Document ID: PHMSA-2014-0003-0021
Agency: phmsa
Document Type: Notice
Title: Hazardous Materials: New York City Permit Requirements for Transportation of Certain Hazardous Materials
Posted Date: 2020-05-15T04:00Z

[Federal Register Volume 85, Number 95 (Friday, May 15, 2020)]
[Notices]
[Pages 29505-29511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10489]

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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: Decision on petition for reconsideration of an administrative 
determination of preemption.

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    Petitioner: The Fire Department of the City of New York (FDNY).
    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: On July 6, 2017, PHMSA published in the Federal Register an 
administrative determination that Federal hazardous material 
transportation law preempts, in part, FDNY's permit, inspection, and 
fee requirements. FDNY has petitioned for reconsideration of that 
determination. FDNY's petition for reconsideration is granted in part, 
and denied in part, as follows:
    1. Permit and Inspection Requirement--PHMSA affirms its 
determination that the HMTA preempts FDNY's permit and inspection 
requirements, FC 2707.4 and 105.6, with respect to vehicles based 
outside the inspecting jurisdiction, and its determination that the 
HMTA does not preempt these requirements with respect to vehicles that 
are based within the inspecting jurisdiction. PHMSA's determination is 
based on its conclusion 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 material on vehicles based outside the inspecting 
jurisdiction.
    2. Permit Fee--Based on new information supplied by FDNY, PHMSA 
reverses its determination that FDNY is not using the revenue it 
collects from its permit fee for authorized purposes. However, PHMSA 
affirms its determination that the permit fee is not ``fair,'' as 
required by 49 U.S.C. 5125(f)(1), and therefore affirms its 
determination that the permit fee is preempted.

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. Preemption Determination

    The American Trucking Associations, Inc. (ATA) applied to PHMSA for 
a determination of whether Federal hazardous material transportation 
law, 49 U.S.C. 5101 et seq., preempts the City of New York (FDNY)'s 
requirement that those wishing to transport hazardous materials by 
motor vehicle must, in certain circumstances, obtain a permit. The 
relevant provisions of the FC and the FDNY rules regarding FDNY'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--sets forth 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.
    The following parties submitted comments in the proceeding: ATA, 
FDNY, Nouveau, Inc., and the American Coatings Association. On July 6, 
2017, PHMSA published in the Federal Register its determination with 
respect to ATA's application, in accordance with 49 U.S.C. 5125(d) and 
49 CFR 107.203. Preemption Determination 37-R (PD-37(R)), 82 FR 31390. 
PHMSA found that Federal hazardous material transportation law preempts 
the FDNY requirements as follows:
    1. Permit and Inspection Requirement--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 material on vehicles based outside the inspecting 
jurisdiction. Accordingly, we determined that the HMTA preempts FDNY's 
permit and inspection requirements with respect to vehicles based 
outside the inspecting jurisdiction, but that the HMTA does not preempt 
those requirements with respect to motor vehicles that are based within 
the inspecting jurisdiction. PD 37(R), 82 FR at 31393-31395.
    2. Permit Fee--The permit fee is preempted because we determined 
that FDNY had not shown that the fee it imposes with respect to its 
permit and inspection requirements is ``fair'' and ``used for a purpose 
related to transporting hazardous material,'' as required by 49 U.S.C. 
5125(f)(1). PD 37(R), 82 FR at 31395-31396
    PHMSA, in Part I of PD-37(R), discussed the standards for making 
determinations of preemption under the Federal hazardous material 
transportation law. Id. at 31392-3. As we explained, unless there is 
specific authority in another Federal law or DOT grants a waiver, a 
requirement of a State, political subdivision of a State, or Indian 
tribe is preempted if:

[[Page 29506]]

--It is not possible to comply with both the State, local, or tribal 
requirement and a requirement in the Federal hazardous material 
transportation law or regulations;
--The State, local, or tribal requirement, as applied or enforced, is 
an ``obstacle'' to accomplishing and carrying out the Federal hazardous 
material transportation law or regulations; or
--The State, local, or tribal requirement concerns any of five specific 
subjects and is not ``substantively the same as'' a provision in the 
Federal hazardous material transportation law or regulations. Id. 
(citing 49 U.S.C. 5125(a)-(b)).

    In addition, 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.'' Id. 
at 31393 (citing 49 U.S.C. 5215(f)(1)).
    These preemption provisions stem from congressional findings that 
State, local, or tribal requirements that vary from Federal hazardous 
material transportation law and regulations can create ``the potential 
for unreasonable hazards in other jurisdictions and confound[ ] 
shippers and carriers which attempt to comply with multiple and 
conflicting . . . regulatory requirements,'' and that safety is 
advanced by ``consistency in laws and regulations governing the 
transportation of hazardous materials[.]'' Public Law 101-615 sections 
2(3) and 2(4), 104 Stat. 3244 (Nov. 16, 1990). In PD-37(R), PHMSA also 
explained that its

[p]reemption 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).

