Hazardous Materials: Special Permit and Approvals Standard Operating Procedures and Evaluation Process, 54418-54440 [2015-22617]

Agencies

• Pipeline and Hazardous Materials Safety Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 80, Number 175 (Thursday, September 10, 2015)]
[Rules and Regulations]
[Pages 54418-54440]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-22617]


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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

49 CFR Parts 105, 107, and 171

[Docket No. PHMSA-2012-0260 (HM-233E)]
RIN 2137-AE99


Hazardous Materials: Special Permit and Approvals Standard 
Operating Procedures and Evaluation Process

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

ACTION: Final rule.

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SUMMARY: 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.

DATES: The final rule is effective on November 9, 2015.

FOR FURTHER INFORMATION CONTACT: 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.

SUPPLEMENTARY INFORMATION: 

[[Page 54419]]

Table of Contents

I. Executive Summary
II. Background
III. Comment Discussion
    A. American Trucking Associations
    B. The Chlorine Institute
    C. Dangerous Goods Advisory Council
    D. Institute of Makers of Explosives
    E. Reusable Industrial Packaging Association
    F. Sporting Arms and Ammunition Manufacturers' Institute, Inc.
IV. Regulatory Analyses and Notices
    A. Statutory/Legal Authority for This Rulemaking
    B. Executive Order 12866, 13563, and DOT Regulatory Policies and 
Procedures
    C. Executive Order 13132
    D. Executive Order 13175
    E. Regulatory Flexibility Act, Executive Order 13272, and DOT 
Procedures and Policies
    F. Paperwork Reduction Act
    G. Regulation Identifier Number (RIN)
    H. Unfunded Mandates Reform Act
    I. Environmental Assessment
    J. Privacy Act
    K. Executive Order 13609 and International Trade Analysis
V. Section by Section Review

I. Executive Summary

    On July 6, 2012, the President signed the Moving Ahead for Progress 
in the 21st Century Act (MAP-21), which includes the Hazardous 
Materials Transportation Safety Improvement Act of 2012 (HMTSIA) as 
Title III of the statute. See Public Law 112-141, 126 Stat. 405, July 
6, 2012. Under section 33012 of HMTSIA, Congress directed the U.S. 
Department of Transportation (Department or DOT) to issue a rulemaking 
to provide:
    [ssquf] Standard operating procedures (SOPs) to support the 
administration of the special permit and approval programs; and
    [ssquf] Objective criteria to support the evaluation of special 
permit and approval applications.
    In this rulemaking, PHMSA is amending the Hazardous Materials 
Regulations (HMR; 49 CFR parts 171-180) to incorporate procedures to 
support the administration of its special permits and approvals 
programs in a new Appendix A to Part 107, Subpart B of the 49 CFR. 
Incorporation of SOPs and objective criteria to support the evaluation 
of special permits and approvals accomplishes the mandate under section 
33012 of MAP-21. By incorporating these internal agency procedures into 
regulation, PHMSA believes the benefits of this final rule will 
increase the public's understanding of the special permit and approval 
application and renewal process, improve the quality of information and 
completeness of applications submitted, improve application processing 
times, improve the quality of information and completeness of 
applications submitted, improve application processing times, promote 
continued safe transportation of hazardous materials, and support U.S. 
trade competitiveness by permitting safe and innovative transportation 
methods for hazardous materials. Because this final rule will affect 
only agency procedures, PHMSA assumes no change in current industry 
costs or benefits and that this final rule does not impose additional 
costs on industry.

II. Background

    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 Sec. Sec.  107.101 to 107.127 of the HMR. 
Applicants who apply for an approval must do so in conformance with the 
requirements prescribed in Sec. Sec.  107.401 to 107.404, and 
Sec. Sec.  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 
Sec. Sec.  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 Sec.  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.

Sec.  105.5

    In Sec.  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.

[[Page 54420]]

Sec.  107.1

    In Sec.  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.''

Sec.  107.113

    In Sec.  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.

Sec.  107.117

    In Sec.  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.

Sec.  107.709

    In Sec.  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.

49 CFR Part 107, Appendix A

    In 49 CFR part 107, we proposed to add new Appendix A to 
incorporate PHMSA's existing standard operating procedures for 
processing special permits and approval applications. These procedures 
can be defined in four phases consisting of: Completeness, Federal 
Register Publication, Evaluation, and Reconsideration.

Sec.  171.8

    In Sec.  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.

III. Comment Discussion

    In response to the August 12, 2014 NPRM, and September 12, 2014 
proposed rule correction notice, PHMSA received comments from the 
following organizations:

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                Name                          Docket No.                           Web site link
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American Trucking Associations.....  PHMSA-2012-0260-0007.......  https://www.regulations.gov/#!documentDetail;D=PHMSA-2012-0260-0007.
Chlorine Institute.................  PHMSA-2012-0260-0008.......  https://www.regulations.gov/#!documentDetail;D=PHMSA-2012-0260-0008.
Dangerous Goods Advisory Council...  PHMSA-2012-0260-0011.......  https://www.regulations.gov/#!documentDetail;D=PHMSA-2012-0260-0011.
Institute of Makers of Explosives..  PHMSA-2012-0260-0006.......  https://www.regulations.gov/#!documentDetail;D=PHMSA-2012-0260-0006.
Reusable Industrial Packaging        PHMSA-2012-0260-0009.......  https://www.regulations.gov/
 Association.                                                      #!documentDetail;D=PHMSA-2012-0260-0009.
Sporting Arms & Ammunition           PHMSA-2012-0260-0010.......  https://www.regulations.gov/
 Manufacturers' Institute.                                         #!documentDetail;D=PHMSA-2012-0260-0010.
----------------------------------------------------------------------------------------------------------------

    In this section, we summarize and discuss the comments received. 
You may access the NPRM, correction notice, comments, and other 
documents associated with this rulemaking by visiting the Federal 
eRulemaking Portal at https://www.regulations.gov, under Docket No. 
PHMSA-2012-0260, and specific comments by visiting the Web site links 
listed in the previous table.

A. American Trucking Associations

Motor Carrier Exposure
    The American Trucking Associations (ATA) expressed concern that the 
criteria PHMSA is using to reject applications during its automated 
tier and fitness application review processes will adversely penalize 
large fleets that transport materials more often. The ATA stated the 
chances for errors to occur in transportation increase proportionally 
as a carrier's frequency in transportation increases. Further, the ATA 
stated that many of the criteria PHMSA says it will use to conduct its 
initial evaluations will cause carriers' applications to be rejected 
for violations proven to be poor indicators of safe transportation 
performance. The ATA believes PHMSA's focus on these types of 
violations is not justified and offers the following in support of its 
position:

    In 2012, hazardous materials carriers had four percent fewer 
crashes per truck tractor than traditional fleets. Fleets 
transporting hazardous materials also had thirty-five percent fewer 
inspections resulting in a driver being taken out of service, and 
fourteen percent fewer inspections resulting in a vehicle being 
taken out of service. Yet even accounting for the hazardous 
materials fleets' superior safety performance, once a fleet reaches 
a certain size it is almost impossible that it will not have 
suffered an accident involving a death, injury, or property-damaging 
tow away due simply to exposure and the laws of probability. These 
carriers are almost guaranteed to fail the automated review process.
    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

[[Page 54421]]

another 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 Sec. Sec.  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.
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    \1\ Web site: Federal Motor Carrier Safety Administration's 
Large Truck and Bus Crash Facts--https://www.fmcsa.dot.gov/safety/data-and-statistics/large-truck-and-bus-crash-facts.
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    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 Sec.  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 a fitness coordinator 
may not be able to review enough of a carrier's accident data 
information to make an offsite fitness determination of that carrier. 
In most instances before an on-site safety profile review is 
considered, PHMSA's fitness coordinators will contact the applicant for 
clarifying information. If the information the applicant provides is 
sufficient to address the coordinators' concerns and/or questions, this 
may eliminate the need for an on-site inspection.
    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 Sec.  172.504(e). 
Historically, materials that meet the hazard classes listed in Table 1 
of Sec.  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 
Sec.  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:
---------------------------------------------------------------------------

    \2\ Federal Motor Carrier Safety Administration Analysis & 
Information Division, ``Roadside Inspections, HazMat Violations'' 
(Web site: https://ai.fmcsa.dot.gov/SafetyProgram/spViolation.aspx?rpt=RDHV).

