Source: https://www.federalregister.gov/documents/2015/09/10/2015-22617/hazardous-materials-special-permit-and-approvals-standard-operating-procedures-and-evaluation
Timestamp: 2019-10-23 19:05:09
Document Index: 349071392

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Federal Register :: Hazardous Materials: Special Permit and Approvals Standard Operating Procedures and Evaluation Process
A Rule by the Pipeline and Hazardous Materials Safety Administration on 09/10/2015
80 FR 54418
54418-54440 (23 pages)
2137-AE99
2015-22617
Hazardous Materials: Special Permit SOP and Evaulation
§ 107.113
§ 107.709
III. Comment Discussion
A. American Trucking Associations
B. The Chlorine Institute
C. Dangerous Goods Advisory Council
Criteria Used To Determine if an Applicant is “Fit” or “Unfit”
D. Institute of Makers of Explosives
E. Reusable Industrial Packaging Association
F. Sporting Arms and Ammunition Manufacturers' Institute, Inc.
V. Section by Section Review
Appendix A to Part 107—Standard Operating Procedures for Special Permits and Approvals
https://www.federalregister.gov/d/2015-22617 https://www.federalregister.gov/d/2015-22617
PHMSA is adopting regulations to include the standard operating procedures (SOPs) and criteria used to evaluate applications for special permits and approvals. This rulemaking addresses issues identified in the Hazardous Materials Transportation Safety Improvement Act of 2012 related to the Office of Hazardous Materials Safety's Approvals and Permits Division. In addition, this rulemaking also provides clarity regarding what conditions need to be satisfied to promote special permit application completeness. An application that contains the required information reduces processing delays by reducing the number of applications rejected due to incompleteness. Through public notice and comment, this final rule is required to establish SOPs to support the administration of the special permit and approval programs, and objective criteria to support the evaluation of special permit and approval applications. These amendments do not change previously established policies, to include but not limited to any inspection activities subsequent to issuance, modification or renewal of a special permit and approval.
Ryan Paquet or Donald Burger, Office of Hazardous Materials Safety, Approvals and Permits Division, (202) 366-4511, Pipeline and Hazardous Materials Safety Administration (PHMSA), 1200 New Jersey Avenue SE., Washington, DC 20590.
The HMR prescribe regulations for the transportation of hazardous materials in commerce. PHMSA issues one type of variance from the HMR in the form of a “special permit.” It also provides written consent to perform a function that requires prior consent under the HMR in the form of an “approval.” These variances are designed to accommodate innovation, provide consent, and allow alternatives that meet existing transportation safety standards and/or ensure hazardous materials transportation safety. Federal hazardous materials (hazmat) law directs the Department to determine if the actions specified in each application for a special permit establish a level of safety that meets or exceeds that already present in the HMR, or if not present in the HMR, establish a level of safety that is consistent with the public's interest. PHMSA, through the HMR, applies these same conditions to the issuance of an approval. Due to the unique features that may exist in each application, PHMSA issues special permits and approvals on a case-by-case basis.
The HMR currently define a special permit as “a document issued by the Associate Administrator, or other designated Department official, under the authority of 49 U.S.C. 5117 permitting a person to perform a function that is not otherwise permitted under subchapter A or C of this chapter,” “or other regulations issued under 49 U.S.C. 5101 et seq. (e.g., Federal Motor Carrier Safety routing requirements).” (See 49 CFR 105.5, 107.1, and 171.8.) An approval is currently defined in the HMR as “written authorization . . . from the Associate Administrator or other designated Department official, to perform a function for which prior authorization by the Associate Administrator is required under subchapter C of this chapter. . . .” Applicants who apply for a special permit must do so in conformance with the requirements prescribed in §§ 107.101 to 107.127 of the HMR. Applicants who apply for an approval must do so in conformance with the requirements prescribed in §§ 107.401 to 107.404, and §§ 107.701 to 107.717 of the HMR.
PHMSA amended the HMR in 1996 (61 FR 21084) to include as part of the approval application review process a requirement to review each applicant's fitness to perform the tasks requested in their applications. PHMSA also issued and updated internal SOPs several times over the past decade to support the process and issuance of special permits and approvals that comply with the HMR. On February 29, 2012 (see Docket No. PHMSA-2011-0283), PHMSA held a public meeting to invite public comment on these considerations. In July 2012, PHMSA established a working group to examine ways to streamline the fitness review process while maintaining an acceptable level of safety, to expand the fitness review process to include special permit applicants, and to define and determine the adequacy of criteria that should be used to initiate fitness reviews. As a result of this working group's efforts, PHMSA published a Notice of Proposed Rulemaking (NPRM) on August 12, 2014 (79 FR 47047) to invite public comment on its proposal to add updated SOP and evaluation criteria to process special permit and approval applications. Specifically, the NPRM proposed to revise §§ 105.5, 107.1, 107.113, 107.117, 107.709; add a new Appendix A to 49 CFR part 107, entitled “Standard Operating Procedures for Special Permits and Approvals;” and revise § 171.8 to incorporate administrative procedures for processing special permits and approval applications. On September 12, 2014 (79 FR 54676), PHMSA published a correction to the August 2014 NPRM to propose that special permit and approval applications that undergo review by an Operating Administration (OA) will complete this review before they undergo an automated review. This proposed correction also clarified that an OA review, depending on its completeness, may negate the need for the automated review. We have summarized these proposed actions below.
In § 105.5, we proposed to revise the definitions for “approval” and “special permit” to clarify that an approval and special permit may be issued by the Associate Administrator, the Associate Administrator's designee, or as otherwise prescribed in the HMR.Start Printed Page 54420
In § 107.1, we proposed to revise the definitions for “approval” and “special permit” to clarify that an approval and special permit may be issued by the Associate Administrator, the Associate Administrator's designee, or as otherwise prescribed in the HMR. In addition, we proposed to add for clarity new definitions for “applicant fitness,” “fit or fitness,” “fitness coordinator,” and “insufficient corrective action.”
In § 107.113(a), we proposed that the Associate Administrator will review all special permit applications in conformance with standard operating procedures proposed in new 49 CFR part 107, Appendix A.
In § 107.117(e), we proposed that the Associate Administrator will review all emergency special permit applications in conformance with standard operating procedures proposed in new 49 CFR part 107, Appendix A.
In § 107.709(b), we proposed that the Associate Administrator will review all approval applications in conformance with standard operating procedures proposed in new 49 CFR part 107, Appendix A.
In § 171.8, we proposed to revise the definitions for “approval” and “special permit” to clarify that an approval and special permit may be issued by the Associate Administrator, the Associate Administrator's designee, or as otherwise prescribed in the HMR.
As stated earlier, PHMSA published a correction notice on September 12, 2014. In this notice, PHMSA added language to the proposed “Automated review” and “Safety profile review” sections of the proposed SOPs to clarify that special permit and approval applications that undergo a safety profile review by an OA will complete this safety profile review before they undergo an automated review, and that an OA review, depending on its completeness, may negate the need for the automated review, respectively.
In response to the NPRM, PHMSA received comments from six entities. These comments and PHMSA's responses are provided in the “Comment Discussion” section of this final rule.
American Trucking Associations PHMSA-2012-0260-0007 http://www.regulations.gov/​#!documentDetail;​D=​PHMSA-2012-0260-0007.
Chlorine Institute PHMSA-2012-0260-0008 http://www.regulations.gov/​#!documentDetail;​D=​PHMSA-2012-0260-0008.
Dangerous Goods Advisory Council PHMSA-2012-0260-0011 http://www.regulations.gov/​#!documentDetail;​D=​PHMSA-2012-0260-0011.
Institute of Makers of Explosives PHMSA-2012-0260-0006 http://www.regulations.gov/​#!documentDetail;​D=​PHMSA-2012-0260-0006.
Reusable Industrial Packaging Association PHMSA-2012-0260-0009 http://www.regulations.gov/​#!documentDetail;​D=​PHMSA-2012-0260-0009.
Sporting Arms & Ammunition Manufacturers' Institute PHMSA-2012-0260-0010 http://www.regulations.gov/​#!documentDetail;​D=​PHMSA-2012-0260-0010.
These carriers likely will not pass during the proposed Section 3(b)(ii) safety profile review either. At this point, PHMSA proposes that the fitness coordinator review “the applicant's history of prior violations, insufficient corrective actions, or evidence that the applicant is at risk of being unable to comply with the terms of an application for an existing special permit, approval, or the HMR[s].” PHMSA proposes that carriers' accidents caused merely by “driver error” can be dismissed at this point. However, a fitness coordinator is unlikely to be able to review enough of a carrier's accident data to make such a determination off-site. The fitness coordinator will therefore likely recommend that the motor carrier applying for a special permit move on to the final level of review: An on-site inspection. During an on-site inspection, the inspector will have access to the carrier[']s accident reports and any other pertinent safety information and would be able to clear the carrier for a special permit.
In 2012, 3,702 fatal crashes involving large trucks were reported to the Department of Transportation (DOT). DOT further estimates Start Printed Page 54421another 367,000 crashes involving large trucks that resulted in injury or property damage only [occurred during this period]. In 2012, large trucks traveled an estimated 268,318,000,000 miles. Thus, on average and based on DOT figures, a large truck is involved in a traffic accident every 1.4 million miles.
