Document ID: PHMSA-2014-0003-0012
Agency: phmsa
Document Type: Notice
Title: Hazardous Materials: New York City Permit Requirements for Transportation of Certain Hazardous Materials
Posted Date: 2017-07-06T04:00Z

[Federal Register Volume 82, Number 128 (Thursday, July 6, 2017)]
[Notices]
[Pages 31390-31396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14147]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

[Docket No. PHMSA-2014-0003; PD-37(R)]

Hazardous Materials: New York City Permit Requirements for 
Transportation of Certain Hazardous Materials

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

ACTION: Notice of administrative determination of preemption.

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[[Page 31391]]

    Applicant: American Trucking Associations, Inc.
    Local Law Affected: New York City Fire Code (FC) 2707.4 and 105.6.
    Applicable Federal Requirements: Federal hazardous material 
transportation law (HMTA), 49 U.S.C. 5101 et seq., and the Hazardous 
Materials Regulations (HMR), 49 CFR parts 171-180.
    Mode Affected: Highway.
SUMMARY: Inspection and Permit Requirement--Federal hazardous material 
transportation law preempts the Fire Department of the City of New 
York's permit and inspection requirements, FC 2707.4 and 105.6 
(transportation of hazardous materials), with respect to trucks based 
outside the inspecting jurisdiction, because scheduling and conducting 
a vehicle inspection (as required for a permit) may cause unnecessary 
delays in the transportation of hazardous materials from locations 
outside the City of New York.
    Permit Fee--Federal hazardous material transportation law preempts 
FDNY's permit fee requirement.

FOR FURTHER INFORMATION CONTACT: Vincent Lopez, Office of Chief 
Counsel, Pipeline and Hazardous Materials Safety Administration, U.S. 
Department of Transportation, 1200 New Jersey Avenue SE., Washington, 
DC 20590; Telephone No. 202-366-4400; Facsimile No. 202-366-7041.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Application and Public Notice

    The American Trucking Associations (ATA) applied to PHMSA for a 
determination on whether Federal hazardous material transportation law, 
49 U.S.C. 5101 et seq., preempts the City of New York's requirement 
that those wishing to transport hazardous materials by motor vehicle 
must, in certain circumstances, obtain a permit. This requirement is 
set forth in the FC in Title 29 of the New York City Administrative 
Code. The Fire Department of the City of New York (FDNY) implements the 
FC rules in Title 3 of the Rules of the City of New York. The relevant 
provisions of the FC and the FDNY rules regarding the City of New 
York's hazardous materials inspection and permitting program, and 
related fees, include:
     FC 2707--sets forth the requirements for the 
transportation of hazardous materials;
     FC 2707.3--prohibits the transportation of hazardous 
materials in quantities requiring a permit without such permit;
     FC 2707.4 and 105.6--permit requirement and exclusions;
     FDNY Rule 2707-02--sets forth routing, timing, escort, and 
other requirements for the transportation of hazardous materials; 
provides that permit holders need not conform to these requirements; 
and
     FC Appendix A, Section A03.1(39) and (67)--specifies the 
permit (inspection and re-inspection) fees.
    ATA states that motor carriers ``must file a separate application 
for each tractor or trailer,'' and pay a $210 fee ``for each tractor or 
trailer to be inspected, and, if approved, must be ready to present 
copies of the permit to enforcement officials at their request.'' \1\ 
The copy of the permit form provided by ATA contains spaces for the 
truck and trailer numbers and the date of inspection of the vehicle or 
trailer. The permit form also indicates that the ``Permit expires (1) 
one year from the above date'' and the requirement that ``This letter 
shall be carried in the cab of the truck and it shall be presented upon 
request to Fire Department representative.''
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    \1\ ATA states that the ``$210 fee to inspect each tractor or 
trailer'' is ``far above the prevailing norm'' and that ``[o]ther 
hazardous materials transportation permits cost significantly less. 
For instance, the entire state of California mandates only $100 per 
motor carrier.''
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    In summary, ATA contends that:

    the City of New York's regulatory regime is deficient in several 
ways. Only motor carriers are required to obtain the City of New 
York's permit, which imposes an unfair burden on a single mode of 
transportation. The permit requirements apply only to some carriers 
and impedes their drivers' ability to comply with 49 CFR 177.800(d), 
which mandates that ``hazardous materials must be transported 
without unnecessary delay.'' Finally, the City of New York (City) 
cannot show that it is using funds generated from its permit fees 
for hazardous materials enforcement and emergency response training.