    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 Sec.  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

[[Page 54422]]

requalifiers, 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 
Sec.  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.
Safety Performance Data
    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:

    FMCSA has developed a new safety measurement tool, known as 
Compliance, Safety, Accountability (CSA). CSA utilizes the 
inspection and crash data that PHMSA proposes should be considered 
in making special permit determinations. The CSA system then 
amalgamates that data and runs it through an algorithm in order to 
generate seven index scores ranking motor carriers in relation to 
other carriers of similar size or with a similar number of 
inspections. But, PHMSA's special permit and approvals requirements 
are based upon applicants showing that safety performance will be at 
the same or a higher level than would prevail outside of the special 
transportation provisions requested. Thus, CSA scores should only be 
used if they can be shown to reliably represent individual carrier 
safety performance.
    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.''
    FMCSA even avoids using CSA scores in awarding Hazardous 
Materials Safety Permits (Safety Permit). Safety Permits are 
required for the transport of highway route-controlled quantities of 
Class 7 hazardous materials, certain high explosives, poison 
inhalation hazards in Zones A-D, and shipments of compressed or 
liquefied natural gas. Rather than utilize CSA scores, FMCSA awards 
safety permits based on a carrier's performance in avoiding crashes 
and out of service orders during vehicle, driver, and hazardous 
materials inspections.
    Wisely, FMCSA is unwilling to award Safety Permits based upon 
CSA scores. In fact, several carriers that hold Safety Permits have 
CSA Hazmat BASIC index scores well above the threshold for agency 
intervention. Therefore, it is inappropriate for PHMSA to rely on 
these same index scores eschewed by FMCSA in approving or denying 
special permit or approval applications. PHMSA can and should rely 
on inspection information and crash history. However, absent 
verification that the index scores contain useful safety 
information, only the underlying data should be consulted.

    As stated earlier in this preamble, PHMSA agrees with the ATA that 
data considered when evaluating an applicant's safety profile should be 
an indicator of the applicant's safe performance in transportation. 
PHMSA further agrees that while an increased number of miles in 
transportation must be considered when evaluating transportation 
safety, companies should not be adversely penalized for placing an 
increased number of properly prepared hazardous materials in transit. 
PHMSA proposed in the NPRM to evaluate an applicant's fitness based on 
accident and other operational data that are historical indicators of 
compromises in hazardous materials transportation safety. While PHMSA 
proposed to use FMCSA's CSA data as a part of this evaluation, PHMSA is 
aware of the FMCSA's concerns about its data collection programs and 
that it is considering revising the type of information it collects. 
PHMSA will investigate its data collection systems and confer with 
FMCSA to determine what safety compromise indicators can be retrieved 
from these databases, and if the normalizing controls of the type the 
ATA discussed may also be obtained. In addition, the initial review of 
the data will only be performed as part of the initial automated 
fitness review. Further review, including the safety profile review, 
will be conducted by a fitness coordinator and the data will be 
evaluated and normalized based upon available data during the review. 
Companies will not be determined to fail the safety profile review 
based solely upon the number of incidents or accidents that were 
discovered during the safety profile review process. Additional 
factors, such as the number of miles traveled and the number of 
vehicles in service, would also be considered.
    As stated earlier in this preamble, PHMSA also proposed in the NPRM 
to modify its evaluation of the information needed to warrant a safety 
profile review into two types of initiating/trigger/tier events. The 
first event is for a safety profile review and emphasizes high-level 
indicators of these types of risks, and the second event is for on-site 
inspections and includes violations that PHMSA finds are low-level risk 
model indicators. In the NPRM, these proposed events were described in 
the following table:

     Table 2--Safety Profile Review and On-Site Inspection Triggers
------------------------------------------------------------------------
                                          Trigger for on-site inspection
   Trigger for safety profile review                    *
------------------------------------------------------------------------
Death or Injury........................  Any incident attributable to
                                          the applicant or package (not
                                          driver error).
Sec.   172.504(e) Table 1 (Placarding)   ...............................
 material AND Two or more Incidents.

[[Page 54423]]

 
Bulk AND Three or more Incidents.......
Two or More Prior Enforcement Case       Insufficient Corrective Actions
 Referrals.                               on any enforcement case OR
                                          Independent Inspection Agency
                                          (IIA) Items (Except when
                                          reinspected with no violations
                                          noted).
Foreign Cylinder Manufacturer Or         Never Inspected under current
 Requalifier.                             criteria (2010).
------------------------------------------------------------------------
* The Fitness Coordinator assesses and applies these triggers.

    PHMSA will consider additional high-level indicators of 
transportation safety compromises, such as wrong package selection, 
failure to close packages properly, and failure to test packages.
    Due to their low risk, PHMSA will not include violations it finds 
are low-level risk model indicators, such as those described in the 
triggers for an on-site inspection in the earlier table, as triggers 
for an applicant's on-site inspection. Also as previously stated, if 
PHMSA finds during an inspection evidence that an applicant in the four 
years prior to submitting its application 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 a special 
permit or approval, an existing special permit or approval, or the HMR, 
PHMSA will recommend that the applicant has failed this portion of the 
safety review process.

B. The Chlorine Institute

General Comments
    The Chlorine Institute (CI) expressed its overall support of 
PHMSA's initiative to incorporate the special permits and approvals 
SOPs and information about the evaluation process into the HMR. It 
stated that by putting this information in the public record and into 
the HMR, it allows stakeholders to be more informed about the special 
permit and approvals application process. In addition, CI stated that 
explaining the evaluation process and what criteria will prompt 
interviews and on-site inspections will assist applicants in being more 
prepared for the evaluation process. Further, CI stated that providing 
stakeholders with such details should make for a smoother and more 
efficient application review process, thereby benefitting both PHMSA 
and industry. Finally, the CI expressed its appreciation that PHMSA has 
listened to industry's concerns pertaining to the special permits and 
approvals review process and undertaken this rulemaking.

C. Dangerous Goods Advisory Council

General Comments
    The Dangerous Goods Advisory Council (DGAC) expressed its support 
of PHMSA's efforts to comply with MAP-21 requirements to issue 
regulations that establish SOPs and criteria to evaluate applications 
for special permits and approvals, in addition to the publishing of the 
SOPs. However, the DGAC also expressed concerns about several proposals 
in the NPRM, and requested that PHMSA revise its SOPs to reduce 
possible subjectivity and processing times.
PHMSA's Responses to Routine Requests
    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 Sec.  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 Sec.  107.705(b) is not as 
clear. Therefore, PHMSA is revising the introductory paragraph of Sec.  
107.705(c) to include language similar to that in Sec.  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

