAICS sector would be relieved of requalifying 
approximately 5 million cylinders in year one, which would save them 
approximately $86 million dollars in costs (undiscounted). Conversely, 
$86 million in requalification costs would be imposed in year one if 
this rulemaking is not adopted, which this analysis assumes would 
sustain HM-233F's requirement for a 10-year requalification timeframe. 
Moreover, if adopted, cylinder marketers would have 20% fewer cylinders 
to requalify in each year after year one. This results in cost savings 
of approximately $8.6 million in years 2-10 (undiscounted).
    Combining these two cost savings effects together, cylinder 
marketers are expected to save $142.2 million over 10 years, discounted 
at 7%. On an annual basis, they are expected to save $20.2 million 
annualized at 7%. We use these figures to calculate total net cost 
savings later in the document, but first we must account for training-
related cost savings, as well as some training-related costs, due to 
the rulemaking scenario.
Analysis of Training Costs and Cost Savings
    This rulemaking may relieve approximately 18,000 cylinder 
manufacturing employees from needing training. In the baseline 
scenario, these cylinder manufacturing employees may need to change the 
way they voluntarily stamp newly-manufactured cylinders, necessitating 
training; conversely, in the rulemaking scenario, their stamping 
practices can remain unchanged, avoiding this training and associated 
costs. The net effect of these training-related impacts is quantified 
in the section, ``Analysis of total net cost savings.''
    However, this rulemaking is also likely to result in approximately 
36,000 cylinder marketer employees to need training on the proposed 
changes to proof pressure requalification periods. Specifically, PHMSA 
is proposing to retain the 10-year requalification timeframe for 
cylinders that are initially requalified using proof pressure testing. 
This may provide cylinder marketers regulatory relief by reducing the 
requalification frequency for proof pressure, but it is also likely to 
necessitate training because this proposal diverges from the standards 
in place before the HM-233F final rule. PHMSA seeks comment on this 
proposal.
    Regarding the training of cylinder marketers, their employees need 
to understand that a 12-year timeframe applies to cylinders initially 
and subsequently requalified by volumetric expansion testing, and that 
a 10-year timeframe applies to cylinders requalified by proof pressure 
testing after an initial 12-year period. In P-1696, NPGA suggests that 
this training would take two hours per employee and that approximately 
half of employees would require training.\27\ PHMSA believes only the 
training portion related to proof pressure testing is a relevant 
change, so we assume this training takes just one hour per employee, 
and, as stated by NPGA, that half of employees would require training. 
Thus, we take the number of

[[Page 38189]]

employees for the 454310 Fuel Dealers sector from Exhibit 5 (73,555) 
and divide it by 2 to get the number of these employees requiring 
training (73,555/2 = 36,778, with rounding). We use the hourly labor 
rate for these 454310 Fuel Dealers employees, as exhibited in Exhibit 
6-1 ($46.23), and multiply by 1 training hour to estimate the cost to 
train each employee ($46.23 * 1 = $46.23). We then multiply $46.23 by 
the number of 454310 Fuel Dealers employees requiring training to 
estimate the training cost for these employees ($46.23 * 36,778 = 
$1,700,247, with rounding).
---------------------------------------------------------------------------

    \27\ See P-1696: https://www.regulations.gov/docket?D=PHMSA-2017-0019.
---------------------------------------------------------------------------

    As NPGA explains in P-1696, millions of cylinders currently in 
service show a stamp placed during manufacture, indicating that the 
cylinder must be requalified 12 years after the manufacture date. Under 
the baseline scenario, cylinder manufacturers would need to adjust this 
stamp to indicate a 10-year period. From this vantage, this proposed 
rulemaking results in training cost savings for cylinder manufacturers, 
not training costs; in other words, the regulations proposed here 
ensure that cylinder manufacturers can continue the industry practice 
of stamping to reflect the 12-year timeframe for initial 
requalification.
    To estimate training cost savings for cylinder manufacturers, PHMSA 
references NPGA's estimate that training would take two hours per 
employee and that approximately half of employees would require 
training.\28\ Thus, we take the number of employees for the 332420 
Metal Tank Manufacturing NAICS sector from Exhibit 5 (36,869) and 
divide it by 2 to get the number of these employees requiring training 
(36,869/2 = 18,435, with rounding). We use $52.48 as the hourly labor 
rate for 332420 Metal Tank Manufacturing employees and multiply by 2 
training hours to estimate the cost to train each employee ($52.48 * 2 
= $104.96).\29\ We then multiply $104.96 by the number of 332420 Metal 
Tank Manufacturing employees requiring training to estimate the 
training cost savings for these employees ($104.96 * 18,435 = 
$1,934,938, with rounding).
---------------------------------------------------------------------------

    \28\ Ibid.
    \29\ U.S. BLS wage rate is based on 2015 Occupational and 
Employment Statistics Survey (OES) for NAICS 332420. Total labor 
rate also includes other costs of employee compensation (i.e., 
benefits) based on BLS' Employer Costs for Employee Compensation 
Summary; available at: https://www.bls.gov/news.release/ecec.nr0.htm.
---------------------------------------------------------------------------

    Based on these assumptions, input values, and methods, PHMSA 
estimates net cost savings related to training, totaling approximately 
$0.2 million dollars (undiscounted). See Exhibit 7. These training 
costs and cost savings would occur in year one of implementation of the 
rulemaking and are not discounted. They are not modeled to repeat in 
subsequent years.

                                                        Exhibit 7--Training Costs/(Cost Savings)
                                                                [Year one; undiscounted]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Number of
                      NAICS Sector                           Number of        Percent        employees       Training       Labor  rate        Total
                                                          employees \30\      trained         trained         hour(s)          \31\       training  cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fuel Dealers (454310)...................................          73,555              50          36,778               1          $46.23      $1,700,247
Manufacturers (332420)..................................          36,869              50          18,435               2           52.48     (1,934,938)
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............  ..............  ..............  ..............       (234,691)
--------------------------------------------------------------------------------------------------------------------------------------------------------

Analysis of Total Net Cost Savings
    PHMSA outlined our assumptions, input values, and methods for 
estimating the expected costs and cost savings of this rulemaking. We 
now present the total net cost savings as the sum of net cost savings 
to both 454310 Fuel Dealers and 332420 Manufacturers. See Exhibit 8-1. 
As such, we estimate total net cost savings at approximately $163.8 
million dollars, undiscounted.
---------------------------------------------------------------------------

    \30\ CB1400A11: Geography Area Series: County Business Patterns 
2014 Business Patterns.
    \31\ U.S. BLS wage rate is based on 2015 Occupational and 
Employment Statistics Survey (OES) for NAICS 454310 and 332420. 
Total labor rate also includes other costs of employee compensation 
(i.e., benefits) based on BLS' Employer Costs for Employee 
Compensation Summary, available at: https://www.bls.gov/news.release/ecec.nr0.htm.
    \32\ A value in parenthesis indicates a cost, or a ``negative 
cost savings.''