ATA has only presented the data concerning crashes. However, PHMSA also proposes to remove those with two or more violations of its placarding regulations from automatic review and approval eligibility. In calendar year 2013, placarding violations were the seventh most common hazardous materials violation cited. Inspectors issued just under 2,300 violations in 2013. PHMSA proposes to check roughly 10,000 placarding violations over a four year period. A carrier—particularly a large one—might easily have two or more of those 10,000 violations. ATA also questions why two placarding violations should automatically send a carrier to secondary review when the six more frequently cited violations—especially failing to secure the package in the vehicle, damaged/deteriorated/obscured placards, and failure to carry shipping papers at all—have no similar effects on special permit or approval eligibility.
Ultimately, a carrier in the scenario described above is likely to receive approval for the special permit. Unfortunately, the carrier must comply with multiple levels of increasingly intrusive reviews in order to do so. Rather than require motor carriers to submit themselves to such levels of observation, ATA suggests that PHMSA implement a system that controls for both fleet size and for fleet utilization. Such a system should also include realistic violation levels for carriers of all sizes that are derived from examining FMCSA [Federal Motor Carrier Safety Administration]-provided data about violations during any given year.
PHMSA agrees with the ATA that those who transport hazardous materials frequently, including carriers with larger fleets, may be at greater risk [1] for involvement in transportation incidents due to their increased opportunity to be exposed to occurrences that affect safety in transportation (e.g., other vehicles, road conditions, weather, vehicle integrity, driver health, driver experience, etc.). PHMSA also agrees that a fitness assessment program which includes incident data proven to be an indicator of safe performance will assist with the process of performing a Section 3(b)(ii) safety profile review. However, PHMSA notes that the issuance of special permits and approvals is unique in that they authorize activities involving hazardous materials not currently permitted under the HMR. To ensure their safe performance, PHMSA must assess the safety of the tasks requested and the ability of the person(s) making the request to successfully perform these tasks. PHMSA assesses the safety of the tasks requested by subjecting them to technical review by its Engineering and Research Division and/or appropriate OA's, as applicable. PHMSA assesses the ability of the person(s) to perform the tasks requested successfully based on recommendations it receives from its Field Services Support Division and OA's. These staff are most closely linked to the acquisition and use of this data, from incident reports submitted in conformance with §§ 171.15 and 171.16 and data that is developed and managed by the FMCSA and PHMSA's evaluation and risk management teams. Identifying and evaluating appropriate fitness screening criteria and available data is the center of PHMSA's risk management strategy.
Further, while other databases exist within the DOT and the federal government that contain additional hazmat transportation safety information that may be useful in a safety profile review, PHMSA does not have access to these databases at this time. In addition, the databases PHMSA currently uses are either not configured to retrieve or do not contain some of the information and normalizing controls the ATA has requested be included in the safety profile review. Nonetheless, PHMSA agrees with the ATA that these types of data collection changes will improve § 3(b)(ii) of 49 CFR part 107, Appendix A's safety profile review results, and reduce the opportunity for frequent shippers and carriers of hazardous materials from being adversely affected during the safety profile review process. Therefore, in the future PHMSA will continue to study what factors are proven indicators of safe hazmat transportation performance for the purposes of a safety profile review, and review its data systems, software programs, and data collection to include those safety indicators that can reasonably be obtained.
PHMSA disagrees with the ATA's statement that PHMSA proposes to remove all carriers with two or more placarding violations from automatic review and approval eligibility. Specifically, the NPRM proposed to remove carriers from automated review and approval eligibility if they have two or more placarding violations involving materials with hazard classes listed in Table 1 of § 172.504(e). Historically, materials that meet the hazard classes listed in Table 1 of § 172.504(e) pose significantly higher risks in transportation. Thus, PHMSA believes additional scrutiny regarding transportation violations involving these materials is justified. The ATA also believes placarding violations involving Table 2 materials should not automatically send a carrier to secondary review. As stated in the revised SOPs, PHMSA will address placarding violations under FMCSA fitness criteria by not considering placarding violations involving § 172.504 Table 2 materials.
PHMSA also agrees with the ATA that a safety profile review should put greater weight on serious and not minor violations. Citing the violations listed on FMCSA's “Roadside Inspections/Hazmat Violations” Web page,[2] the ATA believes the six violations that occur most frequently are associated with more safety risks in transportation. These violations, listed in descending order of frequency, are:
1. Package not secured in vehicle;
2. No copy of USDOT hazmat vehicle registration number;
3. Placard damaged, deteriorated, or obscured;
4. Shipping paper accessibility;
5. No shipping papers (carrier); and
6. Vehicle not placarded as required.
Of these six, the ATA believes three—failing to secure the package in the vehicle, damaged/deteriorated/obscured placards, and failure to carry shipping papers—should take precedence over placarding violations involving § 172.504(e), Table 2 materials.
PHMSA further agrees with the ATA that inspection violations should be categorized in one of two triggers that also distinguish between greater and lesser transportation risks. Therefore, as proposed in the NPRM, PHMSA is reducing the number of levels that initiate, also called “trigger,” a safety profile review to remove enforcement case referrals and incidents involving foreign cylinder manufacturers or Start Printed Page 54422requalifiers, and revising the safety profile review triggers to include incorrect package selection, leaking packages, failure to secure package, damaged/deteriorated/obscured placards, failure to carry shipping papers, not following closure instructions, and blocking/bracing problems. PHMSA is also revising the violations that trigger an on-site inspection to include marking, labeling, placarding, and shipping paper violations. PHMSA will determine applicants as having failed the safety profile review if they are found to have any of the safety profile review violations described earlier in this paragraph. PHMSA believes these changes will lead to safety profile reviews that are more indicative of applicants that may cause compromises in safety. Further, PHMSA is revising the text in 49 CFR part 107, Appendix A, to remove language that states carriers with two § 172.504(e), Table 2, placarding violations, and applicants with more than two safety profile review trigger violations or more than five on-site inspection trigger violations that have occurred during the four years prior to applying for a special permit or approval are automatically subject to a secondary review. PHMSA made this revision because it lacks the software capability to discern these incidents during an automatic review.
The ATA also commented that the NPRM “proposes that highway carriers `will be screened in an automated manner based upon criteria established by FMCSA . . . which consists of interstate carrier data, several states' intrastate data, interstate vehicle registration data, and may include operational data such as inspections and crashes.' PHMSA proposes that FMCSA's Safety and Fitness Electronic Records (SAFER) system or another system like SAFER, but chosen by FMCSA, will be used.” The ATA believes safety data is better reflected in a company's inspection information and crash history. It also recommends that PHMSA consult only the underlying data to the index scores if the validity of the index scores cannot be verified. The ATA recommends that PHMSA base its SOP fitness evaluation criteria on categories FMCSA has determined are better indicators of a motor carrier's safe performance. The ATA further states:
Many of the individual, discrete pieces of data utilized by the CSA algorithm could be useful to PHMSA in making a determination about a carrier. These pieces of information could be useful with only an automated review or at the safety profile review by a DOT official. However, multiple studies have shown that FMCSA's overall aggregate indexing and scoring system does not accurately or reliably represent an individual carrier's safety performance or reliably predict future crash involvement. Essentially, the scores are not good indicators as to whether or not a carrier “is fit to conduct the activity [that would be] authorized by the special permit or approval application.”
Table 2—Safety Profile Review and On-Site Inspection Triggers
Trigger for on-site inspection *
Death or Injury Any incident attributable to the applicant or package (not driver error).
§ 172.504(e) Table 1 (Placarding) material AND Two or more Incidents
Start Printed Page 54423
Bulk AND Three or more Incidents
Two or More Prior Enforcement Case Referrals Insufficient Corrective Actions on any enforcement case OR Independent Inspection Agency (IIA) Items (Except when reinspected with no violations noted).
Foreign Cylinder Manufacturer Or Requalifier Never Inspected under current criteria (2010).
* The Fitness Coordinator assesses and applies these triggers.
The DGAC commented that the procedures PHMSA proposed for managing special permit and approval applications do not provide for responding to routine requests for administrative revisions, such as name changes, address updates, or minor editorial revisions to correct non-substantive errors. The DGAC believes requiring applicants to submit an entire application to make such minor changes does not promote safety and burdens PHMSA's and the applicant's administrative processes.
PHMSA disagrees. When an applicant asks to modify an existing special permit to make routine administrative changes, such as a change of address and/or minor editorial revision to correct a non-substantive error, paragraphs (c) and (d) of § 107.105 require that the applicant requesting this change submit an application to PHMSA that describes and justifies their request and includes information relevant to the proposal, which is a “full” application for this type of request provided it complies with all applicable requirements of the HMR. Since the special permit is already approved, depending on the type of request, all the safety justification information required in the initial application will not be needed. Relevant information to the request is also what is needed to make routine administrative changes to an existing approval, but the language in § 107.705(b) is not as clear. Therefore, PHMSA is revising the introductory paragraph of § 107.705(c) to include language similar to that in § 107.105(c) that requires relevant information be submitted with the request. As a result, PHMSA believes making requests for modifications through the submission of a full application, as prescribed in the HMR, is not a significant burden. In addition, providing a full application does serve a safety benefit since it will require the application to be screened through an automated fitness review that will identify any possible changes to the company's fitness profile. Regarding requests for name changes, additional information is needed since PHMSA technically does not issue “name changes” to permits and approvals. The applicant requesting a company name change must be able to demonstrate that the new company is performing the activities authorized under the special permit or approval in a manner that is identical to that of the previous company. For example, the applicant must provide a filing from the state of incorporation indicating that the only change to the corporation is a change in the name, or other documentation to indicate that although the company is changing, its personnel, procedures and activities performed under the special permit or approval will not change under the auspices of the new company. If these conditions are met, then PHMSA grants an approval or permit to the new company that it may maintain the same approval or permit number as the one previously issued.