[[Page 54424]]

applicants 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.
Assessment of Manufacturers That Do Not Ship
    DGAC stated that it is not clear about the intent of PHMSA's 
request on how to assess hazardous materials manufacturers that do not 
ship. Specifically, the DGAC states that it is not clear what PHMSA's 
jurisdiction is to assess fitness for entities that do not offer 
hazardous materials or packaging marked as acceptable for 
transportation.
    PHMSA disagrees. While the DGAC correctly points out that the HMR 
do not apply to a hazardous material that is not being transported in 
commerce, the HMR apply to all actions that affect the safe transport 
of hazardous materials in commerce, including those performed by 
manufacturers that do not ship, such as hazard classification and 
consignment through a freight forwarder or broker. Therefore, each 
applicant for a special permit or approval must be assessed for its 
fitness to perform actions relevant to compliance with the HMR. For 
those manufacturers that do not perform a hazmat function, PHMSA does 
not have regulatory jurisdiction over these entities. PHMSA believes 
that clarifying the responsibilities under the HMR of manufacturers 
that do not ship is beneficial to this process.
Necessity of Assessments of Applicants Performing Functions That 
Require Registration
    The DGAC questioned the necessity for making fitness determinations 
of applicants that perform certain functions requiring registration. As 
an example, DGAC stated that persons desiring to use a symbol as their 
company identifier must register with PHMSA and be issued a number. 
DGAC stated that performing a fitness determination on these persons 
seems to serve no useful purpose. For persons who perform only visual 
inspections of cylinders that are required to register to receive a 
Visual Identification Number (VIN), the DGAC expressed doubt that PHMSA 
has an inspection history on the vast majority of these individuals, 
and that PHMSA can perform an on-site inspection of all applicants for 
VINs in a timely manner. The DGAC concluded by stating that withholding 
the issuance of a VIN until an inspection can be performed may cause 
severe hardship for such applicants, and affect their ability to stay 
in business.
    PHMSA disagrees. While it is not our intent to inspect all VIN 
applicants, and historically we have found low levels of risk with 
visual cylinder requalifiers, visually inspecting cylinders is a safety 
function under the HMR. Therefore, PHMSA will analyze VIN applicants 
for fitness if PHMSA is aware of any intelligence that the applicant is 
not capable of performing this activity. Further, the average 
processing time for a VIN is 3 to 5 days or less. PHMSA has never had 
delays in processing these applications. However, PHMSA is reviewing 
how we process these applications to determine if we can implement more 
automation.
Authority To Determine Sufficient Corrective Action
    The DGAC expressed concern regarding the authority the proposed 
SOPs would give the PHMSA Field Operations (FOPS) officer or authorized 
Operating Administration (OA) representative to make a subjective 
determination that corrective action taken by an applicant in response 
to a prior enforcement case is insufficient and that the basic safety 
management controls proposed for the type of hazardous material, 
packaging, procedures and/or mode of transport remain inadequate. DGAC 
stated that such a determination by a single individual is purely 
subjective without a determination that a violation continues to exist. 
Further, DGAC believes that this type of determination lacks both the 
administrative and legal review to verify existence of a violation, and 
the administrative processes for a company to challenge such findings.
    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 Sec.  107.1.
Criteria Used To Determine if an Applicant is ``Fit'' or ``Unfit''
    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.

[[Page 54425]]

D. Institute of Makers of Explosives

General Comments
    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.''
    As stated earlier in this preamble, PHMSA continuously strives to 
improve the efficiency of its special permit and approval processing 
operations while processing approximately 30,000 special permit and 
approval applications annually. In the past, delays in processing 
incomplete applications until PHMSA received missing or corrected 
information from applicants resulted in significant delays in 
processing applications. As a result, PHMSA has ceased that practice. 
PHMSA must also ensure that all special permit and approval requests 
are not authorized until they are determined to be as safe as those 
activities permitted under the HMR or are determined to be safe enough 
to serve the public interest. In addition, by undertaking this 
rulemaking process, PHMSA is responding to requests from the regulated 
public to open the development of its special permit and approval SOPs 
to full public disclosure and comment.
Concerns and Observations About the NPRM
    The IME indicated in its comments that it supports several proposed 
amendments in the NPRM. These include a four-year review period, Table 
1 applications, hazmat registration, party-to-applicant fitness, data 
normalization and relevance, and presumption of fitness. However, the 
IME provided several comments pertaining to a number of concerns and 
observations. They are as discussed below.
Costs and Benefits
    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.''
    PHMSA notes that for several years, Congress and the DOT's 
Inspector General (IG) have directed PHMSA to assess the ability (i.e., 
fitness) of special permit, and more recently approval, applicants to 
ensure they can safely perform the tasks requested in their 
applications. PHMSA developed and revised its SOPs as internal 
administrative guidance to help its staff properly process these 
applications, reduce delays, and accommodate changes to automated 
systems, database availability, and DOT and PHMSA directives. PHMSA 
also recognizes the financial impact special permits and approvals have 
on industry processes. However, as mentioned earlier in this preamble, 
the risks associated with hazardous materials and the potential for 
severe consequences to the public and environment if they are 
improperly transported require that PHMSA must not authorize permission 
to transport these materials in a manner not permitted under the HMR 
until PHMSA ensures that the actions requested and the persons 
performing these actions are safe.
Streamlining the Process
    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

[[Page 54426]]

properly 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.
    It is important that PHMSA look for opportunities to streamline 
its 120-day special permit and approval processes. In each of the 
last four fiscal years, PHMSA has requested Congress to authorize 
millions in user fees to pay for the costs to administer the SPAP. 
SPAP users have resisted efforts to impose these fees for many 
reasons. One key reason is that PHMSA has done nothing to restrain 
its own costs within the program. Meanwhile, we are grateful that 
Congress has rejected these budget requests.

    While PHMSA requests that applicants submit their special permit 
and approval applications 120 days before they would like them to be 
issued, PHMSA is not restricted by this timeline. Typically, it takes 
PHMSA less than 180 days to process a special permit application, 
approximately 45 days to process an approval classification, and 
approximately 5-6 days to process a VIN application provided all are 
correct and complete. While PHMSA agrees that the application process 
should be streamlined to the extent possible, PHMSA must take what time 
is needed to efficiently and effectively determine that the actions 
requested in each application are safe and what modifications, if any, 
may be needed to make the requested actions safe. PHMSA believes that 
it must consider applications as they are received to be fair to those 
applicants who have prepared their applications correctly. PHMSA 
disagrees with the IME and other commenters that establishing grace 
periods for applications with missing information will improve its 
ability to streamline its application process. Past efforts to create 
internal systems that did this significantly delayed PHMSA's ability to 
process applications efficiently. Further, budgetary constraints 
prevent PHMSA from modifying its current application processing 
software to create a separate application process for managing routine 
administrative application changes.
    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 Sec. Sec.  107.113(b) and (j), and 107.117(g)).
    Regarding screening applicants with multiple locations as one 
entity, PHMSA agrees. PHMSA already performs its initial screening of 
these applicants as one entity; however, follow-up reviews are more 
site-specific, based on the number of locations and resource 
availability.
    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

[[Page 54427]]

application 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.
Fitness Determination Procedure
    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.

    As stated earlier in this preamble, PHMSA will conduct most of its 
safety profile evaluations through administrative research. PHMSA will 
conduct its site-specific and situational-dependent safety profile 
evaluations based on highest priority with regard to safety risk, and 
the number of locations and availability of agency resources to perform 
these tasks.
Fitness Determination Frequency
    The IME commented on the frequency of fitness determinations when 
it stated that:

    IME recommended that fitness determination reviews not be 
triggered by the filing of an application but be periodically 
performed at least once every four-years unless revoked or suspended 
due to subsequent findings of imminent hazard or a pattern of 
knowing or willful non-compliance. PHMSA addresses this concern, in 
large part, by announcing that it considers only fitness data since 
the last review. While this is a step in the right direction, 
applicants may submit several applications at the same or proximate 
time. It seems a waste of resources to ramp up separate fitness 
reviews for the same day or even month. We would recommend some de 
minimis exception between applications. Otherwise, the review 
becomes just a paper exercise and the cost may not be justified. 
Keep in mind that a de minimis exception does not preclude PHMSA 
from suspending or revoking a permit or approval whenever additional 
proof of non-compliance comes to light.