PD-37(R), 82 FR at 31393.

B. Petition for Reconsideration

    FDNY contacted PHMSA, within the 20-day time period provided in 49 
CFR 107.211(a), and requested a 60-day extension of time in which to 
file a petition for reconsideration. We granted FDNY's request, and set 
a new filing deadline. FDNY timely filed its petition for 
reconsideration on September 25, 2017. FDNY sent a copy of its petition 
to each person who had previously submitted comments in the proceeding. 
Thereafter, we received a request from ATA for a 22-day extension of 
time to file its comments to FDNY's petition. We granted ATA's request, 
and instructed ATA to file its comments on or before November 6, 2017. 
ATA timely submitted its comments.
    FDNY, in its petition, challenges PHMSA's findings that its 
inspection and permit requirements, and the associated permit fee, are 
preempted. FDNY presents four arguments for why it believes the agency 
should reconsider and reverse its decision:
     The permit and inspection program is valid because it 
addresses an issue of foremost local concern, i.e., the public safety 
of FDNY residents;
     The inspection requirement is not an obstacle because it 
does not cause unnecessary delay;
     The fee is fair and used for appropriate purposes; and
     PHMSA's decision in this proceeding is inconsistent with 
the ruling by the agency's predecessor in a prior waiver of preemption 
proceeding.

II. Discussion

A. Inspection and Permit Requirement

    In PD-37(R), PHMSA explained that although State or local 
governments may generally conduct inspections of motor carriers to 
assure compliance with Federal requirements for the transportation of 
hazardous materials, such inspections must not conflict with the 
Federal requirement that:

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.

PD-37(R), 82 FR at 31394 (citing 49 CFR 177.800(d)). PHMSA explained 
that its prior decisions have established several key principles in 
this area.
    First, while ``travel and wait times associated with an inspection 
are not generally considered unnecessary delays . . .[,] a delay of 
hours or days . . . 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.'' Id.
    Second, ``a State's annual inspection requirement applied to 
vehicles that operate solely within the State is presumptively valid,'' 
as 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.'' Id.
    Third, ``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.'' Id.
    Fourth, ``a State or local government may apply an annual 
inspection requirement to trucks based outside its jurisdictional 
boundaries only if [it] can actually conduct the equivalent of a `spot' 
inspection upon the truck's arrival within the local jurisdiction,'' 
and ``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.'' 
Id. (alterations omitted).
    In setting forth these principles, PHMSA discussed three prior 
determinations: (1) A determination that a town's permit requirement 
was preempted with respect to vehicles based outside the town, PD-
28(R), Town of Smithtown, New York Ordinance of Transportation of 
Liquefied Petroleum Gas, 67 FR 15276 (Mar. 29, 2002); (2) a 
determination that a county's permit requirement was preempted with 
respect to vehicles based outside the county, but not with respect to 
vehicles based within the county, PD-13(R), Nassau County, New York, 
Ordinance on Transportation of Liquefied Petroleum Gases, 63 FR 45283 
(Aug. 25, 1998), on reconsideration, 65 FR 60238 (Oct. 10, 2000); and 
(3) a determination that a State's inspection requirement was 
preempted, PD-4(R), California Requirements Applicable to Cargo Tanks 
Transporting Flammable and Combustible Liquids, 58 FR 48933 (Sept. 20, 
1993), on reconsideration, 60 FR 8800 (Feb. 15, 1995).
    Consistent with these principles, PHMSA determined that FDNY's 
permit and inspection requirements are not preempted with respect to 
vehicles based within New York City, but are preempted with respect to 
vehicles based outside New York City. PD-37(R), 82 FR at 31394-95. With 
respect to the latter category, PHMSA noted (among other things) that 
the single facility at which the FDNY performs inspections is only open 
weekdays until 3:00 p.m., and that ``an unpermitted motor carrier based 
outside FDNY's jurisdiction would have no recourse when it arrives to 
pick up or deliver hazardous