Further, though PHMSA continuously strives to improve the efficiency of its special permit and approval processing operations, it is the applicant's responsibility to ensure his or her application is correct and complete. PHMSA receives approximately 30,000 special permit and approval applications annually. One of the most effective ways to ensure efficient processing of an application is that it is complete. Past attempts by PHMSA to delay processing incomplete applications until it received the missing or corrected information from Start Printed Page 54424applicants resulted in significant application processing delays. If applicants are permitted to submit incomplete applications without any negative consequences, there is no incentive for applicants to submit complete and conforming applications. Requiring applications to be complete prior to processing will enhance PHMSA's ability to process the applications in a timely manner. The time that would be utilized gathering additional information and updating applications could be used more effectively by processing complete applications. Further, budgetary constraints prevent PHMSA from modifying its current application processing software. Therefore, PHMSA will not create a separate application process for managing routine administrative application changes.
PHMSA disagrees. Fitness is not determined by one FOPS Division staff, or a representative of the Department, such as an OA representative. An applicant that undergoes an initial safety profile review and is flagged has his or her case first reviewed by a FOPS officer, and then the case goes through a second level review. Further, a company has 30 days to submit corrective actions after a FOPS officer or OA investigator finds possible violations. If the first-line field supervisor considers the corrective actions sufficient to address the observed violation, the supervisor presumes that corrective actions have been put into place and will prevent future recurrence. In some instances, a follow up re-inspection is also executed to ensure the corrective actions have adequately addressed the problem. All field case reports, including corrective actions, are reviewed by PHMSA's legal counsel and a final penalty is assessed. The penalty amount can be challenged by the company under existing administrative processes. Further, for additional clarity and in response to a request from commenters, PHMSA has added a definition for “sufficient corrective action” under § 107.1.
DGAC states that it remains unclear as to what criteria will be used to determine if an applicant is either “fit” or “unfit.” It also states that even though minor violations of the HMR may be uncovered during an on-site investigation, such violations may not have a serious impact on the compliance posture of the applicant. The DGAC recommends that PHMSA clearly articulate the conditions under which an applicant would be determined to be “unfit.”
PHMSA has articulated these conditions to the extent possible in this final rule. However, too many variables exist among those who affect the safe transport of hazardous materials to state with certainty what HMR violations or previous incident history will be found and to what extent they will affect the status of an applicant's fitness. For example, if a violation or series of previous incidents is found and PHMSA determines the applicant has not implemented sufficient corrective actions for prior violations, or that the applicant is at risk of being unable to comply with the terms of an application for a special permit or approval, an existing special permit or approval, or the HMR, then PHMSA will determine that the applicant is unfit to conduct the activities requested. Although FOPS officers and OA representatives do not disclose their inspection process and their inspections are unannounced, their inspections are conducted in a logical sequence and involve all aspects of the applicants' operations that are applicable to the HMR.Start Printed Page 54425
The Institute of Makers of Explosives (IME) expressed concern that the SOPs proposed in the NPRM introduce practices and procedures that increase the costs and timelines of producing and managing special permits and approvals applications without addressing the fundamental problems the DOT Office of Inspector General (OIG) identified with these PHMSA programs—deficiencies in how PHMSA manages its paperwork and provides clarity when processing these applications. The IME stated the DOT OIG directed PHMSA to clarify and publish its SOPs for special permits and approvals in its 2009 report. The IME also stated the DOT OIG cited as the reason for this directive PHMSA's deficiencies in managing its paperwork, but not for the performance of tasks PHMSA authorized in the special permits and approvals it has approved. The IME further stated PHMSA responded to the OIG's request by issuing “without public notice and comment, two documents describing new complex procedural schemes that substantively altered the special permit and approvals application and evaluation process, and fundamentally changed the procedures the agency would follow in conducting a fitness determination.”
The IME further noted that although PHMSA identified its SOPs as “a process for evaluating an applicant's fitness,” it identified its SOPs for approvals “as a draft with a `to be determined'” placeholder for its fitness determination standard. The IME stated that the agency began using these SOPs to make regulatory determinations of fitness although the regulated community had no idea what threshold level of performance would be used to determine an applicant's “fitness.” The IME stated the regulated community responded to this action “with letters and a petition for rulemaking requesting that PHMSA establish its SOPs and fitness criteria by rulemaking.” When PHMSA rejected these requests, the IME stated, “Congress intervened with a directive that PHMSA issue regulations to establish SOPs for the SPAP [Special Permit Application Process], and objective criteria to support the evaluation of special permit and approval applications.”
In its comments, the IME stated that PHMSA's claim that costs and benefits are unaffected due to this rulemaking is premature. Specifically, it stated that “every determination PHMSA makes of an applicant's fitness or whether to issue or deny a special permit or approval has an effect outside of the agency. Furthermore, opportunities to affect those costs and benefits change when the procedures and standards change. For several years, the regulated community has relied on SOPs posted on PHMSA's Web page. Yet PHMSA acknowledged, at some time after its 2012 public meeting on fitness determination standards, that it has revised its SOPs. It may be that the agency's claim that the SOPs and fitness criteria described in the rulemaking are unlikely to change costs and benefits is because PHMSA is describing its current practices, not the SOPs posted to its Web site. Whatever the case, a declaration that costs and benefits are unaffected is premature because it presupposes the outcome of this rulemaking.”
The IME also expressed its concern of how “backlogged” applications have plagued the SPAP since the events of 2009. It noted that:
PHMSA exercises new authority to incorporate proven special permits into the HMR. Backlogs from this part of the SPAP may be self-correcting. While IME appreciates the dedication of PHMSA staff to move existing backlogged applications, the frequency with which intervention is required to request action on these applications suggests that the process needs to be better streamlined. PHMSA has established a 120-day processing schedule before an application can be deemed “backlogged.” We do not believe that every application should be held to a 120-day processing schedule, and we associate ourselves with those that believe the length of time PHMSA takes to process and issue special permits or approvals, especially when applications lag beyond the current 120-day processing threshold, adversely impacts U.S. competitiveness. While nothing in this notice indicates that the regulated community can expect a shorter processing schedule, the agency does describe revised procedures that suggest a shorter timeframe is possible. For example, PHMSA has begun to concurrently process both the technical and the fitness evaluations. Based on concurrent processing, PHMSA should establish a shorter timeframe for applicants to gauge when they will be provided a decision from the agency.
In another streamlining initiative, PHMSA issued notice that it was ceasing to perform fitness reviews for classification approvals. These approvals are simply affirmations of compliance with classification regulations. Those affected must have PHMSA-required tests performed by PHMSA-approved laboratories. Denying a request for such an approval on the basis of fitness is, in effect, denying the applicant the opportunity to Start Printed Page 54426properly classify a material in accordance with the applicable regulations. While we support this policy initiative, PHMSA left open the door for interpretive confusion with a concluding statement that, “[f]itness of applicants for classification approvals will continue to be reviewed through application evaluation, inspection, oversight and intelligence received from PHMSA or another Operating Administration (FAA, FMCSA, FRA, or USCG).” This statement appears to contradict the announced policy that fitness determinations would not be required for classification applications. PHMSA should clarify its policy as part of this rulemaking.
PHMSA states that there are four steps in the processing of an application, whether for special permits or approvals. They include a “completeness” phase, publication, “evaluation” phase (which includes both a technical and a fitness evaluation), and “disposition” phase. The completeness phase is to determine if the application contains all the information required by the HMR. However, the preamble states that evaluation phase is used to “determine if the application is complete.” This duplication is needless and will slow the processing of the application. Additionally, it is not clear from the preamble discussion when applicants will be notified that an application is rejected. Reasons to reject applications, such as incompleteness, omissions, errors, could be manifest at any stage of the processing phases. Whenever PHMSA makes a determination to reject an application, the applicant should be immediately notified. An application tagged to be rejected should not continue to move along the processing queue only to be rejected at some later date.
PHMSA has stated that it queues applications on a “first come, first served” basis. While we support this prioritization principle, it does not recognize the fact that applications are different and, once in the system, applications should be assigned to separate tracks and staff who specialize in the processing of application types. For example, it seems intuitive that classification approvals with a 3-part review process without the need for Federal Register publication or a fitness determination would require less time to complete than special permit applications with a 5-part process which includes Federal Register publication and a fitness determination. PHMSA should accommodate these distinctions with a shorter processing schedule.