    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.
On-Site Reviews for Fitness Determinations
    In its comments, the IME recommended that:

    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.
Data Accuracy
    In response to a solicitation by PHMSA to comment on data accuracy, 
the IME comments that:

    PHMSA asked for comment about how to improve the quality of the 
Hazmat Intelligence Portal (HIP) data it uses to determine applicant 
fitness. When PHMSA launched HIP, the regulated community was 
promised future access to their own information. This has never 
happened. The best way to ensure data accuracy is to give the 
regulated community access to their data and an opportunity to 
challenge and correct misinformation. FMCSA allows motor carriers 
access to their records and provides a process to correct errors 
under its CSA program. While FMCSA is still grappling to perfect its 
process to correct errors, the CSA program sets a precedent that 
PHMSA should follow.

    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.
Fitness Standards
    The IME addressed fitness standards in its comments as follows:

    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:
    [ssquf] 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-

[[Page 54428]]

consequence.'' 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.
    [ssquf] 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.''
    [ssquf] 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.
    [ssquf] 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.
    [ssquf] 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 Sec.  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 Sec. Sec.  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.
Presumption of Guilt
    In its comments, IME stated that:

    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.

[[Page 54429]]

Modal Evaluation
    Regarding the evaluation performed by various modes during a 
fitness determination, IME commented that:

    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.

    The DOT's modal agencies currently evaluate only those issues that 
are germane to their mode of transportation according to their own 
established criteria, and this will continue. In most cases, modal 
agencies will not be involved in the evaluation of classification 
approvals. However, the modal agencies may make fitness recommendations 
with on-site reviews of an applicant according to their own established 
criteria.
Guidance
    In its comments, IME expressed concern whether the Appendix 
proposed in the NPRM was considered by PHMSA as a regulation when it 
stated that:

    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.
Reconsideration/Appeals
    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 Sec.  107.123 for 
special permits and Sec.  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.
Transparency and Accountability
    In its comments, IME noted that PHMSA describes its statutory 
obligation to publish notice of the receipt of special permit 
applications in the Federal Register. It also noted that, on its own 
initiative, PHMSA also occasionally publishes final actions taken on 
special permit applications. The IME recommended that PHMSA utilize 
this rulemaking to institutionalize the publication of final decisions 
on applications for special permits in the Federal Register.
    PHMSA is required by law to publish receipt and processing of its 
special permit applications in the Federal Register. This is an ongoing 
activity and cannot be addressed by issuing these decisions once in 
this final rule.
Organizational Issues
    IME noted that:

    PHMSA enumerates six screening criteria used during the tier 1 
automated fitness review. Screens 5 and 6 should be listed as 
standalone provisions. In contrast to screens 1 through 4, the 
criteria in screens 5 and 6 are not derived from the occurrence of a 
high-consequence event or an enforcement action. Rather, they are 
descriptions of when and how the automatic review will be conducted 
for particular applicants.
    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 agrees with the IME and will revise the language in the 
Appendix of this final rule to make this correction. Further, the 
trigger selection process is an automated review and done without FMCSA 
interaction.
Interim Process
    IME comments that Congress directed PHMSA to issue the regulations 
contemplated by this rulemaking no later than September 30, 2014. 
However, the comment period for the NPRM did not close until October 
14, 2014, and the statutory deadline will obviously be missed. In light 
of these developments, IME expresses concern about the SOPs and fitness 
criteria that PHMSA will continue to use before the rule is 
promulgated. The IME expresses the hope that PHMSA will make changes to 
current practices and standards, but in the interim, exercise restraint 
in how it carries out any punitive actions using unauthorized 
procedures and criteria.
    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.

[[Page 54430]]

PHMSA 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.
Miscellaneous
    In its closing comments, the IME makes several recommendations:
    (1) PHMSA may wish to clarify the following statements:

    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 
Sec.  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 . . .''.

    PHMSA agrees with the IME and has made these clarifications and 
corrections.

E. Reusable Industrial Packaging Association

Data Used for Fitness Determination
    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.
Delays in Processing Approval Applications
    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.
    PHMSA disagrees. As stated earlier in this preamble, PHMSA is not 
restricted to a 120-day deadline. PHMSA has a responsibility to 
authorize only those activities deemed safe in transportation and must 
not institute practices that would ignore this responsibility. Each 
application can be unique and require different types of complex 
information to complete its review, and PHMSA continues to work to 
improve processing times.
Approval Technical Template
    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 https://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.''
    PHMSA agrees with RIPA that some types of approvals require less 
scrutiny than others and, thus, take less time to review. PHMSA also 
agrees that creating templates to help applicants meet SOPs targets 
would aid the applicants with successfully completing their 
applications. However, all forms and other types of government requests 
from the public must first be developed and cleared through the Office 
of Management and Budget. PHMSA has not developed a template under this 
rulemaking, and, as a result, this activity is outside the scope of 
this rulemaking. Therefore, PHMSA must decline this request.
Insufficient Corrective Actions
    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 Sec.  107.1.
On-Site Inspections
    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

[[Page 54431]]

take action only on compliance issues ``in plain sight.'' RIPA states 
in its experience, this threshold provides equivalency in terms of 
public safety.
    As stated earlier in this final rule, an applicant that 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 
a special permit or approval, an existing special permit or approval, 
or the HMR, must be evaluated by PHMSA to determine that the applicant 
is unfit to conduct the activities requested. A full inspection is 
necessary for a complete assessment of the company's capabilities.

F. Sporting Arms and Ammunition Manufacturers' Institute, Inc.

    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.
MAP-21 Requirements
    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 references PHMSA remarks in the NPRM that the Appendix A is a 
guidance document to be used by PHMSA for the internal management of 
its special permits and approvals program. In addition, SAAMI questions 
the scope of the rule, stating its view that the proposed criteria 
cover fitness checks, but not other aspects of the evaluation of 
applications, and also believes that the Appendix A to 49 CFR part 107 
is not guidance, but rather is regulation. 49 CFR part 107, Appendix A, 
is regulatory text because it is being published in the HMR. It also 
serves as agency guidance in that it discloses PHMSA's administrative 
processes to the regulated public. Similarly, Appendix A of 49 CFR part 
107, subpart D, sets forth guidance in the HMR for frequently cited 
violations. Both appendices inform the regulated public of general 
guidelines PHMSA uses to make determinations.
Length of Time To Process Approvals
    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.
Routine Revisions
    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.
Timelines
    SAAMI notes that special permits have determination timelines in 
Sec.  107.113(a) but that approvals do not have similar provisions in 
Sec.  107.709, and recommends that these sections be aligned. 
Similarly, SAAMI recommends that the deadline that exists in Sec.  
107.709 that requires applicants to respond to PHMSA's requests within 
30 days also be applied to special permit applicants in Sec.  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.
Fitness Procedures
    SAAMI's comments regarding fitness procedures indicated that PHMSA 
should focus on the most serious safety concerns and believe that some 
of the criteria PHMSA proposes to use to evaluate an applicant's 
fitness are not adequate to make this assessment. PHMSA agrees and has 
made these changes.
    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 Sec.  107.1 as ``. . . an event resulting in the unintended 
and unanticipated release of a hazardous material or an event