[[Page 29507]]

materials in the City ([which] requires a permit) and discovers that 
the [facility] is closed.'' Id. at 31394. PHMSA noted, moreover, that 
there was no evidence that FDNY can perform ``spot'' inspections at the 
roadside, and that ``fleet inspections at a motor carrier's own 
facility appear to be impractical where the facility is located outside 
the City's jurisdiction.'' Id. Thus, PHMSA concluded 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.'' Id. at 31395.
1. Program Validity Based on Unique Local Conditions
    FDNY argues that the decision disregards the ``presumption against 
preemption'' that it says must be applied to its program based on its 
unique and important purpose of protecting public safety. FDNY relies 
on prior Supreme Court decisions, DOT and federal case law, and 
executive branch orders and guidance on preemption, to justify its 
program. According to FDNY, the ``presumption against preemption'' is a 
rule developed by the courts to limit federal preemption of local 
requirements, and in particular, environmental health and safety 
regulations that are generally recognized as an area of traditional 
local control. Moreover, FDNY argues that since its program is limited 
in scope, i.e., permit not required for through traffic,\1\ it is 
subject to a ``strong presumption of validity.'' In its argument, FDNY 
appears to rely heavily on the City's unique local conditions. 
According to FDNY, the City's unique local conditions such as ``its 
high density; its narrow, congested streets; and its unique security 
concerns'' justify special local safety rules, and should not be 
preempted. Thus, FDNY contends that PHMSA failed to properly 
acknowledge and apply the presumption against preemption of local 
safety regulations; failed to accord proper weight to the fact that its 
program is narrowly limited in scope to only vehicles making local 
deliveries or pickups; and failed to properly consider the unique 
circumstances of the City with respect to hazardous materials 
transportation.
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    \1\ Vehicles in continuous transit through the City without 
pickup or delivery are not required to have a permit, but are still 
subject to routing, time, escort, and other requirements. See FDNY 
Rule 2707-02.
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    We find FDNY's arguments unpersuasive for the following reasons. 
First, FDNY ignores the fact that Congress has expressly provided that 
state and local laws are preempted if they create an obstacle to 
carrying out a provision of the HMRs. When a ``statute contains an 
express pre-emption clause, [courts] do not invoke any presumption 
against pre-emption but instead focus on the plain wording of the 
clause, which necessarily contains the best evidence of Congress' pre-
emptive intent.'' Puerto Rico v. Franklin California Tax-Free Trust, 
136 S. Ct. 1938, 1946 (2016) (quotations omitted). And even if a 
presumption against preemption did apply here, it would easily be 
rebutted by the express command of Congress.
    Second, although FDNY relies heavily on Massachusetts v. DOT, 93 
F.3d 890 (D.C. Cir. 1996), that case demonstrates the appropriateness 
of PHMSA's analysis here. There, the D.C. Circuit rejected a 
determination by PHMSA's predecessor that 49 U.S.C. 5125(a)(2)--the 
same provision at issue here--preempted a state law that created an 
obstacle to accomplishing the HMTA's ``general goal of uniform waste 
regulation.'' Id. at 894. The Court did so based on its conclusion that 
the ``clear intent'' of Section 5125(a)(2) is to preempt ``state rules 
that . . . pose an obstacle to fulfilling explicit provisions, not 
general policies, of HMTA.'' Id. at 895. Although the Court noted a 
``presumption against extending a preemption statute to matters not 
clearly addressed in the statute in areas of traditional state 
control,'' Id. at 896, such a presumption is irrelevant when a matter 
is ``clearly addressed in the statute''--i.e., if a state rule 
``pose[s] an obstacle to fulfilling explicit provisions'' of the HMTA 
or its implementing regulations. And that is exactly what PHMSA has 
determined here: The FDNY requirements pose an obstacle to fulfilling 
an ``explicit provision'' of the HMTA regulations, the prohibition on 
``unnecessary delay'' contained in 49 CFR 177.800(d).
    Third, contrary to FDNY's contentions, PHMSA's determination was in 
no way inconsistent with Executive Order (E.O.) No. 13132, entitled 
``Federalism'' (64 FR 43255 (Aug. 10, 1999)), or the President's May 
20, 2009 memorandum on ``Preemption'' (74 FR 24693 (May 22, 2009)). As 
an initial matter, each of those documents states that it does not 
``create any right or benefit, substantive or procedural, enforceable'' 
against the government. In any event, we specifically stated in our 
decision that our analysis was guided by the principles and policies 
set forth in these documents. PD-37(R) at 31393. We explained that the 
President's 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 sufficient legal basis for preemption.'' Id. Furthermore, we 
acknowledged that E.O. 13132 authorizes preemption of State law only 
when a statute contains an express preemption provision. More 
importantly, we noted that the HMTA contains express preemption 
provisions, which we have implemented through regulations. As such, 
PHMSA's legal authority to make preemption determinations is expressly 
authorized through statute by Congress, and PHMSA's preemption 
determination is therefore consistent with both E.O. 13132 and the 2009 
memorandum.
    Next, like its position in IR-22, it appears FDNY misunderstands 
the scope of the analysis required in making preemption determinations. 
As we pointed out in the IR-22 decision on appeal, consideration of 
local safety concerns is properly conducted during a waiver of 
preemption proceeding, not a preemption determination proceeding. 54 FR 
at 26704. The correct analysis in a preemption determination proceeding 
is whether a state or local requirement stands as an obstacle to 
compliance with the federal regulations, not whether local safety 
concerns justify a waiver of preemption. Id. Virtually all state and 
local hazardous materials requirements are prompted by safety concerns, 
but the focus of preemption analysis is whether state or local 
requirements are inconsistent with nationally-applicable requirements, 
not whether local safety concerns should be weighed against national 
concerns. 54 FR at 26704. Therefore, FDNY's safety concerns would be 
appropriate in a waiver of preemption proceeding but not relevant in 
this proceeding.\2\
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    \2\ The authorities relied on by FDNY are not to the contrary. 
In City of New York v. Ritter Transp., Inc., 515 F. Supp. 663 
(S.D.N.Y. 1981) and Nat'l Tank Truck Carriers, Inc. v. City of New 
York, 677 F.2d 270 (2d Cir. 1982), the courts addressed New York's 
routing requirements for hazardous materials, which necessarily are 
based on local conditions and which are expressly permitted by the 
HMTA, see 49 U.S.C. 5112. Those cases do not suggest that New York 
can rely on local concerns to impose a permit and inspection 
requirement that poses an obstacle to federal law. And while the 
agency did note that a Boston regulation allowing the Fire 
Commissioner to impose certain permit requirements ``may 
legitimately assist the Fire Commissioner in dealing with unusual 
local conditions and emergencies,'' it found that it could not 
determine that regulation's consistency with the HMTA without 
information about the specific permit requirements imposed. IR-3, 
City of Boston Rules Governing Transportation of Certain Hazardous 
Materials By Highway Within the City, 46 FR 18918 (Mar. 26, 1981). 
Similarly here, while New York may certainly rely on local 
conditions in issuing regulations, those regulations are preempted 
if they create an obstacle to compliance with federal law.