    PHMSA published notice of ATA's application in the Federal Register 
on April 17, 2014. 79 FR 21838. On June 2, 2014, the comment period 
closed without any interested parties submitting comments. On April 27, 
2015, we published a notice of delay in processing ATA's application in 
order to conduct additional fact-finding and legal analysis in response 
to the application. 80 FR 23328. In order to ensure PHMSA had all of 
the relevant information before making a determination, we sent a 
letter to FDNY and requested that it submit its position on whether the 
HMTA preempts the New York City requirements that are the subject of 
this proceeding. On August 20, 2015, FDNY submitted its comments on 
ATA's application. On October 1, 2015, we published a notice announcing 
that we were reopening the comment period in the proceeding to provide 
interested parties the opportunity to address any of the issues raised 
by the FDNY comments. 80 FR 59244.
    In response to the October notice, we received written comments 
from ATA, Nouveau, Inc. (Nouveau), and the American Coatings 
Association (ACA). ATA indicated that its comments were intended to 
``provide clarity'' to the FDNY comments submitted by demonstrating 
that the City's registration requirement for transporting certain 
hazardous materials imposes an unnecessary delay and that the 
associated fees are significantly higher than similar fees charged by 
other jurisdictions. Moreover, ATA argues that that revenue collected 
by the City is not being used for an acceptable purpose.
    Additionally, ATA in its comments sought to demonstrate for the 
first time that other requirements in the City's regulations were 
preempted, including requirements for loading and unloading, as well as 
the display requirement for FNDY's inspection sticker. However, because 
ATA did not raise these arguments in its initial petition, they cannot 
be considered now.
    Generally, Nouveau and ACA support ATA's position that certain 
provisions of FDNY's hazardous materials requirements are preempted by 
the HMTA.

B. Prior Administrative Proceedings

    As FDNY points out in its submission, this is not the first time 
that the City's regulations governing the transportation of hazardous 
materials have been adjudicated by the U.S. Department of 
Transportation (DOT or Department). Specifically, in support of its 
position, FDNY points to the Research and Special Programs 
Administration's (RSPA) \2\ determination in the proceeding, City of 
New York Application for Waiver of Preemption as

[[Page 31392]]

to the Fire Department Regulations Concerning Pickup/Delivery 
Transportation of Flammable and Combustible Liquids and Flammable and 
Combustible Gases, Waiver of Preemption Determination (WPD)-1, 57 FR 
23278 (June 2, 1992), and asserts that the Department had ``previously 
considered FDNY's inspection and permitting program, and related fees, 
and determined that they were not preempted[.]'' However, FDNY's 
discussion of the past administrative action involving its hazardous 
materials inspection and permitting program does not accurately reflect 
the agency's prior position on this issue. Therefore, as a preliminary 
matter, PHMSA believes it is important to review the significant 
actions taken by the agency in prior administrative proceedings 
involving the City's hazardous materials inspection and permit 
requirements.
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    \2\ Effective February 20, 2005, PHMSA was created to further 
the ``highest degree of safety in pipeline transportation and 
hazardous materials transportation,'' and the Secretary of 
Transportation redelegated hazardous materials safety functions from 
the Research and Special Programs Administration (RSPA) to PHMSA's 
Administrator. 49 U.S.C. 108, as amended by the Norman Y. Mineta 
Research and Special Programs Improvement Act (Pub. L. 108-426, 
section 2, 118 Stat. 2423 (Nov. 30, 2004)); and 49 CFR 1.96(b), as 
amended at 77 FR 49987 (Aug. 17, 2012). For consistency, the terms 
``PHMSA,'' ``the agency,'' and ``we'' are used in the remainder of 
this determination, regardless of whether an action was taken by 
RSPA before February 20, 2005, or by PHMSA after that date.
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    In Inconsistency Ruling (IR)-22, City of New York Regulations 
Governing Transportation of Hazardous Materials, 52 FR 46574 (December 
8, 1987), Decision on Appeal, 54 FR 26698 (June 23, 1989), the agency 
addressed a preemption challenge to the City's directives requiring 
tank truck carriers to receive permits before transporting hazardous 
materials in the city. In IR-22, the agency ``found that the City 
created its own independent set of cargo containment, equipment and 
related requirements that overlap extensive HMR requirements, are 
likely to encourage noncompliance with the HMR, and concern subjects 
that [PHMSA] has determined are its exclusive province under the HMTA. 
Furthermore, [the agency] found that the City's directives result in 
serious delays in the transportation of hazardous materials.'' 54 FR at 
26699. Because the City's containment system and equipment requirements 
were found to be intimately tied to a permitting system, the agency 
``determined that the City's permitting system for transportation of 
certain hazardous materials is inconsistent with the HMTA and the HMR, 
and, therefore, preempted.'' Id.
    The City appealed the IR-22 ruling, challenging the agency's 
findings, and arguing that its permitting system does not cause delays. 
In the Decision on Appeal, PHMSA's Administrator affirmed IR-22, 
upholding the preemption of the City's permitting system. City of New 
York Regulations Governing Transportation of Hazardous Materials, 
Decision on Appeal, 54 FR 26698 (June 23, 1989). PHMSA, in affirming 
the finding that the permit system caused delay, said the City's 
``burdensome permit application requirements, its unfettered discretion 
in granting permits, and the time needed to process applications create 
delays in the transportation of hazardous materials.'' Furthermore, the 
agency said ``the delays caused by the City's permit system are 
unnecessary because the City's permit requirements are inconsistent 
with the HMTA.'' 54 FR at 26705.
    Subsequently, the City sought a waiver of preemption for many of 
the requirements found to be preempted in the IR-22 proceeding, 
including the permit requirements. WPD-1, City of New York Application 
for Waiver of Preemption as to the Fire Department Regulations 
Concerning Pickup/Delivery Transportation of Flammable and Combustible 
Liquids and Flammable and Combustible Gases, 57 FR 23278 (June 2, 
1992). In WPD-1, PHMSA denied the City's application for a waiver of 
preemption as to the design and construction requirements for trucks 
transporting flammable and combustible liquids; granted a waiver of 
preemption as to the requirements on emergency transfers and 
discharging gasoline by gravity into underground tanks; and dismissed 
the City's application without prejudice for lack of information as to 
the requirements for transporting compressed gases. In addition, PHMSA 
found that the City's ``inspection and permit requirements (as general 
safety measures, separate from its equipment requirements) . . . are 
not preempted'' and therefore, took no action with respect to those 
requirements. 57 FR at 23278. However, the agency was careful to note 
that its finding on this issue was a narrow one, limited by statutory 
requirements. Specifically, the agency initially said ``[t]he permit 
requirements of the City are part of, and tied to, the City's design 
and construction requirements which [PHMSA] found to be preempted by 
the HMTA. For that reason, the permit requirements were held [in IR-22] 
to be preempted as well.'' 57 FR at 23294, referencing IR-22; 52 FR 
46582. Thus, while PHMSA denied the request for a waiver of preemption 
as to the City's permit requirements, the agency noted that the permit 
requirements, when considered separate and apart from the City's design 
and construction requirements, might not be preempted by the HMTA, 
``provided that (1) the annual permit fee is `equitable' and is `used 
for purposes related to the transportation of hazardous materials . . 
.'.'' 57 FR at 23295.
    The WPD-1 decision does not mandate a finding in favor of the City 
here, for two reasons. First, PHMSA was addressing arguments based on 
the City's design and construction requirements, and merely noted in 
the abstract that preemption might not apply to the City's inspection 
and permit requirements, providing that other factors were met. The 
WPD-1 decision did not address the argument that ATA now presents in 
this proceeding specifically that the City's inspection and permitting 
program requirements, and related fees, should be preempted because the 
program causes unnecessary delay and unreasonable cost. Second, PHMSA 
expressly noted that the City's permit requirement could avoid being 
preempted only if the annual permit fee was ``equitable'' and ``used 
for purposes related to the transportation of hazardous materials.'' 
ATA contends that the City fails to meet these requirements.