                                                           Exhibit 8-1--Total Net Cost Savings
                                                                     [Undiscounted]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Cost savings
                                                            Cost savings       (``enduring'' reduction
                       Sector                          (``avoided accelerated    in annual number of     Training cost  savings      Net cost savings
                                                        requalification'' in            needed                    \32\
                                                              year 1)             requalifications)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fuel Dealers (454310)...............................              $86,103,375              $77,493,038             ($1,700,247)             $161,896,166
Manufacturers (332420)..............................                        0                        0                1,934,938                1,934,938
                                                     ---------------------------------------------------------------------------------------------------
    Total...........................................               86,103,375               77,493,038                  234,691              163,831,104
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We also discount these savings over the time period of analysis. 
See Exhibit 8-2. To year one, we add the net cost savings related to 
training ($234,691) to cost savings related to the avoidance of 
accelerated requalification ($86,103,375), yielding $86,338,066 in cost 
savings in year one. The year-one impacts related to both effects are 
not discounted; they are assumed to occur at present value. However, 
the ``enduring'' cost savings are discounted according to the discount 
rate and the appropriate year in which the savings occurs. As such, we 
estimate total net cost savings of $142.4 million over 10 years, 
discounted at 7%, and $20.3 million annualized at 7%. These total 
figures do not differ much from the results presented in Exhibit 6-2 
because

[[Page 38190]]

training impacts are very small relative to requalification impacts.

 Exhibit 8-2--Total Net Cost Savings Over 10 Years; Net Present Value and Annualized at 3% and 7% Discount Rates
----------------------------------------------------------------------------------------------------------------
                              Year                                 Undiscounted         3%              7%
----------------------------------------------------------------------------------------------------------------
1...............................................................     $86,338,066     $86,338,066     $86,338,066
2...............................................................       8,610,338       8,359,551       8,047,044
3...............................................................       8,610,338       8,116,069       7,520,602
4...............................................................       8,610,338       7,879,679       7,028,600
5...............................................................       8,610,338       7,650,173       6,568,785
6...............................................................       8,610,338       7,427,353       6,139,052
7...............................................................       8,610,338       7,211,022       5,737,431
8...............................................................       8,610,338       7,000,992       5,362,085
9...............................................................       8,610,338       6,797,080       5,011,295
10..............................................................       8,610,338       6,599,107       4,683,453
----------------------------------------------------------------------------------------------------------------
    Net Present Value (Total)...................................................    $153,379,096    $142,436,418
                                                                 -----------------------------------------------
    Annualized..................................................................     $17,980,709     $20,279,741
----------------------------------------------------------------------------------------------------------------

Evaluation of Non-Quantified and Non-Monetized Impacts
    PHMSA has not estimated quantitatively all the possible cost and 
cost-savings impacts of this rulemaking. This is due to data 
availability and uncertainty surrounding the actual impacts of the 
rulemaking if it is made effective. Ultimately, the actual impacts of 
the rulemaking may vary from the representation in this analysis; this 
analysis merely represents our expectations based on the available data 
and our professional judgment. For these reasons, PHMSA solicits 
comment on this rulemaking and its analysis as expressed in this NPRM.
    To address some of these uncertainties and data limitations, we 
have identified various non-quantified costs and cost savings that 
might result from adopting this rulemaking. Our discussion here of non-
quantified and non-monetized impacts is not exhaustive. For example, 
PHMSA can identify the following potential impacts, which are not 
quantified or monetized in this analysis:
    1. Changes in the number of cylinders taken out of service due to 
accelerated requalification requirements;
    2. Changes in the demand for or supply of DOT 4-series cylinders 
and requalification services; and
    3. Changes in the prices faced by propane consumers.
    If this rulemaking is not adopted, PHMSA expects there may be 
changes in the number of cylinders that are taken out of service in the 
first year of the rule's effect due to failure of a requalification 
test. The HM-233F final rule accelerated initial requalification 
requirements, resulting in industry performing triple the number of 
requalification tests during year one. The increase in the number of 
requalification tests performed in year one means there could also be 
an increase in the number of cylinders that are taken out of service as 
a result of the requalification testing. To the degree that accelerated 
testing would result in cylinders being removed from service sooner, 
cylinder marketers would incur costs to acquire more replacement 
cylinders. PHMSA has not quantified the number of cylinders that might 
be ``prematurely'' taken from service and has not monetized the costs 
of replacing them. This represents a new category of potential costs 
under the baseline scenario and a new category of potential cost 
savings for cylinder marketers under the petition scenario. As such, 
the cost savings of adopting this rulemaking may be understated. 
Therefore, PHMSA seeks comments and any supporting data on this 
analysis, including comments and data regarding the potential effect of 
accelerated requalification on the number of cylinders removed from 
service and associated costs.
    In addition, if this rulemaking is not adopted, PHMSA can 
anticipate changes in the supply of and demand for DOT 4-series 
specification cylinders, as well as cylinder requalification services. 
For instance, accelerated requalification requirements may be expected 
to result in higher costs for cylinder marketers, disincentivizing 
cylinder supply in the overall market. Similarly, a temporary increase 
in the demand for cylinder requalification services could affect the 
price of these services faced by cylinder marketers. As another 
example, accelerated requalification requirements may result in 
increased demand for newly manufactured cylinders to the extent that 
they are a substitute for requalified cylinders. A temporary increase 
in the demand for newly manufactured cylinders might result in a 
temporary increase in economic activity for that sector and could 
affect the prices for these cylinders and the revenues of cylinder 
manufacturing companies. PHMSA has not quantified these market dynamics 
because of their complexity and highly uncertain nature.
    Lastly, there is uncertainty about the potential impact on 
consumers (e.g., propane end-users), so PHMSA has not quantified 
downstream price impacts. This is also a question of market dynamics. 
Specifically, the baseline scenario may result in price increases for 
propane-related goods and services for end-use consumers to the degree 
that the cylinder manufacturers and marketers are able to pass 
additional costs onto consumers.
Characterization of Additional Uncertainty in Impacts, Including 
Estimated Costs, Cost Savings, and Net Cost Savings
    The discussion in the previous section characterizes non-quantified 
and non-monetized impacts of this rulemaking. Other impacts were 
quantified and/or monetized in this analysis, but PHMSA's estimates 
remain uncertain. As such, this section characterizes additional 
uncertainty in the quantitative impacts estimated in this analysis. 
Note that this discussion is not exhaustive. PHMSA solicits comments on 
our analysis, including commentary on where our estimates could be 
improved and findings made more accurate. We note uncertainty in these 
quantitative areas:
    1. Estimate of the number of affected entities and employees;

[[Page 38191]]