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[[Page 29508]]

    Last, regarding the jurisdiction's local conditions, as we 
discussed in PD-37(R), we previously addressed a preemption challenge 
to FDNY's permit program 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), where we determined that FDNY's permitting system was preempted, 
which was affirmed on appeal. In IR-22, FDNY essentially asserted the 
same public safety argument, i.e., that its regulations are 
``reasonable safety measures justified by its unique combination of 
conditions that create exceptional hazards to the transportation of 
hazmat and high risks of catastrophic consequences in the event of an 
accident.'' 52 FR at 46577. In that proceeding, we rejected this 
argument, because we determined that it does not provide an adequate 
basis on which to find FDNY's requirements were consistent with the 
HMTA and HMR. The reasons we gave for rejecting this ``unique local 
concerns'' argument in IR-22 are just as relevant to FDNY's argument 
today. For instance, in IR-22 we said, ``virtually every urban and 
suburban jurisdiction in the United States has a population density 
which is a matter of concern in planning for, and regulating hazmat 
transportation.'' Moreover, ``consideration of any unique population 
density of New York City must be accompanied by consideration of the 
City's unique location as a crossroad for a large percentage of 
hazardous materials transportation between both New England and Long 
Island and the rest of the Nation; delays and diversions of such 
transportation are of great concern.'' 52 FR at 46583.
    Finally, it is important to recognize there are other 
administrative options available to FDNY to address its concerns. For 
example, if it believes the HMR are inadequate, it may file a petition 
for rulemaking with the agency, or otherwise participate in other PHMSA 
rulemakings related to these issues. Or if the FDNY believes its 
alleged unique circumstances require a different regulatory approach, 
it may request a waiver of preemption. 52 FR at 46583; 49 CFR 107.215.