Likewise, IME has long advocated for a separate track to process applications seeking minor corrections, such as name changes, or those with minor errors, such as misspellings, or omissions. However, PHMSA states that it has a “new” practice of rejecting “incomplete” applications. The agency states that “problems with recordkeeping” require the resubmission of the entire application, with corrections, in order for a rejected application to be reconsidered. This is a costly, ineffective way for PHMSA to get around problems it has with recordkeeping. The policy may make it easy for PHMSA to clear its books, as all the costs of resubmittal, including lost commercial opportunity costs, are borne by the applicant. While we agree that incomplete applications and applications containing non-substantive errors should be tabled pending correction, we do not believe that these types of administrative deficiencies warrant returning resubmitted applications to the end of the queue and restarting the processing time-frame anew. Rather, we suggest that PHMSA establish a dual-track system, allowing applicants of incomplete applications or those otherwise tagged to be rejected for non-substantive reasons a grace period, such as 30 days, to correct the deficiency(ies) identified in the application. If the applicant resubmits a corrected application, the application should be returned to the point in the queue where it was pulled. If the applicant fails to resubmit requested information in the time allowed, the application should be rejected and any resubmittal treated as a new application.
In what could be seen as process streamlining, PHMSA states that it “will review companies with multiple locations as one organization, placing an emphasis on its examination of the company's locations where the requested actions and/or processes are being performed.” However, the announced policy seems contradictory. A company with multiple locations is not being reviewed as one organization if, at the same time, PHMSA is examining locations where the safety permit or approval is to be carried out. If PHMSA means some type of middle ground, it should clarify how many “locations” within a company will be visited and how the locations will be selected.
Over the past 10 years, approximately 10 percent of PHMSA's special permit applications have been in processing for greater than 180 days. PHMSA must report applications that are not processed within 180 days in the Federal Register. PHMSA agrees that whenever an application fails any stage in the process, this failure should trigger immediate notification to the applicant to avoid excessive delays. To improve the transparency of this process, PHMSA has developed and is testing an online process for submitting and checking on the status of special permit and approval applications. This online system is being designed to notify applicants when their applications have failed to meet the required criteria. Once the testing is completed and the software is performing correctly, PHMSA will make this online information available to the general public. This online method should also improve times for issuing “M” and “VIN” numbers, and renewals.
PHMSA disagrees with the request to reduce processing times by no longer publishing notifications of applications received in the Federal Register. PHMSA is required by law to provide public notification in the Federal Register of its receipt of special permit applications only (see §§ 107.113(b) and (j), and 107.117(g)).
PHMSA also agrees with the IME that the language explaining the difference between the completeness phase to determine if the application contains all the information required by the HMR, and the evaluation phase to determine if the application is technically complete, is confusing. Further, the NPRM's preamble stated the evaluation phase will be used to “determine if the Start Printed Page 54427application is complete.” This duplication is needless and will slow the processing of the application. Therefore, in this final rule PHMSA is revising the Appendix to clarify the difference between the completeness phase and the evaluation phase.
The IME also expressed concern with the procedures and policies PHMSA is using to determine “fitness.”
PHMSA states that “incorporating an elaborate review system into the HMR . . . would be extremely difficult [given] the wide range of applicants.” PHMSA is not alone in the realization that establishing standards to fairly and accurately determine fitness of a myriad of private entities is a daunting task. The Federal Motor Carrier Safety Administration (FMCSA) has been attempting to update its fitness standards for years. However, PHMSA proposes to overcome the difficulty of this task by “incorporat[ing] a more straightforward, user-friendly review system.” While we can hope for a process that is straightforward and user-friendly, first and foremost PHMSA needs to accurately disclose the process and standards it is using.
PHMSA disagrees. As stated earlier in this preamble, when PHMSA receives multiple applications from one entity within a short period of time, PHMSA consolidates these applications when performing its safety review. PHMSA has a five-year plan for reviewing cylinders but a one-year plan for reviewing explosives because we have developed our program to be responsive to the level of risks associated with these materials. However, PHMSA does not have the resources to commit to reviewing special permit and approval applicants every four years. PHMSA increases the frequency of its inspections involving materials with greater incident risks regardless of the type of applicant.
The onsite reviews of fitness be reserved to a small set of applicants that have a history of serious hazmat incidents. However, PHMSA believes that these reviews should be a standard part of the process since onsite reviews are necessary to support the “accuracy” of the determination. This statement appears to conflict the fitness triggers that suggest only applicants exceeding certain performance thresholds would be subject to an onsite inspection. Additional agency justifications for onsite reviews—specifically whether packagings and/or operations requested are safe or what additional operational controls or limitations may be needed—may be relevant to the technical evaluation, but not to the determination of fitness. Finally, we agree that an onsite visit may be used to clear up misunderstandings or inaccuracies. However, the option to conduct an onsite review in these instances should be in response to a request from the applicant. Onsite reviews are no doubt the most costly aspect of the fitness determination process. As noted, some applicants may file multiple applications in a short timeframe. We continue to believe that onsite reviews should only be triggered when fitness cannot be demonstrated by some other means.
PHMSA disagrees that on-site reviews would be required for all applicants. PHMSA plans to conduct on-site reviews for only a small percentage of companies that are determined to have failed a safety profile review. However, an on-site review is not required to make a determination of “unfit.” Since 2010, PHMSA performed on-site reviews of five or fewer companies and none were determined to be unfit. PHMSA agrees that on-site reviews and accompanying close-out consultations are opportunities to clear up misunderstandings and inaccuracies.
The vast majority of information PHMSA uses to conduct its carrier-specific fitness reviews, but not general hazardous material reviews, is contained in FMCSA's databases. PHMSA contacted other modal agencies to obtain similar incident data but these agencies either did not have the information needed or were not willing to make this information available to PHMSA. FMCSA's databases are well organized and the agency is willing to share them with PHMSA. PHMSA understands that FMCSA is revising its databases and considering ways to make this information more available to the public. When PHMSA first developed its Hazardous Materials Information System (HMIS) and Hazmat Intelligence Portal (HIP) databases, its intent was to make this information available to the general public. However, PHMSA was unable to complete this step due to budget and software design considerations. PHMSA intends to revise the HMIS, HIP, or other prospective application processing technology, to make the information it contains available to the public in the future.
The standards by which PHMSA determines “fitness” have profound implications for applicants. PHMSA still proposes a three-tiered review process. PHMSA explains that the applicant is first screened to see if a SPR [safety profile review] is triggered. Second, if a SPR finds any of a second set of risk indicators, an onsite review is triggered. Third, PHMSA's field operations staff (FOS) will submit a fitness memorandum with a recommendation of fit or unfit. However, this process continues to be seriously flawed:
Incident Triggers: PHMSA states that it is removing low-level incident data from its tier 1 automated fitness determination process, and focusing on three incident categories to trigger a SPR—incidents resulting in death, incidents resulting in injury, and “high-consequence” incidents. However, there are no definitions of “injury” or “high-Start Printed Page 54428consequence.” First, we would urge PHMSA to adopt the same definition it uses for a “major injury”—one that requires a hospitalization—when reporting hazardous materials incidents as the definition of “injury” under the fitness standard. Second, PHMSA also needs to define “high-consequence” incident, and that definition must filter what incidents will trigger a tier 3 onsite review under the “Table 1” and “bulk packaging” tier 1 automatic screen. These tier 1 screens require that two or more incidents involve a Table 1 applicant or, in the case of a bulk packaging applicant, three or more incidents, in order to trigger a tier 2 SPR referral. During the SPR, PHMSA states that incidents not attributed to the applicant are dropped. However, we disagree with PHMSA's policy that “any” of these attributable Table 1 or bulk package incidents would then trigger a tier 3 onsite review regardless of outcome. Just because the incident involved these materials or equipment does not ipso facto mean that the result of the incident was “high-consequence.” Such an interpretation would negate PHMSA's promise that it is removing “low-level incident data” from the fitness determination. (Also see comments on review triggers below.) We do agree with PHMSA that an incident resulting in a death or injury (requiring hospitalization) attributable to the applicant (other than driver error) is an appropriate standard to trigger a tier 3 review. Finally, an incident attributable to a “package” may be relevant for a technical evaluation, but it is unclear why such an incident would be relevant to the fitness determination.
Conflicting Tier 1 Triggers: Despite the statement above that only three types of high consequence incidents would trigger a fitness review, PHMSA states that a “pattern of minor violations may reveal larger problems that could adversely affect transportation safety.” Again, this statement appears to negate PHMSA's statements about what standards may result in a determination of “unfit.”
Conflicting Tier 2 Triggers: In the preamble, PHMSA states that it has revised its SOP to base fitness evaluations (and SPRs) on incidents and/or violations revealing “flagrant patterns and serious violations.” (Emphasis PHMSA's.) Later in the preamble, PHMSA states that “the suggestion to ignore minor leaks in packaging may not be inconsequential depending on the risks contained in the material, and, therefore, [PHMSA] may not eliminate this as a consideration in a fitness evaluation.” The preamble also states that a trigger for a tier 2 SPR is “two or more prior enforcement case referrals.” However, PHMSA's proposed “Appendix A” states that the trigger is met if the applicant has “a [i.e., one] prior enforcement case referral.” These conflicting statements confuse rather than clarify agency policy and practice. PHMSA needs to clarify these discrepancies.