C. Preemption Under Federal Hazardous Material Transportation Law

    As discussed in the April 17, 2014 notice, 49 U.S.C. 5125 contains 
express preemption provisions relevant to this proceeding. 79 FR 21838, 
21839-40. Subsection (a) provides that a requirement of a State, 
political subdivision of a State, or Indian tribe is preempted--unless 
the non-Federal requirement is authorized by another Federal law or DOT 
grants a waiver of preemption under section 5125(e)--if:
    (1) complying with a requirement of the State, political 
subdivision, or tribe and a requirement of this chapter, a regulation 
prescribed under this chapter, or a hazardous materials transportation 
security regulation or directive issued by the Secretary of Homeland 
Security is not possible; or
    (2) the requirement of the State, political subdivision, or tribe, 
as applied or enforced, is an obstacle to accomplishing and carrying 
out this chapter, a regulation prescribed under this chapter, or a 
hazardous materials transportation security regulation or directive 
issued by the Secretary of Homeland Security.\3\
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    \3\ These two paragraphs set forth the ``dual compliance'' and 
``obstacle'' criteria that are based on U.S. Supreme Court decisions 
on preemption. Hines v. Davidowitz, 312 U.S. 52 (1941); Florida Lime 
& Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963); Ray v. 
Atlantic Richfield, Inc., 435 U.S. 151 (1978). PHMSA's predecessor 
agency, the Research and Special Programs Administration, applied 
these criteria in issuing inconsistency rulings under the original 
preemption provisions in Section 112(a) of the Hazardous Materials 
Transportation Act (HMTA), Public Law 93-633, 88 Stat. 2161 (Jan. 3, 
1975).
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    Subsection (b)(1) of 49 U.S.C. 5125 provides that a non-Federal 
requirement concerning any of the following subjects is preempted--
unless authorized by