[[Page 54432]]

meeting incident reporting requirements in Sec. Sec.  171.15 or 171.16 
of this chapter.''
    SAAMI noted that although the criterion for insufficient corrective 
action relevant to a prior enforcement case is defined, the definition 
merely states that the fitness officer has made a determination. SAAMI 
recommends that this determination be quantified and the subsequent 
criteria be published in a rulemaking for transparency, due to the 
serious impact of application rejection. PHMSA disagrees. Special 
permit and approval applications are reviewed on a case-by-case basis 
because they are often unique and sometimes include information subject 
to applicant confidentiality requests. PHMSA believes providing 
specific determinations and corrective actions directly to an applicant 
is the most effective way to convey the compliance information where it 
is needed. Also, as stated earlier, PHMSA has revised this final rule 
to establish two, instead of four, triggers of violations for each 
applicant for a safety profile review or five or more triggers for an 
on-site inspection enforcement case referral event. Either will result 
in a failed automatic safety profile evaluation recommendation. Fitness 
Coordinators will follow-up with the applicant to provide and obtain 
clarifying information.
    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.
Closing Recommendations
    SAAMI closes out its comments by providing a list of 
recommendations. They are as follows:
    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.
    SAAMI points out that in Appendix A (3)(b)(iii), the reference to 
(3)(b) refers to itself, and suggested revising the reference to 
(3)(b)(i) and (3)(b)(ii). PHMSA agrees and has made this correction.
    SAAMI requests that the language in Appendix paragraph (4)(a) and 
(4)(b) be revised to clarify that special permit and approval 
applications are not issued. PHMSA agrees and has made this correction.

IV. Regulatory Analyses and Notices

A. Statutory/Legal Authority for This Rulemaking

    This final rule is published under the authority of 49 U.S.C. 
5103(b), which authorizes the Secretary to prescribe regulations for 
the safe transportation, including security, of hazardous material in 
intrastate, interstate, and foreign commerce. 49 U.S.C. 5117(a) 
authorizes the Secretary of Transportation to issue a special permit 
from a regulation prescribed in sections 5103(b), 5104, 5110, or 5112 
of the Federal Hazardous Materials Transportation Law to a person 
transporting, or causing to be transported, hazardous material in a way 
that achieves a safety level at least equal to the safety level 
required under the law, or is consistent with the public interest, if a 
required safety level does not exist. This final rule is also 
established under the authority of section 33012(a) of MAP-21 (Public 
Law 112-141, July 6, 2012). Section 33012(a) requires that no later 
than July 6, 2014, the Secretary of Transportation issue a rulemaking 
to provide notice and an opportunity for public comment on proposed 
regulations that establish standard operating procedures (SOPs) to 
support administration of the special permit and approval programs, and 
objective criteria to support the evaluation of special permit and 
approval applications. In this final rule, PHMSA is addressing the 
provisions in the Act.

B. Executive Order 12866, 13563, and DOT Regulatory Policies and 
Procedures

    This final rule is not considered a significant regulatory action 
under Sec.  3(f) of Executive Order 12866 and was not

[[Page 54433]]

reviewed 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.
    In this final rule, PHMSA amends the HMR to incorporate SOPs for 
processing and issuing special permit and approval applications. 
Incorporating these provisions into regulations of general 
applicability will provide shippers and carriers with clarity and 
flexibility to comply with PHMSA's initial review and, as needed, 
subsequent renewal or modification process. In addition, the final rule 
would reduce the paperwork burden on industry and this agency from 
delays in processing incomplete applications. Taken together, the 
provisions of this final rule would improve the efficacy of the special 
permit and approval application and issuance process, which will 
promote the continued safe transportation of hazardous materials, while 
reducing transportation costs for the industry and administrative costs 
for the agency.
    While the majority of commenters did not suggest this rulemaking 
would impose any cost to the regulated community, IME did note costs 
and benefits change when the procedures and standards change. PHMSA 
agrees that changes to procedures could impact both cost and benefits, 
but we reiterate this rulemaking does not change current practices; 
rather, it simply codifies current operating procedures of the Approval 
and Permits Division. Therefore, PHMSA does not anticipate increased 
cost and the impact of this final rule is presumed to be minor. It 
intends to provide clarity by reducing applicant confusion regarding 
the special permit and approval application and renewal process, and 
improve the quality of information and completeness of the application 
submitted. Although it is difficult to quantify the savings, many 
special permits and approvals have economically impacted companies by 
improving the efficiency and safety of their operations in a manner 
that meets or exceeds the requirements prescribed in the HMR. Some 
examples of positive economic impacts include allowing the use of less 
expensive non-specification packages, reducing the number of tasks, or 
other methods that reduce costs incurred before the approval or special 
permit is issued. As a result, PHMSA calculates that this final rule 
does not impose any costs on industry. Although a slight reduction in 
the costs associated with processing delays may provide nominal 
benefits, generally, this final rule affects only agency procedures; 
therefore, we assume no change in current industry costs or benefits.

C. Executive Order 13132

    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:
    (1) The designation, description, and classification of hazardous 
materials;
    (2) The packing, repacking, handling, labeling, marking, and 
placarding of hazardous materials;
    (3) The preparation, execution, and use of shipping documents 
related to hazardous materials and requirements related to the number, 
contents, and placement of those documents;
    (4) The written notification, recording, and reporting of the 
unintentional release in transportation of hazardous materials; and
    (5) The designing, manufacturing, fabricating, inspecting, marking, 
maintaining, reconditioning, repairing, or testing a package, container 
or packaging component that is represented, marked, certified, or sold 
as qualified for use in transporting hazardous material in commerce.
    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.

D. Executive Order 13175

    This final rule was analyzed in accordance with the principles and 
criteria contained in Executive Order 13175 (``Consultation and 
Coordination with Indian Tribal Governments''). Because this final rule 
does not have tribal implications and does not impose substantial 
direct compliance costs on Indian tribal governments, the funding and 
consultation requirements of Executive Order 13175 do not apply.

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

    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

[[Page 54434]]

specific 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.
    The Institute of Makers of Explosives (IME) stated the majority of 
its members are small businesses and the following: (1) Classification 
approvals are also the basis for obtaining authorization from foreign 
competent authorities to transport explosive products abroad, (2) 
criteria PHMSA uses for determining a company's fitness to carry out 
the terms of a special permit or approval can have profound 
implications for the ability of the commercial explosives industry to 
continue to do business in the United States, (3) differences between 
past SOPs PHMSA posted on line and the ones approved under this 
rulemaking may result in costs and benefits not currently assigned to 
this rulemaking, and (4) backlogs in processing special permit and 
approval applications adversely affect U.S. competitiveness. However, 
the IME did not provide any cost information to quantify the possible 
effects the SOP guidance proposed in the NPRM would have on its 
industry.
    PHMSA's SOPs for special permits and approvals serve as internal 
administrative guidance to help its staff properly process these 
applications, reduce delays, and accommodate changes to automated 
systems, database availability, and DOT and PHMSA directives. PHMSA 
recognizes the financial impact special permits and approvals have on 
industry processes. As mentioned earlier in this preamble, risks 
associated with hazardous materials and the potential for severe 
consequences to the public and environment, if they are improperly 
transported, require that PHMSA must not authorize permission to 
transport these materials in a manner not permitted under the HMR until 
PHMSA ensures that the actions requested and the persons performing 
these actions are safe. In response to requests from commenters, 
including the IME, PHMSA revised the SOPs in this final rule for 
clarity, and to include activities for applicant review that are 
statistically revealed to be greater indicators of their safe 
performance in transportation. In addition, PHMSA committed to 
investigate opportunities to improve its special permit and approval 
application review processes in the future, as these opportunities 
become available to the agency. Therefore, we certify that this final 
rule will not have a significant economic impact on a substantial 
number of small entities.
    This final rule has been developed in accordance with Executive 
Order 13272 (``Proper Consideration of Small Entities in Agency 
Rulemaking'') and DOT's procedures and policies to promote compliance 
with the Regulatory Flexibility Act to ensure that potential impacts of 
draft rules on small entities are properly considered.