Tier 3 standard/What is “Fit”?: Most concerning about PHMSA's notice is that applicants unlucky enough to find themselves with a tier 3 onsite review still do not know what will be examined in an onsite inspection or what standard of performance will yield a finding of “fitness.” PHMSA states that, during the inspection, “investigators” will search “for evidence that an applicant is at risk of being unable to comply with the terms of [any applicable] special permit, approval, or . . . HMR.” In fact, PHMSA states that the FOS may initiate audits of the applicant's operations when determining fitness. PHMSA should provide examples of “evidence” that would put an applicant at risk, and clarify what records will have to be produced, who onsite can expect to be interviewed, and how long an onsite review can be expected to take. The onsite inspection should conclude with a closing conference outlining options applicants will have to learn of and address any identified concerns. We assume an inspection report will be prepared. Please clarify whether the applicant will receive a copy. Without some limitations, these inspections could degenerate into fishing expeditions. The uncertainty of what level of performance would produce a finding of “fit” is a burden that will only be borne by U.S. businesses.
Judge and Jury: FOS have been delegated responsibility for the fitness review process for all decision-making after the initial automated review. Although PHMSA proposes that the associate administrator will “review” all special permit and approval applications, the permit or approval can be issued by individuals other than the associate administrator. We are concerned that too much authority for the fitness review, inspection, and determination is left in the hands of one individual. If the associate administrator has delegated the final decision on a fitness determination to FOS, at minimum, FOS should have to get the SPAP to sign-off on the decision.
The information PHMSA uses for safety profile reviews acquired from the incident report forms is standardized. High-consequence/injury events are similar to requirements which trigger National Response Center reporting under § 171.15. Incident reports may also be caused by incorrect package assembly or improper maintenance. Fitness coordinators will consult this information in addition to that provided in an application and, if clarifying information is needed, will contact the applicant to obtain it. If the information the applicant provides is sufficient, an on-site inspection may not be necessary. Also, participation from PHMSA's Engineering and Research Division may be required. PHMSA will conduct an on-site review if it has evidence that: (1) An applicant is at risk of being unable to comply with the terms of an application; (2) any incident listed under paragraph 3(b)(i)(1) of the Appendix A to Part 107 is attributable to the applicant or package, other than driver error; (3) during an inspection in the four years prior to submitting the application an applicant has not implemented sufficient corrective actions for prior violations, or is at risk of being unable to comply with the terms of an application for or an existing special permit, approval, or the HMR; or (4) incorrect or missing markings, labels, placards or shipping papers. The safety profile evaluation will normally follow the same procedures as an inspection. As stated earlier, the FOPS officer or OA representative will provide an exit briefing to document any observed violations, including those which may affect fitness determinations. After PHMSA's Field Operations Division staff, or a representative of the Department, completes the safety profile evaluation the FOPS staff person or OA representative will make a recommendation to PHMSA's Approvals and Permits Division if a company is fit or unfit. PHMSA's Approvals and Permits Division will make the final fitness determination. Denied applicants have a right to reconsideration and appeal of that decision as prescribed in §§ 107.123, 107.125, 107.715, and 107.717. Further, PHMSA must include the scope of its inspection responsibilities under the HMR in the safety profile reviews it conducts.
PHMSA states that the process it has implemented “does not presume innocence or guilt” of an applicant. However, “new companies with no performance history” will still be subject to a fitness determination. PHMSA's treatment of new companies is one that presumes non-compliance. These reviews will be based on a new company's “training records.” Training records are only available for review onsite. Consequently, new companies will automatically find themselves pushed to a tier 3 inspection. We disagree that new companies automatically warrant this costly level of review. Additionally, PHMSA states that “select holders” who have never been inspected will be automatically referred for a tier 2 SPR. Again, this criterion is based on a presumption of non-compliance. This fact alone should not be a justification for a fitness review.
PHMSA agrees that an applicant's history should not imply a presumption of guilt and there is no need to require on-site review of hazmat matters with lower risk, such as training records. PHMSA does not believe that an applicant's lack of data is correlated to non-compliance. New companies are automatically presumed to pass their safety review since they have no “triggers” in the system. However, the fact that a company is new does not prevent PHMSA from doing inspections under other sections of the HMR.Start Printed Page 54429
PHMSA states that it coordinates application evaluation with DOT modal agencies when the application is “mode specific, precedent setting, or meet[s] federal criteria for a “ `significant economic impact'.” We question the rationale for involving a modal agency in any application that does not involve the mode irrespective of whether it is precedent setting, or of significant economic impact. Furthermore, all modes have their own standards for determining “fitness.” PHMSA should not allow modal agencies to use PHMSA's fitness procedures to impose more stringent fitness requirements than already exist in their modal regulations. Likewise, PHMSA should not use the fitness assessment process to impose its interpretation of who is a fit carrier on the modal agencies. We believe that the data reviewed should be relevant to the application. If an application involves “shipper” activities, “carrier” incidents attributable to the applicant, for example, should not be considered in the fitness determination. Likewise, modal agencies should not be involved in classification approvals. For example, applications for explosives classifications are based on UN tests performed by PHMSA-approved laboratories. There is no modal nexus to classification approvals.
PHMSA states that rulemaking is not required because it considers these criteria to be “internal” guidance for its staff. Acting on this declaration, PHMSA proposes to incorporate its SOPs and fitness criteria into the HMR only as an “appendix.” This nomenclature and justification are troubling. Congress certainly felt that the SPAP SOPs and fitness criteria warrant the status of a rule, directing that “regulations” be issued by a date certain. Moreover, to be crystal clear in its intent, Congress directed that these rules be issued under the Administrative Procedure Act. PHMSA's declaration that this appendix is simply guidance begs the question of how the agency views the legal status of the document. As “guidance”, does PHMSA believe that the appendix can be changed, after this initial “rulemaking”, at will, as the agency has done to the current SOPs? We ask PHMSA to resist any temptation to treat the appendix as anything less than a regulation and to clarify the legal standing of the “appendix” in the final rule. Agency guidance issued without the benefit of careful consideration under the procedures for regulatory development and review risks being arbitrary and capricious.
PHMSA disagrees. The Appendix prescribed in this final rule is regulatory text that also performs as guidance because it discloses PHMSA's administrative processes to the regulated public. To change the language in this appendix, PHMSA must issue a rulemaking. Another example of an appendix in the HMR that sets forth guidance is the “List of Frequently Cited Violations” in Appendix A of 49 CFR part 107, subpart D. Both inform the regulated public of general guidelines PHMSA uses to make determinations.
The IME noted that in the NPRM PHMSA proposed to process requests for reconsideration and appeals of special permit and approval decisions “in the same manner . . . [as] new applications.” It asked “what is the point of making such a filing if the application will simply be treated as a new application?” In addition, IME stated that “requests for reconsideration and appeals should be handled on a separate track from new applications.”
PHMSA agrees that applications for reconsideration and appeals will be treated differently from regular special permit and approval applications. Reconsideration requests are managed within the Special Permit and Approvals Division in conformance with § 107.123 for special permits and § 107.715 for approvals, and appeals are managed outside of the Special Permits and Approvals Division by PHMSA's Office of Chief Counsel. When an applicant requests reconsideration of a denied application, the request is provided a higher priority in the review process. Thus, a decision will tend to be rendered more quickly since the initial review and evaluation has been completed. Appeals are handled by the Office of the Administrator and are not part of the routine special permit and approval evaluation process.
Additionally, we question the inclusion of screen 6 in this section of the rule in light of a correction notice recently issued by PHMSA which clarifies that only those applicants who do not require coordination with an Operating Administration (OA) would be subject to the tier 1 review. Yet, screen 6 describes the review that applicants who are interstate carriers would undergo which is based on criteria of FMCSA, an OA. It seems intuitive that PHMSA would “coordinate” with FMCSA for the data used in this review.
PHMSA has undergone its best effort to meet the deadline mandated for this rulemaking by the Congress in MAP-21. The provisions the commenter is requesting will become effective through the issuance of this final rule. Start Printed Page 54430PHMSA does not plan to implement interim SOPs or fitness criteria or make changes to its current practices and standards before the ones prescribed in this final rule are implemented. Therefore, PHMSA has addressed the commenter's concerns.
A. Further, the HMR permit, in various sections, some federal agencies limited authority to directly issue certain types of approvals because of the proven safety of the type of action and/or process requested in the approval, and the subject matter expertise each agency can provide regarding hazardous materials transportation.
B. During the evaluation phase, if the tasks or procedures requested in each special permit or approval application are determined to provide an equivalent level of safety to that required in the HMR or, if a required safety level does not exist, that they provide a level of safety that demonstrates an alternative consistent with the public interest that will adequately protect against the risks to life and property inherent in the transportation of hazardous materials.
(2) PHMSA's proposed definition of “applicant fitness” at § 107.1 is incorrect based on the preamble statement. Rather than “. . . a determination by PHMSA . . .”, the text should read “. . . a determination by the Associate Administrator . . .”.