[[Page 31393]]

another Federal law or DOT grants a waiver of preemption--when the non-
Federal requirement is not ``substantively the same as'' a provision of 
Federal hazardous material transportation law, a regulation prescribed 
under that law, or a hazardous materials security regulation or 
directive issued by the Department of Homeland Security:
    (A) The designation, description, and classification of hazardous 
material.
    (B) the packing, repacking, handling, labeling, marking, and 
placarding of hazardous material.
    (C) the preparation, execution, and use of shipping documents 
related to hazardous material and requirements related to the number, 
contents, and placement of those documents.
    (D) the written notification, recording, and reporting of the 
unintentional release in transportation of hazardous material and other 
written hazardous materials transportation incident reporting involving 
State or local emergency responders in the initial response to the 
incident.
    (E) the designing, manufacturing, fabricating, inspecting, marking, 
maintaining, reconditioning, repairing, or testing a package, 
container, or packaging component that is represented, marked, 
certified, or sold as qualified for use in transporting hazardous 
material in commerce.\4\
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    \4\ To be ``substantively the same,'' the non-Federal 
requirement must conform ``in every significant respect to the 
Federal requirement. Editorial and other similar de minimis changes 
are permitted.'' 49 CFR 107.202(d).
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    In addition, 49 U.S.C. 5125(f)(1) provides that a State, political 
subdivision, or Indian tribe ``may impose a fee related to transporting 
hazardous material only if the fee is fair and used for a purpose 
related to transporting hazardous material, including enforcement and 
planning, developing, and maintaining a capability for emergency 
response.'' \5\
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    \5\ See also 49 U.S.C. 5125(c) containing standards which apply 
to preemption of non-Federal requirements on highway routes over 
which hazardous materials may or may not be transported.
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    The preemption provisions in 49 U.S.C. 5125 reflect Congress's 
long-standing view that a single body of uniform Federal regulations 
promotes safety (including security) in the transportation of hazardous 
materials. Some forty years ago, when considering the Hazardous 
Materials Transportation Act, the Senate Commerce Committee 
``endorse[d] the principle of preemption in order to preclude a 
multiplicity of State and local regulations and the potential for 
varying as well as conflicting regulations in the area of hazardous 
materials transportation.'' S. Rep. No. 1192, 93rd Cong. 2nd Sess. 37 
(1974). A United States Court of Appeals has found uniformity was the 
``linchpin'' in the design of the Federal laws governing the 
transportation of hazardous materials. Colorado Pub. Util. Comm'n v. 
Harmon, 951 F.2d 1571, 1575 (10th Cir. 1991).
    Under 49 U.S.C. 5125(d)(1), any person (including a State, 
political subdivision of a State, or Indian tribe) directly affected by 
a requirement of a State, political subdivision or Indian tribe may 
apply to the Secretary of Transportation for a determination whether 
the requirement is preempted. The Secretary of Transportation has 
delegated authority to PHMSA to make determinations of preemption, 
except for those concerning highway routing (which have been delegated 
to the Federal Motor Carrier Safety Administration). 49 CFR 1.97(b).
    Section 5125(d)(1) requires notice of an application for a 
preemption determination to be published in the Federal Register. 
Following the receipt and consideration of written comments, PHMSA 
publishes its determination in the Federal Register. See 49 CFR 
107.209(c). A short period of time is allowed for filing of petitions 
for reconsideration. 49 CFR 107.211. A petition for judicial review of 
a final preemption determination must be filed in the United States 
Court of Appeals for the District of Columbia or in the Court of 
Appeals for the United States for the circuit in which the petitioner 
resides or has its principal place of business, within 60 days after 
the determination becomes final. 49 U.S.C. 5127(a).
    Preemption determinations do not address issues of preemption 
arising under the Commerce Clause, the Fifth Amendment or other 
provisions of the Constitution, or statutes other than the Federal 
hazardous material transportation law unless it is necessary to do so 
in order to determine whether a requirement is authorized by another 
Federal law, or whether a fee is ``fair'' within the meaning of 49 
U.S.C. 5125(f)(1). A State, local or Indian tribe requirement is not 
authorized by another Federal law merely because it is not preempted by 
another Federal statute. Colorado Pub. Util. Comm'n v. Harmon, above, 
951 F.2d at 1581 n.10. In addition, PHMSA does not generally consider 
issues regarding the proper application or interpretation of a non-
Federal regulation, but rather how such requirements are actually 
``applied or enforced.'' Rather, ``isolated instances of improper 
enforcement (e.g., misinterpretation of regulations) do not render such 
provisions inconsistent'' with Federal hazardous material 
transportation law, but are more appropriately addressed in the 
appropriate State or local forum. Preemption Determination (PD)-14(R), 
Houston, Texas, Fire Code Requirements on the Storage, Transportation, 
and Handling of Hazardous Materials, 63 FR 67506, 67510 n.4 (Dec. 7, 
1998), decision on petition for reconsideration, 64 FR 33949 (June 24, 
1999), quoting from IR-31, Louisiana Statutes and Regulations on 
Hazardous Materials Transportation, 55 FR 25572, 25584 (June 21, 1990), 
appeal dismissed as moot, 57 FR 41165 (Sept. 9, 1992), and PD-4(R), 
California Requirements Applicable to Cargo Tanks Transporting 
Flammable and Combustible Liquids, 58 FR 48940 (Sept. 20, 1993), 
decision on reconsideration, 60 FR 8800 (Feb. 15, 1995).
    In making preemption determinations under 49 U.S.C. 5125(d), PHMSA 
is guided by the principles and policies set forth in Executive Order 
No. 13132, entitled ``Federalism'' (64 FR 43255 (Aug. 10, 1999)), and 
the President's May 20, 2009 memorandum on ``Preemption'' (74 FR 24693 
(May 22, 2009)). Section 4(a) of that Executive Order authorizes 
preemption of State laws only when a statute contains an express 
preemption provision, there is other clear evidence Congress intended 
to preempt State law, or the exercise of State authority directly 
conflicts with the exercise of Federal authority. The President's May 
20, 2009 memorandum sets forth the policy ``that preemption of State 
law by executive departments and agencies should be undertaken only 
with full consideration of the legitimate prerogatives of the States 
and with a sufficient legal basis for preemption.'' Section 5125 
contains express preemption provisions, which PHMSA has implemented 
through its regulations.