    2. Estimate of the training hours necessitated by the rulemaking;
    3. Estimate of the labor hours needed to requalify affected 
cylinders;
    4. Estimate of the number of affected cylinders;
    5. Proportion of cylinders initially requalified by proof pressure 
testing (estimated only in the supplemental analysis); and
    6. Number of cylinders initially requalified by proof pressure 
testing (estimated only in the supplemental analysis).
    As outlined, there is uncertainty regarding the estimate of the 
number of affected entities and, thus, the number of affected 
employees, per Exhibit 5. This uncertainty arises from the fact that 
only some establishments in NAICS 454310 Fuel Dealers may sell fuels in 
DOT 4-series specification cylinders affected by Sec.  180.209(e). 
There may also be propane marketing entities in other NAICS sectors, 
but current data do not support estimates of the portion of affected 
establishments in additional sectors. These uncertainties may result in 
training costs or cost savings being over or underestimated. Since the 
number of affected entities is not actually used as an input variable 
to determine training costs or cost savings, we do not explore this 
variable in a supplemental analysis.
    As another example of uncertainty in this analysis, PHMSA is not 
able to corroborate the NPGA estimate regarding the amount of time 
required for training. NPGA estimated that each employee would need two 
hours to be appropriately trained on the revised requalification 
periods. Since training costs are proportionately small compared to 
estimated requalification cost savings, we do not explore this 
uncertainty in a supplemental analysis. To illustrate this point, 
consider a simple example. Doubling the amount of time for training 
cylinder marketing employees would double estimated training costs, 
from approximately $1.7 million to $3.4 million, yet training costs 
would remain a relatively small proportion of the estimated, year-one 
requalification cost savings ($3.4 million/$86.1 million = 3.9%). It is 
unlikely that variance in this input value would alter PHMSA's 
assessment that this rulemaking provides total net cost savings.
    We are also unable to corroborate NPGA's estimate regarding the 
amount of time required to requalify affected cylinders. To the extent 
that it takes longer to requalify affected cylinders, requalification 
costs are understated in the baseline scenario and cost savings are 
understated in the rulemaking scenario. If less time is required to 
requalify affected cylinders, the reverse is true: Requalification 
costs are overstated in the baseline scenario and requalification cost 
savings are overstated in the rulemaking scenario. However, we believe 
that NPGA is uniquely positioned to estimate this variable due to the 
nature of its member representation. For this reason, we do not explore 
this variable with a supplemental analysis.
    Furthermore, PHMSA is not able to corroborate the NPGA estimate for 
the number of affected cylinders. In this analysis, we rely on NPGA's 
estimate of approximately 5 million cylinders affected due to 
accelerated requalification. The number of cylinders affected is a 
critical input value for the estimation of cylinder requalification 
costs and cost savings in the baseline and rulemaking scenarios, 
respectively. Moreover, this specific variable presents uncertainty in 
that the NPGA estimate may be overestimated. This is because the HMR 
allow a cylinder, filled before the requalification becomes due, to 
remain in service until it is emptied.\33\ As such, filled cylinders 
may remain in service, and cylinder marketers would not need to remove 
compliant cylinders from service to meet the 10-year requalification 
timeframe codified in the HM-233F final rule and presented in this 
analysis as the baseline scenario. To the extent that fewer cylinders 
need to be requalified to meet the 10-year timeframe in the baseline 
scenario, the requalification costs estimated in the baseline scenario 
and the requalification cost savings in the rulemaking scenario are 
both overstated. To explore this uncertainty further, we provide a 
supplemental analysis regarding the number of affected cylinders in the 
following section.
---------------------------------------------------------------------------

    \33\ See Sec.  180.205(c).
---------------------------------------------------------------------------

    Lastly, PHMSA notes uncertainty regarding the proportion and number 
of affected cylinders that would be requalified using proof pressure 
testing versus other methods. Proof pressure testing is an alternative 
to volumetric expansion testing. Despite proposing to retain the 10-
year timeframe for a cylinder initially requalified by proof pressure 
testing, PHMSA did not include proof pressure-related requalification 
cost savings in our primary estimates because of the uncertainty 
surrounding the extent to which proof pressure testing is used to 
requalify the affected cylinders. If it is costlier to requalify using 
proof pressure testing than volumetric expansion testing and 
requalifiers continue to use proof pressure methods, then costs may be 
understated in the baseline scenario and cost savings may be 
understated in the rulemaking scenario. To the extent that requalifiers 
use proof pressure testing and it is less costly to requalify by proof 
pressure testing, then costs may be overstated in the baseline scenario 
and cost savings may be overstated in the rulemaking scenario. There 
also may be little or no difference between the costs of requalifying 
by volumetric expansion and proof pressure testing. PHMSA solicits 
comment on the extent of proof pressure testing versus other 
requalification methods.
    Furthermore, our requalification cost savings analysis 
characterizes the timing of initial requalification in relation to 
cylinder manufacture. Refer to Exhibit 3. For volumetric expansion 
testing, the distinction between initial and subsequent requalification 
tests is not relevant since they would both occur at 12-year intervals; 
however, for proof pressure testing, the question of whether the 
cylinder is being initially or subsequently requalified is relevant and 
would determine the regulatory timeframe that applies (12 or 10 years). 
Noting this distinction, it may be reasonable to conceive of the cost-
savings impacts on proof pressure-tested cylinders as altogether 
separate and possibly affecting a different, older pool of cylinders. 
We do not know whether the estimate of affected cylinders that NPGA 
provided accommodates this distinction. Put another way, uncertainty 
surrounds the proportion and number of cylinders that would be 
initially requalified by proof pressure testing versus volumetric 
expansion testing, as well as the overall number of cylinders that are 
requalified using proof pressure testing during subsequent 
requalification tests. These uncertainties are substantial to the point 
that we refrain from including cost savings related to proof pressure-
tested cylinders in our primary estimates.
    Nevertheless, we provide a supplemental analysis for the possible 
cost savings effects on proof pressure-tested cylinders, specifically 
how this proposed rulemaking would affect different vintages of 
cylinders that would initially be requalified by proof pressure (at the 
12-year mark) and subsequently requalified at the 10-year mark as 
opposed to the 7-year mark, amounting to a 3-year deferral of these 
requalification tests and associated costs. This supplemental analysis 
is found in the section, ``Supplemental analysis regarding possible 
effects on proof pressure-tested cylinders.''
    See Exhibit 9 for a distillation of the uncertainties discussed in 
this analysis.

[[Page 38192]]