The Reusable Industrial Packaging Association (RIPA) supports PHMSA's stated intention in the NPRM to remove “low-level” incident data from fitness determinations, focusing rather on high-level incidents involving death, injury, or other “high-consequence” cases. RIPA does not believe an isolated incident or a reported packaging leak, with no other attendant consequences, warrants a rejection of fitness. RIPA also supports PHMSA's proposal to limit the historical period to 4 years over which the agency will review an applicant's performance history, citing it as “practical and more than sufficient to ensure safety.” RIPA requested that PHMSA “. . . avoid linking a rejection or denial of an application to a single metric or a single occurrence in an applicant's history.” PHMSA has revised the guidance document to emphasize high-level incidents, but disagrees that it must not consider an isolated incident or package leak depending on how seriously the incident affects safety. If a single incident leads to death, serious injury, or a high-consequence event, rejection of that application would be appropriate and satisfy PHMSA's mission.
RIPA stated “PHMSA should address how its proposed modifications to the approval procedures will affect the increasing delays in processing approval applications. According to data recently supplied by the agency, as of October 6, 2014, there were 783 approval applications that had been in process for more than 120 days without a decision. As of July 7, 2014, there were only 570 approval applications older than 120 days. In just three months, the number of applications beyond the 120-day threshold has grown over 37 percent.” One of the purposes of PHMSA's SOPs is to aid the agency in decreasing its delays in processing special permit and approval applications by ensuring that PHMSA begins its review with as complete an application as possible.
RIPA is concerned the additional levels of scrutiny for approval applicants in the proposed SOPs will add to PHMSA's delays in processing applications. RIPA also stated it asked in prior comments to the agency (February 29, 2012; Paul W. Rankin to Docket No. PHMSA-2011-0283—see http://www.regulations.gov/​#!documentDetail;​D=​PHMSA-2011-0283-0003) how PHMSA can ask an applicant to “demonstrate its readiness to meet the terms of an approval if, in fact, the large investment required cannot be made without some certainty of being approved. PHMSA should articulate a process to encourage the adoption of new and better technologies without the huge uncertainty that the application process currently presents.” RIPA suggested PHMSA implement an “approval technical template . . . as a guideline for applicants seeking the same (or very similar) approval. Such a template might also help applicants understand better the threshold for a `complete' application.” RIPA believes that “PHMSA's plans to codify into the HMR certain approvals with wide applicability and records of safety could also go a long way in disseminating new technologies and safe practices.”
RIPA found that PHMSA's proposed criteria for “insufficient corrective actions”:
. . . taken following two or more prior enforcement cases is a standard so broad as to be nearly meaningless. If corrective actions were insufficient, isn't the applicant still out of compliance? Also, who makes a determination of “insufficient corrective action”? Is there a document trail to follow in making such a determination? What if those cases were several years in the past, and were administered by wholly different personnel? Does the proposed 4-year historic limit apply here?
PHMSA agrees with RIPA that it should add more clarity regarding the term “insufficient corrective action.” This will aid applicants as well as those conducting reviews to determine whether an applicant meets these criteria. Additionally, this will greatly aid the review and processing of applications, and clarify to applicants when a corrective action is satisfactory under the HMR. Therefore, PHMSA has added this definition to § 107.1.
RIPA believes on-site reviews should be limited to the most serious instances of safety concerns. However, it states that the criteria for “fit or unfit” remain somewhat malleable, and could support the rejection of an application based on a FOPS Division agent recommendations that may be far removed from the narrow special permit or approval being sought. RIPA requests that an on-site review of an applicant for an approval need not be a “curb-to-curb” inspection, but a limited review of the operation or packaging in question, and that inspectors should Start Printed Page 54431take action only on compliance issues “in plain sight.” RIPA states in its experience, this threshold provides equivalency in terms of public safety.
The Sporting Arms and Ammunition Manufacturers' Institute, Inc., (SAAMI) expresses appreciation of PHMSA's efforts to engage in a rulemaking process regarding the procedures for special permits and approvals applications to allow review and comment by stakeholders. It stated that such a rulemaking addresses concerns with non-transparency when internal policies are enforced but not published. In addition, SAAMI supported the proposed fitness review period of four years, classification approvals not requiring a fitness review, and subjecting applicants for party-to status on a special permit to the same fitness standards as the original applicant. However, SAAMI also expressed concerns “that inflexible and non-accountable internal policies do result in routine unjustified delays for industry operating in good faith,” and provided the following recommendations.
In its comments, SAAMI states the SOPs as guidance will not provide “the accountability sought by industry and regulated by Congress” under Congress' MAP-21 instruction to PHMSA to issue this guidance. PHMSA disagrees. Congress directed PHMSA to issue regulations and objective criteria that support the administration and evaluation of special permit and approval applications. This final rule accomplishes that directive.
SAAMI states its awareness that classification approvals are taking “far too long to be issued.” Specifically, SAAMI states the 120-day timeline PHMSA currently uses “is twice or more the typical time used by other governments to issue similar approvals. This now has been increased to 180 days in notices sent to applicants. Industry can't function efficiently when their new product introductions are delayed.” However, SAAMI supports PHMSA delegating these responsibilities to certified third parties, because it states “the number of PHMSA staff working on these approvals” and “the small technical team responsible for 20,000 approvals per year” is inadequate to quickly perform these tasks, especially when diverted by other work responsibilities like evaluating issues concerning crude oil by rail or other technical questions. As stated earlier in this preamble, PHMSA is not required to issue special permits and approvals in 120 days, but instead must issue them when the agency has determined that the actions requested in the application are safe. Further, PHMSA is streamlining its internal and online practices for processing special permit and approval applications, and will strive to improve these processing times in the future, especially with regard to explosives and fireworks.
SAAMI states that for non-significant “routine revisions to special permits and approvals, such as a company changing its name or acquiring another company . . . [PHMSA] has been inflexible in the application of its internal, non-regulatory requirements for complete documentation of test result, packaging and so forth when there has been no change to the operations at the facility.” Noting that “some companies have hundreds or over a thousand classification approvals,” SAAMI states that these approvals should not be required to meet the new completeness criteria and “undergo a technical review with a complete data package as is currently the case.” SAAMI recommends instead that these approvals be “processed in batches as an administrative function.” SAAMI further recommends that requests for tweaks to recently modified approvals “. . . not go to the bottom of the stack with an additional 180-day waiting period,” as is also currently required, and that PHMSA resolve its recordkeeping problems “rather than making companies resubmit complete data packages” as described in the NPRM preamble. As stated earlier in this preamble, PHMSA currently does not have the resources to institute a separate processing method for routine and editorial revisions but will consider changes of this type as resources become available.
SAAMI notes that special permits have determination timelines in § 107.113(a) but that approvals do not have similar provisions in § 107.709, and recommends that these sections be aligned. Similarly, SAAMI recommends that the deadline that exists in § 107.709 that requires applicants to respond to PHMSA's requests within 30 days also be applied to special permit applicants in § 107.113. SAAMI also recommends that PHMSA consider adding timelines to its responses to requests for reconsideration and appeals, which currently apply only to stakeholders. PHMSA disagrees. As stated earlier in this preamble, PHMSA is not subject to the timelines in the HMR prescribed for applicants to submit special permit and approval applications for processing and renewal. PHMSA must ensure the activities requested in these applications are safe before approving these requests.
SAAMI noted that of the six criteria listed in proposed Appendix A paragraph (3)(i), two refer to “incidents.” SAAMI recommends PHMSA define “incidents” “to ensure that only serious incidents will be factored in.” PHMSA declines this request. “Incident” is already defined in § 107.1 as “. . . an event resulting in the unintended and unanticipated release of a hazardous material or an event Start Printed Page 54432meeting incident reporting requirements in §§ 171.15 or 171.16 of this chapter.”
SAAMI recommends that to reduce subjectivity in safety profile and on-site fitness reviews, PHMSA document the criteria used to make these determinations. SAAMI also suggests that minor violations of the HMR that do not seriously impact safety not be factored in a fitness review. To address this issue, SAAMI further recommends that PHMSA “create a threshold below which violations are not factored in the review, or if a pattern of minor violations are taken into [e]ffect,” PHMSA should create a metric to determine what is a pattern and provide an opportunity for public comment. PHMSA disagrees. For the two trigger violation thresholds, only enforcement cases are factored in. Enforcement cases only pertain to serious safety violations.
Finally, SAAMI states “there is too much subjectivity inherent in the proposed authority to be given to the PHMSA Field Operations Officer or authorizing Operating Administration representative.” SAAMI requests that violations be given an administrative second check to verify that they exist and that PHMSA should provide recourse to a company to challenge such findings without their having to resubmit a data package. SAAMI recommends that for applicants with multiple or frequent applications, “fitness reviews[,] including on-site reviews[,] should not be conducted until after a certain time has elapsed since the last review.” Without such limits, SAAMI states, “the review becomes just a paper exercise using scarce resources of the agency.” PHMSA disagrees. As stated earlier, the fitness coordinator will contact the applicant for clarifying information that may eliminate the need for an on-site inspection. Violations in case reports are given second reviews by a first-line supervisor in the field and then by PHMSA legal counsel. Subsequent reviews are only completed up to the time of the last review to determine if something serious happened since the last review.
SAAMI recommends that PHMSA align the description of the type of approvals with those listed for special permits by adding classification, non-classification and registration approvals, noting that the NPRM “lists all types of special permits but only agency designation approvals. Classification, non-classification and registration approvals are not listed.” PHMSA disagrees. The Appendix in this final rule provides this exact information in the table “Special Permit and Approval Evaluation Review Process.”
