Document ID: PHMSA-2018-0027-0001
Agency: phmsa
Document Type: Notice
Title: Hazardous Materials: Clarification of Process to Reissue Explosives Classification Approvals
Posted Date: 2019-10-08T04:00Z

[Federal Register Volume 84, Number 195 (Tuesday, October 8, 2019)]
[Notices]
[Pages 53822-53824]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21964]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

[Docket No. PHMSA-2018-0027; Notice No. 2018-09]

Hazardous Materials: Clarification of Process To Reissue 
Explosives Classification Approvals

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

ACTION: Notice and request for comments.

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SUMMARY: PHMSA issues this notice to clarify and request comments on 
the Approvals Program procedures for companies to request a 
modification to an explosives classification approval to reflect a 
merger, acquisition, or change in name or legal status.

DATES: Interested persons are invited to submit comments on or before 
January 6, 2020.

ADDRESSES: You may submit comments identified by Docket No. PHMSA-2018-
0027 via any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
     Fax: 1-202-493-2251.
     Mail: Docket Operations, 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 Docket Operations, 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 for this notice. Internet users may access comments 
received by the DOT at: http://www.regulations.gov. Please note that 
comments received will be posted without change to: http://www.regulations.gov including any personal information provided.
    Privacy Act: In accordance with 5 U.S.C. 553(c), the DOT solicits 
comments from the public. The 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: Pipeline and Hazardous Materials 
Safety Administration: Laura Ulmer, Attorney-Advisor (PHC-10), U.S. 
Department of Transportation, Pipeline and Hazardous Materials Safety 
Administration, 1200 New Jersey Avenue SE, East Building, 2nd Floor, 
Washington, DC 20590-0001, Telephone (202) 366-4400.

SUPPLEMENTARY INFORMATION: 

I. Background

    As defined in title 49, section 173.56 of the Code of Federal 
Regulations (CFR), a ``new explosive'' is an explosive produced by a 
person who either has not previously produced that explosive, or has 
previously produced that explosive, but has made a change in the 
formulation, design, or process so as to alter any of the properties of 
the

[[Page 53823]]

explosive. The Hazardous Materials Regulations (HMR; 49 CFR parts 171-
180) require that each new explosive be examined by a DOT-approved 
explosives test laboratory and assigned a recommended shipping 
description, division, and compatibility group in accordance with Sec.  
173.56(b). This classification must be approved by PHMSA. Applications 
are submitted and approvals are issued per the requirements in 49 CFR 
part 107, subpart H. These explosive classification approvals are 
generally known as ``EX'' approvals. A ``person,'' as defined in 49 CFR 
171.8, must obtain an approval classifying each new explosive that he 
or she offers or transports to, from, or within the United States. In 
December 2015, PHMSA posted a document titled ``EXPLOSIVES 
CLASSIFICATION (EX) APPROVALS (Company Name Changes, Mergers, 
Acquisitions, and Changes in Legal Structure)'' on its website, http://www.phmsa.dot.gov. This document clarified that: (1) An EX approval is 
non-transferable in any merger, acquisition, sale of assets, or other 
business transaction; (2) an EX approval is non-transferrable in 
bankruptcy proceedings, and thus, a debtor may not use an EX approval 
as an asset to sell in order to drive up the purchase price; and (3) 
PHMSA may reissue the EX approvals in certain situations to reflect the 
new company name, when adequate documentation is submitted. The 
document also included frequently asked questions on several common 
merger, acquisition, and legal-status change scenarios and provided 
instructions on how companies could request a modification of an EX 
approval to reflect a status change. Companies can also choose to apply 
for new EX approvals instead of requesting to go through the company 
name-change process.
    The specific scenarios and documentation requirements included in 
the document led to questions and concerns from the regulated 
community. Therefore, we are clarifying the description of the program 
procedures and documentation required for PHMSA to reissue EX 
approvals. Specifically, we have revised the guidance to remove the 
requirement that the applicant declare that the information that it is 
providing for the certification is correct, under penalty of perjury, 
after certain members of the regulated community had concerns about 
swearing under penalty of perjury that documents they did not 
personally draw up were complete and correct. PHMSA acknowledges those 
concerns, and believes that the modification of the certification 
letter contents will alleviate these concerns. The guidance also 
clarifies that companies which request a modification at least 30 days 
prior to the merger, acquisition, or legal-status change can continue 
to use their existing approvals until PHMSA takes final administrative 
action on the application for modification. PHMSA is seeking comments 
on:
    1. The contents of the certification letter;
    2. the description of the timeline for applying and processing a 
name change; and
    3. information requested for additional facilities.

II. Clarification of Requirements To Reissue Approvals

    Companies always have the option to apply for a new EX approval in 
anticipation of a merger, acquisition, or other change in corporate 
structure or form. Alternatively, PHMSA may reissue existing EX 
approvals when adequate documentation is provided for the types of 
corporate changes described in this guidance. Provided a request to 
reissue an EX approval is made at least 30 days prior to the 
anticipated corporate change, the new entity may continue to use the 
existing EX approval until PHMSA reaches a final decision on the 
request. Title 49 CFR part 107, subpart H and Sec.  173.56(b) set out 
the requirements for applying for an EX approval. Table 1, below, 
explains what is meant by various types of requested documents. Table 
2, which follows, explains which of these documents are requested for 
an EX approval to be reissued in different scenarios.