B. Unnecessary Delay

    FDNY asserts that PHMSA ignored federal case law and misapplied its 
own precedent in making its determination that FDNY's inspection and 
permit requirements create an obstacle to accomplishing and carrying 
out the HMR's prohibition against unnecessary delays in the 
transportation of hazardous materials with respect to trucks based 
outside the inspecting jurisdiction. FDNY contends that federal 
judicial precedent recognizes that some delay is both necessary and 
acceptable.
1. FDNY's Allegations That PHMSA's Decision Contradicts Federal Case 
Law
    FDNY argues that our decision contradicts federal case law. FDNY 
relies on cases from the First Circuit to emphasize the apparent 
inconsistency of our decision with federal judicial precedent, which 
recognizes that some delay is both necessary and acceptable. See N.H. 
Motor Transport Ass'n v. Flynn, 751 F.2d 43 (1st Cir. 1984) (state 
license fees required for hazardous materials and waste transporters 
not preempted by the HMTA and did not violate the commerce clause); see 
also N.H. Motor Transport Ass'n v. Town of Plaistow, 67 F.3d 326 (1st 
Cir. 1995) (town's zoning ordinance was not preempted by the HMTA or 
other statutes, and did not violate the commerce clause). We do not 
find these cases persuasive for the following reasons.
    The Flynn court conceded that PHMSA's preemption determinations 
have better developed administrative records and are thus more informed 
by the agency's expertise, and it left open the possibility that ``a 
different record, created before DOT'' may have led to ``different 
conclusions.'' Id. at 50, 52 (Notwithstanding the Court's recognition 
of the agency's expertise in this area, it ultimately chose to proceed 
because it favored judicial efficiency over prolonged delay in the 
proceeding that would likely result from consultation with DOT. Id. at 
51.). Thus, even if FDNY's regulations were identical to the 
regulations at issue in Flynn (which they are not), PHMSA might very 
well reach a different result than the First Circuit. Indeed, the 
principal basis for the Court's decision--that a license requirement 
for hazardous materials transporters creates no more delay than a 
requirement that drivers be licensed--is not persuasive: Drivers are 
not licensed in each state into which they travel, and a driver 
entering a state will therefore experience no delay related to 
obtaining a driver's license. See, e.g., 49 U.S.C. 31302 (``An 
individual operating a commercial motor vehicle may have only one 
driver's license at any time.'').
    Additionally, the Flynn court framed the legal question from the 
perspective of the shipper, i.e., looking at the possibility of delay 
that arises when a shipper must choose a licensed truck when 
transporting hazardous materials at night or on weekends. 751 F.2d at 
51. However, as we stated in PD-37(R), as well as prior agency 
precedent developed since the Flynn decision, an inquiry into whether 
non-federal permit and inspection requirements interfere with the HMR 
prohibition against unnecessary delay must necessarily focus on the 
delay that may result when a loaded vehicle arrives unannounced in the 
inspecting jurisdiction.
    The Flynn court also misinterpreted two Inconsistency Rulings 
issued by the Research and Special Programs Administration (RSPA),\3\ 
which the Court cited for the proposition that ``a `bare' permit 
requirement or license requirement is consistent with HMTA.'' 751 F.2d 
at 51-52. In the first ruling, RSPA explained that while a ``bare'' 
permit requirement ``is not inconsistent with Federal requirements,'' 
``a permit itself is inextricably tied to what is required in order to 
get it,'' and therefore determined that the state permit requirement at 
issue did create unnecessary delay. IR-2, State of Rhode Island Rules 
and Regulations Governing the Transportation of Liquefied Natural Gas 
and Liquefied Propane Gas Intended To Be Used by a Public Utility, 44 
FR 75566, 75570-71 (December 20, 1979). In the second ruling, RSPA 
merely determined that it could not determine whether a permit 
requirement created delay. IR-3, City of Boston Rules Governing 
Transportation of Certain Hazardous Materials by Highway Within the 
City, 46 FR 18918, 18923 (March 26, 1981).
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    \3\ 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, 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 this decision, regardless of 
whether an action was taken by RSPA before February 20, 2005, or by 
PHMSA after that date.
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    In any event, PHMSA disagrees with FDNY's claim that its program is 
even less likely to cause delays than the program upheld by the Flynn 
court. The state permits at issue in Flynn were apparently available at 
multiple ``border stations,'' see 751 F.2d at 51, meaning that many 
drivers could likely obtain permits without diverting from their 
intended routes. This type of arrangement may be considered a

[[Page 29509]]