SAAMI requests that PHMSA clarify in Appendix paragraph (3)(b)(ii) who will perform the fitness check when more than one OA is involved to streamline the process and clarify that PHMSA's performance of a fitness review is not an additional [seventh] fitness review criterion. SAAMI recommends that PHMSA perform the fitness review if more than one OA is involved using this language: “The applicable OA performs a profile review if one mode of transportation is requested in the application[;] however, PHMSA [will perform] the review if two or more modes of transportation are included.” PHMSA agrees that we do, and would oversee and not perform a safety profile evaluation if more than one mode is needed.
SAAMI requests that PHMSA clarify that OA's will not be permitted “to use fitness procedures to impose more stringent fitness requirements than already exist in the OA's regulations.” While PHMSA agrees that this clarification would be useful, this action is beyond the scope of this rulemaking because it is dictated by each OA's internal process documents. All special permit and approvals subject to OA coordination will be subject to OA criteria for fitness and not all of the OA criteria are regulatory. For example, air carrier fitness will be based upon whether or not the air carrier has “will-carry” status and is fit to fly. Therefore, FAA cannot in good conscience say an air carrier is fit to perform the activities prescribed in a special permit when the carrier has been assessed as not fit to fly. Therefore, PHMSA denies this request.
This final rule is not considered a significant regulatory action under § 3(f) of Executive Order 12866 and was not Start Printed Page 54433reviewed by the Office of Management and Budget (OMB). The final rule is not considered a significant rule under the Regulatory Policies and Procedures order issued by the Department of Transportation [44 FR 11034].
Executive Orders 12866 (“Regulatory Planning and Review”) and 13563 (“Improving Regulation and Regulatory Review”) require agencies to regulate in the “most cost-effective manner,” to make a “reasoned determination that the benefits of the intended regulation justify its costs,” and to develop regulations that “impose the least burden on society.” Executive Order 13563 supplements and reaffirms the principles governing regulatory review that were established in Executive Order 12866, Regulatory Planning and Review of September 30, 1993. Additionally, Executive Orders 12866, and 13563 require agencies to provide a meaningful opportunity for public participation. Accordingly, PHMSA invited public comment on these considerations at a public meeting held on February 29, 2012 (see Docket No. PHMSA-2011-0283), and in the NPRMs issued on August 12, 2014, and September 12, 2014, under Docket No. PHMSA-2012-0260. PHMSA requested that the public include in its comments any cost or benefit figures or factors, alternative approaches, and relevant scientific, technical and economic data. These comments aided PHMSA in the evaluation of the proposed requirements. PHMSA has since revised our evaluation and analysis to address the public comments received.
This final rule was analyzed in accordance with the principles and criteria contained in Executive Order 13132 (“Federalism”). This final rule would preempt state, local and Indian tribe requirements but does not propose any regulation that has substantial direct effects on the states, the relationship between the national government and the states, or the distribution of power and responsibilities among the various levels of governments. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply. Federal hazardous material transportation law, 49 U.S.C. 5101-5128, contains an express preemption provision (49 U.S.C. 5125(b)) preempting state, local and Indian tribe requirements on certain covered subjects. The covered subjects are:
This final rule addresses covered subject items (1), (2), (3), and (5) and would preempt any State, local, or Indian tribe requirements not meeting the “substantively the same” standard. 49 U.S.C. 5125(b)(2) states that if PHMSA issues a regulation concerning any of the covered subjects, it must determine and publish, in the Federal Register, the effective date of Federal preemption. The effective date may not be earlier than the 90th day following the date of issuance of the final rule, and not later than two years after the date of issuance. PHMSA proposes the effective date of federal preemption will be 90 days from publication of the final rule in this matter in the Federal Register.
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an agency to review regulations to assess their impact on small entities. An agency must conduct a regulatory flexibility analysis unless it determines and certifies that a rule is not expected to have a significant impact on a substantial number of small entities. Incorporation of these SOPs into regulations of general applicability will provide shippers and carriers with additional flexibility to comply with established safety requirements, thereby reducing transportation costs and increasing productivity. Entities affected by the final rule conceivably include all persons—shippers, carriers, and others—who offer and/or transport in commerce hazardous materials. The Start Printed Page 54434specific focus of the final rule is to incorporate standard procedures to assess an applicant's fitness, i.e., ability, to perform the required tasks to receive the relief from the HMR that each applicant is requesting. Overall, this final rule will reduce the compliance burden on the regulated industries by clarifying PHMSA's informational requirements for a special permit and approval application. We expect that the applicant will be better able to provide this information and, as a result, PHMSA can improve application processing and issuance times.
Hazardous materials are capable of affecting human health and the environment if a release were to occur. Start Printed Page 54435The need for hazardous materials to support essential services means transportation of highly hazardous materials is unavoidable. These shipments frequently move through densely populated or environmentally sensitive areas where the consequences of an incident could entail loss of life, serious injury, or significant environmental damage. Atmospheric, aquatic, terrestrial, and vegetal resources (for example, wildlife habitats) could also be affected by a hazardous materials release. The adverse environmental impacts associated with releases of most hazardous materials are short-term impacts that can be greatly reduced or eliminated through prompt clean-up of the incident scene. Improving the process by which the agency assesses the ability of each applicant to perform the tasks issued in a special permit improves the chance that the tasks in each special permit issued will be performed safely. Therefore, we do not anticipate any significant positive or negative impacts on the environment by incorporating these SOPs into the HMR.
The purpose and need of this final rule is to establish criteria for evaluating applications for approvals and special permits based on the HMR, including assessing an applicant's ability to operate under the approval or special permit. More information about benefits of this final rule can be found in the preamble to this final rule. The alternatives considered in the analysis include: (1) The proposed action, that is, incorporation of SOPs to evaluate applications for approvals and special permits based on the HMR, including assessing an applicant's ability to operate under the approval or special permit into the HMR; and (2) incorporation of some subset of these proposed requirements (i.e., only some of the proposed requirements or modifications to these requirements in response to comments received to the NPRM) as amendments to the HMR; and (3) the “no action” alternative, meaning that none of the NPRM actions would be incorporated into the HMR.
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenters provide, to www.regulations.gov, as described in the system of records notice (DOT/ALL-14 FDMS), which can be reviewed at www.dot.gov/​privacy.
Under Executive Order 13609, agencies must consider whether the impacts associated with significant variations between domestic and international regulatory approaches are unnecessary, or may impair the ability of American business to export and compete internationally. In meeting shared challenges involving health, safety, labor, security, environmental, and other issues, international regulatory cooperation can identify approaches that are at least as protective as those that are or would be adopted in the absence of such cooperation. International regulatory cooperation can also reduce, eliminate, or prevent Start Printed Page 54436unnecessary differences in regulatory requirements.
In § 105.5, we revise the definitions for “approval” and “special permit” to clarify that an approval and special permit may be issued by the Associate Administrator, the Associate Administrator's designee, or as otherwise prescribed in the HMR.
In § 107.1, we revise the definitions for “approval” and “special permit” to clarify that an approval and special permit may be issued by the Associate Administrator, the Associate Administrator's designee, or as otherwise prescribed in the HMR. In addition, we amend the HMR for clarity to add new definitions for “applicant fitness,” “fit or fitness,” “fitness coordinator,” “insufficient corrective action,” and “sufficient corrective action.”
In § 107.113, we revise paragraph (a) to state that the Associate Administrator will review all special permit applications in conformance with standard operating procedures proposed in new 49 CFR part 107, Appendix A.
In § 107.117, we revise paragraph (e) to state that the Associate Administrator will review all emergency special permit applications in conformance with standard operating procedures proposed in new 49 CFR part 107, Appendix A.
In § 107.705, we revise paragraph (b) for clarity to state that the information the applicant provides in an approval application must be relevant to the approval request.
In § 107.709, we revise paragraph (b) to state that the Associate Administrator will review all approval applications in conformance with standard operating procedures proposed in new 49 CFR part 107, Appendix A.
In 49 CFR part 107, we amend the HMR to add new Appendix A to incorporate PHMSA's existing standard operating procedures for processing special permits and approval applications. The words “fitness evaluation” and “fitness review” in 3(b)(i) are replaced for clarity with the words “safety profile evaluation” and “safety profile review,” respectively. The title and words “safety profile review” in 3(b)(ii) are replaced for clarity with “safety profile evaluation.” Further, in response to comments we clarify these procedures by revising them from four to five phases and define them as consisting of: Completeness, Federal Register Publication, Evaluation, Disposition, and Reconsideration.
In § 171.8, we revise the definitions for “approval” and “special permit” to clarify that an approval and special permit may be issued by the Associate Administrator, the Associate Administrator's designee, or as otherwise prescribed in the HMR. In addition, we add language to the “Automated review” and “Safety profile review” sections of the SOPs to clarify that special permit and approval applications that undergo review by an Operating Administration (OA) will complete this review before they undergo an automated review, and that an OA review, depending on its completeness, may negate the need for the automated review, respectively.
2. In § 105.5, in paragraph (b), the definitions for “approval” and “special permit” are revised to read as follows:
4. In § 107.1: Start Printed Page 54437
a. Add in alphabetical order a definition for “applicant fitness”;
b. Revise the definition for “approval”;
c. Add in alphabetical order definitions for “fit or fitness,” “fitness coordinator,” and “insufficient corrective action”;
d. Revise the definition for “special permit”; and
e. Add in alphabetical order a definition for “sufficient corrective action”.