II. Discussion

A. Inspection and Permit Requirement.

    ATA argues that the FDNY permit and inspection requirements cause 
unnecessary delays because the process ``delays drivers whose fastest 
route is through the city[.]''
    FDNY believes its permit and inspection process is ``lawful and 
proper, consistent with Federal law and regulations, promotes public 
safety . . . and does not unreasonably burden interstate commerce or 
motor carriers.''
    According to FDNY, the permit process has been streamlined in 
recent years to provide for the immediate

[[Page 31394]]

issuance of the permit, provided of course, that the vehicle passes the 
inspection. FDNY explains that a motor carrier can obtain a same day 
inspection by simply showing up at FDNY's Hazardous Cargo Unit (HCU). 
Or alternatively, the motor carrier can make arrangements to have its 
fleet inspected at its own facility. FDNY estimates the whole process 
takes approximately 30 minutes.
    PHMSA has acknowledged that vehicle and container inspections are 
an ``integral part of a program to assure the safe transportation of 
hazardous materials in compliance with the HMR.'' PD-28(R), Town of 
Smithtown, New York Ordinance on Transportation of Liquefied Petroleum 
Gas, 67 FR 15276, 15278 (Mar. 29, 2002).
    Also, the agency has specifically found that inspections conducted 
by State or local governments to assure compliance with Federal or 
consistent requirements are themselves consistent with Federal 
hazardous material transportation law and not preempted. PD-28(R) at 
15278; PD-4(R), California Requirements Applicable to Cargo Tanks 
Transporting Flammable and Combustible Liquids, 58 FR 48933, 48940 
(Sept. 20, 1993), Decision on Petition for Reconsideration, 60 FR 8800 
(Feb. 15, 1995), quoting IR-20, Triborough Bridge and Tunnel Authority 
Regulations, etc., 52 FR 24396, 24398 (June 30, 1987).
    Accordingly, the agency ``has encouraged States and local 
governments to adopt and enforce the requirements in the HMR `through 
both periodic and roadside spot inspections.' '' PD-28(R) at 15278, 
quoting PD-4(R), 58 FR at 48940 and PD-13(R), Nassau County, New York, 
Ordinance on Transportation of Liquefied Petroleum Gases, 63 FR 45283, 
45286 (Aug. 25, 1998), Decision on Petition for Reconsideration, 65 FR 
60238 (Oct. 10, 2000), quoting from WPD-1, New York City Fire 
Department Regulations, etc., 57 FR 23278, 23295 (June 2, 1992).
    But to be consistent with the HMTA and the HMR, a non-Federal 
inspection of a vehicle or container used to transport a hazardous 
material must not conflict with the requirement in 49 CFR 177.800(d), 
which states:

All shipments of hazardous materials must be transported without 
unnecessary delay, from and including the time of commencement of 
the loading of the hazardous material until its final unloading at 
destination.