                     Table 1--Types of Documentation
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Certification Letter....................  When applicable, the company
                                           requesting the reissued
                                           approval will submit a
                                           certification letter that:
                                             A. Is signed by a director
                                              or officer of the company
                                              requesting the reissued
                                              approval;
                                             B. states that the company
                                              is not producing a new
                                              explosive and that there
                                              has been no change in the
                                              formulation, design, or
                                              process so as to alter any
                                              of the properties of the
                                              explosive; and
                                             C. states that the
                                              requesting company
                                              understands that failure
                                              to provide accurate and
                                              complete information could
                                              result in the
                                              modification, suspension,
                                              or termination of the
                                              approval.
Approvals List..........................  A list of EX approval numbers
                                           and product descriptions, and
                                           a copy of each EX approval
                                           that the company is
                                           requesting that PHMSA
                                           reissue.
Lab Report..............................  Copies of any laboratory
                                           reports or technical drawings
                                           in the company's possession
                                           relating to the requested EX
                                           approvals.
Proof of Change.........................  Legal documentation of the
                                           applicable change (e.g.,
                                           certification of merger,
                                           sales agreement, etc.).
Relinquishment Letter...................  When applicable, the company
                                           that initially held the
                                           approval should provide a
                                           letter that:
                                             A. Is signed by a director
                                              or officer of the company
                                              holding the initial
                                              approval; and
                                             B. states that the company
                                              holding the initial
                                              approval voluntarily
                                              relinquishes all the
                                              rights to the EX approval
                                              numbers listed in the
                                              document and that they
                                              will no longer manufacture
                                              the explosives approved
                                              under those respective EX
                                              approvals.
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                                      Table 2--Requested Documentation To Reissue Approvals in Different Scenarios
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                      Scenario                              Documents requested to reissue EX approval
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                                                     Cert.               EX                 Lab                Proof              Relinquishment
                                                     letter............  number list......  reports..........  of change........  letter
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Merger.........................  Hazmat Companies    Yes...............  Yes..............  Yes..............  Yes (merger        No.
                                  A, B, C, and D                                                                certification).
                                  are merging to
                                  create new
                                  company X, which
                                  is legally
                                  distinct from its
                                  predecessors.
                                  Company X wants
                                  to perform
                                  activities that
                                  require an EX
                                  approval.

[[Page 53824]]

 
Total Purchase.................  Company A buys      Yes...............  Yes..............  Yes..............  Yes (sales         No.
                                  100% of Company                                                               agreement).
                                  B. Both companies
                                  hold EX
                                  approvals.
                                  Company B will
                                  now operate under
                                  Company A's name.
                                  Company A wants
                                  to use Company
                                  B's EX approvals.
Partial Purchase (Assets)......  Company A buys      Yes...............  Yes..............  Yes..............  Yes (sales         Yes.
                                  less than 100% of                                                             agreement).
                                  Company B's
                                  assets. Company A
                                  wants to use
                                  Company B's EX
                                  approvals.
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Subsidiary (Separate Legal       X Corporation has   N/A. Reissuing of EX numbers is not permitted. Each of the four companies (one parent and three
 Entities).                       three               subsidiaries) needs EX approvals for covered activities. Each of these entities is a separate
                                  subsidiaries that   ``person'' based on the definition PHMSA uses. The term ``person'' refers to each separate legal
                                  are distinct        entity, such as a corporation, partnership, association, or LLC, or LP. This means that a
                                  legal entities:     separately incorporated subsidiary (or LLC or LP) must apply for their own approval if it engages
                                  X LLC,...   in activities that require an EX approval, even when a parent company already holds an EX
                                  X Inc.,     approval.
                                  and.
                                  X LP.....
                                 X Corporation
                                  wants to use X
                                  Inc.'s EX
                                  approvals..
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New Additional, U.S. Facility..  Company X adds a    N/A. No change needed.
                                  new U.S.
                                  facility. The
                                  principal place
                                  of business and
                                  manufacturing
                                  process do not
                                  change.
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New Primary, U.S. Facility.....  Company X changes   No................  Yes..............  Yes..............  No...............  No.
                                  ``principal place
                                  of business'' to
                                  new U.S.
                                  facility, and
                                  therefore must
                                  submit an
                                  application to
                                  amend its EX
                                  approval.
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Additional Facility Abroad.....  Company X           N/A. All manufacturing locations outside of the U.S. are required to apply for their own EX
                                  purchases an        approvals.
                                  additional
                                  manufacturing
                                  plant location
                                  outside of the
                                  United States.
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New Name, Same Legal Structure.  Company X changes   No................  Yes..............  Yes..............  No...............  No.
                                  its name to
                                  ``Company Y,''
                                  but does not
                                  change the legal
                                  structure or
                                  ownership of the
                                  company.
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New Name, New Legal Structure..  Company X, LLC      Yes...............  Yes..............  Yes..............  No...............  No.
                                  changes its name
                                  to ``Company X,
                                  Inc.'' indicating
                                  a change in legal
                                  structure.
                                  Company X., Inc.
                                  wants to use
                                  Company X, LLC's
                                  approval.
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Bankruptcy.....................  Debtor holds an EX  N/A. EX approvals are non-transferrable and cannot be treated as assets in the event of a
                                  approval with       bankruptcy.
                                  PHMSA and goes
                                  into bankruptcy.
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    Signed in Washington, DC, on October 2, 2019.
William S. Schoonover,
Associate Administrator for Hazardous Materials Safety, Pipeline and 
Hazardous Materials Safety Administration.
[FR Doc. 2019-21964 Filed 10-7-19; 8:45 am]
BILLING CODE 4909-60-P