Fitness coordinator means the PHMSA Field Operations (FOPS) Division officer or an authorized representative or special agent of DOT upon request, such as an Operating Administration (OA) representative, that conducts reviews regarding an organization's hazardous materials operations, including such areas as accident history, on-site inspection, compliance data, and other safety and transportation records to determine whether a special permit or approval applicant is determined to be fit as prescribed in §§ 107.113(f)(5) and 107.709(d)(5).
5. In § 107.113, paragraph (a) is revised to read as follows:
Application processing and evaluation.
(a) The Associate Administrator reviews an application for a special permit, modification of a special permit, party to a special permit, or renewal of a special permit in conformance with the standard operating procedures specified in appendix A of this part (“Standard Operating Procedures for Special Permits and Approvals”) to determine if it is complete and conforms with the requirements of this subpart. This determination will typically be made within 30 days of receipt of the application for a special permit, modification of a special permit, or party to a special permit, and typically within 15 days of receipt of an application for renewal of a special permit. If an application is determined to be incomplete, the Associate Administrator may reject the application. If that occurs, PHMSA will inform the applicant of the deficiency in writing.
6. In § 107.117, paragraph (e) is revised to read as follows:
(e) Upon receipt of all information necessary to process the application, the receiving Department official transmits to the Associate Administrator, by the most rapidly available means of communication, an evaluation as to whether an emergency exists under § 107.117(a) and, if appropriate, recommendations as to the conditions to be included in the special permit. The Associate Administrator will review an application for emergency processing of a special permit in conformance with the standard operating procedures specified in appendix A of this part (“Standard Operating Procedures for Special Permits and Approvals”) to determine if it is complete and conforms with the requirements of this subpart. If the Associate Administrator determines that an emergency exists under § 107.117(a) and that, with reference to the criteria of § 107.113(f), granting of the application is in the public interest, the Associate Administrator will grant the application subject to such terms as necessary and immediately notify the applicant. If the Associate Administrator determines that an emergency does not exist or that granting of the application is not in the public interest, the applicant will be notified immediately.
7. In § 107.705, paragraph (b) introductory text is revised to read as follows:
8. In § 107.709, paragraph (b) is revised to read as follows:
Processing of an application for approval, including an application for renewal or modification.
(b) The Associate Administrator will review an application for an approval, Start Printed Page 54438modification of an approval, or renewal of an approval in conformance with the standard operating procedures specified in appendix A of this part (“Standard Operating Procedures for Special Permits and Approvals”). At any time during the processing of an application, the Associate Administrator may request additional information from the applicant. If the applicant does not respond to a written request for additional information within 30 days of the date the request was received, the Associate Administrator may deem the application incomplete and deny it. The Associate Administrator may grant a 30-day extension to respond to the written request for additional information if the applicant makes such a request in writing.
9. Add Appendix A to 49 CFR part 107 to read as follows:
The words “special permit” and “approval” are defined in § 107.1. PHMSA receives applications for: (1) Designation as an approval or certification agency, (2) a new special permit or approval, renewal or modification of an existing special permit or an existing approval, (3) granting of party status to an existing special permit, and (4) in conformance with § 107.117, emergency processing for a special permit. Depending on the type of application, the SOP review process includes several phases, such as Completeness, Publication, Evaluation, and Disposition.
1. Completeness. PHMSA reviews all special permit and approval applications to determine if they contain all the information required under § 107.105 (for a special permit), § 107.117 (for emergency processing) or § 107.402 (for designation as a certification agency) or § 107.705 (for an approval). If PHMSA determines an application does not contain all the information needed to evaluate the safety of the actions requested in the application, the Associate Administrator may reject the application. If the application is rejected, PHMSA will notify the applicant of the deficiencies in writing. An applicant may resubmit a rejected application as a new application, provided the newly submitted application contains the information PHMSA needs to make a determination.
Emergency special permit applications must comply with all the requirements prescribed in § 107.105 for a special permit application, and contain sufficient information to determine that the applicant's request for emergency processing is justified under the conditions prescribed in § 107.117.
2. Publication. When PHMSA determines an application for a new special permit or a request to modify an existing special permit is complete and sufficient, PHMSA publishes a summary of the application in the Federal Register in conformance with § 107.113(b). This provides the public an opportunity to comment on a request for a new or a modification of an existing special permit.
(b) Safety profile evaluation. Each applicant for a special permit or non-classification approval is subject to a safety profile evaluation to assess if the applicant is fit to conduct the activity authorized by the special permit or approval application. PHMSA will coordinate the safety profile evaluations with the appropriate OA if a proposed activity is specific to a particular mode of transportation, if the proposed activity will set new precedent or have a significant economic impact, or if an OA Start Printed Page 54439requests participation. PHMSA does not conduct initial safety profile reviews as part of processing classification approvals, which include fireworks, explosives, organic peroxides, and self-reactive materials. Additionally, cylinder approvals and certification agency approvals do not follow the same minimum safety profile review model.
(2) Two or more incidents involving a § 172.504(e) (placarding) Table 1 hazardous material; (2) An on-site inspection at the recommendation of the fitness coordinator if the following criteria applies—Any incident listed under automated review in paragraph 3(b)(i) of this appendix is attributable to the applicant or package, other than driver error.
(ii) Safety profile evaluation. A fitness coordinator, as defined in § 107.1, conducts a safety profile evaluation of all applicants meeting any of the criteria listed earlier in this appendix under “automated review,” and all applicants whose safety profile evaluations are subject to coordination with an OA, as described in introductory paragraph 3(b) of this appendix. In a safety profile evaluation, PHMSA or the OA performs an in-depth evaluation of the applicant based upon items the automated review triggered concerning the applicant's four-year performance and compliance history prior to the submission of the application. Information considered during this review may include the applicant's history of prior violations, insufficient corrective actions, or evidence that the applicant is at risk of being unable to comply with the terms of an application for an existing special permit, approval, or the HMR. PHMSA performs the review or coordinates with the OAs, if necessary, if two or more modes of transportation are requested in the application, and coordinates this review with the OA(s) of the applicable mode(s). The applicable OA performs the review if one mode of transportation is requested in the application. If necessary, the fitness coordinator will attempt to contact the applicant for clarifying information. If the information provided is sufficient, an on-site inspection may not be necessary. After conducting an evaluation, if the fitness coordinator determines that the applicant may be unfit to conduct the activities requested in the application, the coordinator will forward the request and supporting documentation to PHMSA's Field Operations Division, or a representative of the Department, such as an authorized Operating Administration representative, to perform an on-site inspection. After the safety profile evaluation is completed, if the applicant is not selected for an on-site inspection, the applicant is determined to be fit. On-site inspections are not required for fitness determinations from modal administrations according to their own procedures.
(2) Insufficient Corrective Actions, as defined in § 107.1, in any enforcement case for a period of four years prior to submitting the application, except when re-inspected with no violations noted; or
(1) An “EX” approval number for classifying an explosive (including fireworks; Start Printed Page 54440see §§ 173.56, 173.124, 173.128, and 173.168(a));
(2) A “RIN” (requalification identification number) to uniquely identify a cylinder requalification, repair, or rebuilding facility (see § 180.203);
(4) An “M” number for identifying packaging manufacturers (see § 178.3); or
(5) A “CA” (competent authority) for general approvals (see §§ 107.705, 173.185, and 173.230).
(c) Denial. An application for a special permit or approval may be denied in whole or in part. For example, if an application contains sufficient information to successfully complete its technical review but the Associate Administrator determines the applicant is unfit, the application will be denied. If an application for a special permit or an approval is denied, PHMSA provides the applicant with a brief statement, in writing, of the reasons for denial and the opportunity to request reconsideration (see §§ 107.113(g), 107.402, and 107.709(f)).
(d) Reconsideration and Appeal. (1) Special Permit. If an application for a special permit is denied, the applicant may request reconsideration as provided in § 107.123 and, if the reconsideration is denied, may appeal as provided in § 107.125. Applicants submitting special permit reconsiderations and appeals must do so in the same manner as new applications, provided the new submission is sufficiently complete to make a determination.
(2) Approval. If an application for an approval is denied, the applicant may request reconsideration as provided in § 107.715 and, if the reconsideration is denied, may appeal as provided in § 107.717. Applicants submitting approval reconsiderations and appeals must do so in the same manner as new applications, provided the new submission is sufficiently complete to make a determination.
10. The authority citation for part 171 is revised to read as follows:
11. In § 171.8, the definitions for “approval,” and “special permit” are revised to read as follows:
1. Web site: Federal Motor Carrier Safety Administration's Large Truck and Bus Crash Facts—http://www.fmcsa.dot.gov/​safety/​data-and-statistics/​large-truck-and-bus-crash-facts.
2. Federal Motor Carrier Safety Administration Analysis & Information Division, “Roadside Inspections, HazMat Violations” (Web site: http://ai.fmcsa.dot.gov/​SafetyProgram/​spViolation.aspx?​rpt=​RDHV).
[FR Doc. 2015-22617 Filed 9-9-15; 8:45 am]