                      Exhibit 9--Uncertainties Associated With the Regulatory Cost Analysis
                                         [Quantified and non-quantified]
----------------------------------------------------------------------------------------------------------------
                                                                                             Description of
             Variable                    Estimate(s)                 Source                   uncertainty
----------------------------------------------------------------------------------------------------------------
Number of affected entities.......  Fuel Dealers: 8,677..  U.S. Census...............   Additional NAICS
                                    Manufacturers: 739...                               sectors may be affected.
                                    Total: 9,416.........                               Affected
                                                                                        entities may be a subset
                                                                                        of represented NAICS
                                                                                        sectors.
                                                                                        Number of
                                                                                        affected entities may
                                                                                        vary from estimates,
                                                                                        which is likely to
                                                                                        affect the number of
                                                                                        employees in need of
                                                                                        training.
Number of affected employees......  Fuel Dealers: 36,778.  U.S. Census...............   Additional
                                    Manufacturers: 18,435                               employees in other NAICS
                                    Total: 55,213........                               sectors may require
                                                                                        training.
                                                                                        The number of
                                                                                        employees in represented
                                                                                        NAICS sectors may vary.
                                                                                        Training costs
                                                                                        are positively related
                                                                                        to the number of
                                                                                        employees.
Training hours per employee.......  1-2..................  NPGA......................   Training hours
                                                                                        per employee may vary.
                                                                                        Training costs
                                                                                        are positively related
                                                                                        to the training hours
                                                                                        per employee.
Percent of affected employees in    50%..................  NPGA......................   Percent of
 need of training.                                                                      affected employees in
                                                                                        need of training may
                                                                                        vary.
                                                                                        This percentage
                                                                                        is positively related to
                                                                                        training costs.
Labor hours to requalify            Residential: 0.33      NPGA......................   Labor hours per
 residential and commercial          hours.                                             cylinder requalification
 cylinders.                         Commercial: 0.5 hours                               may vary.
                                                                                        Labor hours to
                                                                                        requalify affected
                                                                                        cylinders is positively
                                                                                        related to
                                                                                        requalification costs
                                                                                        and cost savings.
Labor rates.......................  Fuel Dealers: $46.23.  U.S. BLS..................   Labor rates for
                                    Manufacturers: $52.48                               cylinder marketers and
                                                                                        cylinder manufacturers
                                                                                        may vary.
                                                                                        Labor rates for
                                                                                        cylinder marketers are
                                                                                        positively related to
                                                                                        cylinder requalification
                                                                                        costs and cost savings,
                                                                                        as well as training
                                                                                        costs.
                                                                                        Labor rates for
                                                                                        cylinder manufacturers
                                                                                        are positively related
                                                                                        to training cost
                                                                                        savings.
Number of affected cylinders......  5,000,000............  NPGA......................   Number of
                                                                                        affected cylinders may
                                                                                        vary.
                                                                                        HMR allows
                                                                                        compliant in-service
                                                                                        cylinders to remain in
                                                                                        service past required
                                                                                        requalification dates.
                                                                                        Number of
                                                                                        affected cylinders
                                                                                        positively relates to
                                                                                        requalification costs
                                                                                        and cost savings.
Number of cylinders removed from    Non-quantified.......  N/A.......................   Accelerated
 service early.                                                                         requalification may
                                                                                        increase or expedite the
                                                                                        number of cylinders
                                                                                        removed from service.
                                                                                        Cylinder
                                                                                        marketers may face
                                                                                        increased replacement
                                                                                        costs.
Cost to requalify (market           Non-quantified.......  N/A.......................   Accelerated
 dynamics).                                                                             requalification may
                                                                                        affect requalification
                                                                                        capacity or throughput.
                                                                                        Accelerated
                                                                                        requalification may
                                                                                        increase requalification
                                                                                        costs/pricing.
Cost of newly manufactured          Non-quantified.......  N/A.......................   Increased
 cylinders (market dynamics).                                                           requalification costs
                                                                                        may reduce supply of
                                                                                        available requalified
                                                                                        cylinders.
                                                                                        Newly
                                                                                        manufactured cylinders
                                                                                        may be a substitute for
                                                                                        a requalified cylinder.
                                                                                        Demand for newly
                                                                                        manufactured cylinders
                                                                                        may increase.
                                                                                        Price of newly
                                                                                        manufactured cylinders
                                                                                        may in turn increase.
End-user cylinder prices (market    Non-quantified.......  N/A.......................   End-user market
 dynamics).                                                                             prices may be positively
                                                                                        related to
                                                                                        requalification and
                                                                                        training costs.
                                                                                        Cylinder
                                                                                        marketers and
                                                                                        manufacturers may pass
                                                                                        on compliance costs to
                                                                                        end-users (e.g., propane
                                                                                        consumers).
Proportion of proof pressure-       Non-quantified in      N/A.......................   See supplemental
 tested cylinders.                   primary analysis.                                  analysis.
                                                                                        High proportion
                                                                                        of proof pressure-tested
                                                                                        cylinders could result
                                                                                        in material cost savings
                                                                                        due to deferred
                                                                                        subsequent
                                                                                        requalification.
                                                                                        Low proportion
                                                                                        of these cylinders
                                                                                        minimizes forgone cost
                                                                                        savings if 7-year
                                                                                        requirement were adopted
                                                                                        (not proposed).
Number of affected proof pressure-  Non-quantified in      N/A.......................   See supplemental
 tested cylinders.                   primary analysis.                                  analysis.
                                                                                        Large number of
                                                                                        proof pressure-tested
                                                                                        cylinders could result
                                                                                        in material cost savings
                                                                                        due to deferred
                                                                                        subsequent
                                                                                        requalification.
                                                                                        Small number of
                                                                                        these cylinders
                                                                                        minimizes forgone cost
                                                                                        savings if 7-year
                                                                                        requirement were adopted
                                                                                        (not proposed).
----------------------------------------------------------------------------------------------------------------

[[Page 38193]]

Supplemental Analysis Regarding the Number of Affected Cylinders
    As previously discussed, PHMSA believes the number of affected 
cylinders may differ from NPGA's estimate of 5 million affected 
cylinders. For example, affected cylinders may be fewer than 5 million 
due to existing allowances in the HMR. Specifically, a cylinder that is 
filled prior to its requalification date may remain in service until it 
is emptied. For this reason, the number of cylinders that would need to 
undergo accelerated requalification in the baseline scenario could be 
fewer than estimated, and associated costs would be less than 
estimated. Similarly, the cost savings in the rulemaking scenario would 
be less than estimated. For example, imagine a cylinder manufactured in 
2009; in the baseline scenario, this cylinder would need to be 
initially requalified in 2019 (10 years later), even though cylinder 
marketers conventionally expected this cylinder to be requalified in 
2021 (12 years later). If that cylinder were filled prior to 2019, but 
remained in service to the end-user until 2021, this cylinder would not 
need to be requalified until 2021 despite the regulatory change made in 
the HM-233F final rule.
    Thus, for this cylinder, the baseline and rulemaking scenario are 
no different. No new cost is imposed in the baseline; no cost savings 
are achieved by adopting this rulemaking.
    Nevertheless, PHMSA does not have data to estimate the number of 
cylinders that would remain in service under HMR allowances despite the 
acceleration of their requalification date, and NPGA may have 
considered this factor when developing its estimate. Even if data were 
available, this task of differentiating cylinders in this manner would 
undoubtedly be complicated given differences in service periods. Since 
we are unable at this time to corroborate NPGA's estimate, PHMSA also 
considers a scenario where the number of affected cylinders may be 
greater than estimated in this analysis. This could be the case if NPGA 
based its estimate on information from its members and there are 
marketers that are not members of NPGA who requalify cylinders.
    In the absence of additional data, PHMSA uses a simple, assumption-
based method to present the cost saving variances that would be 
expected if the number of affected cylinders were 25 percent fewer or 
25 percent greater. This gives us a range of requalification cost-
savings estimates occurring in year one, and over the 10-year time 
period of analysis. See Exhibit 10.