    In prior decisions, the agency has identified several principles 
regarding unnecessary delay that are relevant to this proceeding.
    First, travel and wait times associated with an inspection are not 
generally considered unnecessary delays. PD-13(R), Decision on Petition 
for Reconsideration, 65 FR 60238, 60243 (Oct. 10, 2000); PD-4(R) at 
48941. However, a delay of hours or days waiting for the arrival of an 
inspector from another location is unnecessary, because it 
substantially increases the time hazardous materials are in 
transportation, increasing exposure to the risks of the hazardous 
materials without corresponding benefit. PD-28(R) at 60243; PD-4(R) at 
48941.
    Second, a State's annual inspection requirement applied to vehicles 
that operate solely within the State is presumptively valid because it 
would not create the potential for delays associated with entering the 
State or being rerouted around the State. A carrier whose vehicles are 
based within the inspecting jurisdiction should be able to schedule an 
inspection at a time that does not disrupt or unnecessarily delay 
deliveries. 65 FR at 60243; 60 FR at 8803; PD-13(R) at 45286.
    But, when applied to vehicles based outside of the inspecting 
jurisdiction, a State or local periodic inspection requirement has an 
inherent potential to cause unnecessary delays because the call and 
demand nature of common carriage makes it impossible to predict in 
advance which vehicles may be needed for a pick-up or delivery within a 
particular jurisdiction and impractical to have all vehicles inspected 
every year (or alternatively, inspection of select vehicles dedicated 
to the inspecting jurisdiction). PD-28(R) at 15279, referring to the 
discussion in PD-4(R) 58 FR at 48938-41, and PD-13(R), 65 FR 60242-44.
    Last, a State or local government may apply an annual inspection 
requirement to trucks based outside its jurisdictional boundaries 
``only if the [State or local government] can actually conduct the 
equivalent of a `spot' inspection upon the truck's arrival within the 
local jurisdiction. The [State or local government] may not require a 
permit or inspection for trucks that are not based within the local 
jurisdiction if the truck must interrupt its transportation of 
[hazardous materials] for several hours or longer in order for an 
inspection to be conducted and a permit to be issued.'' 65 FR at 60244.
    Applying these principles to FDNY's permit and inspection program, 
it appears that the program would not cause unnecessary delays in the 
transportation of hazardous materials with respect to motor vehicles 
that are based within FDNY's jurisdiction. As noted in PD-13(R), motor 
carriers based within the inspecting jurisdiction ``should be able to 
present their trucks for an inspection . . . without incurring an 
unnecessary delay in the delivery of [hazardous materials]. They should 
be able to plan and schedule inspections without any interruption of 
deliveries.'' 65 FR at 60244. And on the few occasions where an 
inspection must be performed on short notice, it is reasonable to 
consider this an exception and simply a part of doing business, rather 
than an unreasonable delay under the HMR. Id.
    However, with respect to motor vehicles that are based outside the 
inspecting jurisdiction, FDNY's process doesn't appear to be as 
flexible or accommodating as it portrays. For example, although FDNY 
says a same-day inspection at the HCU is possible, the unit is only 
open for operation, Monday through Friday, from 7:30 a.m. to 3:00 p.m. 
Since the permit and inspection program is not limited to one specific 
class of hazardous material, and considering that the HCU is only open 
weekdays until 3:00 p.m., an unpermitted motor carrier based outside 
FDNY's jurisdiction would have no recourse when it arrives to pick up 
or deliver hazardous materials in the City (requires a permit) and 
discovers that the HCU is closed. FDNY indicates that there is some 
flexibility in performing inspections, i.e., a motor carrier can 
arrange for fleet inspections at its own facility, and that it has co-
located FDNY inspection operations with other regulatory departments. 
But fleet inspections at a motor carrier's own facility appear to be 
impractical where the facility is located outside the City's 
jurisdiction. And, although co-locating the HCU with the City's other 
regulatory departments may be an operational convenience, it is not 
relevant to the issue here. More importantly, FDNY is silent on whether 
it is capable of performing a `spot' inspection upon a motor carrier's 
arrival within its jurisdiction. Therefore, it does not appear that 
FDNY is able to conduct inspections and issue permits ``on demand.'' As 
ATA pointed out, FDNY is ``unable to apply the inspection and 
permitting process at the roadside[,]'' and ``FDNY's policy requires 
the truck to `interrupt its transportation . . . for several hours' by 
traveling to the FDNY inspection site and being inspected before 
returning to productive service[.]'' Comments of ATA at 5, quoting 67 
FR at 15279. Although ATA did not specify that its members have 
actually experienced delays of this kind and duration, our prior 
determinations on this issue support the position that

[[Page 31395]]

when FDNY is confronted with the unannounced arrival of a motor carrier 
based outside its jurisdiction, it should be capable of conducting the 
equivalent of a spot or roadside inspection to avoid unnecessary 
delays. FDNY has not shown that its program has this flexibility.
    PHMSA, for the reasons set forth above, finds that the HMTA does 
not preempt FDNY's permit and inspection requirements, FC 2707.4 and 
105.6 (transportation of hazardous materials), with respect to motor 
vehicles that are based within the inspecting jurisdiction. On the 
other hand, PHMSA finds that FDNY's permit and inspection requirements 
create an obstacle to accomplishing and carrying out the HMR's 
prohibition against unnecessary delays in the transportation of 
hazardous materials on vehicles based outside of the inspecting 
jurisdiction. Accordingly, the HMTA preempts FDNY's permit and 
inspection requirements, FC 2707.4 and 105.6 (transportation of 
hazardous materials), with respect to trucks based outside the 
inspecting jurisdiction.