F. Paperwork Reduction Act

    PHMSA has analyzed this final rule in accordance with the Paperwork 
Reduction Act of 1995 (PRA). The PRA requires federal agencies to 
minimize the paperwork burden imposed on the American public by 
ensuring maximum utility and quality of federal information, ensuring 
the use of information technology to improve government performance, 
and improving the federal government's accountability for managing 
information collection activities. This final rule's benefits include 
reducing applicant confusion about the special permit and approval 
application and renewal processes; improving the quality of information 
and completeness of applications submitted; and improving applicant 
processing times. This final rule does not impose any additional costs 
on industry. Although a slight reduction in the costs associated with 
processing delays may provide nominal benefits, generally, this final 
rule affects only agency procedures; therefore, this final rule 
contains no new information collection requirements subject to the PRA. 
Further, this final rule does not include new reporting or 
recordkeeping requirements.
    As stated earlier in this preamble, PHMSA is not aware of any 
information collection and recordkeeping burdens for the hazardous 
materials industry associated with the requirements proposed in this 
rulemaking. Thus, PHMSA has not prepared an information collection 
document for this rulemaking and did not assess its potential 
information collection costs. However, if any regulated entities 
determine they will incur information and recordkeeping costs as a 
result of this final rule, if information on this matter should become 
available, or if commenters have questions concerning information 
collection on this final rule, PHMSA requests that they provide 
comments on the possible burden developing, implementing, and 
maintaining records and information these requirements may impose on 
businesses applying for a special permit or approval. Please direct 
your comments or questions to Steven Andrews or T. Glenn Foster, 
Standards and Rulemaking Division, Pipeline and Hazardous Materials 
Safety Administration, 1200 New Jersey Avenue SE., Washington, DC 
20590-0001, Telephone (202) 366-8553.

G. Regulation Identifier Number (RIN)

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

H. Unfunded Mandates Reform Act of 1995

    This final rule does not impose unfunded mandates under the 
Unfunded Mandates Reform Act of 1995. It does not result in costs of 
$141.3 million or more to either state, local or tribal governments, in 
the aggregate, or to the private sector, and is the least burdensome 
alternative that achieves the objective of the proposed rule.

I. Environmental Assessment

    The National Environmental Policy Act, 42 U.S.C. 4321-4375, 
requires that federal agencies analyze proposed actions to determine 
whether the action will have a significant impact on the human 
environment. The Council on Environmental Quality (CEQ) regulations 
require federal agencies to conduct an environmental review considering 
the need for the proposed action, alternatives to the proposed action, 
probable environmental impacts of the proposed action and alternatives, 
and the agencies and persons consulted during the consideration 
process. 40 CFR 1508.9(b).
The Need for the Proposed Action
    This final rule revises the HMR to include the standard operating 
procedures and criteria used to evaluate applications for special 
permits and approvals. This rulemaking also provides clarity for the 
applicant as to what conditions need to be satisfied to promote 
completeness of the applications submitted.
    Hazardous materials are capable of affecting human health and the 
environment if a release were to occur.

[[Page 54435]]

The 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.
Alternatives to the Proposed Action
    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.
Analysis of the Alternatives
(1) Incorporate Special Permit and Approval Processing Standard 
Operating Procedures
    We proposed clarifications to certain HMR requirements to include 
those methods for assessing the ability of new special permit and 
approval applicants, and those applying for renewals of special permits 
and approvals, to perform the tasks they have requested for 
transporting hazardous materials. The process through which special 
permits and approvals are evaluated requires the applicant to 
demonstrate that the requested approval, the alternative transportation 
method, or proposed packaging provides an equivalent level of safety as 
that for activities and packagings authorized under the HMR. Implicit 
in this process is that the special permit or approval must provide an 
equivalent level of environmental protection as that provided in the 
HMR or demonstrate 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. Thus, 
incorporating SOPs to assess the performance capability of special 
permit and approval applicants should maintain or exceed the existing 
environmental protections built into the HMR.
(2) Incorporation of Some, But Not All, of the Proposed Requirements or 
Modifications to These Requirements in Response to Comments Received
    The changes proposed in the NPRM were designed to promote clarity 
and ease of the administration of special permits and approvals during 
the application review process. Since these changes may make it easier 
for special permit and approval applicants to successfully apply to 
PHMSA for authorized variances from the HMR, incorporation of the 
special permit and approval SOPs into the HMR may result in an 
increased number of applicants transporting hazardous materials under 
these types of variances. Because PHMSA will have determined the 
shipping methods authorized under these new variances to be at least 
equal to the safety level required under the HMR or, if a required 
safety level does not exist, consistent with the public interest, PHMSA 
expects that these additional shipments will not result in associated 
environmental impacts. Incorporating only some of these changes will 
help to obscure the informational requirements of the special permit 
and approval application process, confuse the regulated public by 
providing a partial understanding of the information needed to submit a 
complete special permit or approval application, and possibly further 
delay application review times. PHMSA does not recommend this 
alternative.
(3) No Action
    If no action is taken, then special permit and approval applicants 
will continue to be assessed in the same manner as they are today. This 
will result in no change to the current potential effects to the 
environment, but will also not provide the applicant with information 
needed to improve its application processing time within PHMSA. 
Further, it may negatively impact transportation in commerce by not 
making innovative and safe transportation alternatives more easily 
available to the hazmat industry. PHMSA does not recommend this 
alternative.
Discussion of Environmental Impacts in Response to Comments
    PHMSA solicited comments about potential environmental impacts 
associated with the NPRM from other agencies, stakeholders, and 
citizens. None of the respondents commented on the potential 
environmental impacts of this rule.
Conclusion
    The provisions of this rule build on current regulatory 
requirements to enhance the transportation safety of hazardous 
materials transported by all modes. PHMSA has calculated that this 
rulemaking will not impact the current risk of release of hazardous 
materials into the environment. Therefore, PHMSA finds that there are 
no significant environmental impacts associated with this final rule.

J. Privacy Act

    In accordance with 5 U.S.C. 553(c), DOT solicits comments from the 
public to better inform its rulemaking process. DOT posts these 
comments, without edit, including any personal information the 
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.

K. Executive Order 13609 and International Trade Analysis

    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

[[Page 54436]]

unnecessary differences in regulatory requirements.
    Similarly, the Trade Agreements Act of 1979 (Pub. L. 96-39), as 
amended by the Uruguay Round Agreements Act (Pub. L. 103-465), 
prohibits federal agencies from establishing any standards or engaging 
in related activities that create unnecessary obstacles to the foreign 
commerce of the United States. For purposes of these requirements, 
federal agencies may participate in the establishment of international 
standards, so long as the standards have a legitimate domestic 
objective, such as providing for safety, and do not operate to exclude 
imports that meet this objective. The statute also requires 
consideration of international standards and, where appropriate, that 
they be the basis for U.S. standards.
    PHMSA participates in the establishment of international standards 
in order to protect the safety of the American public, and we have 
assessed the effects of the final rule to ensure that it does not cause 
unnecessary obstacles to foreign trade. Accordingly, this final rule is 
consistent with E.O. 13609 and PHMSA's obligations.

V. Section by Section Review

Sec.  105.5

    In Sec.  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.

Sec.  107.1

    In Sec.  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.''

Sec.  107.113

    In Sec.  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.

Sec.  107.117

    In Sec.  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.

Sec.  107.705

    In Sec.  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.

Sec.  107.709

    In Sec.  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.

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.

Sec.  171.8

    In Sec.  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.

List of Subjects

49 CFR Part 105

    Administrative practice and procedure, Hazardous materials 
transportation, Penalties, Reporting and recordkeeping requirements.

49 CFR Part 107

    Administrative practice and procedure, Hazardous materials 
transportation, Penalties, Reporting and recordkeeping requirements.