                         Exhibit 10--High-, Mid-, and Low-Range Cost Savings Estimates Based on the Number of Affected Cylinders
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Estimated             Total estimated
                  Scenario label(s)                     Number of  affected     Proportion of  primary   requalification  cost    requalification  cost
                                                             cylinders                 estimate           savings  (year one)     savings  (years 1-10)
--------------------------------------------------------------------------------------------------------------------------------------------------------
High................................................                6,250,000                     1.25             $107,629,219             $204,495,516
Primary/Middle/NPGA.................................                5,000,000                      1.0               86,103,375              163,596,413
Low.................................................                3,750,000                     0.75               64,577,531              122,697,309
--------------------------------------------------------------------------------------------------------------------------------------------------------

    This simple, straightforward exercise shows that cost savings would 
be lower if fewer cylinders are affected by the proposed rule due to, 
for example, the current HMR allowance to keep a cylinder in service 
past its requalification date. Similarly, if the number of affected 
cylinders is greater than estimated, cost savings would also be 
greater. PHMSA solicits comments on this analysis, including the 
supplemental analysis and our estimate of the number of affected 
cylinders (5 million) in year one, which is the same as NPGA's. Despite 
the allowance for in-service cylinders in the HMR and other 
uncertainties, we continue to use NPGA's estimate because it is the 
best data available.
Supplemental Analysis Regarding Possible Effects on Proof Pressure-
Tested Cylinders
    PHMSA focused its cost savings analysis on revising the 
requalification timeframe for cylinders that are requalified by 
volumetric expansion. This reflects NPGA's emphasis in its petition for 
rulemaking (P-1696) and the uncertainty surrounding the extent of 
impacts on proof pressure-tested cylinders. As discussed in this 
analysis, PHMSA does not know the proportion or total number of 
affected cylinders that would be requalified using proof pressure 
testing, or whether these variables would have any material influence 
on our cost and cost savings estimates. Similarly, we do not know 
whether proof pressure-tested cylinders constitute an additional (and 
possibly older) pool of affected cylinders beyond NPGA's estimate of 5 
million cylinders affected in year one. If so, then cost and cost 
savings estimates may be understated in this analysis. Nevertheless, 
PHMSA explores the possible effects on proof pressure-tested cylinders 
in this supplemental analysis. Specifically, we explore the difference 
between a 7-year timeframe and a 10-year timeframe for cylinder 
requalification occurring after initial requalification (i.e., 
``subsequent'' or second requalification). By way of the HM-233F final 
rule, the HMR currently reflect a 10-year timeframe for both initial 
and subsequent requalification of proof pressure-tested cylinders, 
whereas the pre-HM-233F standard held that proof pressure-tested 
cylinders would be initially requalified at the 12-year mark and 
subsequently requalified on a 7-year timeframe.
    In its petition, NPGA appears to recommend that the proof pressure 
standard for subsequent requalification be reverted to the 7-year 
timeframe in the HMR prior to HM-233F's publication.\34\ In contrast, 
this NPRM proposes to retain the 10-year requalification timeframe 
since it may add relief. PHMSA solicits comment on this proposal.
---------------------------------------------------------------------------

    \34\ See P-1696: https://www.regulations.gov/docket?D=PHMSA-2017-0019.
---------------------------------------------------------------------------

    PHMSA believes this proposal would offer additional relief because 
it would enable cylinder marketers to defer by up to 3 years the 
subsequent requalification of cylinders that would otherwise be subject 
to the 7-year requirement. This deferral changes the timing of cash 
flow obligations for cylinder marketers and presents a potential cost 
savings.
    Exhibit 11 illustrates the difference between the 7- and 10-year 
proof pressure requalification timeframes. Please note, this 
supplemental analysis relays these abstract scenarios for analysis 
purposes only; one must refer to the regulatory text of the proposed

[[Page 38194]]

rule to understand actual regulatory changes and effects.
BILLING CODE 4910-60-P
[GRAPHIC] [TIFF OMITTED] TP06AU19.048

BILLING CODE 4910-60-C
    Exhibit 11 illustrates the effects of the proposal to allow a 3-
year deferral of subsequent requalification by proof pressure test. In 
2019, under the 7-year requirement, industry would requalify cylinders 
manufactured in 2000 and initially requalified using proof pressure in 
2012; that same set of cylinders would need to be subsequently 
requalified 7 years later in 2019. In contrast, under the 10-year 
requirement, industry could defer requalifying those same cylinders 
until 2022. By 2022, although the timeframe has shifted, industry is 
back to a more normal condition where subsequent requalification needs 
to be performed annually.
    The potential value of these cost savings is less certain than the 
cost savings estimates in the primary analysis, because it is not clear 
what proportion of requalification tests are performed using proof 
pressure testing (and therefore what number of cylinders would be 
affected).\35\ Due to this uncertainty, we do not incorporate proof 
pressure-related cost savings into our primary analysis and its 
estimation of requalification cost savings. However, by adopting some 
assumptions similar to those used in our primary analysis, it is 
possible to provide an approximate measure of these cost savings.
---------------------------------------------------------------------------

    \35\ It is also somewhat further complicated by the fact that 
the provision applies not just to a second requalification, but any 
requalification that follows a prior requalification performed using 
the proof-pressure test (third, fourth, etc.).
---------------------------------------------------------------------------

    Based on NPGA's estimate, the primary analysis assumed that 5 
million cylinders would be affected by the changes to the volumetric 
expansion timeframes. These 5 million affected cylinders came from two 
different vintages of cylinders. Assuming there are 2.5 million 
affected cylinders per vintage, there would be 7.5 million cylinders 
potentially affected by the 3-year deferral of subsequent proof 
pressure requalification requirements. Absent information on the 
frequency with which proof pressure testing is used, we assume a range 
of 5 percent to 15 percent of these cylinders were initially 
requalified using proof pressure testing. This suggests an estimate of 
approximately 0.38-1.13 million potentially affected cylinders during 
2019 to 2021 (7,500,000 * 0.05 = 375,000; 7,500,000 * 0.15 = 
1,125,000). We adopt the same prior assumptions regarding the 
allocation of cylinders between residential and commercial customers 
(75 percent residential and 25 percent commercial), the labor rate for 
employees performing the requalification tests ($46.23), and the time 
required to perform a requalification (0.33 hours for each residential 
cylinder and 0.5 hours for each commercial cylinder). Please note, the 
amount of time required to complete a requalification may vary between 
volumetric expansion and proof pressure testing.
    This approach results in total potentially avoided requalification 
costs of $6.46-$19.38 million dollars, as presented in Exhibit 12.