B. Permit Fee.

    ATA challenges FDNY's transportation of hazardous materials permit 
fee on the grounds that it is not ``fair'' and that it is not being 
used for purposes that are related to the transportation of hazardous 
material. ATA also alleges that FDNY has not sufficiently accounted for 
the revenues generated by its ``hazardous materials registration 
program.'' Nouveau echoed ATA's assertion that FDNY is not using the 
revenue generated from the fees for authorized purposes and contends 
that FDNY has not provided any evidence regarding the collection and 
use of the fees.
    According to FDNY, permit revenues, like all revenues received by 
City agencies, are paid into a general City fund, with the amounts 
credited toward agency, bureau and unit operations. Over the past three 
years, annual revenue generated from the permit fees ranged from 
$250,000 to $450,000.\6\ FDNY claims it expends on an annual basis, 
``tens of millions of dollars'' for its hazardous materials response 
operations, including staffing, training and equipping the HMU and 
other specialized units, but it provided no specific figures.
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    \6\ FY2013; FY2015 (July 1 through June 30).
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    It is FDNY's position that its inspection and permitting program, 
and related fees, are not preempted because it believes the agency 
already addressed this issue, and found that the requirements were not 
preempted. However, as discussed above in the prior administrative 
proceedings section, the WPD-1 language was conditioned on the City 
separating and severing the permit fee requirements from the preempted 
truck design and construction requirements. More importantly however, 
PHMSA expressly noted that the City's permit requirement could only 
avoid being preempted if the annual permit fee was ``equitable'' and 
``used for purposes related to the transportation of hazardous 
materials.'' Since that time, the City's current inspection and 
permitting (including fees) regulatory scheme has not been challenged 
on these issues. Therefore, FDNY's contention that its permit fees are 
valid based on the language in WPD-1 is not persuasive. The challenge 
to the validity of the permit fees as now raised in this proceeding, 
requires that PHMSA determine that the fees satisfy the statutory 
requirements.
    The HMTA provides that ``[a] State, political subdivision of a 
State, or Indian tribe may impose a fee related to transporting 
hazardous material only if the fee is fair and used for a purpose 
related to transporting hazardous material, including enforcement and 
planning, developing, and maintaining a capability for emergency 
response.'' 49 U.S.C. 5125(f)(1). In prior preemption determinations, 
PHMSA has utilized tests for determining whether a fee is ``fair'' and 
whether it is ``used for a purpose related to transporting hazardous 
material.''
1. The Fairness Test
    PHMSA has determined that the test of reasonableness in Evansville-
Vanderburgh Airport Auth. v. Delta Airlines, Inc. 405 U.S. 707, 92 
S.Ct. 1349 (1972) ``appears to be the most appropriate one for 
interpreting the fairness requirement in [the HMTA].'' PD-21, Tennessee 
Hazardous Waste Transporter Fee and Reporting Requirements, 64 FR 
54474, 54478 (October 6, 1999).\7\
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    \7\ Complaint for judicial review, Tennessee v. U.S. Dept. of 
Transportation, C.A. No. 3-99-1126 (M.D. Tenn.), filed Dec. 3, 1999; 
order denying claim of state sovereignty (Feb. 27, 2001); affirmed 
and remanded, 326 F.3d 729 (6th Cir.); cert. denied, 124 S.Ct. 464 
(2003); judgment in favor of DOT and AWHMT (June 28, 2004).
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    In Evansville-Vanderburgh, the Supreme Court found that a state or 
local ``toll'' would pass constitutional muster ``so long as the toll 
is based on some fair approximation of use or privilege for use . . . 
and is neither discriminatory against interstate commerce nor excessive 
in comparison with the governmental benefit conferred[.]'' 405 U.S. at 
716-17, 92 S.Ct. at 1355. Following Evansville-Vanderburgh, the Court 
stated that ``a levy is reasonable under Evansville if it (1) is based 
on some fair approximation of the use of the facilities, (2) is not 
excessive in relation to the benefits conferred, and (3) does not 
discriminate against interstate commerce.'' Northwest Airlines, Inc. v. 
Kent, 510 U.S. 355, 367-68, 114 S.Ct. 855, 864 (1994).
    In PD-21, PHMSA evaluated Tennessee's requirement for hazardous 
waste transporters to pay an annual $650 remedial action fee. In that 
matter, PHMSA observed that there was no evidence that Tennessee's 
annual fixed fee had any approximation to a transporter's use of roads 
or other facilities within the State or that there were genuine 
administrative burdens that prevented the application of a more finely 
graduated fee. Id. PHMSA thus concluded that the fee was not ``fair'' 
and was preempted.
    In PD-18, Broward County, Florida's Requirements on the 
Transportation of Certain Hazardous Materials to or From Points in the 
County, 65 FR 81950 (December 27, 2000), Decision on Petition for 
Reconsideration, 67 FR 35193 (May 17, 2002), PHMSA preempted the 
County's licensing fee for hazardous waste transporters. In making its 
determination, the agency followed the fairness test discussed in 
Tennessee and emphasized that a fee discriminates against interstate 
commerce if there is a ``lack of any relationship between the fees paid 
and the respective benefits received by interstate and intrastate 
carriers.'' PD-18 at 81959 (quoting PD-21). The agency went on to say 
that the case in Broward County was similar to the situation in 
Tennessee because the County ``requires that any person transporting . 
. . waste `to from, and within' the County must obtain a waste 
transporter license.'' PHMSA also noted that the fee for obtaining the 
waste transport license ``apparently is the same for every 
transporter'' without being based on some fair approximation of use of 
facilities, i.e., roads or other facilities within the State. PD-18 at 
81959.
    Here, FDNY has acknowledged its permit fee is a flat fee applicable 
to motor carriers whether they are engaged in interstate or intrastate 
transportation of hazardous materials. Moreover, FDNY admitted that it 
does not maintain statistics as to whether motor carriers are engaged 
in interstate or intrastate commerce. Consequently, since there is no 
evidence showing that FDNY's flat fee is apportioned to a motor carrier 
based on some approximation of the benefit conferred