49 CFR Part 171

    Exports, Hazardous materials transportation, Hazardous waste, 
Imports, Incorporation by reference, Reporting and recordkeeping 
requirements.

    In consideration of the foregoing, we are amending 49 CFR chapter I 
as follows:

PART 105--HAZARDOUS MATERIALS PROGRAM DEFINITIONS AND GENERAL 
PROCEDURES

0
1. The authority citation for part 105 is revised to read as follows:

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


0
2. In Sec.  105.5, in paragraph (b), the definitions for ``approval'' 
and ``special permit'' are revised to read as follows:


Sec.  105.5  Definitions.

* * * * *
    Approval means a written authorization, including a competent 
authority approval, issued by the Associate Administrator, the 
Associate Administrator's designee, or as otherwise prescribed in the 
HMR, to perform a function for which prior authorization by the 
Associate Administrator is required under subchapter C of this chapter 
(49 CFR parts 171 through 180).
* * * * *
    Special permit means a document issued by the Associate 
Administrator, the Associate Administrator's designee, or as otherwise 
prescribed in the HMR, 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).
* * * * *

PART 107--HAZARDOUS MATERIALS PROGRAM PROCEDURES

0
3. The authority citation for part 107 continues to read as follows:

    Authority:  49 U.S.C. 5101-5128, 44701; Pub. L. 101-410 section 
4 (28 U.S.C. 2461 note); Pub. L. 104-121 sections 212-213; Pub. L. 
104-134 section 31001; Pub. L. 112-141 section 33006, 33010; 49 CFR 
1.81 and 1.97.


0
4. In Sec.  107.1:

[[Page 54437]]

0
a. Add in alphabetical order a definition for ``applicant fitness'';
0
b. Revise the definition for ``approval'';
0
c. Add in alphabetical order definitions for ``fit or fitness,'' 
``fitness coordinator,'' and ``insufficient corrective action'';
0
d. Revise the definition for ``special permit''; and
0
e. Add in alphabetical order a definition for ``sufficient corrective 
action''.
    The additions and revisions read as follows:


Sec.  107.1  Definitions.

* * * * *
    Applicant fitness means a determination by PHMSA, the Associate 
Administrator's designee, or as otherwise prescribed in the HMR, that a 
special permit or approval applicant is fit to conduct operations 
requested in the application or an authorized special permit or 
approval.
* * * * *
    Approval means a written authorization, including a competent 
authority approval, issued by the Associate Administrator, the 
Associate Administrator's designee, or as otherwise prescribed in the 
HMR, to perform a function for which prior authorization by the 
Associate Administrator is required under subchapter C of this chapter 
(49 CFR parts 171 through 180).
* * * * *
    Fit or fitness means demonstrated and documented knowledge and 
capabilities resulting in the assurance of a level of safety and 
performance necessary to ensure compliance with the applicable 
provisions and requirements of subchapter C of this chapter or a 
special permit or approval issued under subchapter C of this chapter.
    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 Sec. Sec.  
107.113(f)(5) and 107.709(d)(5).
* * * * *
    Insufficient corrective action means that either a PHMSA Field 
Operations (FOPS) Division officer or an authorized representative or 
special agent of DOT upon request, such as an Operating Administration 
(OA) representative, has determined that evidence of an applicant's 
corrective action in response to prior to enforcement cases is 
inadequate or incomplete and the basic safety management controls 
proposed for the type of hazardous material, packaging, procedures, 
and/or mode of transportation remain inadequate to prevent recurrence 
of a violation.
* * * * *
    Special permit means a document issued by the Associate 
Administrator, the Associate Administrator's designee, or as otherwise 
prescribed in the HMR, under the authority of 49 U.S.C. 5117 permitting 
a person to perform a function that is not otherwise permitted under 
subchapters 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).
* * * * *
    Sufficient corrective action means that either a PHMSA Field 
Operations officer or an authorized representative or special agent of 
DOT upon request, such as an Operating Administration (OA) 
representative, has determined that evidence of an applicant's 
corrective action in response to prior to enforcement cases is 
sufficient and the basic safety management controls proposed for the 
type of hazardous material, packaging, procedures, and/or mode of 
transportation are inadequate.
* * * * *

0
5. In Sec.  107.113, paragraph (a) is revised to read as follows:


Sec.  107.113  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.
* * * * *

0
6. In Sec.  107.117, paragraph (e) is revised to read as follows:


Sec.  107.117  Emergency processing.

* * * * *
    (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 
Sec.  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 Sec.  
107.117(a) and that, with reference to the criteria of Sec.  
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.
* * * * *

0
7. In Sec.  107.705, paragraph (b) introductory text is revised to read 
as follows:


Sec.  107.705  Registrations, reports, and applications for approval.

* * * * *
    (b) Description of approval proposal. In addition to the provisions 
in paragraph (a) for an approval, an application for an approval, or an 
application for modification or renewal of an approval, the applicant 
must include the following information that is relevant to the approval 
application--
* * * * *

0
8. In Sec.  107.709, paragraph (b) is revised to read as follows:


Sec.  107.709  Processing of an application for approval, including an 
application for renewal or modification.

* * * * *
    (b) The Associate Administrator will review an application for an 
approval,

[[Page 54438]]

modification 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.
* * * * *

0
9. Add Appendix A to 49 CFR part 107 to read as follows:

Appendix A to Part 107--Standard Operating Procedures for Special 
Permits and Approvals

    This appendix sets forth the standard operating procedures 
(SOPs) for processing an application for a special permit or an 
approval in conformance with 49 CFR parts 107 and 171 through 180. 
It is to be used by PHMSA for the internal management of its special 
permit and approval programs.
    The words ``special permit'' and ``approval'' are defined in 
Sec.  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 Sec.  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.

                              Special Permit and Approval Evaluation Review Process
----------------------------------------------------------------------------------------------------------------
                                                                     Non-
                                               Special permit   classification   Classification    Registration
                                                                   approval         approval         approval
----------------------------------------------------------------------------------------------------------------
1. Completeness.............................               X                X                X                X
2. Publication..............................               X   ...............  ...............  ...............
3. Evaluation...............................
a. Technical................................               X                X                X   ...............
b. Safety Profile...........................               X                X   ...............               X
4. Disposition..............................
a. Approval.................................               X                X                X                X
b. Denial...................................               X                X                X                X
c. Reconsideration/Appeal...................               X                X                X                X
----------------------------------------------------------------------------------------------------------------