[[Page 38195]]

               Exhibit 12--Estimate of Potentially Avoided Requalification Costs Associated With the HM-233F Proof Pressure Test Provision
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Number of  affected                                                              Avoided
                    Cylinder type                          cylinders \36\        Hours to  requalify      Labor rate  for fuel     requalification cost
                                                             (million)                   \37\           dealer  inspectors \38\         (million)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Residential.........................................              0.281-0.844                     0.33                   $46.23             $4.29-$12.88
Commercial..........................................              0.094-0.281                     0.50                   $46.23              $2.17-$6.50
                                                     ---------------------------------------------------------------------------------------------------
    Total...........................................  .......................  .......................  .......................            $6.46-$19.38
--------------------------------------------------------------------------------------------------------------------------------------------------------
\36\ Exhibit 4: Affected Cylinders.
\37\ This is based on the NPGA's estimate.
\38\ U.S. BLS wage rate is based on 2015 Occupational and Employment Statistics Survey (OES) for NAICS 454310 (https://www.bls.gov/oes/current/naics4_454300.htm). Total labor rate also includes other costs of employee compensation (i.e., benefits) based on BLS' Employer Costs for Employee
  Compensation Summary, which indicates that private industry labor rates are, overall, comprised of wages/salaries (68.6%) and benefits (30.2%), https://www.bls.gov/news.release/ecec.nr0.htm.

    In its petition, NPGA appears to recommend maintaining the status 
quo (pre-HM-233F conditions), that is, a 7-year requirement for proof 
pressure testing after initial requalification, while foregoing the 
possible cost savings suggested by this supplemental analysis and 
proposed rule. This supplemental analysis gives some indication that 
the combined net effect of both provisions would remain beneficial to 
the petitioner; specifically, the incremental costs that are avoided by 
NPGA's petition are expected to be larger than the cost savings 
foregone by its petition. By this logic, the gains of avoiding the 
acceleration of volumetric expansion requalification testing should 
outweigh the gains of deferring subsequent proof pressure 
requalification testing. Quantitatively, within this framework, the 
value of foregone cost savings begins to exceed the value of avoided 
costs if one assumes that approximately 67 percent or more of cylinders 
are requalified using the proof pressure test. This is simply an 
abstract comparison between the primary analysis' estimation of cost 
savings at initial requalification (assuming use of volumetric 
expansion) and the supplemental analysis' estimation of cost savings at 
subsequent qualifications (assuming use of proof pressure). Many other 
factors could affect whether NPGA's recommendations in P-1696 will 
yield net cost savings, such as there being a different cost to perform 
the different tests.
    In summation, based on this supplemental analysis, PHMSA's proposal 
in this NPRM might lead to overall cost savings that exceed the 
estimates specified in the primary analysis. The primary analysis 
yielded net cost savings of $163.83 million (undiscounted), whereas 
this supplemental analysis estimated an additional $6.46-$19.38 million 
in cost savings. Thus, if the two effects affect separate cylinder 
cohorts and are combined, adoption of this rulemaking might result in 
approximately $170.29-$183.21 million in total net cost savings 
(undiscounted). Again, we have not incorporated the findings of this 
supplemental analysis into our primary analysis' findings because of 
the substantial uncertainty that surrounds the extent of proof pressure 
cylinder requalification testing. Please refer to the above section, 
``Summary of preliminary findings,'' for the net cost savings estimates 
of our primary analysis.

C. Executive Order 13771

    This proposed rulemaking is expected to be an Executive Order 13771 
deregulatory action. Details on the estimated cost savings of this 
proposed rule can be found above in ``Section III.B. Execuitve Order 
12866 and DOT Regulatory Policies and Procedures.''

D. Executive Order 13132

    This rulemaking was analyzed in accordance with the principles and 
criteria contained in Executive Order 13132 (``Federalism'') and the 
President's memorandum (``Preemption'') that was published in the 
Federal Register on May 22, 2009 [74 FR 24693]. Executive Order 13132 
requires agencies to assure meaningful and timely input by State and 
local officials in the development of regulatory policies that may have 
``substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government.'' This 
rulemaking will preempt State, local, and Tribal requirements but does 
not propose any regulation that has substantial direct effects on the 
States, the relationship between the national government and the 
States, or the distribution of power and responsibilities among the 
various levels of government. Therefore, the consultation and funding 
requirements of Executive Order 13132 do not apply.
    The Federal hazmat law, 49 U.S.C. 5101-5128, contains an express 
preemption provision [49 U.S.C. 5125 (b)] that preempts State, local, 
and Indian tribal requirements on the following subjects:
    (1) The designation, description, and classification of hazardous 
materials;
    (2) The packing, repacking, handling, labeling, marking, and 
placarding of hazardous materials;
    (3) The preparation, execution, and use of shipping documents 
related to hazardous materials and requirements related to the number, 
contents, and placement of those documents;
    (4) The written notification, recording, and reporting of the 
unintentional release in transportation of hazardous material; and
    (5) The design, manufacture, fabrication, marking, maintenance, 
recondition, repair, or testing of a packaging or container 
represented, marked, certified, or sold as qualified for use in 
transporting hazardous material.
    This proposed rule addresses covered subject item (5) above and 
preempts State, local, and Indian tribe requirements not meeting the 
``substantively the same'' standard. This proposed rule is necessary to 
provide cost savings and regulatory flexibility to the propane 
industry. If the proposed changes are not adopted, propane industry 
members likely will incur substantial costs related to the accelerated 
requalification schedule when using the volumetric expansion test. 
PHMSA invites those with an interest in the issues presented in this 
NPRM to comment on the effect the adoption of specific proposals may 
have on State or local governments.

E. Executive Order 13175

    This rulemaking was analyzed in accordance with the principles and 
criteria contained in Executive Order

[[Page 38196]]

13175 (``Consultation and Coordination with Indian Tribal 
Governments''). Executive Order 13175 requires agencies to assure 
meaningful and timely input from Indian tribal government 
representatives in the development of rules that significantly or 
uniquely affect Tribal communities by imposing ``substantial direct 
compliance costs'' or ``substantial direct effects'' on such 
communities or the relationship and distribution of power between the 
Federal Government and Indian tribes. This rulemaking does not have 
tribal implications. Therefore, the funding and consultation 
requirements of Executive Order 13175 do not apply.
    However, we invite Indian tribal governments to provide comments on 
the costs and effects that this or a future rulemaking could 
potentially have on Tribal communities.

F. Regulatory Flexibility Act, Executive Order 13272, and DOT Policies 
and Procedures

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
agencies to review regulations to assess their impact on a substantial 
number of small entities unless the agency determines that a rulemaking 
is not expected to have significant impact on a substantial number of 
small entities. This proposed rule provides cost savings and regulatory 
flexibility to the propane industry, as previously discussed. The 
proposed changes are generally intended to provide relief to members of 
the propane industry, including small entities, by easing requirements 
with no anticipated reduction in safety.
    Consideration of alternative proposals for small businesses. The 
Regulatory Flexibility Act directs agencies to establish exceptions and 
differing compliance standards for small businesses, where it is 
possible to do so and still meet the objectives of applicable 
regulatory statutes.
    The impact of this proposed rule is not expected to be significant. 
The proposed changes are generally intended to provide regulatory 
flexibility and cost savings to industry members.
    This proposed rule has been developed in accordance with Executive 
Order 13272 (``Proper Consideration of Small Entities in Agency 
Rulemaking'') and DOT's procedures and policies to promote compliance 
with the Regulatory Flexibility Act to ensure that potential impacts of 
draft rules on small entities are properly considered.