functionally equivalent option to a spot or roadside inspection. FDNY's 
program, in contrast, requires drivers without permits to travel to a 
single inspection facility, diverting from their intended routes by 
potentially significant amounts.
    FDNY also relies on Nat'l Tank Truck Carriers, Inc. v. City of New 
York, 677 F.2d 270 (2d Cir. 1982) and City of New York v. Ritter 
Transp., Inc., 515 F. Supp. 663 (S.D.N.Y. 1981) to support its argument 
that due to the City's unique safety considerations, enforcement of 
certain city regulations promote safety and as such, any associated 
transportation delays are not unnecessary. However, as we noted 
earlier, these cases involve routing requirements, which are 
specifically allowed by the HMTA, and do not suggest that the City can 
rely on local concerns to impose a permit and inspection requirement 
that poses an obstacle to federal law. Supra at 12 n.2.
2. FDNY's Allegations That PHMSA's Decision Is Inconsistent With Agency 
Precedent
    FDNY claims that our decision is inconsistent with agency precedent 
as it relates to what is considered an unnecessary delay. According to 
FDNY, it estimates that on average, its program only adds about 2 hours 
of additional travel and inspection time for unscheduled inspections at 
its Hazardous Cargo Unit (HCU). As such, FDNY asserts that a 2-hour 
delay falls within the range that DOT previously determined to be 
reasonable and presumptively valid.
    Also, FDNY alleges that PHMSA downplayed the program's flexibility 
regarding on-site fleet inspections and drop-in inspections during the 
HCU's business hours, which FDNY says it is extending to 7 days a week, 
starting November 1, 2017.\4\ Finally, FDNY contends that spot or 
roadside inspections are not feasible, would raise significant safety 
concerns, and are not required because its program is the functional 
equivalent of a roadside inspection. Here, the main premise of FDNY's 
argument is the proposition that any additional travel and inspection 
time associated with its program is a reasonable and necessary delay.
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    \4\ In its petition, the FDNY stated that in the future, under a 
``pilot program,'' the HCU will be open for drop-in inspections on 
weekends.
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    Although FDNY is correct that in prior proceedings we have 
considered the length of time involved with a delay, we disagree with 
its interpretation of the agency's findings in these proceedings 
regarding unnecessary delay. In PD-37(R), we discussed our prior 
precedent, and 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. Furthermore, we 
outlined the agency's position regarding these types of inspections by 
highlighting relevant agency precedent developed through prior 
Inconsistency Rulings and Preemption Determinations. But we also said 
that a local inspection of a vehicle or container used to transport 
hazardous material must not conflict with the HMR's prohibition against 
unnecessary delays. In the analysis of the issue in PD-37(R), we then 
identified several principles related to unnecessary delay based on 
agency precedent, including travel and wait times; intrastate and 
interstate considerations; and program flexibility. PD-37(R) at 31393-
4. We applied these principles to our analysis of FDNY's program.
    A state or local periodic inspection requirement has an inherent 
potential to cause unnecessary delays in the transportation of 
hazardous materials when that requirement is applied to vehicles based 
outside of the inspecting jurisdiction. PD-28(R) at 15279; see also PD-
4(R); PD-13(R). The inherent potential for unnecessary delay is not 
eliminated by a flexible scheduling policy. Id. It is the 
impracticability of scheduling an inspection that creates unnecessary 
delay. It is the delay in deviating from an intended route to travel to 
an inspection facility, and/or waiting with a loaded vehicle for the 
arrival of an inspector from another location, that creates unnecessary 
delay, rather than the time waiting in line or the inspection time. Id. 
Contrary to FDNY's characterization, our precedent does not say that 
any delay of 1.5 to 2 hours is ``reasonable and presumptively valid,'' 
it says that a delay of that length ``during which a State inspection 
is actually conducted'' is ``reasonable and presumptively valid.'' PD-
13(R) at 60243. As such, we said in our decision here, and as we have 
consistently stated in prior proceedings, that unnecessary delay would 
be eliminated if FDNY performed the equivalent of a spot or roadside 
inspection upon the unannounced arrival of a truck carrying hazardous 
materials. PD-37(R) at 31395; supra. If such an inspection took one or 
two hours, such delay could perhaps be characterized as ``necessary.'' 
But the same is not true for the delay caused by FDNY's requirement 
that vehicles drive to the HCU in Brooklyn to be inspected, even if 
doing so would amount to a significant re-routing (for example, if a 
truck wished to cross the George Washington Bridge and make a delivery 
in Upper Manhattan).
    Here, FDNY contends that spot or roadside inspections are not 
feasible and would raise significant safety concerns. But we have 
repeatedly held that States or localities may sometimes impose 
requirements, without creating unnecessary delay, if they offer the 
equivalent of spot or roadside inspections, and have never said that 
actual spot or roadside inspections are required. FDNY argues that its 
program offers the equivalent of a spot or roadside inspection because 
it offers flexible scheduling and because its HCU is now open 7 days a 
week and offers ``on demand'' inspections. Since we issued our decision 
in this proceeding, we have confirmed that the HCU is now open on the 
weekends. However, we note that it remains the sole inspection facility 
within the jurisdiction and it still closes at 3 p.m. each day.
    According to FDNY, these operational changes amount to the 
functional equivalent of a spot or roadside inspection. We disagree. 
The underlying principle of a spot inspection is the elimination of 
delay caused by travelling to an inspection facility or waiting for an 
inspector to arrive. Previously we have indicated that options that may 
be considered ``functional equivalents'' may include conducting 
inspections at points of entry into the inspecting jurisdiction; other 
roadside inspection locations; and terminals. PD-4(R) at 48941. These 
options all have the common effect of eliminating unnecessary delays by 
bringing the inspection site closer to a vehicle loaded with hazardous 
materials as it enters the inspecting jurisdiction. FDNY's primary 
solution to delays caused by its program amounts to nothing more than 
keeping its single inspection facility open for a few hours on the 
weekends. On balance, we do not believe these changes rise to the level 
of a functional equivalent of a spot or roadside inspection.
    For the reasons stated above, we believe FDNY misunderstands the 
prohibition against unnecessary delays because its arguments here focus 
on trying to justify the length of time of a delay that may be caused 
by its inspection program, rather than implementing changes to its 
program that would eliminate unnecessary delays. Here, FDNY estimates 
that such a delay would only be about 2 hours, which it asserts is 
considered reasonable and necessary. However, as we explained above, 
under the unnecessary delay requirement, 49 CFR 177.800(d), the 
determinative factor is