    An approval for assessing an applicant's ability to perform a 
function that does not involve classifying a hazardous material is 
described as a non-classification approval and certifies that: An 
approval holder is qualified to requalify, repair, rebuild, and/or 
manufacture cylinders stipulated in the HMR; an agency is qualified 
to perform inspections and other functions outlined in an approval 
and the HMR; an approval holder is providing an equivalent level of 
safety or safety that is consistent with the public interest in the 
transportation of hazardous materials outlined in the approval; and 
a radioactive package design or material classification fully 
complies with applicable domestic or international regulations. An 
approval for assessing the hazard class of a material is described 
as a classification approval and certifies that explosives, 
fireworks, chemical oxygen generators, self-reactive materials, and 
organic peroxides have been classed for manufacturing and/or 
transportation based on requirements stipulated in the HMR. 
Registration approvals include the issuance of a unique 
identification number used solely as an identifier or in conjunction 
with approval holder's name and address, or the issuance of a 
registration number that is evidence the approval holder is 
qualified to perform an HMR-authorized function, such as visually 
requalifying cylinders. This appendix does not include registrations 
issued under 49 CFR part 107, subpart G.
    1. Completeness. PHMSA reviews all special permit and approval 
applications to determine if they contain all the information 
required under Sec.  107.105 (for a special permit), Sec.  107.117 
(for emergency processing) or Sec.  107.402 (for designation as a 
certification agency) or Sec.  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 Sec.  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 Sec.  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 Sec.  
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.
    3. Evaluation. The evaluation phase consists of two assessments, 
which may be done concurrently, a technical evaluation and a safety 
profile evaluation. When applicable, PHMSA consults and coordinates 
its evaluation of applications with the following Operating 
Administrations (OAs) that share enforcement authority under Federal 
hazardous material transportation law: Federal Aviation 
Administration, Federal Motor Carrier Safety Administration, Federal 
Railroad Administration, and United States Coast Guard. PHMSA also 
consults other agencies with hazardous material subject-matter 
expertise, such as the Nuclear Regulatory Commission and the 
Department of Energy.
    (a) Technical evaluation. A technical evaluation considers 
whether the proposed special permit or approval will achieve a level 
of safety at least equal to that required under the HMR or, if a 
required safety level does not exist, considers whether the proposed 
special permit is consistent with the public interest in that it 
will adequately protect against the risks to life and property 
inherent in the transportation of hazardous material. For a 
classification approval, the technical evaluation is a determination 
that the application meets the requirements of the regulations for 
issuance of the approval. If formal coordination with another OA is 
included as part of the evaluation phase, that OA is responsible for 
managing this process within the applicable OA. The OA reviews the 
application materials and PHMSA's technical evaluation, and may 
provide their own evaluation, comments and recommendations. The OA 
may also recommend operational controls or limitations to be 
incorporated into the special permit or approval to improve its 
safety.
    (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

[[Page 54439]]

requests 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.
    (i) Automated Review. An applicant for a special permit or 
approval which requires a safety profile evaluation, but does not 
include coordination with an OA, is subject to an automated safety 
profile review. If the applicant passes the initial automated 
review, the applicant is determined to be fit. If the applicant 
fails the initial automated review, the applicant is subject to a 
safety profile evaluation. An applicant that fails a safety profile 
evaluation may be determined to be unfit. To begin this review, 
PHMSA or the applicant enters the applicant's information into the 
web-based Hazardous Materials Information System (HMIS) or Hazmat 
Intelligence Portal (HIP), or other future application processing 
technology that provide an integrated information source to identify 
hazardous material safety trends through the analysis of incident 
and accident information, and provide access to comprehensive 
information on hazardous materials incidents, special permits and 
approvals, enforcement actions, and other elements that support 
PHMSA's regulatory program. PHMSA then screens the applicant to 
determine if, within the four years prior to submitting its 
application, the applicant was involved in any incident attributable 
to the applicant or package where two or more triggers for a safety 
profile review or five or more triggers for on-site inspection 
enforcement case referral events occurred.
    (1) The trigger events are listed in the following table:

------------------------------------------------------------------------
                                          Trigger for on-site inspection
   Trigger for safety profile review                    *
------------------------------------------------------------------------
(1) Any incident that involved a death   (1) Evidence that an applicant
 or injury;.                              is at risk of being unable to
                                          comply with the terms of an
                                          application, including those
                                          listed below.
(2) Two or more incidents involving a    (2) An on-site inspection at
 Sec.   172.504(e) (placarding) Table 1   the recommendation of the
 hazardous material;                      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.
(3) Three or more incidents involving a  (3) If, during an inspection,
 bulk packaging, or an applicant that     evidence is found in the four
 is acting as an interstate carrier of    years prior to submitting its
 hazardous materials under the terms of   application that an applicant
 the special permit or an approval; or    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 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 in an application or
                                          authorized special permit or
                                          approval.
(4) Any incident that involved:          (4) Incorrect or missing: (a)
 Incorrect package selection; leaking     Markings, (b) labels, (c)
 packages; not following closure          placards, or (d) shipping
 instructions; failure to test            papers.
 packages, if applicable; and failure
 to secure packages, including
 incorrect blocking and/or bracing.
------------------------------------------------------------------------
* The Fitness Coordinator assesses and applies these triggers.

    (2) If an applicant is acting as an interstate carrier of 
hazardous materials under the terms of the special permit, they will 
be screened in an automated manner based upon criteria established 
by FMCSA, such as that contained in its Safety and Fitness 
Electronic Records (SAFER) system, which consists of interstate 
carrier data, several states' intrastate data, interstate vehicle 
registration data, and may include operational data such as 
inspections and crashes.
    (ii) Safety profile evaluation. A fitness coordinator, as 
defined in Sec.  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.
    (iii) On-Site Inspection. (A) The factors in paragraph 3(b)(i) 
and 3(b)(ii) are used as evidence that an applicant is at risk of 
being unable to comply with the terms of an application, including 
those listed below. PHMSA's Field Operations Division or 
representative of the Department, such as an Operating 
Administration representative, will conduct an on-site inspection at 
the recommendation of the fitness coordinator if one of the 
following criteria applies:
    (1) 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;
    (2) Insufficient Corrective Actions, as defined in Sec.  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
    (3) Items noted by an IIA on a cylinder requalifier inspection 
report, except when re-inspected with no violations noted.
    (B) If, during an inspection, the PHMSA investigator or a 
representative of the Department finds evidence in the four years 
prior to submitting its application that 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 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 in an 
application or authorized special permit or approval.
    4. Disposition. (a) Special Permit. If an application for a 
special permit is issued, PHMSA provides the applicant, in writing, 
with a special permit and an authorization letter if party status is 
authorized.
    (b) Approval. If an application for approval is issued, PHMSA 
provides the applicant, in writing, with an approval, which may come 
in various forms, including:
    (1) An ``EX'' approval number for classifying an explosive 
(including fireworks;

[[Page 54440]]

see Sec. Sec.  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 Sec.  180.203);
    (3) A ``VIN'' (visual identification number) to uniquely 
identify a facility that performs an internal or external visual 
inspection, or both, of a cylinder in conformance with 49 CFR part 
180, subpart C, or applicable CGA Pamphlet or HMR provision;
    (4) An ``M'' number for identifying packaging manufacturers (see 
Sec.  178.3); or
    (5) A ``CA'' (competent authority) for general approvals (see 
Sec. Sec.  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 Sec. Sec.  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 Sec.  107.123 and, if the 
reconsideration is denied, may appeal as provided in Sec.  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 Sec.  107.715 
and, if the reconsideration is denied, may appeal as provided in 
Sec.  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.

PART 171--GENERAL INFORMATION, REGULATIONS, AND DEFINITIONS

0
10. The authority citation for part 171 is revised to read as follows:

    Authority:  49 U.S.C. 5101-5128, 44701; Pub. L. 101-410, section 
4 (28 U.S.C. 2461 note); Pub. L. 104-121, sections 212-213; Pub. L. 
104-134, section 31001; 49 CFR 1.81 and 1.97.


0
11. In Sec.  171.8, the definitions for ``approval,'' and ``special 
permit'' are revised to read as follows:


Sec.  171.8  Definitions and abbreviations.

* * * * *
    Approval means a written authorization, including a competent 
authority approval, issued by the Associate Administrator, the 
Associate Administrator's designee, or as otherwise prescribed in the 
HMR, to perform a function for which prior authorization by the 
Associate Administrator is required under subchapter C of this chapter 
(49 CFR parts 171 through 180).
* * * * *
    Special permit means a document issued by the Associate 
Administrator, the Associate Administrator's designee, or as otherwise 
prescribed in the HMR, 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).
* * * * *

    Issued in Washington, DC, on September 2, 2015, under the 
authority delegated in 49 CFR part 1.97.
Marie Therese Dominguez,
Administrator, Pipeline and Hazardous Materials Safety Administration.
[FR Doc. 2015-22617 Filed 9-9-15; 8:45 am]
 BILLING CODE 4910-60-P