G. Paperwork Reduction Act

    While this NPRM proposes to address the requalification of certain 
DOT 4-series specification cylinders, we do not anticipate that it will 
affect the burden for this or any other information collection. Under 
the Paperwork Reduction Act of 1995, no person is required to respond 
to any information collection unless it has been approved by OMB and 
displays a valid OMB control number. Section 1320.8(d) of 5 CFR 
requires that PHMSA provide interested members of the public and 
affected agencies an opportunity to comment on information and 
recordkeeping requests. PHMSA specifically solicits comment on the 
information collection and recordkeeping burdens associated with 
developing, implementing, and maintaining these proposed requirements. 
Address written comments to the Dockets Unit as identified in the 
ADDRESSES section of this rulemaking. We must receive comments 
regarding information collection burdens prior to the close of the 
comment period as identified in the DATES section of this rulemaking. 
In addition, you may submit comments specifically related to the 
information collection burden to the PHMSA Desk Officer, Office of 
Management and Budget, at fax number 202-395-6974. Requests for a copy 
of this information collection should be directed to Steven Andrews or 
Shelby Geller, Standards and Rulemaking Division (PHH-10), Pipeline and 
Hazardous Materials Safety Administration, 1200 New Jersey Avenue SE, 
Washington, DC 20590-0001.

H. Regulation Identifier Number (RIN)

    A regulation identifier number (RIN) is assigned to each regulatory 
action listed in the Unified Agenda of Federal Regulations. The 
Regulatory Information Service Center publishes the Unified Agenda in 
April and October of each year. The RIN contained in the heading of 
this document can be used to cross-reference this action with the 
Unified Agenda.

I. Unfunded Mandates Reform Act

    This rulemaking does not impose unfunded mandates under the 
Unfunded Mandates Reform Act of 1995. It does not result in costs of 
$155 million or more to either State, local, or Tribal governments, in 
the aggregate, or to the private sector and is the least burdensome 
alternative that achieves the objective of the rulemaking. Further, in 
compliance with the Unfunded Mandates Reform Act of 1995, PHMSA will 
evaluate any regulatory action that might be proposed in subsequent 
stages of the proceeding to assess the effects on State, local, and 
Tribal governments and the private sector.

J. Environmental Assessment

    The National Environmental Policy Act of 1969 (NEPA) requires 
Federal agencies to consider the consequences of major Federal actions 
and prepare a detailed statement on actions significantly affecting the 
quality of the human environment. The Council on Environmental Quality 
(CEQ) implementing regulations (40 CFR part 1500) require Federal 
agencies to conduct an environmental review considering (1) the need 
for the action, (2) alternatives to the action, (3) probable 
environmental impacts of the action and alternatives, and (4) the 
agencies and persons consulted during the consideration process (see 40 
CFR 1508.9(b)).
1. Need for the Action
    The purpose of this NPRM is to amend the HMR through revisions to 
the requalification period for certain DOT 4-series specification 
cylinders in non-corrosive gas service. This proposed action is 
intended to provide regulatory relief. If the changes in this proposed 
rule are not adopted in the HMR, PHMSA would forgo the opportunity to 
provide regulatory relief.
2. Alternatives Considered
    Transportation of hazardous materials in commerce is subject to 
requirements in the HMR, issued under authority of Federal hazmat law, 
codified at 49 U.S.C. 5101 et seq. To facilitate the safe and efficient 
transportation of hazardous materials in international commerce, the 
HMR provide that both domestic and international shipment of hazardous 
materials may be offered for transportation and transported under 
provisions of the international regulations.
    In proposing this rulemaking, PHMSA is considering the following 
alternatives:
Alternative 1: No Action Alternative
    The No Action Alternative does not incorporate the regulatory 
changes proposed in this NPRM. If PHMSA were to select this 
alternative, it would not proceed with any rulemaking on this subject 
and the current regulatory standards would remain in effect. If the 
current regulatory standards remain in effect, Sec.  108.209(e) would 
not be amended, and the requalification period for volumetric expansion 
and proof pressure testing would remain at a 10-year period. This 
alternative would not address NPGA's petition for rulemaking. The 
requalification period for the

[[Page 38197]]

volumetric expansion test would not be extended to a 12-year period and 
the requalification period for the proof pressure test would not be 
extended to an initial 12-year period followed by a 10-year period.
Alternative 2: Preferred Alternative
    The Preferred Alternative is the current proposal as it appears in 
the NPRM, applying to transportation of hazardous materials by various 
modes (highway, rail, vessel, and aircraft). The proposed amendments 
encompassed in this alternative are more fully addressed in the 
preamble and regulatory text sections. However, the general amendment 
in this NPRM is to revise the requalification period in Sec.  
180.209(e) for DOT 4-series specification cylinders to allow for a 12-
year period for volumetric expansion testing and an initial 12-year 
period followed by a 10-year requalification period for proof pressure 
testing.
3. Environmental impacts
Alternative 1: No Action Alternative
    If PHMSA were to select the No Action Alternative, current 
regulations would remain in place and no new provisions would be added. 
This alternative would not address NPGA's petition for rulemaking. The 
current regulatory requirements, with shorter requalification intervals 
for volumetric expansion testing, are more conservative and, assuming 
100% compliance, there would be more opportunities to identify 
cylinders with defects so that they could be repaired or removed from 
service. The failure of a DOT 4B, 4BA, 4BW, or 4E specification 
cylinder results in a large release of energy, which can result in 
destruction to property, injury, and death. Nonetheless, PHMSA believes 
that prior cylinder requalification intervals, both under HM-233F 
standards and the standards prior to that change, were unnecessarily 
burdensome.
Alternative 2: Preferred Alternative
    PHMSA proposes that amending the requalification period for DOT 4-
series specification cylinders in non-corrosive gas service will result 
in decreased regulatory and economic burden. PHMSA does not anticipate 
that increased cylinder failures will occur because PHMSA believes that 
prior standards were unnecessarily conservative. The proposed change 
clarifies and broadens regulatory requalification periods, ensuring 
consistency with training programs developed within the industry. There 
are no anticipated significant impacts in the release of environmental 
pollutants under either alternative. However, fewer trips transporting 
cylinders for retest may result in minor reductions to air pollutants, 
including greenhouse gases.
4. Agencies Consulted
    PHMSA has coordinated with the Federal Aviation Administration, the 
Federal Motor Carrier Safety Administration, the Federal Railroad 
Administration, and the U.S. Coast Guard in the development of this 
proposed rule. PHMSA will consider the views expressed in comments to 
the NPRM submitted by members of the public, State and local 
governments, and industry.
5. Conclusion
    PHMSA proposes to find that no significant environmental impact 
will result from this proposed rule. PHMSA welcomes any views, data, or 
information related to safety or environmental impacts that may result 
if the proposed requirements are adopted, as well as possible 
alternatives and their environmental impacts.