[[Page 29510]]

not the amount of time of delay caused by an inspection program, or 
whether the delay is of a reasonable length. But rather, whether the 
delay is unnecessary. Here, FDNY's single inspection facility with 
limited operating hours revealed an inflexible program that creates 
delays in the transportation of hazardous materials. Therefore, we are 
unpersuaded by FDNY's arguments and affirm our finding that, with 
respect to vehicles based outside the inspection jurisdiction, its 
program is an obstacle to accomplishing and carrying out the HMR's 
prohibition against unnecessary delays in the transportation of 
hazardous materials.

C. Permit Fee

    In PD-37(R), PHMSA addressed ATA's contention that FDNY's permit 
fee violates 49 U.S.C. 5125(f)(1), which provides in relevant part that 
a ``political subdivision of a State . . . may impose a fee related to 
transporting hazardous material only if the fee is fair and used for a 
purpose related to hazardous material.'' PHMSA concluded that FDNY's 
fee was neither ``fair'' nor ``used for a purpose related to hazardous 
material.'' PD 37(R), 82 FR at 31395-96. FDNY challenges both findings.
1. Fairness of the Fee
    In PD-37(R), PHMSA noted that it had previously determined that it 
should determine whether a fee is ``fair'' by using the test 
articulated by the Supreme Court in Evansville-Vanderburgh Airport 
Auth. v. Delta Airlines, Inc., 405 U.S. 707 (1972). PD37(R), 82 FR at 
31395. PHMSA stated that this test, as further clarified by the Court, 
provides that a fee is reasonable 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.'' Id. (citing Northwest Airlines, Inc. v. 
Kent, 510 U.S. 355, 367-68 (1994)). PHMSA discussed two prior instances 
in which it had found that flat fees were not ``fair'' when there was 
no evidence that they were based on a fair approximation of the use of 
the roads or other facilities within a state. Id. PHMSA concluded that 
FDNY's fee was not fair and discriminated against interstate commerce, 
because ``there is no evidence showing that FDNY's flat fee is 
apportioned to a motor carrier based on some approximation of benefit 
conferred to the permit holders,'' and ``there is no evidence that a 
more finely graduated fee would pose genuine administrative burdens to 
the City.''
    FDNY asserts that the program's inspection fee, $105 per 
inspection, is not excessive. Furthermore, FDNY states that the costs 
of conducting the inspections ``exceeds or approximates'' revenue from 
fee collection and that the FDNY spends more money than it collects 
from the program on hazardous materials transport emergencies, 
including training and equipment for emergency response. Therefore, 
FDNY contends that its inspection fee is a reasonable flat fee since 
each regulated vehicle costs the same amount to inspect, regardless of 
how many times it uses local roads, and for that reason, ``a graduated 
fee that reflects road usage is not appropriate.''
    In support of its arguments here, FDNY submitted expense sheets for 
FY 2015-2017. In addition, FDNY contends that PHMSA ``ignores 
Evansville's recognition that a jurisdiction `may impose a flat fee for 
the privilege of using its roads, without regard to the actual use by 
particular vehicles, so long as the fee is not excessive.' '' FDNY 
relies on the First Circuit Court of Appeals' interpretation of this 
statement in Evansville, in N.H. Motor Transport Ass'n v. Flynn, 751 
F.2d 43 (1st Cir. 1984) (state license fees required for hazardous 
materials and waste transporters did not violate the commerce clause). 
The Flynn Court, in validating the annual license fee, said that the 
``burden of proving `excessiveness' falls upon the truckers, not the 
state[,]'' and found persuasive ``the unrefuted plausibility of 
significant state expense[.]'' Flynn at 48.
    The materials FDNY submitted with its petition, which provided 
additional detail about the emergency and other services provided and 
their associated costs would, under the logic of Flynn, appear to 
support FDNY's assertion that its annual inspection and permitting 
program typically costs more than the revenue from the fees collected. 
However, as ATA noted in its comments on the petition, and as we 
acknowledged in PD-22(R), FDNY fails to recognize that the Court 
subsequently limited its holding in Evansville to situations where a 
flat tax is the `` `only practicable means of collecting revenues from 
users and the use of a more finely gradated user-fee schedule would 
pose genuine administrative burdens.' '' PD-22(R) at 59403 (quoting Am. 
Trucking Assoc., Inc. v. Scheiner, 483 U.S. 296, 266, 107 S. Ct. 2829 
(1987)). More importantly, in Scheiner, the Court recognized the 
discriminatory consequences for out-of-state vehicles that are 
associated with an unapportioned flat tax, such as FDNY's fee, and 
rejected the proposition that every flat tax for the privilege of using 
a State's highways must be upheld even if it has a clearly 
discriminatory effect on commerce. Accordingly, ``imposition of the 
flat taxes for a privilege that is several times more valuable to a 
local business than to its out-of-state competitors is unquestionably 
discriminatory and thus offends the Commerce Clause.'' Id. at 296; see 
also, Am. Trucking Assoc., Inc. v. Secretary of State, 595 A.2d 1014, 
1017 (Me. 1991).
    Furthermore, even if the fee collected does not cover the cost of 
the program and an apportioned program is not appropriate, as alleged 
here by FDNY, ``in-state trucking concerns will be favored more than 
their interstate competitors.'' Id. Consequently, the burden is on the 
states to establish that collection of more finely calibrated user 
charges is impracticable. Id. FDNY did not meet this burden. As noted 
above, apart from its showing that its annual inspection and permitting 
program typically costs more than the revenue from the fees collected, 
it failed to adequately address whether apportionment of its fee was 
impracticable.
2. Fee Used for Appropriate Purposes
    We now turn to FDNY's challenge to our finding that it is not using 
the fees it collects under its program in accordance with the statutory 
mandate. FDNY's argument here is that because the cost to administer 
the FDNY program generally exceeds the revenues collected from the fee, 
FDNY believes it has demonstrated that the fee satisfies the ``used 
for'' test. However, before we address the merits of FDNY's argument, 
it is important to note that under the HMTA, FDNY has an affirmative 
obligation to submit a biennial report to DOT on fees that it levies in 
connection with the transportation of hazardous materials. The report 
must include information about the basis on which the fee is levied; 
the purposes for which the revenues from the fees are used; the annual 
total amount of the revenues collected from the fee; and such other 
matters requested by DOT. See 49 U.S.C. 5125(f)(2). According to our 
records, FDNY has consistently failed to comply with this statutory 
mandate. Consequently, since FDNY is the only party with the 
information and data related to its use of the fees, it has the burden 
to sufficiently demonstrate it is using the fees appropriately.
    Notwithstanding FDNY's failure to file the required report, upon 
review of the information available to us, we find that the 
supplemental information provided by FDNY in its petition