[[Page 31396]]

to the permit holders, it discriminates against interstate commerce. 
Furthermore, there is no evidence that a more finely graduated fee 
would pose genuine administrative burdens on the City. PHMSA therefore 
finds that the FDNY's permit fee is not fair and is preempted.
2. The ``Used For'' Test
    Under the HMTA, a State, political subdivision of a State, or 
Indian tribe may impose a fee related to transporting hazardous 
material, but only if the fee is used for a purpose related to 
transporting hazardous material, including enforcement and planning, 
developing, and maintaining a capability for emergency response. 49 
U.S.C. 5125(f)(1). Therefore, non-Federal fees that are collected in 
relation to the transportation of hazardous materials must be used for 
a related purpose; otherwise they are preempted. PD-22, New Mexico 
Requirements for the Transportation of Liquefied Petroleum Gas, 67 FR 
59386 (Sept. 20, 2002); PD-18 at 81959; PD-21 at 54479.
    In prior preemption determinations, PHMSA has acknowledged that a 
State, political subdivision of a State, or Indian tribe does not have 
to create and maintain a separate account for fees related to the 
transportation of hazardous materials. However, ``[i]f the [non-Federal 
entity] prefers not to create and maintain a separate fund for fees 
paid . . . then it must show that it is actually spending these fees on 
the purposes permitted by the law. In this area where only the [non-
Federal entity] has the information concerning where these funds are 
spent, more specific accounting is required.'' PD-21 at 54479.
    FDNY acknowledged that the revenue it receives through its permit 
program is put into a general City fund; which is permissible, provided 
it can show the funds are used for purposes related to the 
transportation of hazardous materials. FDNY believes that the revenue 
is used for permitted purposes because it contributes to the cost of 
staffing, training, and equipping its HCU. However, FDNY also indicated 
that the inspection fee largely covers the cost of the inspection and 
the administrative processing of the permit. Here, apart from general 
statements about how the revenue is used, FDNY does not provide 
specific figures. FDNY's failure to provide definitive information on 
the allocation of permit revenues is not sufficient to refute ATA's 
direct challenge of the permit fee on the grounds that FDNY has not 
sufficiently accounted for revenues generated by its hazardous 
materials registration program. Therefore, without any evidence from 
FDNY on how it uses the permit fees that it collects, PHMSA cannot find 
that the fees are used for purposes related to hazardous materials 
transportation, and thus, FDNY's permit fee is preempted under the 
``used for'' test.

III. Ruling

    Inspection and Permit Requirement--PHMSA finds that FDNY's permit 
and inspection requirements, FC 2707.4 and 105.6 (transportation of 
hazardous materials), create an obstacle to accomplishing and carrying 
out the HMR's prohibition against unnecessary delays in the 
transportation of hazardous materials on vehicles based outside of the 
inspecting jurisdiction. Accordingly, the HMTA preempts FDNY's permit 
and inspection requirements with respect to vehicles based outside the 
inspecting jurisdiction. PHMSA, however, finds that the HMTA does not 
preempt FDNY's permit and inspection requirements with respect to motor 
vehicles that are based within the inspecting jurisdiction.
    Permit Fee--PHMSA finds that FDNY has not shown that the fee it 
imposes with respect to its permit and inspection requirements is 
``fair'' or ``used for a purpose related to transporting hazardous 
material,'' as required by 49 U.S.C. 5125(f)(1). Accordingly, the HMTA 
preempts FDNY's permit fee requirement.

IV. Petition for Reconsideration/Judicial Review

    In accordance with 49 CFR 107.211(a), any person aggrieved by this 
decision may file a petition for reconsideration within 20 days of 
publication of this decision in the Federal Register. A petition for 
judicial review of a final preemption determination must be filed in 
the United States Court of Appeals for the District of Columbia or in 
the Court of Appeals for the United States for the circuit in which the 
petitioner resides or has its principal place of business, within 60 
days after the determination becomes final. 49 U.S.C. 5127(a).
    This decision will become PHMSA's final decision 20 days after 
publication in the Federal Register if no petition for reconsideration 
is filed within that time. The filing of a petition for reconsideration 
is not a prerequisite to seeking judicial review of this decision under 
49 U.S.C. 5127(a).
    If a petition for reconsideration is filed within 20 days of 
publication in the Federal Register, the action by PHMSA's Chief 
Counsel on the petition for reconsideration will be PHMSA's final 
action. 49 CFR 107.211(d).

    Issued in Washington, DC, on June 29, 2017.
Vasiliki Tsaganos,
Acting Chief Counsel.
[FR Doc. 2017-14147 Filed 7-5-17; 8:45 am]
 BILLING CODE 4910-60-P