K. Privacy Act

    In accordance with 5 U.S.C. 553(c), DOT solicits comments from the 
public to better inform its rulemaking process. DOT posts these 
comments, without edit, including any personal information the 
commenter provides, to http://www.regulations.gov, as described in the 
system of records notice (DOT/ALL-14 FDMS), which can be reviewed at 
http://www.dot.gov/privacy.

L. Executive Order 13609 and International Trade Analysis

    Under Executive Order 13609, ``Promoting International Regulatory 
Cooperation,'' agencies must consider whether the impacts associated 
with significant variations between domestic and international 
regulatory approaches are unnecessary or may impair the ability of 
American business to export and compete internationally. See 77 FR 
26413 (May 4, 2012). In meeting shared challenges involving health, 
safety, labor, security, environmental, and other issues, international 
regulatory cooperation can identify approaches that are at least as 
protective as those that are or would be adopted in the absence of such 
cooperation. International regulatory cooperation can also reduce, 
eliminate, or prevent unnecessary differences in regulatory 
requirements. This rulemaking does not impact international trade.

M. National Technology Transfer and Advancement Act

    The National Technology Transfer and Advancement Act of 1995 (15 
U.S.C. 272 note) directs Federal agencies to use voluntary consensus 
standards in their regulatory activities unless doing so would be 
inconsistent with applicable law or otherwise impractical. Voluntary 
consensus standards are technical standards (e.g., specification of 
materials, test methods, or performance requirements) that are 
developed or adopted by voluntary consensus standards bodies. This 
rulemaking makes revisions to the requalification periods for DOT 4-
series specification cylinder consistent with current Federal statute 
and guidance and PHMSA policies and procedures; it does not involve use 
of voluntary consensus standards.

N. Executive Order 13211

    Executive Order 13211 (``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'') [66 FR 
28355; May 22, 2001] requires Federal agencies to prepare a Statement 
of Energy Effects for any ``significant energy action.'' Under the 
executive order, a ``significant energy action'' is defined as any 
action by an agency (normally published in the Federal Register) that 
promulgates, or is expected to lead to the promulgation of, a final 
rule or regulation (including a notice of inquiry, ANPRM, and NPRM) 
that (1)(i) is a significant regulatory action under Executive Order 
12866 or any successor order and (ii) is likely to have a significant 
adverse effect on the supply, distribution, or use of energy; or (2) is 
designated by the Administrator of the Office of Information and 
Regulatory Affairs as a significant energy action. PHMSA welcomes any 
data or information related to energy impacts that may result from this 
NPRM, as well as possible alternatives and their energy impacts. Please 
describe the impacts and the basis for the comment.

List of Subjects in 49 CFR Part 180

    Hazardous materials transportation, Motor carriers, Motor vehicle 
safety, Packaging and containers, Railroad safety, Reporting and 
recordkeeping requirements.

    In consideration of the foregoing, PHMSA proposes to amend 49 CFR 
chapter I as follows:

[[Page 38198]]

PART 180--CONTINUING QUALIFICATION AND MAINTENANCE OF PACKAGINGS

0
1. The authority citation for part 180 continues to read as follows:

    Authority:  49 U.S.C. 5101-5128; 49 CFR 1.81 and 1.97.

0
2. In Sec.  180.209:
0
a. Revise Table 1--Requalification of Cylinders in paragraph (a); and
0
b. Revise paragraph (e).
    The revisions read as follows.

Sec.  180.209   Requirements for requalification of specification 
cylinders.

    (a) * * *

                Table 1--Requalification of Cylinders \1\
------------------------------------------------------------------------
                                     Minimum test
    Specification under which       pressure (psig)     Requalification
        cylinder was made                 \2\           period (years)
------------------------------------------------------------------------
3...............................  3,000 psig........  5.
3A, 3AA.........................  5/3 times service   5, 10, or 12 (see
                                   pressure, except    Sec.
                                   non-corrosive       180.209(b), (f),
                                   service (see Sec.   (h), and (j)).
                                     180.209(g)).
3AL.............................  5/3 times service   5 or 12 (see Sec.
                                   pressure.            180.209(j) and
                                                       (m)\3\).
3AX, 3AAX.......................  5/3 times service   5.
                                   pressure.
3B, 3BN.........................  2 times service     5 or 10 (see Sec.
                                   pressure (see        180.209(f)).
                                   Sec.
                                   180.209(g)).
3E..............................  Test not required.  ..................
3HT.............................  5/3 times service   3 (see Sec.  Sec.
                                   pressure.            180.209(k) and
                                                       180.213(c)).
3T..............................  5/3 times service   5.
                                   pressure.
4AA480..........................  2 times service     5 or 10 (see Sec.
                                   pressure (see        180.209(h)).
                                   Sec.
                                   180.209(g)).
4B, 4BA, 4BW, 4B-240ET..........  2 times service     5, 7, 10, or 12
                                   pressure, except    (see Sec.
                                   non-corrosive       180.209(e), (f),
                                   service (see Sec.   and (j)).
                                     180.209(g)).
4D, 4DA, 4DS....................  2 times service     5.
                                   pressure.
4E..............................  2 times service     5, 10, or 12 (See
                                   pressure, except    Sec.
                                   non-corrosive       180.209(e)).
                                   service (see Sec.
                                     180.209(g)).
4L..............................  Test not required.  ..................
8, 8AL..........................  ..................  10 or 20 (see Sec.
                                                         180.209(i)).
Exemption or special permit       See current         See current
 cylinder.                         exemption or        exemption or
                                   special permit.     special permit.
Foreign cylinder (see Sec.        As marked on        5 (see Sec.  Sec.
 173.301(j) of this subchapter     cylinder, but not    180.209(l) and
 for restrictions on use).         less than 5/3 of    180.213(d)(2)).
                                   any service or
                                   working pressure
                                   marking.
------------------------------------------------------------------------
\1\ Any cylinder not exceeding 2 inches outside diameter and less than 2
  feet in length is excepted from volumetric expansion test.
\2\ For cylinders not marked with a service pressure, see Sec.
  173.301a(b) of this subchapter.
\3\ This provision does not apply to cylinders used for carbon dioxide,
  fire extinguisher or other industrial gas service.

* * * * *
    (e) Cylinders in non-corrosive gas service. A cylinder made in 
conformance with DOT Specifications 4B, 4BA, 4BW, or 4E protected 
externally by a suitable corrosion-resistant coating and used 
exclusively for non-corrosive gas that is commercially free from 
corroding components may be requalified by volumetric expansion testing 
every 12 years instead of every 5 years. As an alternative, the 
cylinder may be subjected to a proof pressure test at least two times 
the marked service pressure, but this latter type of test must be 
repeated every 10 years after expiration of the initial 12-year period. 
When subjected to a proof pressure test, the cylinder must be carefully 
examined under test pressure and removed from service if a leak or 
defect is found.
* * * * *

     Issued in Washington, DC, on July 31, 2019, under authority 
delegated in 49 CFR 1.97.
William S. Schoonover,
Associate Administrator of Hazardous Materials Safety, Pipeline and 
Hazardous Materials Safety Administration.
[FR Doc. 2019-16677 Filed 8-5-19; 8:45 am]
 BILLING CODE 4910-60-P