[[Page 29511]]

regarding its use of the fee revenue appears to show that FDNY is 
spending the revenue on purposes permitted by the law. Therefore, we 
are reversing decision with respect to the ``used for'' test. 
Nevertheless, as discussed above, we are affirming our finding that the 
fee is not fair.

D. Prior Administrative Proceedings

    FDNY argues that in a prior ruling, the agency already indicated 
that FDNY's inspection and permit requirements were not preempted. That 
is patently erroneous. In PD-37 we extensively discussed these 
proceedings. Furthermore, we explained that these prior proceedings did 
not involve a direct challenge to FDNY's program, or attempt to answer 
any of the arguments that ATA presented in this proceeding. For 
example, whether the City's inspection and permitting program 
requirements, and related fees, should be preempted because the program 
causes unnecessary delay and unreasonable cost; whether its fees are 
fair; and whether FDNY is using the revenue generated from the fees for 
authorized purposes. For these reasons, we do not believe further 
discussion on our related prior administrative proceedings is 
necessary.

III. Ruling

    For the reasons set forth above, FDNY's petition for 
reconsideration is granted in part, and denied in part, as follows:
    PHMSA affirms its determination that the HMTA preempts FDNY's 
permit and inspection requirements, FC 2707.4 and 105.6, with respect 
to vehicles based outside the inspecting jurisdiction, and its 
determination that the HMTA does not preempt these requirements with 
respect to vehicles that are based within the inspecting jurisdiction. 
PHMSA's determination is based on its conclusion 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 material on vehicles based outside the 
inspecting jurisdiction.
    Permit Fee--Based on new information supplied by FDNY, PHMSA 
reverses its determination that FDNY is not using the revenue it 
collects from its permit fee for authorized purposes. However, PHMSA 
affirms its determination that the permit fee is not ``fair,'' as 
required by 49 U.S.C. 5125(f)(1), and therefore affirms its 
determination that the permit fee is preempted.

IV. Final Agency Action

    In accordance with 49 CFR 107.211(d), this decision constitutes the 
final agency action by PHMSA on ATA's application for a determination 
of preemption as to the FDNY's requirement that those wishing to 
transport hazardous materials by motor vehicle must, in certain 
circumstances, obtain a permit. This decision becomes final on the date 
of publication 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).

    Issued in Washington, DC, on May 12, 2020.
Paul J. Roberti,
Chief Counsel.
[FR Doc. 2020-10489 Filed 5-14-20; 8:45 am]
BILLING CODE 4910-60-P